Although George Osbourne is an unsufferable arse...

[Dibden Purlieu Saint]

...is it really up to him what economic policies we employ. I always hear from people at work, on this forum etc that we should have a Chancellor that knows economics. I'm not so sure myself and I think it's quite naive if people believe he actually makes any economic decisions and that it's not left to an economic thinktank...my old lecturer at Uni was part of Labour's for instance during GB's reign.

[Ex Lion Tamer]

There are left and right wing think tanks, so it's who he decides to listen to. In that respect he doesn't really need to be an economist, but it might help him make an informed decision. Instead we get ideology driving his choices.

 

On a related note, most of the right wing think tanks are funded by big business which is why they advocate policies which help the wealthy managerial classes rather than those who need it most. A better understanding of economics would help him sees through the fog of information

Edited 5 April, 2013 by Ex Lion Tamer

[eurosaint]

Gordon Brown was allegedly an economics expert and turned out to be an unmitigated disaster !

Maybe we should stick with the amateurs ?

[Ex Lion Tamer]

Gordon Brown was allegedly an economics expert and turned out to be an unmitigated disaster !

Maybe we should stick with the amateurs ?

 

He studied history.

 

Rachel Reeves and Matt Hancock are economists and have diametrically opposed views, so I guess it doesn't really help. Or possibly the latter is just an idiot

[Joensuu]

DP - Osbourne will definitely not be alone in setting the agenda, he is merely sticking to the views of many right wing economic think tanks.

 

IMO, the first rule of government should be to never spend more than you receive (except in absolute emergencies). Governments, and departments should be credited whenever they manage to achieve a surplus, not have their budgets cut if they "don't spend enough by the beginning of April". Once you have a surplus, you can then be generous with the social support you provide.

 

The problem I see in this country is that there is a continuous cycle of the left overspending, leaving the right having to over cut. I would like the government to introduce a automatic legal inquiry with reasonably severe personal penalties for any government minister who sanctions an over spend. If there is good justification (say we are attacked) the court will rule in their favour, if however, they are just building new hospitals or submarines which weren't absolutely needed, the ministers responsible should suffer penalties.

 

The law should also cover all pledges or promises of future spend too. So, no more PPI-type overspending.

 

BTW, I'm saying this as a liberal, and slightly left of centre too. I just think the country should be generous with it's support mechanisms, but never, ever, overspend.

[Sergei Gotsmanov]

There are left and right wing think tanks, so it's who he decides to listen to. In that respect he doesn't really need to be an economist, but it might help him make an informed decision. Instead we get ideology driving his choices.

 

On a related note, most of the right wing think tanks are funded by big business which is why they advocate policies which help the wealthy managerial classes rather than those who need it most. A better understanding of economics would help him sees through the fog of information

 

and incidentally the left wing think thanks are funded by you and me or trade unions - that is why they have no understanding that you have to make money not borrow it.

[Sergei Gotsmanov]

DP - Osbourne will definitely not be alone in setting the agenda, he is merely sticking to the views of many right wing economic think tanks.

 

IMO, the first rule of government should be to never spend more than you receive (except in absolute emergencies). Governments, and departments should be credited whenever they manage to achieve a surplus, not have their budgets cut if they "don't spend enough by the beginning of April". Once you have a surplus, you can then be generous with the social support you provide.

 

The problem I see in this country is that there is a continuous cycle of the left overspending, leaving the right having to over cut. I would like the government to introduce a automatic legal inquiry with reasonably severe personal penalties for any government minister who sanctions an over spend. If there is good justification (say we are attacked) the court will rule in their favour, if however, they are just building new hospitals or submarines which weren't absolutely needed, the ministers responsible should suffer penalties.

 

The law should also cover all pledges or promises of future spend too. So, no more PPI-type overspending.

 

BTW, I'm saying this as a liberal, and slightly left of centre too. I just think the country should be generous with it's support mechanisms, but never, ever, overspend.

 

Quite right. It is quite simple you spend what you can afford.

 

Where we probably differ is I would say that you then have a low tax economy that attracts lots of business and entrepreneurs to create wealth to increase spending.

[Ex Lion Tamer]

Quite right. It is quite simple you spend what you can afford.

 

Where we probably differ is I would say that you then have a low tax economy that attracts lots of business and entrepreneurs to create wealth to increase spending.

 

So you don't have a mortgage then? Sometimes you have to borrow to invest in the future. I do think Brown overspent during the good times, but trying to cut back to 'what we can afford' in a recession is madness.

 

Low tax economies are are self-defeating race to the bottom, because they merely force other countries to do the same, and we are back to where we started. It's similar to how Clinton deregulated banking in the US, forcing other countries such as the UK to do the same in order to attract business, and leading us into this financial crash.

[Ex Lion Tamer]

and incidentally the left wing think thanks are funded by you and me or trade unions - that is why they have no understanding that you have to make money not borrow it.

They still have to work hard to prove to their funders that the work they are doing is worthwhile. This article is a good summary of how left and right wing think tanks are funded:

 

http://www.guardian.co.uk/commentisfree/2011/sep/12/thinktanks-crushing-democracy-pr-agenices

[Joensuu]

Quite right. It is quite simple you spend what you can afford.

 

Where we probably differ is I would say that you then have a low tax economy that attracts lots of business and entrepreneurs to create wealth to increase spending.

 

I'm can see merit in arguments for both higher and lower tax economies that have merit. I feel we actually have the level about right already, although I'd like to see slightly more taken from the top earners, and slightly less from those in the middle and bottom.

 

I'd like to see the tax-free lowest band increased to c. £13k. The current upper rate replaced with a new 'middle band' tax rate introduced of c. 30% at £32k, and a new 'upper middle band' of c.38% at £45k, and a 'higher band' of c. 42% over £70k, and finally an 'elite band' of c. 46% over £120k. Although all of that might be too complex to actually run. Nobody should ever be hit with a 50%+ tax IMO.

 

I'd like to see loopholes closed, so that any money generated in the UK, is taxed in the UK, and not taxed overseas (fine Mr tescobucks, register your company in the TaxAvoidance Islands, but UK plc will send you an invoice for the difference between their tax rate an ours for every penny you earn in this country).

 

I'd like to see government spending re-focused, with far less to the MoD (we are currently the 7th largest economy in the world, yet somehow spend the third largest amount on our military; while conversely for a 7th largest economy, we seem to be languishing at 31st on the education index. Surely, paying teachers more, and auditing them less is a better spend than wasting millions on MoD middle management).

 

In education I'd create a single nationalised exam board (half the current issue is that schools are judged on performance, and exam boards earn money by demonstrating that more kids will pass their exam, so if you choose them over other exam boards your school will get better grades). Cut that out and the spiral of 'exams getting easier' will hopefully be removed.

 

I'd like to see significant changes to welfare. I'd actually provide more generous benefits - for a shorter period of time. If you are unlucky enough to lose you job, you will be able to take generous dole of 80% of your last salary (up to £40k) for 18 months, if you still haven't got a job after 18 months your dole would then be reduced to c. £8k pa. To earn back your unemployment allowance, each month of work buys you a month a dole. At any point when unemployed you would be able to 'volunteer' to work on government run projects, which would up you benefit by an additional c. £8k pa. Exceptions would include single parents and the disabled, who should be generously supported (the former by having far more free time with government creches and after school clubs).

 

I would also shake up the NHS (why ring fence spending cuts from your least efficient department). Ideally cut the tiers of management, so instead of having 15 or so levels from top to bottom and flatten the organisation. Introduce (controversial) penalties for non-critical treatment for people who have bad lifestyle choices (excess body fat, smoking, excessive alcohol consumption etc). Also penalties for time-wasting (which could be taken by having to deposit a refundable amount (say £5) whenever you make an appointment (linked with dole, so that if you are on benefits, this money will be automatically taken from your following month's payment). This deposit will be refunded in full if you aren't wasting time, or fail to attend (without giving notice). Doctors should only rarely need to prevent deposit being refunded, but I would estimate c. 30% reduction in appointments.

 

Government should avoid excessive outsourcing. Work should only be outsourced if the role is so specialised that the contract is for less that 3 months (or very generic, such as cleaning contracts). Long-term outsourced contracts are rarely providing the government with a good deal (e.g. 1 gov dept spends c. £30m on pa in total to inhouse IT skills to support and develop all their systems; another similar sized government dept (both have c. 30k people), has outsourced their systems for c. £150m pa and then has c. 50 employees who all chase invoices and contract clauses.

 

And breath..

[Sergei Gotsmanov]

So you don't have a mortgage then? Sometimes you have to borrow to invest in the future. I do think Brown overspent during the good times, but trying to cut back to 'what we can afford' in a recession is madness.

 

Low tax economies are are self-defeating race to the bottom, because they merely force other countries to do the same, and we are back to where we started. It's similar to how Clinton deregulated banking in the US, forcing other countries such as the UK to do the same in order to attract business, and leading us into this financial crash.

 

I am afraid I do not buy into this 'investing in the future'. Actually all we are doing is borrowing to such an extent that our children and grand children will have to pay it off. Do you really believe that there is this sort of Nania around the corner where we will all be affluent again.We are seeing a shift in wealth from the West to the East.

 

I believe that people should spend their money not governments and that low tax economies attract business and generate wealth.

[bridge too far]

Didn't we overspend hugely after WW2? To build infrastructure and housing? Did we never have good times after that?

[Whitey Grandad]

I am afraid I do not buy into this 'investing in the future'. Actually all we are doing is borrowing to such an extent that our children and grand children will have to pay it off. Do you really believe that there is this sort of Nania around the corner where we will all be affluent again.We are seeing a shift in wealth from the West to the East.

 

I believe that people should spend their money not governments and that low tax economies attract business and generate wealth.

I agree. We are not investing in the future, we are subsidising the past.

[Ex Lion Tamer]

I am afraid I do not buy into this 'investing in the future'. Actually all we are doing is borrowing to such an extent that our children and grand children will have to pay it off. Do you really believe that there is this sort of Nania around the corner where we will all be affluent again.We are seeing a shift in wealth from the West to the East.

 

I believe that people should spend their money not governments and that low tax economies attract business and generate wealth.

 

Generate wealth for who? The US is one of the wealthiest countries in the world but also has terrible levels of poverty.

 

You didn't answer whether you have a mortgage.

 

I agree that there has been a shift in wealth to the east but that doesn't mean we are doomed. We need to invest in our infrastructure, education etc to compete and get the economy growing. Given how much money China has lent us they need us to be healthy enough to pay it back, and they need us to be able to afford to buy their products.

Edited 5 April, 2013 by Ex Lion Tamer

[JackFrost]

The thought of Osborne running the economy depresses me

 

The thought of Balls running the economy terrifies me

[Sergei Gotsmanov]

Generate wealth for who? The US is one of the wealthiest countries in the world but also has terrible levels of poverty.

 

You didn't answer whether you have a mortgage. Indeed it doesn't seem as if you took my points on board at all. You just stated what you believe.

 

I agree that there has been a shift in wealth to the east but that doesn't mean we are doomed. We need to invest in our infrastructure, education etc to compete and get the economy growing. Given how much money China has lent us they need us to be healthy enough to pay it back, and they need us to be able to afford to buy their products.

 

You have to generate wealth before you can spend it. The trouble with the left is that they do not believe that people should be able to keep the money that they generate so they take away the incentive to make it. The Nation then becomes poorer as a result.

 

I do understand what you are trying to say I just have a definition of investment in the future.

 

At what point do we stop investing? Another 100billion? Perhaps 200 billion? What do you think?

[Ex Lion Tamer]

At what point do we stop investing? Another 100billion? Perhaps 200 billion? What do you think?

 

Whatever it takes to get the economy growing. Then we can start paying off the debt.

 

I dispute your belief that taxing people takes away their incentive to work. You really think people are just going to sit around all day because half of the money they earn will go to tax? They will still want to work in order to increase their 50%. In fact, although it is difficult to calculate, research suggests that governments can go up to 70% tax without affecting people's willingness to work or losing revenue (http://en.wikipedia.org/wiki/Laffer_curve).

 

The bigger problem is losing business overseas so I wouldn't suggest going that high. But we can't just keep bringing tax rates down and down because then it becomes a race to the bottom, and no countries can afford to pay for roads, police, etc.

 

I suspect we differ on this but the welfare state does actually have important business functions such keeping workers healthy and productive, and preventing poverty-related crime. We need tax revenue to maintain a healthy environment for business.

[saintfully]

You have to generate wealth before you can spend it. The trouble with the left is that they do not believe that people should be able to keep the money that they generate so they take away the incentive to make it. The Nation then becomes poorer as a result.

 

I do understand what you are trying to say I just have a definition of investment in the future.

 

At what point do we stop investing? Another 100billion? Perhaps 200 billion? What do you think?

 

Is the best way to stimulate the economy is to have an inheritance tax rate of ~90%?

 

Forces folks to generate wealth for themselves and not rely on inheritance/the work of the forebears.

[Sergei Gotsmanov]

Is the best way to stimulate the economy is to have an inheritance tax rate of ~90%?

 

Forces folks to generate wealth for themselves and not rely on inheritance/the work of the forebears.

 

Probably would get things going but there would be a pretty big exodus of money abroad.

[Sergei Gotsmanov]

Whatever it takes to get the economy growing. Then we can start paying off the debt.

 

I dispute your belief that taxing people takes away their incentive to work. You really think people are just going to sit around all day because half of the money they earn will go to tax? They will still want to work in order to increase their 50%. In fact, although it is difficult to calculate, research suggests that governments can go up to 70% tax without affecting people's willingness to work or losing revenue (http://en.wikipedia.org/wiki/Laffer_curve).

 

The bigger problem is losing business overseas so I wouldn't suggest going that high. But we can't just keep bringing tax rates down and down because then it becomes a race to the bottom, and no countries can afford to pay for roads, police, etc.

 

I suspect we differ on this but the welfare state does actually have important business functions such keeping workers healthy and productive, and preventing poverty-related crime. We need tax revenue to maintain a healthy environment for business.

 

Do you really believe that - just keep on spending and things will come right.... just like they have in Greece

 

If you dispute my belief that taxing people takes away their incentive to work look to France and what the 75% tax has done to their economy. All the brightest and entrepreneurial people and a few celebs have moved away. I don't generally subscribe to 'research' - I look at the figures - the 50% tax on high earners drove people away and did not raise much money.

 

Again it is quite straight forward - you are better to have 25% tax of a billion than 40% tax of half a billion.

 

The Welfare state enabled Mick Philpot to not do a day's work for twenty years. It is why when the Polish came they had so many jobs to fill - they took the jobs that the welfare dependent could not be bothered to do.

[Whitey Grandad]

Do you really believe that - just keep on spending and things will come right.... just like they have in Greece

 

If you dispute my belief that taxing people takes away their incentive to work look to France and what the 75% tax has done to their economy. All the brightest and entrepreneurial people and a few celebs have moved away. I don't generally subscribe to 'research' - I look at the figures - the 50% tax on high earners drove people away and did not raise much money.

 

Again it is quite straight forward - you are better to have 25% tax of a billion than 40% tax of half a billion.

 

The Welfare state enabled Mick Philpot to not do a day's work for twenty years. It is why when the Polish came they had so many jobs to fill - they took the jobs that the welfare dependent could not be bothered to do.

Raising the top rate from 40% to 50% resulted in less revenue. Raising above 50% would only reduce it even more.

[Whitey Grandad]

Is the best way to stimulate the economy is to have an inheritance tax rate of ~90%?

 

Forces folks to generate wealth for themselves and not rely on inheritance/the work of the forebears.

I don't know anybody who relies on inherited money.

[Whitey Grandad]

Whatever it takes to get the economy growing. Then we can start paying off the debt.

 

I dispute your belief that taxing people takes away their incentive to work. You really think people are just going to sit around all day because half of the money they earn will go to tax? They will still want to work in order to increase their 50%. In fact, although it is difficult to calculate, research suggests that governments can go up to 70% tax without affecting people's willingness to work or losing revenue (http://en.wikipedia.org/wiki/Laffer_curve).

 

The bigger problem is losing business overseas so I wouldn't suggest going that high. But we can't just keep bringing tax rates down and down because then it becomes a race to the bottom, and no countries can afford to pay for roads, police, etc.

 

I suspect we differ on this but the welfare state does actually have important business functions such keeping workers healthy and productive, and preventing poverty-related crime. We need tax revenue to maintain a healthy environment for business.

I would prefer to choose how to invest my earnings (personal and business) myself rather than let the government take it off me and pour it down the scuppers of the public services. I need to invest in new products and designs and new sales efforts but if the government takes my moneys then there's not enough left for all that.

[Ex Lion Tamer]

Do you really believe that - just keep on spending and things will come right.... just like they have in Greece

 

If you dispute my belief that taxing people takes away their incentive to work look to France and what the 75% tax has done to their economy. All the brightest and entrepreneurial people and a few celebs have moved away. I don't generally subscribe to 'research' - I look at the figures - the 50% tax on high earners drove people away and did not raise much money.

 

Again it is quite straight forward - you are better to have 25% tax of a billion than 40% tax of half a billion.

 

The Welfare state enabled Mick Philpot to not do a day's work for twenty years. It is why when the Polish came they had so many jobs to fill - they took the jobs that the welfare dependent could not be bothered to do.

 

- The 75% tax rate in France hasn't even been implemented yet as it was struck down by the courts, so I don't know where you get the idea that everyone has moved away. And even if they did it would show that they had decided to move elsewhere to make more money, not that they wouldn't have the incentive to work if they had stayed. You're confusing incentive to work with an inability to compete internationally, the latter of which I acknowledged above.

- The 50% tax rate in the UK didn't raise much money because rich people shifted their earnings to either before or after it was in force. If the government had left it in place they wouldn't have been able to do this. I haven't seen any evidence that it drove people away but you are welcome to show me some

- Greece hasn't carried on spending, it has made massive cuts. It's also completely wrong to compare Greece with the UK as their debt has a much shorter repayment time and their membership of the Euro means they don't have the flexibility we have to adjust our currency

- Mick Philpott is one bad example that should have been be prevented but that does not mean the entire welfare state is bad. Most people on welfare in the UK are working.

Edited 5 April, 2013 by Ex Lion Tamer

[CB Saint]

Whatever it takes to get the economy growing. Then we can start paying off the debt.

 

I dispute your belief that taxing people takes away their incentive to work. You really think people are just going to sit around all day because half of the money they earn will go to tax? They will still want to work in order to increase their 50%. In fact, although it is difficult to calculate, research suggests that governments can go up to 70% tax without affecting people's willingness to work or losing revenue (http://en.wikipedia.org/wiki/Laffer_curve).

 

The bigger problem is losing business overseas so I wouldn't suggest going that high. But we can't just keep bringing tax rates down and down because then it becomes a race to the bottom, and no countries can afford to pay for roads, police, etc.

 

I suspect we differ on this but the welfare state does actually have important business functions such keeping workers healthy and productive, and preventing poverty-related crime. We need tax revenue to maintain a healthy environment for business.

 

From the same article

 

A 1996 study by Y. Hsing of the United States economy between 1959 and 1991 placed the revenue-maximizing average federal tax rate between 32.67% and 35.21% -

[Ex Lion Tamer]

From the same article

 

A 1996 study by Y. Hsing of the United States economy between 1959 and 1991 placed the revenue-maximizing average federal tax rate between 32.67% and 35.21% -

 

I accept that there are differences of opinion and it is impossible to get a conclusive answer. But what you've done there is pick out the only one with a low figure and ignored all the others

[CB Saint]

I accept that there are differences of opinion and it is impossible to get a conclusive answer. But what you've done there is pick out the only one with a low figure and ignored all the others

 

Only to give balance to your figure, which happens to be the highest in the article.

 

I seem to recall from my economics a level that the figure bandied about was 43%, after which the people decided that the money they retained after tax was not worth the effort.

[Sergei Gotsmanov]

- The 75% tax rate in France hasn't even been implemented yet as it was struck down by the courts, so I don't know where you get the idea that everyone has moved away. And even if they did it would show that they had decided to move elsewhere to make more money, not that they wouldn't have the incentive to work if they had stayed. You're confusing incentive to work with an inability to compete internationally, the latter of which I acknowledged above.

- The 50% tax rate in the UK didn't raise much money because rich people shifted their earnings to either before or after it was in force. If the government had left it in place they wouldn't have been able to do this. I haven't seen any evidence that it drove people away but you are welcome to show me some

- Greece hasn't carried on spending, it has made massive cuts. It's also completely wrong to compare Greece with the UK as their debt has a much shorter repayment time and their membership of the Euro means they don't have the flexibility we have to adjust our currency

- Mick Philpott is one bad example that should have been be prevented but that does not mean the entire welfare state is bad. Most people on welfare in the UK are working.

 

http://www.businessweek.com/news/2012-12-30/hollande-s-75-percent-tax-rate-loss-shows-limit-of-ability-to-tap-rich

 

 

So if they shifted their earnings are you admitting that this took money out of the UK tax system? It discouraged people away from and drove them away.

 

Why is it wrong to compare debt to Greece? What about Spain, Italy, Ireland, Portugal? What do all this markets have in common? What is the root cause of their problem? and you are advocating we go down the same route?

 

So how come the Poles all found work?

[Lord Duckhunter]

I accept that there are differences of opinion and it is impossible to get a conclusive answer. But what you've done there is pick out the only one with a low figure and ignored all the others

 

Sir Geoffrey Howe's first budget cut the top rate of tax from 83% to 60% and the basic rate from 33% to 30%, cue up roar from the Labour benches and I believe the sitting was even suspended. Further Tory cuts in tax rates came in subsequent budgets and guess what, more tax revenue was raised. The political consensus for years afterwards seemed to be that lower top rates of tax brought in more revenue, until Labour in a purely political act raised it to 50% in the dying days of the last Government. The reason was to try and box the Tory's into a corner so that they could parrot this "tax break for millionaires" line. When Labour wanted to increase tax whilst in Government they did so by fiscal drag and increasing NI contributions, surely if they really believed taxing the rich more was the answer they would have raised the 40% figure earlier?

 

On the wider point, economists aren't the font of all knowledge. Nobody predicted the banks going bust and they have been wrong politically before. The Tory 1981 Budget defied conventional economic wisdom at the time by deflating the economy at a time of recession. At the time, his decision was fiercely criticised by 364 economists in a letter to The Times, who contended that there was no place for de-stimulatory policies in the economic climate of the time

Howe decided that by reducing the deficit which at the time was 3.6% GDP, and controlling inflation, long term interest rates would be able to decline, thus re-stimulating the economy. This is exactly what happened, he was right and the economists were wrong.

 

As for spending your way out of a recession. It is possible to expand the deficit to do so, however the other side of the coin is you pay down debt and reduce the deficit during growth periods. Brown (with advise from the 2 Ed's) failed to do this. Embarking on a spending spree like a sailor on shore leave. Believing that he had abolished boom and bust and was some sort of genius. He threw money at unreformed welfare, threw money at an unreformed NHS and bottled making cuts and modernising the state subsides that people get. Most of the reforms going through now should have happened years ago. Now the money's gone and there's no room for borrowing on a scale that'll make any difference at all. The markets may get spooked, nobody knows for sure, but I'd rather not take the chance of following Balls' advise and end up with crippling interest rates. Maybe if Alistair Darling was shadow I would consider it, but Balls is one of the reasons we can not spend our way out of this recession. Him and his crony Brown ****ed all the money up.

 

Balls, Brown and Labour did not cause the global economic heart attack any more than the Tory's can be blamed for the Euro zone dragging us down. What Balls and co did was leave us ill equipped to deal with it when it came and for that reason they should never be trusted with our economy again.

[Ex Lion Tamer]

http://www.businessweek.com/news/2012-12-30/hollande-s-75-percent-tax-rate-loss-shows-limit-of-ability-to-tap-rich

 

 

So if they shifted their earnings are you admitting that this took money out of the UK tax system? It discouraged people away from and drove them away.

 

Why is it wrong to compare debt to Greece? What about Spain, Italy, Ireland, Portugal? What do all this markets have in common? What is the root cause of their problem? and you are advocating we go down the same route?

 

So how come the Poles all found work?

I'm tired now and can't take both you and Duckhunter on so am going to give in. But I just explained why we can't compare ourselves to Greece, please read it again. When the government compared us to Greece it was actually being pretty irresponsible (or it really is stupid).

 

The Euro is also the reason why you can't compare us to Spain, Italy, Ireland and Portugal.

[Sergei Gotsmanov]

I'm tired now and can't take both you and Duckhunter on so am going to give in. But I just explained why we can't compare ourselves to Greece, please read it again. When the government compared us to Greece it was actually being pretty irresponsible (or it really is stupid).

 

The Euro is also the reason why you can't compare us to Spain, Italy, Ireland and Portugal.

 

So how does their debt and our debt differ?

[Lord Duckhunter]

I'm tired now and can't take both you and Duckhunter on so am going to give in. But I just explained why we can't compare ourselves to Greece, please read it again. When the government compared us to Greece it was actually being pretty irresponsible (or it really is stupid).

 

The Euro is also the reason why you can't compare us to Spain, Italy, Ireland and Portugal.

 

Where have I compared us to Greece.

 

The markets have punished them and they COULD punish us. Maybe they will, maybe they wont. But I certainly don't want the man who left us so exposed by ****ing away our children's and Grand children's inheritance, running the economy.

[Ex Lion Tamer]

So how does their debt and our debt differ?

 

"Britain has control over its monetary policy in the way Greece, as a member of the European single currency, does not.

 

As economist Giles Wilkes has previously highlighted, as Britain borrows in its own currency it could effectively print more money to pay its debts if required.

Indeed, the Bank of England’s programme of Quantitative Easing has already done this – using some of the £200 billion it has injected into the UK economy to buy government bonds.

The key indicator of investor confidence in buying sovereign debt lies in the price of government bonds. Although Britain and Greece have similar deficit levels, markets are prepared to lend to Britain at a much lower interest rate than that offered to Greece. Comparing ten year bond yields suggest that while the UK can borrow at around 4 per cent; Greece is facing commercial borrowing rates of over 9 per cent.

 

 

Greece faces a debt crisis. Britain has a very large deficit also, but the structure of the British economy is different and our freedom of action to address the debt problem is far greater. It is clear that the markets do not consider the UK to be facing the same perilous situation as Greece; if they did, prices would reflect that fear."

 

http://fullfact.org/blog/is_it_economically_illiterate_to_compare_greece_to_the_uk-2262

[Lord Duckhunter]

 

 

 

 

Greece faces a debt crisis. Britain has a very large deficit also, but the structure of the British economy is different and our freedom of action to address the debt problem is far greater. It is clear that the markets do not consider the UK to be facing the same perilous situation as Greece; if they did, prices would reflect that fear."

 

http://fullfact.org/blog/is_it_economically_illiterate_to_compare_greece_to_the_uk-2262

 

You seem to have left this bit off from the passage you quoted

 

" but to raise Greece as an illustrative warning of what can happen when debts are not tackled does not seem unreasonable."

[Ex Lion Tamer]

You seem to have left this bit off from the passage you quoted

 

" but to raise Greece as an illustrative warning of what can happen when debts are not tackled does not seem unreasonable."

 

I think that bit is overly generous to Cameron and contradicts the rest of the article to be honest. So I just quoted the bit that had proper facts in it.

Edited 5 April, 2013 by Ex Lion Tamer

[Lord Duckhunter]

I think that bit is overly generous to Cameron and contradicts the rest of the article to be honest. So I just quoted the bit that had proper facts in it.

 

"proper facts" as in stuff you agree with?

[Johnny Bognor]

Suppose that every day, ten men go out for beer and the bill for all ten comes to £100...

If they paid their bill the way we pay our taxes, it would go something like this...

 

The first four men (the poorest) would pay nothing.

The fifth would pay £1.

The sixth would pay £3.

The seventh would pay £7..

The eighth would pay £12.

The ninth would pay £18.

The tenth man (the richest) would pay £59.

 

So, that's what they decided to do..

 

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve ball.

 

"Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by £20". Drinks for the ten men would now cost just £80.

 

The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected.

They would still drink for free. But what about the other six men?

The paying customers?

 

How could they divide the £20 windfall so that everyone would get his fair share?

 

They realised that £20 divided by six is £3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer.

 

So, the bar owner suggested that it would be fair to reduce each man's bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.

 

And so the fifth man, like the first four, now paid nothing (100% saving).

 

The sixth now paid £2 instead of £3 (33% saving).

The seventh now paid £5 instead of £7 (28% saving).

The eighth now paid £9 instead of £12 (25% saving).

The ninth now paid £14 instead of £18 (22% saving).

The tenth now paid £49 instead of £59 (16% saving).

 

Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.

 

"I only got a pound out of the £20 saving," declared the sixth man.

He pointed to the tenth man,"but he got £10!"

"Yeah, that's right," exclaimed the fifth man. "I only saved a pound too. It's unfair that he got ten times more benefit than me!"

"That's true!" shouted the seventh man. "Why should he get £10 back, when I got only £2? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison, "we didn't get anything at all. This new tax system exploits the poor!"

 

The nine men surrounded the tenth and beat him up.

 

The next night the tenth man didn't show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

 

And that, boys and girls, journalists and government ministers, is how our tax system works. The people who already pay the highest taxes will naturally get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore.

 

In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.

 

David R. Kamerschen, Ph.D.

Professor of Economics.

[solentstars]

Suppose that every day, ten men go out for beer and the bill for all ten comes to £100...

If they paid their bill the way we pay our taxes, it would go something like this...

 

The first four men (the poorest) would pay nothing.

The fifth would pay £1.

The sixth would pay £3.

The seventh would pay £7..

The eighth would pay £12.

The ninth would pay £18.

The tenth man (the richest) would pay £59.

 

So, that's what they decided to do..

 

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve ball.

 

"Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by £20". Drinks for the ten men would now cost just £80.

 

The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected.

They would still drink for free. But what about the other six men?

The paying customers?

 

How could they divide the £20 windfall so that everyone would get his fair share?

 

They realised that £20 divided by six is £3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer.

 

So, the bar owner suggested that it would be fair to reduce each man's bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.

 

And so the fifth man, like the first four, now paid nothing (100% saving).

 

The sixth now paid £2 instead of £3 (33% saving).

The seventh now paid £5 instead of £7 (28% saving).

The eighth now paid £9 instead of £12 (25% saving).

The ninth now paid £14 instead of £18 (22% saving).

The tenth now paid £49 instead of £59 (16% saving).

 

Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.

 

"I only got a pound out of the £20 saving," declared the sixth man.

He pointed to the tenth man,"but he got £10!"

"Yeah, that's right," exclaimed the fifth man. "I only saved a pound too. It's unfair that he got ten times more benefit than me!"

"That's true!" shouted the seventh man. "Why should he get £10 back, when I got only £2? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison, "we didn't get anything at all. This new tax system exploits the poor!"

 

The nine men surrounded the tenth and beat him up.

 

The next night the tenth man didn't show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

 

And that, boys and girls, journalists and government ministers, is how our tax system works. The people who already pay the highest taxes will naturally get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore.

 

In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.

 

David R. Kamerschen, Ph.D.

Professor of Economics.

ha ha " i like the one with the cake when the richest top 5 % of society have 75 % of the cake and the rest is shared amongst the rest,if it happened at a party ayou wy your house you would call them selfish g reedy bar stards". i find it funny that the wealthy bankers who caused this recession are the ones we bailed out with billions and they carry on lining their pockets with our money.

[Jonnyboy]

The right wingers are losing the argument again with their tired, irrelevant analogies and ignorant, populist logic.

[Fuengirola Saint]

So how does their debt and our debt differ?

 

We print our own money, 375 billion so far

[buctootim]

"Contrary to Internet folklore, Dr. Kamerschen is NOT the author of "Tax Cuts: A Simple Lesson in Economics" or “Bar Stool Economics” or anything similar to that. Additionally, he does NOT know who wrote it and he has no opinion on its merits."

 

 

http://davidk.myweb.uga.edu/

[Sergei Gotsmanov]

The more you borrow the more it costs.

 

So we print money to pay off our debts? Do you think this has any repercussions?

 

Understatement of the year; 'Greece faces a debt crisis'. No we face a debt crisis, Greece face debt Armageddon.

[Sergei Gotsmanov]

We print our own money, 375 billion so far

 

Mugabe economics.

[scotty]

Quite right. It is quite simple you spend what you can afford.

 

 

Theres a conundrum, though. What if what you spend directly affects your income, and therefore what you can afford?

 

It annoys me when people bang on about the national economy and equate it with a household budget, ie "we only have x amount coming in so we must only spend x amount". If it has to be equated to something, (and thats unreasonable given that the national economy is unique,) then at least compare it to a business. A private business could look at the last few years figures and say "we cant afford to advertise, employ anyone, or retain our transport fleet and premises. We'll have to pay redundancy money and take the other capital losses. That way, the business will be put on a secure footing." Well, if you dont advertise, you wont get any clients, and if youve sacked the workforce you couldnt provide the service anyway. Every employee sacked by government at the moment is likely to go straight onto benefits, and will certainly stop paying tax. They wont just cease to exist, and the state will still be responsible for them.

[solentstars]

Mugabe economics.

 

 

[h=1]Japan aims to jump-start economy with $1.4tn of quantitative easing[/h] Haruhiko Kuroda, the Bank of Japan's new governor, launches aggressive drive to end a deflationary decade

 

 

 

 

Haruhiko Kuroda announces the plan to buy up government debt at a rate only just below that of the US. Photograph: AP

 

 

Japan's central bank has promised to unleash a massive programme of quantitative easing – worth $1.4tn (£923bn) that will double the country's money supply – in a drastic bid to restore the economy to health and banish the deflation that has dogged the country for more than a decade.

As part of a new set of policies known as Abenomics, formulated by Japan's new prime minister Shinzo Abe, the Bank of Japan will buy ¥7tn yen (£46bn) of government bonds each month using electronically created money, with the aim of rekindling demand and pushing up prices and wages.

Haruhiko Kuroda, the Bank of Japan's new governor, described its stance as "monetary easing in an entirely new dimension".

He promised to target a doubling in the size of the "monetary base" – the amount of cash circulating in the economy, plus the reserves held by financial institutions at the central bank – in the hope of stoking inflation of 2% within two years.

The more aggressive approach to tackling Japan's economic problems had been well-trailed, but the scale of the BoJ's operation still stunned financial markets, pushing the Nikkei index of leading shares up by 2.2%.

In a statement released on Wednesday in Tokyo, the Bank of Japan said it wanted to "drastically change the expectations of markets and economic entities", and "lead Japan's economy to overcome deflation that has lasted for nearly 15 years".

 

The US Federal Reserve – an enthusiastic supporter of so-called "unconventional" monetary policies such as QE – is spending $85bn a month, only just above the $70bn planned by the BoJ, in an economy almost three times the size of Japan's.

[Lord Duckhunter]

Every employee sacked by government at the moment is likely to go straight onto benefits, and will certainly stop paying tax. They wont just cease to exist, and the state will still be responsible for them.

 

So what do you want? Guaranteed jobs for everyone.

 

Do you want the state to employ everybody who cant get a job in the private sector or do you want Government to force private companies to employ people?

[bridge too far]

So what do you want? Guaranteed jobs for everyone.

 

Do you want the state to employ everybody who cant get a job in the private sector or do you want Government to force private companies to employ people?

 

If the private companies paid living wages to their lower paid workers, those workers wouldn't need to claim benefit support and that would save all of us a fair bit. In the meantime, I find my taxes are, in part, being used to bolster the earnings of shareholders and directors.

[scotty]

So what do you want? Guaranteed jobs for everyone.

 

Do you want the state to employ everybody who cant get a job in the private sector or do you want Government to force private companies to employ people?

 

No. But my point was that its not like a household budget, which is a widely held misconception. If the state sacks a state employee, the state will incur costs in doing so whether we like it or not. Obviously, state departments are overstaffed, but its naive to think we could just sack the ones we think we cant afford and save that amount on their salaries.

[Lord Duckhunter]

If the private companies paid living wages to their lower paid workers, those workers wouldn't need to claim benefit support and that would save all of us a fair bit. QUOTE]

 

Agree.

 

Labour set the minimum wage way too low. It actually holds down wages because companies that pay above it bench mark their pay against it. The minimum wage was a typical labour policy, it was a gimmick and a political stunt to try and trap the Tory's. You can not have a minimum wage and then set it so low that the state has to top it up. That's not a minimum wage policy, but a taxpayer funded subsidy for major companies.

[bridge too far]

But, LD, there's nothing to stop companies paying living wages without being told to. That's a moral thing to do. But do morals and principles mix with business?

 

There are a few private companies and a number of local authorities (including many London boroughs) opting to pay the living wage already.