The question next assumes that when the government spends it’s at cost to other activity elsewhere in the economy. But this is only true when the economy is at productive full employment. We’re a long way from that right now.

We’ve the highest employment to population ratio since the early 70s, the lowest unemployment rate since about then. We have skills shortages all over the place. We’ve lots of excess capacity, do we?

14 thoughts on “Interesting”

  1. Similarly, tax dodging creates money for someone which gets spent, becomes someone else’s income and gets taxed, etc., and therefore boosts the economy. So the more tax dodging the better, right?

  2. @Andrew C
    “It’s the wrong sort of employment so doesn’t count.”
    If they are talking about diversity advisors they are right

  3. Bloke in Costa Rica

    Despite his manifold inconsistencies in other areas, Murphy has never acknowledged the validity of either opportunity costs or crowding out.

  4. WTF is ‘productive full employment’ ?

    I’ve asked him to explain before but got the usual tripe about what isn’t (e.g. gig economy etc) Does anyone know?

  5. ‘Productive full employment’ = 100% employment by the state.

    When Ritchie talks about spare capacity, he means bankers, big 4 accountants, lawyers who he thinks should be doing manual labour.

  6. I sneeze in threes

    What about the opportunity cost? If you tax me to spend it on x, I can’t spend it on y. I suppose the response is, they are always going to tax me so y is never in the calculation.

  7. Isi3

    They tax you, give it to a newly employed diversity officer, who spends it on curries.

    They don’t tax you; the diversity officer is instead now your decorator / landscaper / plumber (which you couln’t afford before), who spends it on curries.

    One of those options adds more value than the other to GB plc.

    The logic has to be to keep the state as small as reasonably possible. Legally starving them of funds is a small step – it might even encourage the more competent amongst them to focus on what’s important.

  8. We are a long way from productive full capacity because the state takes too much in tax from the median-to-lower-paid workers and spends it on unproductive employment. To get us nearer to productive full employment sack all those whose work decreases real GDP, leave taxes on the above-median incomes unchanged and reduce effective tax rates for the poor from, 70-odd% to 50% as a start; when the budget approaches balance reduce them to the 30-ish% applying to the majority.
    However I don’t think that is what Murphy wants …

  9. “…But this is only true when the economy is at productive full employment. We’re a long way from that right now….” As Sowell would say, “What hard evidence do you have for that [assertion]?”

    That’d be none then?

  10. MVA

    In the context of John’s quote, and crucially note the word “productive”, perhaps take a wander around the public sector sometime. You can very quickly come to your own (similar) conclusion!

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