Its willingness to think very firmly within the neoliberal box whilst always believing that the rich will leave and the City has a choice as to what to do with its money,
Other people do not have choices about what they do with their own money?
Its willingness to think very firmly within the neoliberal box whilst always believing that the rich will leave and the City has a choice as to what to do with its money,
Other people do not have choices about what they do with their own money?
How many not-rich people, but potentially rich in the future, leave is never modelled as far as I’ve seen.
If the UK doesn’t offer opportunities then its people in their 20s with skills and qualifications people want, but who aren’t yet rich, will clear off. There’s anecdata for isntance about Scottish engineering graduates going off to the oilfields off Brazil for instance, as the opportunities in the North Sea are zilch.
Yes some rich will leave if taxes go up, but there must be a term for the phenomenon of the rich you won’t get coming through your own ranks.
My assumptions (some framed to make life for Reeves a little easier ) are that, first of all, the situation now is worse than she thought when she made the promise not to increase all the aforementioned taxes, and so that assumption has to be abandoned. There have to be some increases in those taxes if the public services of the UK, on which we all, the wealthy included, rely, are not to collapse. It really would not be hard for Reeves to say this. She keeps saying the Tories made a mess of things, so why not blame the need for tax rises now on their reckless tax cuts before the election whilst emphasising all that she will do will impact the wealthiest alone?
The tax burden is the highest it has been for 50 years more or less – it’s beyond ludicrous to suggest when billions are being hosed on things like Foreign Aid that there need to be tax rises
Second, she has to revise the fiscal rule, or simply not have one. They are, after all, just bits of economic folklore which everyone knows will never be compiled with. Why not just say she will invest in what this country now needs to make it productive, sustainable and secure rather than spend her time talking about rules that prevent all those things? Which, ultimately, matters more?
I don’t hold much of a candle for Reeves but the Removal of the Fiscal rule would be a surrender to the lunatics, like Murphy that hold based on one part of a 10 year old bank of England paper they misinterpret that there is a Magic Money Tree.
Third, she has to tell the Bank of England to cut the bank base rate: it is absurd that it is so high, and the fact is that it is costing this country dear when there is absolutely no need for high positive real interest rates right now given that a) there is no significant inflation risk right at present and b) any risk that does exist will be entirely incapable of being addressed through interest rates manipulation. The ludicrous constraint of the government not being able to do what is required for this country because its cost of borrowing is too high because a government agency (which is what the Bank of England is) has set it at an absurd level has to come to an end.
Interest rates are scheduled to fall but inflation is still far too high. Anyone with even a toe in the real world can see that when they look at their outgoings. The official inflation figures are a fiasco
Fourth, the payment of interest on at least 75 per cent of the central bank reserves that were created by new money creation via the QE process between 2009 and 2021 has to end. Right now, taking tax into account, that might save £18 billion a year, which is around 75 per cent of what the IFS says is needed to fund essential improvements in public services.
Not sure what he is drivelling on about here – he appears to be looking at not paying interest on bank reserves. That’s an unwelcome precedent which could be used by people like him possessed of a rapacious mindset founded on the immensely evil viewpoint that private property is the state’s to dispose of.
Fifth, if the City goes on gilt strike, refusing to buy more of them, then two things have to happen. First, the absurd quantitative tightening process, which is effectively sucking £100 billion of funds out of the City this year solely to reduce the size of the central bank reserves accounts and not to in any way support government spending or investment, has to stop. It is beyond crazy that cuts in real investment are being discussed when this programme is underway for no good reason.
That’s the QT process you said wouldn’t happen right? Perhaps more of the assumptions that MMT makes, which you claim are some kind of holy writ are equally questionable?
Then, sixth, if there remain issues around funding, despite the fact that the City has purchased £156 billion of news bonds so far this year according to Debt Management Office data, which makes a mockery of the claim that they have no inclination to buy government debt, then the government has a duty to chose between City and people, and side against the City. It can do so by simply funding investment by borrowing directly from the Bank of England, who have no choice but fund the sums in question if instructed to do so by parliament.
A policy which would likely turbocharge inflation and lead to ever increasing deficits and interest payments. Mortgaging the future.
Seventh, the paranoia about the wealthy has to end. Firstly, they do not pay disproportionate amounts of tax. As Chapter 3 of the full version of the Taxing Wealth Report shows, they vastly underpay tax in the UK. They know that. The vast majority of them are not going anywhere as a result. And even if they do, their wealth has to stay here: to presume that they now pack up their money in an old kit bag, put it on their back, and take it with them on a pack mule when they leave is absurd but appears to be what political and economic commentators think to be the case.
As a result, more taxes on wealth are required. Equalise capital gains tax. Add an investment income surcharge. Do both, and the funding the IFS says is needed is available. See chapters 6.2 and 8.1 of the Taxing Wealth Report for details.
Absurd – all manner of independent bodies point to a mass exodus of wealthy individuals even prior to the budget. The ‘Taxing Wealth report’ has been proven to be an absurdity based on quarter baked, almost demented assumptions that suggest the author needs sectioning largely for the wider good of the community. To base any policy on it would be consent to government by the mentally ill.
But most important of all, end for good the belief that the UK only exists as an entity for the purposes of financial engineering and exploitation by the City and the wealthy, which is the current framing used for all budget decisions. What the City and the wealthy may want is not the basis for choosing what is required for the benefit of this country. What the people of this country need is the required basis for choosing budget priorities.
The notion that the country has been run for the wealthy is interesting. The tax burden has been raised constantly since 2010. Tim and others have exploded the myth of austerity on numerous occasions. I’d ideally like a Monaco residence and a pension linked to the 1984 inflation rate in Brazil – I deem that I need it. Does that mean Reeves has to engineer that in her budget accordingly?
The City and the wealthy want:
– Children in poverty
Perhaps stop issuing visas to a city the size of Birmingham per year?
– Pensioners dying of cold
Aren’t they the ‘Gammons’ who voted for Brexit?
– Under-educated children
The number of university students is at an all time record. Many are on courses being taught things like ‘The Tax Gap’ and other absurdities. If we abolish 20 or so universities this could end.
– Low pay
– Inequality
– Rising rates of sickness
– High levels of mental ill health
I don;t think anyone wants these especially – if we reduced public expenditure and took people out of the taxation net then Low pay would be less of an issue. Inequality is as low as it has been for decades. Sickness is largely caused by people swinging the lead and the public sector. If we cut the latter back it should resolve itself. The high taxation levels are a cause of that mental health for sure.
– A failing justice system
I agree – we need to tackle fox -killing lawyers who are unwilling to prosecute environmental terrorists and their academic supporters
– Skyrocketing household debt
A consequence of massive tax bills and inflation caused largely by public expenditure being too high
They must want these things: someone demanded that they be delivered, and they have been. The only people who could have chosen them are the City and the wealthy. They must, in that case, have demanded them in exchange for their support for fourteen years of Tory government.
Utter rubbish – they were demanded by the Hard Left and all those who support spending money without limit and unrestricted immigration. People like semi-retired bloggers masquerading as academics safely insulated from the chaos. As the post yesterday indicated, to foment revolution.
So the choice is, the City and the wealthy versus the people. It is becoming increasingly clear that is the case. The massive, panicked and utterly absurd reactions to Labour’s feeble attempts to adopt a different agenda makes clear that is true.
Rachel Reeves could decide to be on the side of the people.
It is already clear that she is caving in on almost all her plans. She is deciding to succumb to the demands of the City and wealth.
If she is genuflecting to the wealthy I haven’t seen it.
The short-term cost will be enormous. Misery and despair will continue whilst the wealthy continue to consume our planet as if there is a spare available when this one runs out, which will never be true.
The long-term costs of this cowardice from Reeves will be bigger still: we are talking about the fates of people, this country, our democracy and our planet here and she is putting herself on the wrong side of all of these issues.
I’d agree with that but for very different reasons. She has prioritized the evil of the public sector and the immigration lobby. She has utterly caved on Public sector management.
Meanwhile, the IFS is hailed as the voice of reason when it is the voice of the wealthy and the City, wishing, as a result, the destruction of everything of value in our society.
I despair
the notion that the IFS is in hoc to the wealthy is truly insane. It’s very far to the Left of North Korea on many issues.
Thanks again to VP for going through all the nonsense in detail. I don’t know how you can stand it.
He portrays the “City and the Wealthy” as top-hatted villains, presumably rushing around evicting widows and stealing electric fires from pensioners, pausing only to twirl their moustaches. It’s risible. It’s not even student politics level, it’s pantomime stuff.
He’s sitting on a potential huge capital gain on his house. He is one of the wealthy. Watch him scream if Labour tax that in a few weeks time.
Brilliant by VP.
When left university when I was 21 I fled the UK as an ecomonic refugee, and became an illegal immigrant in order to be able to earn enough to stay alive. I came back some years later, and the UK rewarded me by refusing to employ me for a decade, throwing away my skills.
@ Tim
“Other people do not have choices about what they do with their own money?”
Not when Murphy is in charge, they don’t
Bongo said:
”How many not-rich people, but potentially rich in the future, leave is never modelled as far as I’ve seen. … there must be a term for the phenomenon of the rich you won’t get coming through your own ranks.”
In the 1970s it was called the “brain drain”.
My daughter, a medical student, has just done 6 weeks of ‘elective’ med study in Australia. Predictably she absolutely loved it. She has a year to go at med school, two years of HNS foundation training, and then will be off there like a shot.
Suits me. She’s bilingual English/Japanese and the Aussies will welcome her with open arms: there’s a sizeable Japanese population in Queensland that will find her very handy.
And, I daresay, when she settles there and pups there’ll be a requirement for kindly grandparents to go and help out. Excellent. Gets me out of the hellhole this place is becoming. Yes, Australia is woke but at least it’s woke with space, resources and sunshine.
So, yet another doctor born, bred and trained here at taxpayer’s expense legs it Down Under, to be replaced by Drs. Bongo-Bongo and Jihad asset-stripped from the 3rd world, whom the 3rd world trained and we get for free, so quits. Except of course we’ve lost someone with fluent English, steeped in indigenous culture and deeply sympathetic to it, and replaced her with someone who is – not.
But by their actions are they known, and on this basis, clearly this is what our rulers want.