Now, I know that sounds, to some extent, a little counterintuitive, but a great many economic truths are completely counterintuitive, so let’s not worry about that.
Actually, all economics is obvious or trivial except……and the exception is Ricardo on comparative advantage. It’s actually the only point in the social sciences that is not either obvious or trivial.
Taxing wealth increases our national income.
That’s not counterintuitive it’s simply wrong.
If you take money away from those with wealth, which is what you would do if you taxed them, and – and that is an important ‘and’ – you then redistributed the benefit of that to those who do not have savings and who are therefore quite vulnerable with regard to their incomes and who are probably on, let’s be candid, lower incomes, what you do is give money to people who are going to spend virtually everything that they get. They might save a little bit, but the vast majority of what they get will be spent.
So the wealthy, who’ve already got enough to live on, who therefore save a great deal in many cases of what they actually get by way of income, and who therefore don’t contribute to the income of the country as a whole because they put that money out of use in their savings facilities, have less money to spend, and those who spend more money in proportion to their income have more money to spend.
Ah, yes the marginal propensity to spend/save. OK.
But there are also deadweight costs. Each tax destroys some amount of economic activity through the mere act of taxing. Different taxes destroy smaller or larger amounts dependent upon what is being taxed and how. Taxing wealth – the stock, the capital – destroys much more than taxing income, consumption or land.
And, at some point, the destruction through the deadweights is greater than the boost from the marginal proensity to spend. We’ve even got a sideeyed view of this. The IMF has pointed out that taxing to redistribute income does indeed boost the economy. Up to a point. That point being to move the Gini by about 13 points. Which is a little less than Britain already does.
But, you know, Spud.
Candidly, a portly well fed man who has a spare room for a toy train set quite obviously has more than enough to live on, yet counterintuitively is not redistributing this wealth to the needy
Dennis Moore Dennis MooreRachel Reeves Rachel Reeves
Galloping through the land
Dennis Moore Dennis MooreRachel Reeves Rachel Reeves
Without
hisher merry band(S)He steals from the poor
And gives to the rich
Stupid bitch
As I’ve said often before, he has a book-keeper’s mentality. All he can see are the numbers in the ledgers of money belonging to the wealthy. But where’s the value that underlies money? There’s only goods & services in the economy. The wealthy aren’t consuming them, there would be more than they could possibly consume. So where are they? They have to be with other people in the economy.
An example: A wealthy person creates an asset. A factory. Building a factory requires the consumption of goods & services. So the wealth went to the people who built it. The wealthy person now has an entry on the ledger of the “value” of the factory instead of the wealth. But that’s all it is. A ledger entry. It’s actual value in the present is its utility value. What it could be let for. It maybe an income stream in the future but that’s not wealth in the present. He’s not a wealthy person now, he’s an owner of a factory.
It’s the same with all the wealth that he’s got his eyes on. It all currently with someone other than the wealthy. The only way Spud can tax it is by taking it away from them.
If we stole Jeff Bezos $200,000,000,000 and divvied it up amongst the rest of us, what would we all do with the $26 extra dollars we would have?
Oh yeah, end up giving it and much, much more to the governments of the world to pay for all the now out of work Amazon employees.
Addolff. We wouldn’t be getting the $26. Besos doesn’t have them. We do. They’re our $26.
Again. There’s a difference between a book-keeping entry in money & the underlying value of goods & services. And there isn’t anything else in an economy but goods & services.
It’s all obvious or trivial except..for the jargon and sheer obfuscation of imaginary concepts introduced solely to give academics something to debate about and make what is basically a set of observations into a putative science.
Examples: GDP as a useful measure of anything. Bollocks.
The use in a formula of the term ‘velocity of money’ which can only be derived by knowing all the other variables, not measured in a valid way.
It’s not a science, it’s not even a discipline.
Let’s be candid, the reason why some people have wealth and others don’t is not the size of their income but whether or not they spend it all on current consumption.
Murphy’s two wives have been, respectively, a successful accountant and a GP. I have never been paid as much as a GP currently gets yet I have some savings (“wealth”) to support myself in my old age which Murphy wants to steal. Why doesn’t Murphyredistribute some of his wealth to the poor instead?
“Why doesn’t Murphy redistribute some of his wealth to the poor instead?”
He’s part of the nomenklatura. All of his stuff is *necessary* for him to keep doing his utterly required vocation, which is haranguing the rest of us.
You didn’t think the Soviet commissars’ Black Sea dachas were perks of the idle rich, did you? They were utterly necessary for them to do their jobs.
/sarc
Taking money from the wealthy and give it to the poor has consequences. Now the UK population collectively has what(?) tens of billions burning a hole in their pocket. Overtime and second jobs aren’t going to be too popular so income tax receipts could fall. What do they spend their extra cash on on? Probably not on goods and services from the UK as there isn’t the capacity, and the easy way to increase capacity has just gone. Importing goods will take time too so initially it will be an over supply of cash chasing not enough goods. Prices go up to make up the difference and the extra imports devalue the pound pushing inflation further. VAT receipts should more than compensate the fall in income tax, but inflation brings higher interest rates so this extra tax revenue is going to get eaten by interest payments on government borrowing.
The tax will make the wealthy poorer, it could make retailers like Amazon, and the supporting factory workers in China much richer, but it could also make people in the UK poorer.
Let’s look at the residence of this utterly repellent fvck.
His end terrace in Ely comprises the following accommodations:
Kitchen diner
Living room
4 bedrooms, two being used as office and gym room when he bought it.
He is separated and boys have left home, so this house is occupied by a SINGLE PERSON.
By any measure that is significant wealth, which is not being redistributed to a family which could usefully use all the rooms. His carbon footprint is probably high as well – I assume he heats all of the rooms at least to some extent.
Although he’ll pay more council tax than for a smaller property, it does not adequately tax this mini lord of the manor’s wealth and over-consumption.
I’d almost vote for the return of a window tax, based on excess rooms over occupancy.
He’s a repugnant cvnt, pure and simple.
If the US was able to magically confiscate the wealth of its 800-odd billionaires, who are worth a total of $5.7 trillion, according to Forbes, it could cover around 3 years of deficit, or pay off one sixth of the national debt. ie it couldn’t do a fat lot.
Even in the richest country in the world, there’s not enough billionaires to cover the profligacy of the state.
Labour are certainly dumb and spiteful enough to try it though.
Now, I know that sounds, to some extent, a little counterintuitive, but a great many economic truths are completely counterintuitive, so let’s not worry about that.
Translation: Now I’m gonna make up a bunch of shit that I will then use to confirm my own personal prejudices.
“So the wealthy, who’ve already got enough to live on”
I’ve got enough to live on *BECAUSE* of my wealth. My savings, in future my pension. Take my wealth off me and I cease to have enough to live on.
I think we all agree that if you give poorer people money they are more likely to spend it than save it, but what does this mean for the consequences of taking money from rich people and giving it to poorer people? Obviously it means that more of the money is spent and less is invested. Is that supposed to be a good thing?
It’s all obvious or trivial except..for the jargon and sheer obfuscation of imaginary concepts introduced solely to give academics something to debate about and make what is basically a set of observations into a putative science.
You’re right, Rhoda. You can go through the Wealth of Nations & there’s nothing Smith wrote wasn’t known & used by people engaged in commerce. The only people it was news to was academics. It’s just a compilation of observations.
Is even Ricardo non-obvious & non-trivial? People had making local decisions on that basis long enough. It was new to politicians?
When you look at banks & money, how much of that are we doing because it suits the banks? Like the 2% inflation target. Yeah I can see how they could like the deposits they’re holding losing 2% of value every year. And the government debt reducing by the same amount. But what are we supposed to get out of it?
BiS: If the banks like to see the real value of their deposits fall (and I’m not convinced they do), they must be equally unhappy to see the real value of their loans fall. Obviously, in both cases depositors / lenders protect themselves by demanding a positive real interest rate.
What do we get out of a target inflation rate above zero? – well, we get, and typically achieve, a target below (say) 10% or 40% – which is the natural inclination of politicians, since it makes it easy to spend all that lovely, lovely money to buy precious, precious votes. We also get a target inflation that allows adjustment for declining industries or activities despite human aversion to adverse changes in nominal flows.
Ricardo was very much non-obvious – some of the strongest proponents of protectionism were the manufacuturers in the relatively disadvantaged industries – and they remain so to this day. The idea that we could all be richer by concentrating on what we do relatively least badly is indeed revolutionary, and a wonderful counter-argument to those who would restrict trade to their own advantage.
He still thinks savings are like Scrooge McDuck’s money pit, doesn’t he?
@ Charles
If you want a takeover by “The Party” and a cushy job in whatever it will call “The Ministry of Truth” spouting economic nonsense – Yes
@dcardno
Dealing with your points in turn.
Inflation is contrived. By rights, increases in factor productivity should result in the opposite.(As long as you don’t keep stuffing the country with unproductive immigrants live off benefits) Of course the banks like inflation. They make their money out of making loans. A continual net transfer of wealth from savers to borrowers incentivises borrowers. The don’t care what the inflation rate as long as they make money off it. Far as I can see, they make more money when it’s high or at least rising. Loan rates rise whilst deposit rates lag.
Individuals have been choosing to do the things they’re least worse at forever. People are protectionist or free-trade depending on whether they’re selling or buying. They’ve always seemed to be able to hack the contradiction on an individual level. It’s when governments get involved…
Inflation. House price rises. Produces the great BTL theivery. Banks extend credit to BTLers thus pushing up house prices. BTLers, in receipt of rents & with the rising value of their asset can leverage to extend their property empires. Some of them have gone from quite modest stakes to paper multi-millions. Nothing of value was created whatsoever. It’s just a transfer of wealth from those who need somewhere to live to those who benefit from preferential credit. With the banks making a packet as it goes past. We may find out who’s expected to swallow the risk in due course. We can be sure it won’t be the banks. Wasn’t last time, was it?
@ bis
The risk is taken by the Building Societies firstly, the banks and their shareholders, secondarily, and if that is not enough by the large depositors and the “Financial Services sector” who are required by law to pay for any loss by a depositor who has a deposit < £85k.
As to your Murphy-style comment that the banks didn't swallow the risk last time – (censored). Brown and Darling stole the net assets of Northern Rock and talked their New Labour pal Victor Blank into bailing out the Bank of Scotland (HQ less than a mile from Alastair Darling's constituency – he was being a "good constituency MP") which cost The pre-existing shareholders of Lloyds Bank over £2BILLION
There’s nothing Murphylike about me. I don’t even like government scrip. Let alone the printing of it whenever it suits them. You don’t need it to facilitate commerce in an economy. It’s just a convenience & a habit. One that’s rapidly getting to costly to continue. All you need is is a token of value satisfies the necessities of a token of value. The confidence that it can be readily & widely exchanged for goods & services.
Of course I don’t like the banks. Government money & the banks are so intertwined they’re inseparable. And I don’t like government. Any more than an absolute minimum.