Author Archives: Tim Worstall

Faced with the claim that there has been no austerity you realise you are up against what might best be described as a small world, and decidedly selfish, view of economics.

Whether or not there has been austerity is a simple empirical fact. By the Wren Lewis definition – government not ballooning he deficit out to whatever level means no rise in unemployment – then yes, there has been.

By a more reasonable one, there hasn’t been. Government spending is about where it was before the crash as a percentage of GDP. Which is what should have happened along entirely standard Keynesian lines of course. Recession, deficit rises, recovery, it falls.

Varied people are telling broadcasters that they simply will not appear on a programme that includes Richard Murphy. Which, given how he’s himself supported no platforming seems rather fun. For I am at least told that the broadcasters are tending to prefer having the not-Spuds rather than the Great Tuber.

I would suggest that the observation (not set up as an experiment, but by chance offering a large scale observation of actual behaviour as if an experiment was intended) is capable of extrapolation. Whenever suppliers are price takers (as in competitive markets they should be) taxes on suppliers will always be paid by suppliers and the suggestion that they are passed on to others makes no sense at all. This is now seen to be true for rents. I think it will be elsewhere.

So the next time you hear some rightwinger argue that tax is not paid by capital but is passed on to consumers or workers just note that what they are actually saying is that there are non-competitive markets in existence and that this fact should be their real focus of concern. But oddly, it never is. Right wingers are the last people who want competitive markets. They do not permit abuse, after all.

He’s confusing “capital pays this tax” with “capital pays all taxes I think should be incident upon capital.”

Ritchie is, himself, insistent that employer’s national insurance is actually incident upon wages. Who pays the tax thus being a question of “it depends.”

Plus he’s missing what the damn point was in the first place. More taxation of landlords will mean fewer landlords, thus fewer places to rent an thus higher rents. Could happen too – and pointing to rents falling doesn’t change that. Because that’s to ignore ceteris paribus, something we never should in economics.

We are twentieth. And ignore Ireland: its GDP data is so distorted by being a tax haven even Walt Disney would dismiss it as incredible.

We are also the slowest growing country in the EU.

That is not a coincidence.

Tax rises? Bring them on, I say. We will all be better off.

It is the deficit – or surplus of course – which is stimulatory or contractionary. For tax is, as MMT says, taking money out of the economy, reducing demand.

So, the MMT man tells us that more tax is going to make us better off.

Hmm.

Oh, and those places which do send more of GDP through government. Are they better off than we are? Hungary? Croatia, Greece?