Some people, eh?

PS Tim Worstall doesn\’t recognise the concept of limits to growth …

That link is to this in the Telegraph where I discuss the concepts of limits to growth. Pointing out that of course there are physical limits to physical growth: the number of atoms available for example. I then go on to point out that as economic growth involves the adding of value then the limits to economic growth are the limits of our ability to add value.

I\’m sure you can disagree with me here. But to state that this is me not recognising the concept of limits to growth in a discussion of limits to growth is an odd one.

15 thoughts on “Some people, eh?”

  1. You also wrote recently in the DT that it is wrong to think that employers bear the cost of PAYE and employees do not pay it . But is it not the true, that when there are un-occupied workers looking for jobs available then that situation is in fact the case. If an employee agrees to work for £10 after tax and then PAYE is abolished the employer is not going to hand them the untaxed amount are they, as they have allready declared that they are willing to turn up for work at the lower sum.

  2. Dinero, you’re probably correct with respect to the worker’s *current* employer not increasing their pay by the PAYE no longer being collected.

    But on the other hand, another employer will probably be able to poach them by paying £10+PAYE, which will cost them only the £10 compared with the situation before PAYE was abolished. Assuming, of course, that such an employer has no knowledge that their new employee was working for only £10 previously.

  3. Hi Alex

    Well my example was only to illustrate the incidence of the tax. The point is – If employers can hire at a certain take home pay then thats the pay for the job. The Point is in an enviroment where their are ample people available to fill posts the employer pays all taxes assosiated with employment. As that has been the case since the 60’s, then Tim got that wrong.

  4. Just did some checking – there was not full employment in the sixties . But the the fact remains, that where there is no difficulty for the employer to find a person to fill a post then the amount that an employee is prepaired to work for in take home pay is the cost to the employer and the PAYE is a further cost to the employer .

  5. Dinero, it’s more complex than that, because PAYE is person-specific.

    If A and B will work for £100 gross, that doesn’t mean that A wil work for the same net that B does.

  6. On a wider point, although there is unemployment, a lot of businesses say that there is still plenty of difficulty in filling vacant posts.

    Finding workers who can get out of bed in the morning and have sufficiently advanced education to work out which bus they need to catch, for example.

  7. As a small employer, I can safely say that every penny of Employers NI, Employee’s NI and Income Tax that is paid for my employees comes out of their pockets.

    This is certainly true but might be the limiting anecdata. I don’t believe it so.

    There may well be people out there willing to work for less than my employees but, hell, at least two-thirds of them understand enough about the tax system that they’d be in for their 12%-ish pay rise.

  8. Therefore in your particular case you are saying that you pay them what
    what you can afford to, and not what you actually need to, in order to retain their services.

  9. Dinero is stating a case where the employer will pocket the difference. It might happen, but if does it will be very small numbers. Most will hand over the extra dosh to the employee because of all the publicity surrounding the change. And there will be publicity, of that there will be no doubt. Employers will do so to keep their employees. Any that try and diddle their employees will find them going elsewhere.

  10. Serup – I’m not critisising that, just pointing out that usually economic analysis is more focust on self interest, of course may be simplistic.

  11. Sad but mad lad-

    It is not the case of the Employer pocketing a Hypotheical difference. The point is at the present moment in time employees in mass unspecialised employment do not pay PAYE. It is a tax paid by the employer.

  12. Dinero>

    No. The employer gains a certain value from the services of their employee. The total cost of employment should be less than that, to reflect the costs of things like capital investment, but if it’s too low – that is, the employer is making too much profit – then the employees will be lured away by someone less greedy who will offer them more.

    Obviously, the total cost of employment includes taxes, and without the taxes the employees would take home more money – because as we’ve just established, if the employer takes the money instead, he’ll be outbid by a rival. It is, therefore, a tax paid by workers.

  13. The point is – If employers can hire at a certain take home pay then thats the pay for the job.

    This is true, and I offer up myself as evidence for it. I pay 8% tax by virtue of my being tax resident in Geneva and put to work in various shitholes around the world. I get paid a base rate which is supposedly reflective of market rates in Geneva, which is utter shite compared to gross salaries in London or Paris. But when compared with net salaries in London or Paris, my Geneva take-home pay is broadly similar. In other words, the take-home pay for an engineer in London, Paris, or Geneva is pretty much the same but the gross salary varies considerably due to the different tax rates.

  14. When there are more workers looking for jobs then there are jobs offered, the competition between employees keeps the pay down to what they are prepared to work for, not what the employer can afford.

    >Tim Newman

    And maybe you did that calculation before accepting the post. Every employee offered a PAYE job does a calculation of net pay consiously or unconsiously.

  15. @ Dinero
    i) There was “full employment” at the beginning of the 60s
    ii) We still have a situation where the large majority of those who have completed their education and not yet retired are in paid employment. If you exclude “stay-at-home” mothers with young children, the disabled and chronically sick, as well as students and those who have taken early retirement, those employed or self-employed amount to more than 90% of the available workforce. So, while there are a (relatively small) minority taking jobs at whatever the employer can get away with, the large majority are in the category Tim describes where the decision on whether or not to hire an extra worker is based on comparing value added with gross employment costs including NI (and pension contributions and rent for the space occupied by his/her desk and … of course)

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