Unpacking this little piece from the UK\’s number 1 economics blogger:
The answer is that it matters for three reasons. The first is that we wouldn’t have a world economic crisis now if we hadn’t had tax evasion. The current crisis focuses on the Euro. Italy is at its epicentre. It has external debt of €1.9 trillion. If only it had suffered the UK’s rate of evasion in the last decade then its deficit would be less than half that sum now.
Lesse, Italy\’s external debt is around €1.9 trillion. Yes, yes it is, so says the Bank of Italy.
It is also true that Italy\’s government debt is around €1.9 trillion.
But external debt and government debt are not the same thing, are not the same thing at all. Look at the Bank of Italy report: about €825 billion of the government debt is external debt.
The majority of government debt is in fact owed to Italian households and financial institutions: something we already knew in fact for it\’s referred to often enough.
The rest of the external debt is borrowing by banks and companies etc: something which the rate of tax evasion or not has absolutely nothing at all to do with.
So, we\’ve the UK\’s number 1 economics blogger getting terribly confused over government debt, something at least potentially amenable to a change in the rate of tax evasion, and external debt, which is something very different indeed.
Then of course there is the schoolboy howler there. The use of the word \”deficit\”. Which, as any fule kno, is the annual addition to the stock of government debt, not the stock of government debt itself.
If this is the level of knowledge of the UK\’s number 1 economics blogger then we\’re all entirely screwed, doomed, aren\’t we?