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Interesting economics

So interesting that we could find Spud contradicting himself if we bothered to go looking:

We also need to raise taxes on the wealthy for three reasons. The first is that the government needs to spend more as a proportion of GDP in both the short and long term and that will require that the inflationary impact of that spending be removed from the economy by making extra demand on those best able to meet it.

But taxing the wealthy doesn’t reduce inflation. Because it doesn;t reduce comnsumption. Wealthy people maintain their lifestyle by just saving less and keeping consumption constant. As Spud has told us a number of times. Therefore taxing the wealthy doesn;t reduce the inflation stemming from higher government spending.

21 thoughts on “Interesting economics”

  1. I want to have equal society, Poverty needs to be cut. One way to do that is to tax the rich to pay for public services, health, education, the army, the police, and democracy.

  2. Anthony Griffiths – “I want to have equal society,”

    OK. Fair enuff. We’ll send the boys round to rob you of your surplus wealth later, shall we?

  3. Anthony Griffiths

    If you Google either ‘Tax Research Uk’ or ‘Funding the Future’ and click on the link listed you’d probably find the blog more to your liking than here?

  4. I still don’t understand why he thinks taxation will reduce inflation. Government will just spend extra revenue back into the economy. So it doesn’t reduce demand, does it? I know it’s highly unlikely Spud would suggest using taxation to reduce government debt, but would even that reduce inflation? In reducing debt, you’re returning the money you borrowed to the lender. So now the lender has the money to spend.

  5. bloke in spain – Taxation is needed. Without we would live in a brutal chaos. Who would fund the police, army, health, education, roads, public services?

  6. In the end the government will have all the money and to combat inflation the people will have none. Why would anyone in the taxee community want that. Equality of having nothing is not desirable to me at least.

  7. Well Anthony, I’m not so concerned about an equal society.

    I’d certainly like a rich society though. That way even those at the bottom of the shitheap have plenty of food, accommodation, medical treatment etc. I’d also like plenty of freedom.

    Having been a bureaucrat, I’d argue that this is best achieved by the minimum of regulation. In other words a market economy. And of course lots and lots of fossil fuel burnt to run lots and lots of machines to do as much of the work as possible.

    So if we burnt all of the Greens on top of a heap of regulations, I should achieve my aims.

  8. He’s been working for De Beers again on the sly – gems galore in this one:

    Those renting are having a torrid time. Rents are up at least 10% in the past year.

    And of course you are in favour of rent controls and restrictions on eviction which have reduced supply. Additionally by your proposed taxes on every other type of asset you make property ever more attractive as a ‘safe haven’ – even if over regulation means you are better off as a landlord letting it on Airbnb

    Those who can get a property are accessing some of the poorest housing stock in Europe.

    Probably best not bring in a city the size of Birmingham by boat annually or object to people who advocate reducing the number, eh?

    That is not the only problem for banks. As the FT has noted, bank third quarter earnings look like they will be hit hard by the fall in the value of their bond holdings as markets take the impact of long-term high-interest rates into account. Since interest rates and bond values are pretty much the inverse of each other, those rates are now hitting the value of bank balance sheets hard, just when their mortgage and loan portfolios are severely threatened by bad debt risks, also created by high-interest rates.

    That also means that one of the key cornerstones of your much vaunted ‘Taxing wealth report 2024’ has already collapsed as this will hit the savings and pensions of those with money in bind funds – meaning public expenditure will have to be reduced so as not to cause inflation

    And let me add some more misery into the mix. September was totally abnormally hot:

    Following an August which was abnormally cold – perhaps it goes to show that ‘selective data use’ isn’t solely the province of oil companies or organizations like the GWPF

    Second, the cost of this is not going to be some little blip in the economy. This moment now feels like 2007 – when everything began to go wrong but few said it (again, I was one of the exceptions). It feels like everything could totter over soon, with calamitous (I do not use the word lightly) consequences.

    If you predict something 700 times and it eventually turns out to be correct I’m not sure I’m going to be asking you to assist me next time I’m in Ladbrokes

    We need to cut interest rates because that is possible and would cut inflation. It is economically counter-cultural, but when convention is very obviously not working what is wrong with that?

    I’m guessing his contract with the Turkish government as an ad hoc economic advisor didn’t get him much as it was on a pay by results basis?

    Shooting fish in a barrel doesn’t come close – too easy by far….

  9. AG: You don’t need taxes to pay for some in that list. The public service of my swimming pool is paid for by me handing over money on entry. The public service of outdoor toilets is paid for by me handing over money on entry. The public service of taking a bus journey is paid for by me handing over money on entry. The public service of entry to my local museum is paid for by a bequest from the founder.

  10. Taxation is needed. Without we would live in a brutal chaos.
    Last time I looked you were living in a brutal chaos. And it’s getting worse. Want to rethink that?

  11. Incidentally, I do find peculiar the claimed supposed connection between equality & a well regulated society.
    Some of the strongest regulated & safest societies are also societies with the highest inequalities. Singapore for instance. Sweden’s Europe’s poster boy for equality & the place is verging on becoming a war zone. The experience of de-colonisation would seem to indicate that greater equality results in more violence.
    UK equality has steadily been increasing since I was a kid. It’s also become far more disordered & dangerous.
    Here’s a thought: Inequality is the natural human state. Attempting to impose equality will always be countered by those seek to be unequally superior. The harder you try to impose equality, the more violent the resistance will be.
    Make sense?

  12. Anthony Griffiths – “I want to have equal society,”

    Is that worldwide? Only the average income in the UK puts you in the top 1% worldwide.

    There would need to be an awful lot of redistribution from the UK to achieve equality.

    Careful what you wish for.

  13. Andrew C

    Murphy had a post relating to the Renault 4 which seemed to indicate he is thinking along those lines as well!

    We need to accept what is ‘sustainable’, apparently – here’s a flavour:

    I am not, of course, saying we should cease to innovate. That is not my point, at all. We need to innovate to save this planet. But the object of that innovation should not be to go faster. Or to consume more. Or to out-compete other countries. It should, instead, be about making life better and more sustainable.

    So we do need innovation in public transport. We need to make smaller, safer cars, and to create a tax system that makes them much more attractive than alternatives. Progressive consumption, which favours sustainability, can be part of a progressive tax system.

    And we need to innovate so that work suits more people, is more fulfilling and flexible when so much is at the moment an exercise in alienating people from their meaning.

    We also, of course, need innovation in tax and the way we organise society.

    But what we do not need is tech for the sake of it, because that makes no sense at all now. More than that, it is very obviously failing us.

  14. bloke in spain – Taxation is needed. Without we would live in a brutal chaos.

    We have been invaded by 15 million people, many of whom work for Al Qaeda and ISIS – the ‘brutal chaos’ is a daily reality for millions and intensifies each day.

    Who would fund the police
    God forbid there aren’t sufficient resources for them to ‘twerk at trans parades’ or investigate ‘transphobic tweets’ when burglary clear up rates are zero

    Perhaps if we stop agreeing limitless funding for a war in a far off land of which we know nothing there might be more left over for them?

    health ,
    Chris Whitty and Neil Ferguson, alongside Independent SAGE are definitely worth giving more money to!

    Our schools are the envy of the world – noone else gets to learn about the Nazis running the British Empire and the brave Trans resistance and their underground railroad

    No real need for roads as noone’s going to be moving within 10 years under Net Zero

    public services?
    I am always impressed every time I deal with a public sector worker – they’re supremely efficient and customer focused and definitely need even higher tax rates than the current ones which are an all time record

    As the Bloke in Wales says – a genuine Troll! haven’t had one in a while here!!

  15. Meanwhile, erstwhile Surrey and England seamer probes the Potato’s defence with a direct quote on a good length:

    Robin Jackman says:
    October 5 2023 at 12:49 pm
    This year the government will give the UK’s banks £45 billion they have done nothing to earn. That’s because of QE and interest rate rises.

    The banks should therefore be okay?

    Richard Murphy says:
    October 5 2023 at 2:10 pm
    Only if they have significant reserve account balances

    Robin Jackman says:
    October 5 2023 at 2:33 pm
    But industry-wide in the UK, the banks will have an extra 45 billion, effectively as a bonus. That should surely cushion any upcoming bad news

    Richard Murphy says:
    October 5 2023 at 3:08 pm
    Banks fail individually

  16. a great delivery from Robin – is Murphy out LBW? Or will he call for a stoppage of play and dismiss Robin as a ‘troll’ or ‘neoliberal’?

  17. O/T
    A Swiss bloke has been jailed for 60 days for calling another journalist a fat lesbian.
    The guy has some pretty ripe opinions (and he’s a journalist) but the point is that Catherine Macherel is a fat lesbian.
    The truth will send you to jail, with a hefty fine as well.

  18. The truth will send you to jail, with a hefty fine as well.

    That’s been the case in Switzerland since almost forever, as Brit expats working for Swiss banks discover from time to time.

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