Ragging on Ritchie

Ooooooh! A gravy train!

Squeal like a stuck piggy for Timmy here!

Global Geo-Politics Net is carrying an important article by David Cronin highlighting the desperate need for a civil society campaign to counter the might of financial lobbying by banks and hedge funds. Besieged by legions of well-funded financial lobbyists (reinforced by columns of financial journalists acting as mouthpieces for the City of London and other offshore financial centres), politicians are fighting an uneven battle to protect public interest from endless lobbying to water-down regulation and protect tax privileges — and there are virtually no organised campaigns to oppose this relentless pursuit of self-interest. A cross-party alliance of European parliamentarians has issued a call for the creation of an international civil society campaigning organisation to work on systemic financial market problems in the same way that Amnesty International has worked on human rights issues and Greenpeace on environmental issues……The call from European politicians for civil society action should not go unanswered. TJN, for one, is keen to participate.

What a trough to get one\’s snout into!

The ultimate, the Brussels, gravy train.

Good Lawdy Miss Clawdy

Yes, I have left a comment there and no, I don\’t know whether it will get through. What I said was:

Richard: because we don’t know about the future, because we don’t know which technologies will be possible, which products of which new technologies people will want, we need to have some sector of the economy where experimentation takes place.

The market in short.

Precisely because we don’t know what the future holds we cannot plan for it: thus we cannot use government to do said planning for us. Moving 5% of GDP from the government, planned, sector to the unplanned, experimental, market sector is thus a very reasonable response to exactly your point: that we cannot forsee the future.

Other critiques are welcome in comments.

Apparently I\’m your leader

If people argue their case I’ll by and large let them on

But there are a nihilistic bunch of libertarians on the web – led it seems by Tim Worstall – whose sole aim is to be abusive, negative and disruptive

I’m sure like 17 year olds getting drunk on Saturday night they think it clever

Those of greater insight realise that their abuse is a cover for a lack of any real argument, a purely destructive temperament and an inability to engage with the realities of life

They add nothing to debate here, but do waste time

And they seek to abuse others who engage here, which I find wholy unacceptable

Decency requires they be kept off this blog

Given that I am your leader, where would you like to go? For as that French Marshall said, because I am their leader I must follow them.

I\’m not sure this makes sense

Nor does it seem to be fair.

I’d simply abolish higher rate tax relief for pensions.

let’s be honest – pensions are just a savings scheme. That’s it: no more, or less. And it beats me why the savings of most of the richest in society (and I know about the new cap for the very wealthy) should be subject to double the rate of tax relief as all the rest in society – especially when it is estimated that this costs at least £9 billion a year.

When austerity is needed the savings of the rich do not subsidy. This is one law that definitely needs to be axed.

For while there is a subsidy there, it\’s not the one being highlighted.

Here\’s what happens with pensions and tax.

You save your money into a pension fund. This applies whether it\’s you putting cash in, your employer doing it on your behalf (pensions of this sort are best looked at as delayed compensation). On the money that goes in you get tax relief on what you put in at your normal tax rate.

This can indeed be described as a subsidy.

However, when you start taking your money out of your pension, when your pension starts being paid, you pay tax on that income that comes out of it.

So the \”subsidy\” isn\’t a straight such subsidy: it\’s rather a delay in your tax bill. Essentially, you get to save tax free, and thus make returns on both your money and the notional tax bill. This is nice, yes, for it means that you are earning returns, you are earning interest, on that delayed tax rather than it being spent this year on outreach diversity advisors.

But that subsidy does get paid back: because you\’re paying income tax on what you receive in pension.

One could imagine various flavours of fairness in such a system. Save tax free, pay tax on the income received (if, for example, as a matter of public policy, we would like people to save for their pensions: which we do). Pension savings must be made from post tax income and pension income is free of tax (again, if for public policy reasons we want to encourage people to save for retirement).

We could even have save for pensions out of post tax income and have income tax on the returns from pensions: essentially, do not have a pension scheme at all. No tax privileges, nada. In effect,  pensions saving is just like any other form of investment.

But it would seem wildly unfair to have a hybrid system. Where some people get tax relief on pensions savings and pay full income tax on income from a pension and others get no (or less) tax relief on savings but still pay full whack income tax on income from pensions.

Which is what Ritchie is suggesting. You don\’t get 40% or 50% relief on saving for a pension, only 20%. But you do have to pay 40 or 50% on income from a pension when you get it.

In order actually to be fair you\’d need to have a lower rate of income tax on income from pensions that didn\’t attract the original tax relief, wouldn\’t you?

Yes, him

So, well, no, we\’ll subcontract this one out shall we?

Yes, Ritchie forgot double taxation relief. No, Ritchie won\’t admit to having done so.

Quite why he cannot simply admit to an \”Ooopsie Moment\” I don\’t know. We all have them sometimes and most of us realise at some point that the best response is to simply declare \”Ah, yes, sorry, Ooopsie Moment there. Sorry, try harder next time\”.

But I have to say further that what I really love about this is that Ritchie\’s own plans, those country by country reporting ones, would lead to a much larger double taxation relief. And thus, by the measurements he uses, a larger tax gap in the UK.

Bear with me here a moment. The aim of country by country reporting is to make sure that companies are properly tax compliant.

Tax compliance – the duty of the taxpayer

For the individual taxpayer tax justice is about tax compliance. This happens when the individual seeks to pay the right amount of tax (but no more) in the right place at the right time where right means that the economic substance of the transactions they undertake coincides with the place and form in which they report them for taxation purposes.

What this means for large, international, companies is that they should be paying tax where the economic substance of the transaction takes place. Profits made from oil in Angola should be taxed in Angola. From flogging mustard in Poland in Poland. Country by country reporting is an aid to making sure that this happens.

I\’ve not misrepresented his views here: this is absolutely what he is campaigning for.

Excellent: now we come to double taxation relief. The money that BP makes in Angola should be taxed. righteously, in Angola. Mustard sales in Poland by Tesco\’s should be taxed in Poland. But of course BP and Tesco\’s should not be taxed in the UK on such profits because the economic substance of the transaction is not in the UK. And thus, under Ritchie\’s preferred tax and information scheme, double taxation relief will rise.

And thus, given that Ritchie uses the existence of double taxation relief as proof perfect that there is a tax gap, the tax gap will rise. That very tax gap which Ritchie is campaigning to close.

Infamy, Infamy, they\’ve all got it In For Me…..

The far right have always liked to argue that my work on the tax gap is wrong because I categorise tax avoidance as part of the tax gap.

Can you guess who yet?

But this argument is entirely wrong.

Indeed it is. the argument from this little Fuhrerlite right wing bastardo is exactly the opposite. I have no problem at all with \”tax avoidance\” being categorised as part of the tax gap.

My argument is that in calculating the tax gap Ritchie includes legitimate use of tax allowances, people justly and rightly doing exactly what Parliament intended, as part of the tax gap. That is, he states that tax compliance is tax avoidance and thus part of the tax gap.

Note that the Revenue quite categorically say that tax planning – that is using allowances and reliefs provided in law for the intention that parliament considered appropriate (in my lexicon, tax compliant behaviour)  is not part of the tax gap. I completely and utterly agree. I have never once suggested otherwise.

Oh, gosh, really? Perhaps I\’ve got the man all wrong then. If so, my deepest apologies.

So, let us look at The Missing Billions, which is where the estimation of the tax gap all starts out.

In 2006–07, HM Revenue & Customs raised £44.3 billion in corporation tax, of which
£23.8 billion came from those businesses within the Large Business Service. In 2006
the companies in this survey declared UK current tax liabilities of £11.5 billion, or just
under half the total tax managed by this unit. If the estimated loss is extrapolated
across all of these 700 companies then the total corporation tax expectation gap
might be some £11.8 billion. This is an increase from £9.2 billion, which was the
estimate made the last time a similar exercise to that undertaken here was completed,
relating to the period to 2004 30.
As a proportion this may be the highest gap of all. Much may be due to legitimate tax
planning, but by no means all is. Some, undoubtedly, is due to tax avoidance
When this sum is added to the £12.9 billion of tax loss already calculated for individuals
it suggests that the total UK tax gap due to tax avoidance can be estimated at £24.7
billion, and rising.

My bolding.

So, do you see what he\’s done there? Yes, he\’s included legitimate tax planning in his estimate of the tax gap. He\’s actually said that he\’s done this.

Just to remind ourselves. From Ritchie\’s report on the tax gap:

Much may be due to legitimate tax
planning, but by no means all is. Some, undoubtedly, is due to tax avoidance

Ritchie today:

using allowances and reliefs provided in law for the intention that parliament considered appropriate (in my lexicon, tax compliant behaviour)  is not part of the tax gap. I completely and utterly agree. I have never once suggested otherwise.


So, let’s summarise this: it is clear that the far right have no idea what they’re talking about, clearly can’t do statistics or appraise them, do not understand what tax avoidance is or, alternatively, peddle straightforward incorrect information for their own political purposes.

Umm, perhaps I\’ll not be apologising after all then.

However, much, much, more exciting than this revelation that R. Murphy cannot even remember his own report (to put the gentlest possible interpretation of these variances in words forward) we have an intervention from a tax accountant. One that I am not competent to evaluate of course but one which is absolutely fascinating:

However, Ritchie\’s real howler is where he claims, on p.11, that large companies pay an average tax rate of 22.2% as if this is evidence of wholesale avoidance.  Ritchie has used the tax payable figure of £47.7bn and compared this to average chargeable income of £226bn to get all frothy at the mouth about the iniquity of this effective tax rate of 21.1%.

But the HMRC figures show that the actual tax charge on those profits is in fact £65.5bn, for an effective tax rate of almost 29% – bang on what you would expect given a statutory rate for large companies of 30%.  This charge is then relieved by the provision of double tax relief on £16.8bn of the tax due, to reduce the actual amount payable to £47.7bn.

What the berk has done is ignore double tax relief altogether.  Double tax relief is an essential part of our tax system to keep it fair.  It ensures that companies that trade in one jurisdiction but are legally resident in another only pay tax on those profits once.  Basically the UK and another country come to an agreement to tax each other\’s companies to ensure that profits aren\’t taxed twice.

Ritchie\’s analysis needs to take account of double tax relief or, as he\’s capably shown, you end up with idiotic garbage as a result.

Now, it looks like he owes Gauke a big apology. And he\’d better go back to the drawing board, because his estimates of tax avoidance are now clearly several orders of magnitude too big.

Assuming this is correct then our international tax expert has managed to forget something really quite important. That corporation tax paid to Johnny Foreigner gets knocked off your corporation tax bill due to HMRC.

Something which, well, no, he didn\’t did he? Seriously? He did? Or not?

Yes, of course I believe Christie but can we get some independent verification? Has he really been banging on about this for all these years without noting this really rather important point? And the TUC has been paying for this \”research\”?

What say you?

I can help Ritchie here

Slightly technical but I can indeed help R. Murphy here.

He\’s made \”calculations\” of what the tax gap is.

HMRC, the naughty little boys, disagree with Richard as to the size of that tax gap.

He\’s got a nice little chart here.

Now, look at that chart. The boxes and so on.

OK, so HMRC count as part of the tax gap the second and third of the top four boxes.

General non-compliance and avoidance.

Richard (although he doesn\’t say so here) counts as the tax gap the second, third and fourth of the top four boxes.

Oh yes he does!

In the Missing Billions he looks at the headline tax rate and the actual tax rate. The difference between the two is the tax gap.

He makes no allowance at all for people making use of tax allowances exactly as Parliament intended.

Well, one allowance:

As a proportion this may be the highest gap of all. Much may be due to legitimate tax
planning, but by no means all is. Some, undoubtedly, is due to tax avoidance.

That is, in one sentence, he manages to point out that his entire calculations are wrong. The difference between the headline rate and the effective rate is not in fact a good guide to tax avoidance. It\’s a measure of the just and righteous use of allowances plus avoidance. Indeed, he implies himself that the majority of it is just and righteous (\”much\”).

And then, every time he returns, like a dog to its own vomit, he ignores his own observation. That he has not measured tax avoidance at all.

So, this is why his figures differ from those of HMRC. They are trying to measure tax avoidance. Richard is not trying to measure tax avoidance. Richard is trying to measure tax avoidance plus the just and righteous use of tax allowances: tax compliance in fact.

Well, if you ask different questions you\’re likely to get different answers, aren\’t you?

Yes, it\’s Ritchie again

We all know he wants us to invest our pension in Green Bonds. Green bonds that pay 3%.


Then there\’s this:

Planned inflation has to be part of the solution too. It is the only historically proven way to wash bad debt out of an economy. Which is why we need it at 4 to 5% now.

Rightie Ho.

The thing is, I really cannot see how those two can be combined with this:

People want fair pensions – not ones that decline in value.

Do you think Ritchie realises that if inflation is higher than interest rates then people lose money as they hold bonds?

Well, yes

Markets misprice: fact.

Just look at the fact that some enormously overpaid footballers have been humiliated over the last couple of weeks by a succession of teams staffed by people who are paid less.


English top flight clubs spent in excess of £1.32billion on employee salaries – more than Italy’s Serie A (£0.93bn), Spain’s La Liga (£800m), the Bundesliga (£684m) and France’s Lique 1 (£615m).

Not that I can see any direct link between club wage bills and national team success really.

On those vile cuts to the education budget

Our Man:

In other words, to achieve this goal is equivalent to increasing the school starting age to 11. That’s ludicrous.

But even more absurd is he idea that the teachers and teaching assistants who lose their jobs will have to then sit on the dole watching the children of this country go uneducated when there is nothing at all – I stress no reason whatsoever – why hey should not enjoy the education they deserve.

He\’s taken his data from this FT piece:

Under Labour, education became one of the fastest rising budgets in Whitehall. The budget has almost quadrupled since 2004, paying for a big expansion of teachers and the creation of teaching assistants.

A 25% cut in the current planned expenditure would mean that the budget would only be 3 times, rather than four times, what it was in 2004.

Now I\’m not a great fan of the current education system, this is true, nor of the one we had those 6 years ago to be honest.

But I am fairly sure that in 2004 kiddies still went to school around their fifth birthday, not their eleventh. So I\’m pretty sure that with three times the budget they\’d still be able to make plasticine snakes at 5 rather than 11.

Now there is an important point here, over and above the raggin\’onRitchie.

Whine about \”the cuts\” all you like: I\’ll start taking such whining seriously when y\’all start comparing the post cuts levels of spending to to the pre-spluge levels. Not only compare them to the levels left by the drunken sailor from Fife.

Actually, perhaps there\’s someone with greater data retrieval and charting skills than myself (shouldn\’t be tough).

Can we have a graph which shows spending levels from 97 to 2000 say, simply upgraded for inflation, through to 1012/3 or so? And on that same chart, see spending levels as they actually were and are planned to be after the cuts?

I don\’t actually know but I strongly suspect that….we\’ll find that planned expenditures for a couple of years ahead are pretty much on that straight line and actual expenditures will show a huge ballooning over it and then he cuts bringing it back down to the straight line.

In fact, here\’s a little start.


Note that this is real terms, adjusted for inflation to 2005-2006 levels.

The current proposals are that we chop something like £100 billion off that. Ignoring inflation from 2006 to today that means we\’re trying to get spending back down to about, umm, 2005 levels.

We\’re not, in fact, trying to have a bonfire of public services. We\’re just trying to reverse the past five years of drunken sailoring.

Ritchie\’s new gig

This is a nice little bit of, umm, well, I\’m not quite sure what to call it. Reverse astro-turfing? Product placement? Argument from authority?

Anyway, it\’s a nice little bit. Ritchie has, as us devotees know, got himself a column at Forbes.com.

As a U.K.-based accountant and economist

Well, yes, ahem…..

Now of course there is some cachet to being published in Forbes. One is basking in the reflected glow of such wonderful writers as Virginia Postrel for example.

And of course such cachet can be used, as the TUC\’s Touchstone blog does:

Further coverage included Richard Murphy on Forbes.com:

See that? It\’s not just Our Dickie, the man we employ, writing on some blog somewhere (or in one of the reports that we pay for) it\’s Mr. Murphy and he\’s in Forbes!

Isn\’t that special and important?

So, what actually is the business model at Forbes.com? Felix has a go at it here:

He’s right about this: Forbes is doomed if it thinks that running vast amounts of PR drivel (the flacks are already salivating) is any way of building a successful website.

What\’s that? PR drivel you say? And Felix also links to this at Techcrunch:

That Forbes.com will soon be opening its doors to 1000s of unpaid contributors….

Oh, so this isn\’t rigorously edited, carefully chosen, commentary then. This is for the \”look at me! I\’m in ur intertubes\” crowd.

There are almost not enough words to describe how wrong-headed this move is: Forbes’ online editorial standards are already in the toilet and Dvorkin has just yanked on the flush. Not only will this new breed of hacks add thousands of pages of self-promotional, unedited (Forbes simply doesn’t have the resources to monitor thousands of contributors) drivel to Forbes.com but….

Is he talking about someone we know?

But Ritchie will no doubt carry on writing there, some will apply greater weight to his maunderings because, hey, look, they\’re on Forbes and the rest of us, well, we\’ll still know that our Ritchie is special and important, won\’t we?

To borrow a phrase from the Septics, short bus special.

Oh dear

Something wrong with Ritchie\’s maths I think.

His estimates of the number that the baby eating Gideon will throw into the reserve army of the unemployed are based upon cash cuts from current cash spending.

When, of course, there are no cash cuts from current levels of spending. There are simply cuts in planned levels of spending in the future: actual cash spending (unadjusted for inflation to be sure) continues to rise.

I\’m sorry, but this does make me snigger

Over the next four years the top rate of corporation tax in the country will be reduced from 28% to 24%, only paid for in part by a small reduction in the investment allowances large businesses (in particular) enjoy.

Small companies will, at the same time, see a fall in their corporation tax rate from 21% to 20%.

However, all is not as it seems. In the TUC publication The Missing Billions published in 2008 we showed that the effective rate of corporation tax paid by large businesses in the UK was no more than 22%. Subsequent data from H M Revenue & Customs published on their own web site has confirmed this estimate as generous – they show an average rate of 21% and that some large companies pay much less.

Now, do we all recall how Ritchie got to his estimate of the tax gap (for of course this is Ritchie)?

Yes, we do: he said that the headline tax rate is x, the actual tax rate is y and the tax gap is x-y equals loadsamoney. But what he didn\’t include in his calculations was that Parliament deliberately puts all sorts of things into the tax code, things that it really rather wants companies to do. R&D gets a 125% tax allowance for example, there are all sorts of capital allowances, no doubt there are ones that I\’ve not even dreamt of. But Ritchie counted all of these entirely legitimate uses of allowances, companies actually doing what Parliament wanted them to do, as part of the tax gap.

So, what the government is doing is reducing those allowances and offsetting this in part by reducing the headline rate. The headline rate will therefore be closer to the actual rate. X-y equals lessthanloadsamoney.

In short, given the way that Ritchie calculates it, the Coalition has just ensured that the tax gap will shrink, just as Ritchie desires.

And yet he\’s complaining?

And I see that others have the same thought.

Ritchie on t\’budget

This gamble will fail. Give it three years and, as I predicted on Radio 2 today, we\’ll be seeing unemployment at 4 million, almost no cut in the deficit and the coalition government a distant memory after its chaotic disintegration as backbenchers fled its ranks. Furthermore, a new government will be announcing a budget to tackle the mess that George Osborne has left.

Well, there we go, a firm and testable prediction.

Shall we all come back 22 June 2013 and see how well Richard\’s knowledge of economics stands up?

Glory Be! Ritchie cannot even read!

So we have a new bank levy – to be charged on bank assets.

Err, no.

Plans for a global bank levy took a major step forward on Tuesday as the UK announced it would raise £2.5bn with a tax on bank balance sheets and the leaders of France and Germany called for the Group of 20 to reach international agreement on a similar tax……..The levy will have the secondary effect of encouraging banks to cut their reliance on short term funding – a major goal of global banking regulators – because wholesale funding of more than a year’s duration will be subject to a reduced rate of 0.02 percent, rising to 0.035 per cent, and tier 1 capital and retail deposits would be exempt.

We have a new bank levy – to be charged on bank liabilities.

Good grief, the man\’s an accountant and cannot even get which side of the balance sheet is which right.

Ritchie\’s found a new dupe

This time his same old report goes out under the banner of the Green Party, with Caroline Lucas headlining.

First up is the Green New Deal: they\’ve still not grasped that by making energy more expensive you destroy more jobs than you create in making energy more expensive. 2:1 according to that Spanish report.

Now the Spanish may or may not be right in their counting: but to, as the Green New Deal does in all its myriad appearances, claim that because a someone now has a job that nett jobs have been created is nonsense. We need to look at the effect upon unemployment of the rise in the cost of energy as well.

We also get a nice little chart about how the debt was brought down after WWII. With no mention of the budget surpluses that were run at the time: nor the inflation which ate into the debt. Tsk, tsk.

You\’ve already guessed that there\’s going to be the argument that pre 2007 spending was just fine and dandy, haven\’t you? It\’s revenue that\’s fallen off a cliff?

Entirely ignoring the point that to be properly Keynesian, back in 2007 and the years before, at the tippy toppy of a vast boom (the longest in our modern history) we should have been running huge budget surpluses. If you\’re a Keynesian that is. So that there was room for both fiscal expansion and also to take on the debt to pay for it.

A proper Keynesian would therefore place the blame with Brown….for not taxing enough or for spending too much (either way) in 2001-2007. A non-Keynesian might look at the same figures and simply blame Brown for pissing away all that money.

This is quite gorgeous:

The second step in this programme is to take
action to close down tax avoidance that exploits
loopholes in our tax system. In 2008 the TUC
estimated that there was £25 billion of tax
avoidance per annum in the UK. The figure has
been disputed – most recently by a coalition
government minister who on one hand claimed this
sum represented legitimate use of loopholes and
was not, therefore, avoidance and who then on the
other hand said the government was determined to
stamp out tax avoidance, leading to serious doubt
if he really understood what he was talking
aboutxvi. It has also been challenged by a Big 4
firm of accountants – but only because they said
that there really was no such thing as tax
avoidance at allxvii. We accept the TUC view that
there is serious tax avoidance in the tax system
– and that this is particularly problematic in
big corporate businesses. That is why many of the
legislative proposals to raise more tax noted
below are aimed at these issues.

That \”TUC reports that\” is in fact Ritchie himself making entirely absurd estimations of the amount of avoidance and evasion. He even says so himself in that very report: \”undoubtedly some of this is the result of legitimate uses of tax allowances\” or some such. And then goes on to insist that there\’s still that £25 billion missing.

And as to \”we accept the TUC view\” well of course you do. It\’s the same damn person writing both reports.

And guess what? We also get an echo of the report Ritchie wrote for PCS, the taxman\’s union. Yup, hire more union members!

But really, the very bestest is at the last. Here\’s their list of references:

The following documents are referenced in this report:
A Green New Deal, The Green New Deal group, New
Economics Foundation, London, 2008
The Cuts Won’t Work, The Green New Deal group, New
Economics Foundation, London, 2009
A Socially Just Path to Economic Recovery: TUC
Submission to 2009 Pre Budget Report, Trade Union
Congress, London, 2009
A Code of Conduct for Taxation Richard Murphy,
Association for Accountancy and Business Affairs and
Tax Justice Network, London, 2007
Country-by-Country Reporting: Holding Multinational
Corporations to Account Wherever They Are, Richard
Murphy, Task Force on Financial Integrity and Economic
Development, Washington, 2009
In Place of Cuts, George Irvin, Dave Byrne, Richard
Murphy, Howard Reed and Sally Ruane, Compass, London,

Information Exchange: what would help developing
countries now? Richard Murphy, Tax Research LLP,
London, 2009
Small Company Taxation in the UK: A review in the
aftermath of the ‘Arctic Systems’ Ruling, Richard
Murphy, Tax Research LLP, London, 2007
Stemming the Flood, Richard Murphy, Trade Union
Congress, London, 2009
Taxing Banks: A joint submission to the International
Monetary Fund, Richard Murphy, The Tax Justice
Network and others, London and Washington, 2010
Tax Justice and Jobs: The business case for investing
in staff at HM Revenue & Customs
Richard Murphy , Tax Research LLP for PCS, London,
The direct tax cost of tax havens to the UK Richard
Murphy , Tax Research LLP, London, 2009
The Missing Billions, Richard Murphy, Trade Union
Congress, London, 2008
The Robin Hood Tax, London, 2010

As far as I can tell, every single one of those reports was written by Richard Murphy. We\’ve not actually got any outside references at all: everything is built upon the Tower of Babble that the Great Man himself has been pumping out through various front groups over the past few years.

Every time one part of such a report is critiqued, critiqued to the point of being shown to be untrue, (as examples, the £25 billion lost to tax avoidance being an artefact of his refusing to recognise people doing what Parliament expressly wants them to do by using tax allowances, or his tax debts unpaid figure which includes all those people and companies which go bust and thus have no money to pay taxes, his highly entertaining idea that raising tax rates on the highly paid will lead to greater market labour being offered (no, really, he thinks, contrary to what all of the research shows, that raising tax rates on high earners will mean their wives go out to work), his even more entertaining idea that a rise in CGT will produce more revenue….when our historical experience is that revenue fell when Lawson raised it and only rose again when the rate was cut….well, you get the picture, eh?), this same falsity is then laid out as fact in the next report.

A fact which relies upon no one bothering with the errors in the first report for its veracity.

With that list of reports you can see the stilts upon which this nonsense is balanced.

For more detailed rebuttals of each of most of the points he makes in these varied reports (and thus a snatching away of those stilts he supports this latest nonsense upon) just have a search through the archives here for \”Ritchie\”, \”Richard Murphy\”, \”our favourite retired accountant \” and even the \”Ragging on Ritchie\” category.

Have fun.

Interesting claim by you know who

It has its own currency, so it’s not Greece, because if you have your own currency you can’t default.

(And Ritchie says in comments \”As an economist I know how limited the accountants view of the world is\” which is really rather amusing.)

So let us look at the modern bible of defaults: This Time is Different. (Yes, I did get my copy as a freebie from the publishers and yes, it is worth buying if this sort of thing is your bag.)

Modern defaults (ie, post gold standard, post Bretton Woods fixed exchange rates, only countries with their own currency).

Algeria 1991, Angloa 1985, Egypt, 1984, Kenya, 1994, 2000, Morocco, 1983m 1986, Nigeria, 1982, 1986, 1992,2001,2004, South Africa, 1985,1989,1993, Zambia, 1983, Zimbabwe 2000, Indonesia, 1998, 2000, 2002, Myanmar, 2002, Phillippines, 1983, Sri Lanka, 1980, 1982, Poland, 1981, Romania, 1981, 1986, Russia, 1991, 1998, Turkey, 1978,1982, Argentina, 1982, 1989, 2001, Bolivia, 1982, 1986, 1989, Brazil, 1983, Chile, 1983, Costa Rica, 1981, 1983, 1984, Dominican Republic, 1982, 2005, Ecuador, 1982, 1999, 2008 (that last doesn\’t count as they had dollarised, maybe the second doesn\’t either), Guatemala, 1986, 1989, Honduras, 1981, Mexico, 1982, Nicaragua, 1979, Peru, 1976, 1978, 1980, 1984, Uruguay, 1983, 1987, 1990, 2003, Venezuela, 1983,1990,1995,2004.

And that is just external default: there\’s a whole other chapter on episodes of default on domestic debt to go as well.

Sure, some of these are wars, repudiations, regime changes and so on.

However, I think we\’ll take \”if you have your own currency you can’t default\” as being not true then, shall we?

On the rich capturing the State

In other words profits rise when state spending rises, not vice versa. Cutting state spending now is likely to reduce profits, that’s what the evidence says…….But it is outright class warfare as the rich seek to capture the state for their own benefit.

Guess who says that cutting state spending so that profits fall is proof perfect of the rich capturing the State for their own benefit?

Only Ritchie could say this

The man\’s sure up on his British political history, ain\’t he?

Before the election it amazed me that some from the same Manchester School of economics- like Giles Wilkes of Centre Forum were being called “progressives”. He wasn’t – he’s now a ConDem adviser. The positions are simply irreconcilable – and I bet he’s loving every minute of all the cutting he’s no doubt relishing.

As I suspect Clegg is.

These people infiltrated the Lib Dems better than the Trots (thankfully) ever did Labour.


Sure, OK, disagree with Manchester and all that but to call adherents of Manchester Liberalism infiltrators into the Liberal Democratic Party is showing the historical awareness of a wet cod.

Our favourite retired accountant does know that Cobden and Bright were founders of both, no?

So says Ritchie

Look, I know I make fun of the man but there is a reason:

I am incredibly worried about the impact of debt on society. No one is free when in debt.

This is said by the man who insists that we should borrow more money (through the government) in order to have further fiscal expansion.

So, can we objectively say that he wishes to increase our debts so as to reduce our freedom?

Or would that just be me being this appalling neo-liberal type who asks for consistency?

And barbequed babies, of course, for everyone knows that neo-liberals insist upon those.

I would have left this snark there but of course Ritchie doesn\’t allow people like me to sully his blog any more.

Tant pis.