Compass\’ Plan B

Oh dearie me. 100 economists sign up for this?

This is not to argue that the deficit can be
ignored indefinitely. But if demand could be
restored and the employment rate increased, a
significant portion of the structural deficit would
disappear, leaving the rest to be financed through
a combination of controls on spending at the
right moment when the economy is growing
again and tax revenue increases.

Err, no. The structural deficit is, by definition, that part of the deficit that does not disappear when demand is restored and the employment rate increased. They are there talking about the cyclical deficit but calling it the structural one.

Pure ignorance of economics of course, as if the people writing it didn\’t pay attention to their economics classes after the first few weeks. You know, that \”of course neo-classical economics is all bullshit\” thing?

Looks like our favourite retired accountant from Wandsworth did more than just advise on this document.

And given that error in the first few paragrpahs, how many of our \”100 economists\” actually read the plan before signing it?

This is fun:

It is now widely agreed that the £200 billion
programme of quantitative easing (QE1) launched
in March 2009 mostly benefitted the bankers.25

Hmm, footnote 25:

25 See for example R Murphy and C Hines, Green Quantitative Easing: Paying
for the Economy we Need, Finance for the Future, 2010.

So \”widely agreed\” now means one of the autohrs of this report referring to his own previous report, does it?

This is also fun:

At
the moment, the Jobseeker’s Allowance payment
for a single working age person under 25 is £53.45
and for a person over 25 it is £67.50. Research
by the Centre for Research in Social Policy at
Loughborough University shows that a single
working age person with no children requires
a weekly income of around £185 ‘to reach a
minimum acceptable standard of living, covering
essential requirements and allowing people to
participate in society’.28 It is clear that benefit
levels for working age single people fall far short
of what is required to alleviate poverty. Raising
the levels of Jobseeker’s Allowance and other
working-age benefits such as Employment and
Support Allowance so that they are at, or at least
much nearer to, the minimum income standard is
an essential prerequisite for the benefit system to
be effective at preventing poverty among people
searching for work.

We\’re going to cut unemployment by subsidising unemployment more. Ignorance of the basic causality here seems to be an essential doesn\’t it? If you subsidise something you get more of it.

Research by Landman Economics

Another writer of the report self-referencing his own  work there.

Another economic boost could come from a
financial transactions tax.

Well, no. The EU actually says that an FTT would shrink the European economy by 1.7% or so. Not really an economy boosting measure that.

Research on the possible revenues from a
financial transactions tax published by Tax
Research LLP in 2010 suggested that total global
yields from a tax of one half of a basis point (one
200th of 1% or 0.005%) on spot and derivative
foreign exchange dealing would raise approximately
$33 billion annually, while a tax at a
similar rate on exchange-traded and over-thecounter
bond, gilt, derivative, swap and other
trades could yield approximately $118 billion
per year.30 Obviously these are global figures,
but the large volume of trades taking place in the
UK suggests that the UK’s share of this revenue
would be substantial.

Tax on spot FX is illegal in the EU which is why the EU version doesn\’t include it. We\’ve also another self-reference and even better, no one seems to have noticed that the FTT being proposed by the EU is for the money from the FTT to go to the EU. It would actually be a net loss to the UK Treasury as what we currently get from Stamp Duty would be redirected to the EU under this new FTT.

HM Revenue & Customs
say it is £42 billion – made up of £35 billion of
illegal tax evasion and £7 billion of unacceptable

tax avoidance. But the true figures are possibly
as much as £70 billion and £25 billion a year,
respectively, to which can be added £25 billion of
tax paid late.34

Self-referential Murphybollocks again.

The report as a whole just seems to be a collection of every bad idea that\’s been floated by Compass, Murphy and the nef over the past few years. And they\’re taking the fact that they had a bad idea a couple of years ago as proof that this is a widely accepted and wonderful idea now.

Ho hum.

 

 

14 comments on “Compass\’ Plan B

  1. They also seem confused as to how quantitative easing works. Buying £75bn of gilts off the banks doesn’t allow for the creation of a £75bn Green Investment Bank.

  2. I note that the quote from the report carefully fails to mention that the difference between JSA and the alleged weekly minimum income is made up for by other benefits, e.g. housing, council tax relief…

  3. I’ve had a few spats with RM on benefits as it seems that those hardworking people at all taxation levels are continually expected to cough up for Richtie’s causes. His moralising, self righteous bollocks is truely staggering at times.

    Here’s one for you. I was in my local Kwik-fit when a brand new BMW Coupe (about £35K) comes in and the owner asks for a new tyre fitted. No problem says Kwik-Fit man that will be £209. Just book it to ‘Motability’ says the driver.

    Yes folks you’re hard earned is paying for top of the range Beemers for benefit claimants. Where do they get this £67 from ??? WFT – the lunatics have truely taken over the asylum.

  4. Nick,

    They haven’t a bloody clue how QE works. See my comment on Tim’s other Plan B post today.

    If they want the Government to print money to finance new investment in the economy they should say so. It’s a legitimate strategy for fiscal expansion. But it may of course carry a cost in the form of future inflation. They don’t mention this, do they?

  5. The structural deficit is, by definition, that part of the deficit that does not disappear when demand is restored and the employment rate increased.

    Yes, but the last demented lefty I argued about this with thought the structural deficit was that part of the deficit which was spent on infrastructure projects. This chap was a lecturer at the OU too, no less.

  6. @MactheKnife: I can well believe your story. A couple I know have a child that is statemented at his school. As such they qualify for a motability car on his behalf. The husband drives this car to work, as the wife doesn’t drive. The child however needs to be taken to school, and as the wife can’t drive the motability car (apart from the fact its at the husbands workplace), social services pay for a taxi to ferry the child to and from school. So the taxpayer pays for a car for the benefit of the child, which it doesn’t use, and taxis as well.

    Great isn’t it?

  7. @ Jim

    I live in what is classified as a socially deprived area with way above average unemployment and some of the scams that go on are truly unbelieveable. Moreover they are proud that they have scammed the system. I could write a book on the abuses I see everyday.

  8. Maybe you should. If enough people learn how to game the system, the abuses will be too obvious to ignore. Let’s teach them.

  9. I am glad that there are blogs such as this that point out the flaws in these plans. I am worried though, that the media at large seem to give credence to these. I heard R. Murphy on Radio 4 the other day and although they had some Tory MP (don’t remember which) on to give the opposing view, Murphy expressed himself much more fluently.

    It may be that his figures are bollocks, but those who are trying to put the opposing view need to seriously up their game. Their are an awful lot of left wingers out their whose statements chime with the population at large. RM essentially said that there is no need whatsoever for any cuts because we can fund the shortfall by cracking down on tax evasion. This fits what people want to believe.

  10. “I heard R. Murphy on Radio 4 the other day and although they had some Tory MP (don’t remember which) on to give the opposing view, Murphy expressed himself much more fluently.” Both the last couple of times I’ve heard him on Radio 4 he’s come across as more reasonable than the other guest. Slightly worrying…

  11. My academic advisor is on the list! And I thought all I had to worry about was that I had beaten him in local elections 🙂

    I shall be having words! I wonder how many of te others are Green Party members/campaigners. But I note that none of Tony Atkinson’s colleagues at Nuffield are co-signatories. Given it’s promoting Compass stuff I’m kind of surprised – I’d have thought there would be one or two more sympathisers there.

  12. Pingback: Market metaphors, unemployment and ideology « the red rock

  13. Nitpicking nonsense from those who are congenitally blind to the bigger picture.

    Good to know that this bigger picture is now resonating with the public at large.

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