Good Lord, tax research has some useful information on it

Of course, it’s in the comments, not the blog. And of course Spud doesn’t grasp it either:

Trevor says:
August 12 2020 at 12:40 pm
Yes the methods are meant to be similar but the methods around government output really are not similar. As government output is not sold on the market nearly all countries simply measure government output and hence government contribution to gdp as input = output. ONS has for the last decade or more not been doing this. Instead they use direct measures of output in certain areas of government including education. Looking at number of children educated, exam results etc. In the good times these does not impact international comparability as both input=output and direct measures give broadly the same results. However if in a pandemic you close all the schools, keep all the teachers employed then the direct measures are going to fall off a cliff whilst input=output does not change.

So where other countries have simply said the the inputs (wages of teachers primarily) have remained constant and therefore there is no decrease in output. ONS have based their numbers on surveys of reported hours worked by teachers and number of children actually attending school.

Despite the best efforts of teachers and schools it is clearly the case that the level and quality of education and therefore education output has dropped over the past months. ONS are to the best of knowledge the only national statistics institute to have attempted to record this in their figures. A 30% decrease in education output. A reward to all those parents who have struggled with homeschooling is that the ONS correctly say (based on current rules) that homeschooling is household production and therefore outside the production boundary. That time and effort is not in gdp.

Here is the ONS article concerning it all.

There is a fascinating story to write about this. To see almost the entire academic economic profession and all economics journalists completely fail to spot it is an inditement of them all. And only further confirms that the profession has no idea about the data they use.

Richard Murphy says:
August 12 2020 at 1:41 pm
And, politely, that’s been a poor measure then

Or, alternatively, a good one

It either shows that the government did not react appropriately to keep public services going

Or it utterly fails to reflect the considerable effort made by many to ensure that they were – which I have witnessed, in education for example


25 thoughts on “Good Lord, tax research has some useful information on it”

  1. Ah yes, his blog post in which he argues that the US has better GDP figures than the UK because it entered lockdown later and Europe has better GDP figures than the UK because their countries entered lockdown earlier.

  2. Bloke in North Dorset

    An interesting approach and it would be fun to see them turn their attention to the NHS. Whilst we know some small parts of it worked especially hard, we also know that large sections virtually shut down eg cancer treatment, so I’d wager the overall effect is the same as education.

  3. BiND – John Redwood wrote about this yesterday:

    The ONS decided they delivered 34.4% less education and 27.2% less healthcare.


  4. I wonder what the great Potato would be saying if he had, say, a hernia operation postponed for a year because of the lockdown. How would he simultaneously blame it on the government while also claiming that it needed to happen to “save the holy NHS”?

  5. “The ONS decided they delivered 34.4% less education and 27.2% less healthcare.”

    So if the economy declined 20% overall, that means the private sector significantly outperformed the public sector.

  6. I was trying to remember if this was the case yesterday, but couldn’t find a quick answer.

    If, for government contributions to GDP, input=output, then does this mean that a country with a higher proportion of public sector expenditure than the UK would show a less severe fall in GDP than we would have done on an equivalent basis?

    I’m thinking of France here, which is often used as a comparison for the UK.

  7. “Or it utterly fails to reflect the considerable effort made by many to ensure that they were – which I have witnessed, in education for example”
    Where? Through the window of an upstairs bedroom of a terraced house in Ely? I’d put money on the fat cnut has hardly been out the front door since March. Too busy masturbating on the interweb.

  8. I wonder how trains and buses are worked out – drivers on full pay, but fare paying passenger numbers dropped off a cliff. The inputs measurement for state train provision in most of Europe would show no drop in GDP presumably.
    Then again the UK went to state provision of trains too when LD began.

  9. “Or it utterly fails to reflect the considerable effort made by many to ensure that they were – which I have witnessed, in education for example.”

    Following his educational trip to Dachau with his sons, Murphy uses lockdown to educate them on the Joy of Tax

  10. @ Jim
    Not necessarily. Two parts of the public sector were analysed on estimated output but all (I think, maybe almost all) the rest were still counted on cost, most of which was salaries paid whether they worked or not: all the civil service, all of local government, police, armed forces (who, at least, did something sorting out the NHS’ inadequacies) so average public sector downturn would be less than 20%.
    Chunks of the private sector were wiped out – all “non-essential” shops, pubs, most leisure such as sport and theatres, sundry personal services like hairdressers … – and others, e.g. buses, worse than halved.
    You’ve kept going, presumably full-tilt, but thousands have not. Will the “woke” appeal to pay more to “essential workers” include a pay rise for farmers? You’re not even dreaming the “woke” will want farmers more, are you?

  11. “You’re not even dreaming the “woke” will want farmers more, are you?”

    Good lord no. I fully realise no one, left or right, wants independent farmers these days, we’re either destroying the countryside by blanketing it in chemicals, or advancing global warming with our farting cows, or getting in the way of global corporate agribusiness. Everyone is 100% sure they can have full shops sourced 100% from abroad, and nothing will ever happen to prevent that food arriving……..

  12. I want independent farmers.
    My guess is that everyone on Tim’s threads do.
    What I don’t want are dependent farmland owners (which gets shortened to ‘farmers’ by many) – that is dependent on landowner subsidies by area owned, being exempt from VED on their vehicles, getting a cheap price for their red diesel, some of their produce being 0% VAT rated at the shops, and being protected from competition from much of foreign.

  13. @Jim

    Not to mention that farmers kill animals and eat them.

    Why can’t farmers buy their meat from supermarkets like nice woke people do?

  14. If you have good farmland, it will be farmed. No-one is going to let good land lie fallow. What is farmed, how it is farmed and the prices for the produce may vary, but not that it is farmed. Britain is never going to move to 100% imported food.

    Removing subsidies will cause the land value to fall to the point it becomes economic again.

    Bad farmland might be put into forestry or suchlike, but we shouldn’t be farming bad farmland anyway (and all over the world we increasingly are not)>

  15. @ chester Draws
    “No-one is going to let good land lie fallow. ” Except the EU bureaucrats dictating CAP with their set-aside policies and limits on UK milk production and …
    There is a lot of good (or at least fairly good) land lying fallow just now bordering the footpaths I utilise for my daily exercise during lockdown.

  16. @ Jim
    I want independent farmers and I want a return to the hill farm subsidy to improve the balance between the remoter areas and the south-east (not just the farms but the associated trades and tourism and support for within-Britain holidays and improved viability of rural transport and …

  17. “Removing subsidies will cause the land value to fall to the point it becomes economic again.”

    The price of land has nothing to do with whether its profitable or not. Farmers who have sunk cost of land (ie have inherited their farm and have zero financing costs) still struggle to make a profit without subsidies. Its entirely down to the price one gets for the output, and the costs imposed on production by UK legislation. At world prices, no subsidies, and all the UK regulatory restrictions probably 75% of UK farmland is uneconomic to farm.

  18. I’m not sure that ‘world prices’ are the best yardstick here. One of the difficulties is that farmers by and large are not very proactive but accept the ‘commoditisation’ of their product instead of looking for ways to add value.

    This is all well and good for a large arable business in East Anglia but less so for a dairy business selling indirectly to supermarkets.

    If you are selling a commodity then your only option is to try and squeeze out costs and there is no amount of squeezing that can make UK ag as a whole competetive. On the bright side there is a growth in, say, cheese making or introducing rare breeds to enhance the quality of fresh meat which reintroducers the farmer to the consumer and this is to be welcomed.

  19. @Jim
    As @Bongo says, except his implied opposition to zero vat on food

    What puts many against farmers are the NFU & sheep farmers whining about EU post Brexit tariffs when every shopper knows we import lamb from NZ

    “Add Value” – spot on

  20. @ Jim
    “At world prices, no subsidies” is an oxymoron. Hundreds of countries (or states, such as California) subsidise their farmers – some to win votes from farmers, some to win votes from consumers. The more prosperous a country, the greater the ratio of consumers to farmers [Tim will doubtless point out that the causality is the other way round] so political bias favours consumers in food-importing countries

  21. Pcar – you’re not quite right about lamb. UK lamb comes to market from spring until autumn in thew UK after which springtime comes to New Zealand and fresh NZ lamb becomes available to UK consumers. Both UK and NZ export lamb but not in the same months.

    Old season lamb or hogget is not popular among UK supermarket shoppers and mutton is even less prized.

    Sheep work well on land which is unsuited for arable farming or more fastidious and less hardy livestock.

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