A famous theorem in economics states that a competitive enterprise economy will produce the largest possible income from a given stock of resources. No real economy meets the exact conditions of the theorem, and all real economies will fall short of the ideal economy—a difference called “market failure.” In my view, however, the degree of “market failure” for the American economy is much smaller than the “political failure” arising from the imperfections of economic policies found in real political systems. The merits of laissez-faire rest less upon its famous theoretical foundations than upon its advantages over the actual performance of rival forms of economic organization.
If only it were possible to beat this point into him.
Looking around the world, we don’t have any examples of countries with successful model of state-run economic organization that have consistently over the long-term provided a higher level of standard of living or faster growth than the many countries with market-based systems–that is, not just a different set of constraints and rules to a fundamentally market-oriented economy, but a genuinely different model where the economy is run primarily through the political system. That fact tends to confirm Stigler’s suggestion that real-world political failures in economic management can be severe.
Richard Murphy says:
August 23 2019 at 12:28 pm
But those in public life have a duty to educate themselves
Does being part of civil society mean being in public life?
That is spot on. The absurdity that is faced by almost everyone around this country is that what is recycled, and how, varies considerably from place to place. This has to end. If it’s worth recycling then doing so must be enforced and nothing less than a national framework will do. That’s what a Green New Deal requires.
A rigorous examination of what’s “worth recycling”? Bring it on.
Assuming that it will in fact be a rigorous examination of course.
Richard Murphy says:
August 21 2019 at 10:54 am
You can give a reason
But you can’t explain how to do it and honour our commitments
Nor can you explain how we are still a nation or why you think we passed our sovereignty to the EU when very clearly we never have, in the slightest
So as an argument that’s so full of holes and so not based on truth or reality it takes us nowehere
So. Let us consider the Vodafone tax case. Where Murph was vehement that massive amounts of tax were being dodged. As Richard Brooks was alleging. And English law was stating that those profits in a Luxembourg company in Luxembourg were taxable in the UK. Controlled Foreign Companies, dontchaknow. And the EU demurred. They said that under EU law such profits were not taxable in the UK.
We have a conflict between UK and EU law. Sovereignty is rather defined by whose law wins in such circumstances.
And the second. Murph decided that the UK should adopt passport based taxation. It was gently – if sneeringly – pointed out that he couldn’t do that, not regarding other EU countries that is. Would go against free movement of peeps. He accepted that – eventually. UK cannot pass a law to do x because it has given up its sovereignty on that issue.
As, of course, with trade etc.
Now, of course, it’s possible to argue that it’s all worth it. But the statement ” you think we passed our sovereignty to the EU when very clearly we never have, in the slightest” is clearly and obviously colei.
Capital gains tax Entrepreneurs Relief does, in essence, reduce the rate of gains tax by those who sell privately owned businesses. In most situations they pay 10% on their gains rather than 20%. The tax rate is halved.
In the last year for which data is available the relief cost as much as the tax paid on these disposals, or £2.36 billion. Of this £1.73 billion went to just 4,000 people, at a tax savings of more than £430,000 each, on average.
That is wholly unjust. It is a simple boost to those already wealthy. Remember, these people had by definition just picked up gains of in excess of £4 million each. And as I have argued before, the relief makes no sense. It does not encourage entrepreneurial activity at all. It encourages short-termism and selling out rather than developing entrepreneurial activity, both of which are the opposite of what the UK needs.
Nothing about this relief makes any sense at all. It has to go.
Rule number one in economics. Incentives matter.
A corollary of which is that we get less of those things which we tax. Because that reduces the incentive to do those things which are taxed.
We like people being entrepreneurs. They end up – as Bill Nordhaus pointed out – keeping about 3% of the total value created by their endeavours. The other 97% largely flows to consumers in the form of the consumer surplus. We like people working hard to make us richer. Therefore we let them keep more of the already trivial portion of the value created they get to keep in order to create that greater incentive to crack on with it.
This does not make sense in what manner?
The biggest claim made by Brexiteers right now is that Remainers do not understand them. If only we tried a bit harder it would be obvious what this is all about, they say.
It’s about national pride; democracy; taking back control; having our own laws; deciding who lives here.
I think those are their claims. Tell me if there are more. Just don’t mention economics: it does not come into it.
D’ye think the Spudmeister has even heard of Patrick Minford?
It did continue. For a bit:
Richard Murphy says:
August 20 2019 at 10:20 am
The UK has reasonable residence rules now: I have to say that as I helped shape them
We simply do not need domicile to be fair to those arriving or temporary residents : tho0se issues are covered without alternation being required
There is no base cost to entry for people now and there would not be from the change
Laurence Parry says:
August 20 2019 at 10:34 am
I also helped draft the residence rules (apart from the split year treatment, which is rubbish)
Richard Murphy says:
August 20 2019 at 11:02 am
I do not recall your involvement
August 20 2019 at 11:30 am
You helped shape the non-dom rules?
I can’t find any mention of you in the formulation of non-dom rules at all. All I can find is you saying repeatedly that they should be changed.
So if you helped write the rules, why did you do such a bad job of it?
Richard Murphy says:
August 20 2019 at 1:29 pm
I helped write the current U.K. residency rules
A slight difference there
August 20 2019 at 2:31 pm
I can’t find any record of you writing the residency rules, or indeed being involved in that process at all either.
Other than writing a few blogs about it anyway. I can check the House of Commons library if needed.
Could you point us to where you say you had so much input? Because I can’t find any record of you at all in this process.
Richard Murphy says:
August 20 2019 at 3:08 pm
You clearly do not know how advisory teams work
And that is also your last comment here because you are a troll
Most concerning of all, however, to the Corporate Accountability Network is the fact that this change of heart by the leaders of American business, whilst welcome, includes no suggestion as to how these new priorities will be evidenced or how they will be reported upon. The Corporate Accountability Network believes that unless corporate accounting is reformed so that businesses must report to all their stakeholders then words such as these will be largely meaningless. Our aims is to ensure that the accounts of limited companies are available to all who want to view them, and in a format that might supply them with the information that they need to understand the activities that it undertakes from the user’s perspective as a stakeholder of the company.
Replace “CAN” and “Corporate Accountability Network” with “I, Spud!” – so also “our” and you’ve about got it.
It is almost absurd that when we face a global heating crisis what is of concern in the UK energy market is the fate of small companies trying to make a buck out of a failed system of energy privatisation that has very largely led to consumer rip off, limited real energy supply transformation, and a system so lacking in co-ordination that it can be claimed that when these companies fail people are left without energy suppliers when glaringly obviously the supply to their properties still exists.
If we are to get serious about tackling global heating the nineteen-eighties obsession with energy market reforms needs to be replaced with energy policy intended to deliver zero net carbon as the only issue of real priority.
And in the process we should also have single, fair, tariffs for all so that the age of rip-off ends forever.
This is what the Green New Deal requires. And we need it now.
One single price for all electricity taken from the network. So, no cheaper electricity when there’s lots of it about. Meaning no load balancing when the sun shines and the wind blows. We can throw out all those smart meters then, the entire plan to deal with intermittentcy.
Or if that’s not what he means, tariffs allowing for different prices at different times, it’s still remarkable, isn’t it? A supposed economist arguing that competition doesn’t increase efficiency over time….
I’ve been using a tool which tells me how often something is searched for. “What is Modern Monetary Theory” appears to get 260 searches a month.
Won’t Richie be pissed that no one cares?
This low tax rate creates a number of perverse incentives. ….. Third, it reduces the impact of fiscal policy as tax incentives and allowances have limited value.
Low tax rates are bad because the distortions introduced into asset allocation by stupid government are reduced.
George Osborne’s tax policies have cost Britain billions, because the super-rich are fleeing the country and taking their wealth with them, statistics have revealed.
The number of non-doms – those not legally domiciled in the UK but who obtain tax advantages here – fell to a record low of 78,300 last year, from 98,500 in the previous year, figures from HM Revenue and Customs show.
The amount of tax directly contributed by non-doms fell from £9.5 billion to £7.5 billion over the same period. Experts said that a string of tax policies introduced under the former chancellor were principally to blame.
Because of course people don’t move for tax reasons and even if they do it’s a very small number of people and they’re the sort who only increase inequality so it’s good they go. So there.
Let me offer an alternative explanation that I think much more likely than this deeply politically driven hype from the firms servicing this declining market.
It costs to be a non-dom. The charge can be as much as £60,000 a year. It increases the longer a person claims to be non-domiciled.
My suggestion is a simple one. The non-doms might not be leaving. Instead I suspect they may just be choosing to pay their taxes in the UK.
Because £60,000 a year is a lot of money people will volunteer to pay more?
OK, about which the Senior Lecturer tells us that:
I would suggest that the answer is simple: it is growing inequality that is creating this situation, plus a structural change in the way that wealth is held.
Now let me be clear, households is all households so in principle this should not be the case, since the ranking should be indifferent to wealth. But if the wealthy hold more of their assets through companies and pension funds invest ever more widely outside the UK, whilst the links between asset owners and their assets becomes ever harder to trace because of nominee holdings, then the likelihood that there will have been a shift of apparent asset holding out of the so-called household sector and into other categories is high. The result is that the net insolvency of a great many UK households becomes much more apparent.
The sectoral balances are the flows between the different parts of the economy. It’s the net change in any one period.
Insolvency is of course the stock position, not the flow. With household wealth (yes, net of liabilities) at whatever it is, £9 trillion or summat, we don’t have evidence that the British household sector is net insolvent.
Stocks and flows matey….
This post by me was on The Conversation, a blog reserved exclusively for academics,
The comments section is not – unlike one or two others we could mention – so reserved.
The Treasury is to review George Osborne’s controversial tax rules on pensions amid concerns they are stifling the delivery of public services and pushing up NHS waiting times.
Higher earners are restricted from putting more than £10,000 annually into pensions without facing punitive taxes. The rules have been blamed for consultants and GPs turning down work, undermining patient treatment.
It was also suggested the rules have led to entrepreneurs losing faith in corporate pension schemes, reducing the attractiveness of plans to employees.
We’ve had much over the years about how tax relief for pensions is a very bad thing. How it should be restricted. About how it’s all a waste. And why give all that relief to the already well off anyway?
So, restrict it.
Funny that we’ve not – I’ve not looked today as yet – had a rethink as reality intrudes upon such plans. You know, maybe an “Ooops!” or something?
Third, Boris was a facto. Wait until fuel prices increase in the next week or so and then see whether that remains the case, because he will be the sole reason for that.
Fuel prices are going to rise.
Oil prices plunged by more than 8 percent immediately after the news, pushing WTI below $55 per barrel and Brent down to $61.
An 8% drop in the USD price of oil is greater or lesser than the change in the value of the GDP against the USD?
Fuel prices are therefore going to do what?
A retired accountant from Wandsworth tells us that:
So, fourthly, what this proves is that Sajid Javid is a fantasist, living in his Brexit bunker, thinking that writing a letter will solve a problem. It won’t. Just a monent’s thought on his part would make that obvious.
So why has he done this?
Because he’s stuoid?
This from the Senior Lecturer who does indeed tell us on alternative days that if everyone just followed his own little plan then everything would work.
The levers of control in something as complex as a national economy are wet noodles for conservatives and progressives alike….
A bit after 9.30, as I headed up Regent Street to the BBC I thought it may be safe to tweet that I was going on air. The BBC had booked me a hotel for the night by then, as I could not get home after the programme. It seemed it was going ahead.
And then they said Laffer had pulled out. No reason had been given. I could suggest one. He’d learned who his opponent was.
I do know a number of people who refuse to appear on programmes with the Senior Lecturer. Just as the Senior Lecturer has threatened to pull out of a conference if I were to actually speak as I’d been invited to.
Of course, when he does it to me it’s just a spiteful insistence that no one who might show the holes in his arguments be allowed. When others do it to him it’s a righteous insistence that no one’s interested in such a rude man spouting drivel.
But, you know, chacun a son gout.