The MurphMonster and economics

One, among the many, problems that blemish Richard Murphy\’s suggestions for how he ought to rule the world is that he just doesn\’t understand the simple basics of the subject, economics, that he claims to be expert in.

So, we have this today:

The Prime Minister said yesterday that he could not risk sending between £20 billion and £40 billion on boosting the economy, creating jobs, building social housing, repairing our schools or anything else for fear of increasing interest rates.

OK, so we\’re talking about a little fiscal expansion through infrastructure spending. Could be a good idea, could be a bad one, let\’s leave that aside. But it is at least a respectable idea. There\’s a logic to it, a theory backing it up and so on.

So, now we turn to how Ritchie thinks such fiscal expansion should be financed:

First close the tax gap.

At which point the buffoonery becomes apparent.

No, not the closing of the tax gap (for the moment, leave aside all of his wibble about it). Collecting taxes that are due is not a, per se, bad idea. There might be limits as to how sensible it is to pursue everyone for every last penny, diminishing returns and all that, but the basic principle that people should pay the taxes the law says they should pay seems fair enough.

So neither of these things is, on their own, entirely risible. The combination of the two is.

For increasing the tax take is of course fiscally contractionary. No, it doesn\’t matter whether they put up the rates at which tax is charged and thus collect more or whether they collect more of what is actually due: collecting more tax is fiscally contractionary.

So, what Murphy is actually suggesting is that we should be fiscally expansionary by being fiscally contractionary.

Which is of course insane.

And the insanity comes from the fact that he knows diddley squat of the subject under discussion: economics.

27 thoughts on “The MurphMonster and economics”

  1. Unless he’s suggesting simplifying the tax code, and then adjusting headline rates (down) to maintain the existing revenue, closing the gap from the other side.

    Nah, couldn’t be. Sorry, Friday brain.

  2. Dear oh dear timothy. Still the same dreary defence of abusers and de facto fraudsters. You know nothing about tax justice, or indeed any campaigning that seeks to improve the lot of those without a voice. Your the true ivory tower dweller, as are many ukippers, with no concept whatsoever about the matters being discussed.

    You’d be stopping women having the vote a few generations ago.

    You sad fool.

    Oh and look, Farage is a dirty law-breaker too. And the BNP and EDL support him. That makes you filth.

  3. The problem with Murphy’s thinking here is that he is considering that tax not collected for whatever reason is dead money. However sums avoided, evaded, or whatever are not going to be stuffed under the mattress, they’re going to be spent on something else that may or may not benefit the economy more than government infrastructure projects.

  4. RM was tweeting yesterday as Question Tines Extra Guest that giving someone a £25k public sector job saved/made the government £23k in taxes and welfare benefits. Struck me as highly unlikely.

    Arnald. Please keep to the topic. As TW said collecting tax is a good thing but it is contractionary.

  5. Shinshei, if that was true would France not have zero public debt and a healthy annual surplus? After all, they are the Kings of state job-creation schemes.

  6. It’s the old thing that Keynesians believe that any money that is touched by the government’s hands is magic money that automatically goes forth and multiplies. It’s one of those things like Creationism; however much you demonstrate not only that this isn’t true but cannot possibly be true, they still cling to it.

    So in Ritchie’s addled noggin, if the government taxes a pound and spends a pound, it’ll always get back more than unity (at least until all the unemployment has been soaked up); so he’s not being self-contradictory. Just crackers.

  7. Murphy is convinced that tax avoidance, tax havens, secrecy and so on are all the same thing. So any tax avoided will have left the country and so cannot contribute to anything.

    He said as much about Russia’s “capital flight”, directly equating the amount which is leaving Russia in overseas investment of any sort with tax avoidance/evasion. Money is leaving the country: therefore all that money has been hidden in tax havens. Not a rouble has been invested overseas with the income from it being taxed there or in Russia: no, all money which leaves a country disappears.

    OK, I imagine a fair chunk is leaving in that sort of way, and that’s a problem; but by no means all.

  8. @Arnald

    Let us take it as read: Second only to Mos Eisley there is no greater wretched hive of scum and villainy than https://www.timworstall.com. Perched at the top is our own erstwhile ivory-tower dwelling, baby-eating, drinking and smoking Jabba the Hut, Timmy.

    Now that all the toys are out of the pram and we know that Timmy and his readers are beneath all levels of contempt, can we get back to the issue highlighted:

    “what Murphy is actually suggesting is that we should be fiscally expansionary by being fiscally contractionary”

    True? False? Do explain.

    NB – In the spirit of full disclosure, I am a far worse capitalistic pig than Timmy. Whatever ad hominem description you may come up with is agreed and also considered read (hopefully that will allow you to use your valuable time and actually stick to the topic at hand).

  9. Arnald we missed you, did you get your internet privileges back

    ….campaigning that seeks to improve the lot of those without a voice….

    Well we can not put the Murphy in that category can we. He has free run of the media to spout his ignorant bollocks. Its like the BBC choosing a witch doctor as the expert on health.

  10. Is it possible for two people to have writing styles that match as closely as Ritchie the Blemish’s and Arnald’s do, without them actually being just one person with two names?

  11. Arnald, could you at least impose some consistency within each individual comment, if not your comments in general? If TW lives in an Ivory Tower he can hardly be filth as well, can he? Make your mind up – either he’s an otherworldly academic debating how many angels can dance on the head of a pin, or he’s an evil neo-con who wants to grind the poor into dust to adulterate the bread he’ll sell to the remaining peasants. But not both. Your choice.

  12. When did i use the word “capitalist”?

    Do you people really believe that any of the tax “saved” by hiring overpaid suits to build structures that not only undermine tax-bases, democracy and the rule of law, but cause structural damage to the entire system through secrecy and mis-trust, is expending any economy? Are you fucking stupid?

    Jim, yes you can have both.

  13. “When did i use the word “capitalist”?”

    It must be medication time again Arnald, Ctrl-f reveals your last comment as the first use of the word on this page.

  14. Bloody WordPress!!

    For Ritchi-nomics (£1 in <= £1 out to work).

    1. Government identifies extra £1 to tax. (£0 cost).
    2. Government collects extra £1. (£0 cost).
    3. Government identifies extra £1 of spending – Project A. (£0 cost).
    4. Government commissions Project A. (£0 cost).
    5. Government supervises and audits Project A to ensure correct spend and quality. (£0 cost).

    This is impossible.

  15. @Arnald

    When did i use the word “capitalist”?

    I was saving you the effort

    Do you people really believe that any of the tax “saved” by hiring overpaid suits to build structures that not only undermine tax-bases, democracy and the rule of law, but cause structural damage to the entire system through secrecy and mis-trust, is expending any economy?

    Broadly speaking, yes. Individuals keeping their own money and spending it as they see fit is far preferable. As it relates to the rule of law being undermined, to quote Noel C who quotes RM himself, “Legality is not the issue….” (http://www.bbc.co.uk/news/uk-england-derbyshire-21661506). The issue of taxes is a morality play not a legal one, according to our betters.

    Are you fucking stupid?

    Depends on the topic.

  16. Arnald… how was holiday in the room with rubber walls? Did you enjoy licking the windows? Need a thorazine topup?

    As for Murphy’s proposition – it’s simply bollocks, like most of the left’s economics propositions.. Next thing you know he’ll have worked out a way top eliminate “Boom and Bust”

  17. Arnand

    hiring overpaid suits to build structures that not only undermine tax-bases…is expending any economy?

    As I understand Keynsian thought, one of its insights (which I think I agree with, but others do not) is that in certain unusual circumstances, it can be beneficial to pay people to do pointless things, in order to increase demand.

    Does not hiring (ie paying) overpaid suits increase demand? They (the overpaid suits) will spend the money, or at least some of it.

    The tax dodging bastards are spending some money on accountants, AND have more money left to spend on whatever tax dodging bastards spend their money on.

    I generally hate to agree with TW, but I think he has a point here.

  18. Arnald

    What does the BNP and EDL have to do with the points being made here incidentally? Are you claiming Tim is a supporter of either organization?

  19. I think Arnald’s detractors here are overlooking the fact that he invokes the word “justice”, effectively trumping any possible counter-argument.

    We must therefore conclude that Arnald is correct; in the same way that someone advocating “sex justice” – also known as rape – is axiomatically justified (not to say wise and compassionate.)

  20. “capitalist”?

    Don’t know if that looks the same to you, but for those it does: it’s quite arty, a stencilled sprayed paint on the walls of charity shops and hospitals could win over wannabe activists.

    Luke
    Those you state do not add to economic expansion. The demand is fed by a very few willing to pay whatever price. There is less than a tiny market force driving seeking the level of scam that Murphy campaigns about. No economic product.

    Georges
    Your’re talking absolute nonsense. Remember the level of abuse the campaigning is focussing on. The ratio of reinvestment into whatever national economy whence they misdirect, against the their real personal benefit, as a factor of reality, has nothing to do with capitalism.

    Capitalism demands transparency.

    That’s hardly a communist manifesto.

    I know [Georges} has failed with his sparring with Murphy from quite a while back but clainimg you are “capitalist” means you a putting yourself in a camp that misunderstands trade.

    Honesty.

    On this topic, maybe you should stop thinking Mrphmnstr and look at how the fuck the UK can lift a generation out of despair.

    As the Right love to espouse, why can’t the unemployed dredge my moat? Pay them. Oh, but paying them will discourage moat clearance. Thus those that wanr some equitable justice causes moat blockage.

    Won’t someone think of the moat-aeshetics?

    Taxation in it’s textbook form, contracts economic potential. It is also a necessity – backed by a democratic mandate, Timothy has agreed that it is necessary. So why support those individuals, companies, and financial structures that lobby the hardest to potray it as a theft worthy of execution.

    Cash saved by connivance does not benefit society efficiently. The market fails by supporting these entities.

    Oh, and for the record, perhaps from another thread, the BBC use many more right-leaning/corporate lobbyist talking heads for opinions-for-facts news-bites than anyone like Murphy.

    Maybe with the exemption of charities. Etonesque.

  21. @Arnald

    I know [Georges} has failed with his sparring with Murphy from quite a while back but clainimg you are

  22. @Arnald

    I know [Georges} has failed with his sparring with Murphy from quite a while back but clainimg you are “capitalist” means you a putting yourself in a camp that misunderstands trade.

    If by “failed” you mean I have been banned from posting comments on Tax Research UK, I am in a pretty long line on that front. As you are no doubt aware, Tax Research UK does not ascribe to the tenants of an open and transparent debate of the issues via informed comments.

    Now, capitalist = misunderstanding trade, by all means, do tell.

    Capitalism demands transparency.

    That’s hardly a communist manifesto.

    I agree. Who said otherwise?

    As for the rest, I am really not sure if it is directed at me -or- is just a stream of consciousness routine.

  23. Anyone who desires a good laugh at the madness of Keynesianism might like this explanation of Luis’s “balanced budget multiplier”-

    http://www.amosweb.com/cgi-bin/awb_nav.pl?s=wpd&c=dsp&k=balanced-budget+multiplier

    -complete with lots of typical add-the-eleventy-two-divide-by-the-marginal-propensity-t0-consume bollocks.

    So far as I can tell, it’s trying to claim that if you tax X and spend X you get an increase in their beloved “aggregate production” equal to X, due to lots of MPCs cancelling out in their equation. Presumably therefore if the govt. taxed the entire national income, then spent the entire national income on a terracotta army of Tony Blair statues, aggregate production would double.

    Remarkable.

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