This has actually been recommended by a professor

When you listen to all the discussion about balancing the budget, about how any increase in spending needs to be matched by an increase in tax, why does no one mention that an increase in spending automatically generates extra tax?
There is no need to raise tax rates!

In fact, unless people choose to save the extra spend then it all comes back to the government as extra tax. In other words the extra spending is self funding.

No, really, Snippa says it’s good.

Have they banned him from teaching yet?

21 comments on “This has actually been recommended by a professor

  1. In fact, unless people choose to save the extra spend then it all comes back to the government as extra tax. In other words the extra spending is self funding.

    Utterly moronic even by his standards.

  2. — “Have they banned him from teaching yet?”

    On the contrary. The inventor of the economic equivalent of the perpetual motion machine is surely all but guaranteed the Nobel Prize.

  3. It’s a counterfeit Nobel Prize. For him they’d need a special edition – the cunterfeit Nobel Prize.

  4. “an increase in spending automatically generates extra tax” is true.

    The “all” in “all comes back” is not true.

  5. Is he assuming that, aside from not saving anything, Britons never import anything either?

  6. “an increase in spending automatically generates extra tax”
    There are circumstances where that could be false. Suppose the extra government spending is on a teacher earning 30k, compulsorily seconded from google engineering where she was previously adding 150k of value to the economy. Or anything else where the tax lost from that person or team operating in the private sector is greater than the tax gained by redeployment in the public sphere.

  7. “If this were true, why the hell is there a deficit in the first place?”

    Quite. And they wonder why people are scornful of ‘experts’………………..

  8. @SJW

    “The “all” in “all comes back” is not true.”

    It was carrying quite a heavy load in his outpouring of mindvom, wasn’t it?

  9. Someone once asked why Tim bothers about Spud on the basis that most rational people know he’s an idiot.

    I spend some of my time in the “lounge” of a sailing forum and you’d be surprised how regularly Spud’s pronouncements get an airing as being from an expert. We’ve got a long thread going about money and his recent pronouncement that the Govt just needs to print more money then raise taxes to control inflation.

    I expect this idiocy to surface soon.

  10. The answer to that is very simple.

    Old Labour. High taxes, high spending, majority of the economy running through government.

    Spud Labour. Just print the money to spend it, tax away the inflation. So, how high do inflation rates have to rise to stop the inflatrion? Ah, aren’t we back at Old Labour? A high spend, high tax economy with hte majority of it running through government?

  11. It wouldn’t matter if it DID all come back.

    Assume the government pays Bloke A 10k to do a non-job creating no value.
    Assume he spends it all, and that 20% goes back to the government as a result of every transaction. Exactly the same happens with the 8k that stays in the economy (no savings, no imports or exports).
    Assume everyone else involved has a proper job, adding value at the same rate that they get paid.

    Once the cycle has been repeated 50 times, the government does indeed have its 10k back.

    This is great. Bloke A is no longer unemployed, at least not technically. his salary cost nothing and, even better, his 10k salary generated 50k in economic activity. Vote Corbyn! Viva Murphy!!

    One small snag.

    While 50k’s worth of goods has been consumed, only 40k’s worth has been created.

  12. It’s not written by the murf, but by a Professor Charles Adams, who is a Physics professor.

    If the article itself is rather colourful, some of the comments below it are firmly into fruitcake territory..

  13. Oh how glorious!

    Over on Progressive Pulse, the one and only Mark Crown is back (on the Leaked Manifesto thread). Same unique style…

    I had so missed his contributions over at Murf’s.

  14. I am very very certain that whenever I spend money only about 20% of it goes to the Government – VAT/Excise/etc. The majority of the money goes to the person I’m purchasing from.

  15. @jgh – So you never by petrol then? and the companies you buy from never make a profit and pay corporation tax or employ any staff and so pay tax / national insurance?

  16. This is just childish rubbish, but it sounds vaguely plausible to someone who fancies themselves a bit smarter than they actually are. A physicist ought to know the difference between first-order and second-order effects although, since academics very seldom see actual market economics in action it’s perhaps not surprising that this doofus thinks the way he does. If you’re ever trying to have a conversation about economics with someone and they say something to the effect of “well, it’s all just ones and zeroes isn’t it?” then you can safely terminate the interaction as nothing of any good can come of it.

  17. Yes I do buy petrol, note the use of ‘VAT/Excise/etc’. Some years ago I calculated that about 20% of all my spend was taxes paid at the point of spending. I don’t smoke and rarely drink so there are some taxes I avoid paying.

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