Perhaps the Senior Lecturer would care to comment?

Sam Jones

Comment:
O/T but amusing to see the Fair Tax Mark’s posterchild SSE succeed in litigation against HMRC for £200m of tax allowances.

https://www.accountingweb.co.uk/tax/business-tax/what-words-are-worth-for-capital-allowances

It shows how worthless the FTM is if a company with high value litigation and more than a decade of open tax audits can get one. I wonder if the FTM even knew about this or if they just pocketed the fee.

No, not really

And third, the money could be cancelled by way of tax if it is necessary to do so to control inflation. But this is possible because the spend will become someone’s income. And they will be taxed on it. And when they spend the net proceeds after tax the recipient of that spending will also be taxed, and so on, until the tax is recovered. So the spend pays for itself, eventually. But along the way it will create economic growth, redistribute income and wealth in society and reduce hardship. And all by simply letting money flow from the government and back to it, in due course.

If this were true then there would be no outstanding stock of debt from previous government spending. Yet there’s getting on for a couple of trillion of such government debt. Thus the argument don’t work, eh?

Or, alternatively, we could say that we’ve had inflation in the past, therefore government hasn’t been taxing enough. But then that would be to accuse the past of not enough austerity. Possibly an argument that Snippa wouldn’t agree with.

Empirical claims can be tested

And nor, when it comes down to it, will almost any one those who are well off enough to earn more than £80,000 a year flee the country, or even work less, as a result. First, most of those people are on contracts that do not vary pay with tax rates. Second, most people have no clue how much tax they pay. And third, most people work harder when they earn less if (as is true of many of those on high pay) they have fixed and very expensive commitments. The plan does, then, make sense. Inelastic behaviour will result in the higher taxes being settled with little issue arising.

The claim there is that the income effect is greater than the substitution at those high income levels. Which is an empirical claim, as such one that can be tested.

Ah, yes, we did, didn’t we? Ritchie’s wrong.

That’s interesting

But I do know is that the Cheif Rabbi’s friend Boris Johnson is a racist, homophobic, misogynist liar who supports a war waged by the most anti-Semitic state on earth.

Who actually is the most anti-semitic state on Earth? Hamas? Hezbollah? Germany still? Who?

Further, given Boris’ love for the laydeez entirely unsure that calling him misogynistic works. And the homophobia? What? After all, he’s hardly the only one who thinks Alan Duncan is a prat, is he?

Snigger

I asked how I had been selected. Purely on the basis of my telephone number, I was told.

I commented that the call had been one of very few now received on my landline, that my children never use, or answer.

I asked if all calls were to landlines. I was told they were. That is how they could determine they were reaching the right geographic area.

I asked if they realised that this also meant that their polling was very heavily biased towards those who are older, and so inherently more conservative. They are the people who have landlines now.

I got no response. But if this is normal, and I do not know that, no wonder polling is so unreliable. This poll was pre-selected to deliver a Tory bias.

Err, yes, that’s why no one ever does take raw polls seriously. The art is in adjusting the responses given for the known demographics of the sample as op[posed to the population. The reason being that people use polling to find out what is happening….

He really doesn’t understand economics in the slightest, does he?

What the cowardly state does is look at an issue, and then walk away from it, suggesting that whatever a government might do the market could do better. This is, of course, the logic inherent in microeconomic theory as taught to the vast majority of undergraduates who study that subject.

EH?

Microeconomics says that markets always do better than governments? That no intervention, no correction, of market activity can ever be useful?

Has he ever actually cracked open an economics book?

Here is the GCSE economics syllabus. Note, GCSE, not even A Level.

6. Market failure

There are only six sections in microeconomics. Market failure is thus one sixth of the microeconomics course.

Students explore the meaning of market failure and gain an understanding that the market mechanism does not always allocate resources efficiently. Students will explore the costs associated with misallocation of resources, and how government intervention can counter this.

One sixth of the GCSE microeconomics course. And yet Snippa perpetrates the nonsense that microeconomics teaches markets are always best?

It would actually be rather fun to impose a test on the Senior Lecturer. Could he, today and without further preparation, actually pass economics GCSE?

We must elect a new people

Ritchie’s rather Berlin in 1953:

So austerity, stagnant real wages, growing inequality, universal credit, no house building, the bedroom tax, a 15% decline in the exchange rate since 2016, public services in crisis and record levels of household debt that threaten the stability of his economy are matters on which he and his party are in denial even if they all happened as a result of their policy.

Objectively, most people are worse off now than in 2010. They have worse public services. They have more limited hopes if they can correctly appraise their prospects.

And the Tories are saying nothing at all about what they will do about any of this.

Instead the only talk is of Brexit.

But Brexit was unknown to almost anyone as an idea, let alone an objective, a decade ago.

The truth is that we must have a trade deal with our EU partners, come what may, and eventually will.

And the reality is that of the pressing issues facing this country Brexit comes immeasurably far behind the climate crisis, and yet Johnson is going to refuse to debate that issue.

Objectively, then, the Tories are running a dire campaign. And if opinion polls are anything like right they are winning.

Why is that? It can only be because of media manipulation.

Well, a plurality of the electorate do seem to think that Brexit is important, as the referendum result showed. But isn’t that lovely of Snippa? The people disagree with Snippa, therefore we need a new people.

Ignorance

And paying staff more is part of that necessary spending. Public sector employees have done very badly over the last decade and have seen their real pay fall significantly. You cannot supply decent public services on the back of underpaid and demotivated staff directed by politicians who continually tell them they are not worth what they’re paid when the public very clearly disagrees with that view.

Has public sector pay fallen – if it has ta all – by more or less than private sector pay over this past decade? Actually, by less. So, why should they get that more then?

Oh, does it now?

Charging for GP services leads to sub-optimal prescribing that’s bad for health

Interesting assertion.

It is widely known that excessive antibiotic prescribing is bad for patients, for populations and long term drug resistance that undermines public health. And yet it is prevalent in Jersey where the only really likely factor to explain the difference in prescribing is charging (and I have noted the other arguments in the article and think they are extraordinarily unlikely to be relevant across the population as a whole, to which this data relates).

Giving people a prescription to justify their fee is bad medicine, but all too easy to succumb to. Charging leads to bad medicine. It’s an easy, and in this case, very obviously correct conclusion.

But it keeps drug companies happy.

Hmm.

Once you’ve signed up with your insurance company Holland does not charge for a GP visit, Sweden does. Finland charges, the UK does not.

So, the contention that there’s a direct link seems refuted, no? But then, as we know, there’s no limit to what the Snippa doesn’t know about but will pronounce upon.

It’s remarkable how stupid the man can be

There is a shortage of government bonds – and the way to solve it is for governments to borrow

Hmm, the FT:

A wide variety of investors and corporations prize the highest-quality government bonds for their cash-like qualities — and the near certainty of getting their money back. This demand has grown since the financial crisis as central banks hoover up a hefty slice of bond markets under quantitative easing programmes.

So why’s there a shortage? Because the central banks have a stock of bonds through QE. So, what should we do? Issue more bonds so that the central banks have to buy more to keep interest rates low? Or, if we need more bonds, why don’t they sell off their QE bonds?

Or, even, how can we say there is a natural shortage of government bonds when we’ve that artificial, engineered, shortage from QE?

Someone has got something wrong here. And let me suggest it is the politicians. The reality is that the demand for government bonds is real, continuing and unlikely to dissipate for a long time, with QE as a back top if it ever does.

But QE is the cause of the shortage……

Why Spud’s so pissed with Ed Davey

Snippa’s really very annoyed with Ed Davey.

I could go on. But let me summarise instead. This is hard-core, right-wing neoliberal economic illiteracy. It manages to make George Osborne look left-wing. And it shows not the slightest understanding of economics, the role of government in society or the nature of money and its relationship to tax. It’s also callously indifferent to society, the role of government, all who work in it and all who are dependent upon it.

For all those who had, like me, considered voting LinDem for tactical reasons I do seriously wonder whether it might be time to think again. The idea that the LibDems should ever be trusted near government ever again does look to be in doubt once more, although I am aware that for many the doubt never went away.

Hmm. It’s about this speech. Which contains:

New laws to require a financial institution or large corporate to publish their multi-year strategy to move to net zero.

And there’s the cause of the ire. Ritchie’s carbon accounting network hasn’t even written a report yet. And already someone is solving the perceived problem. Meaning there’s no opportunity for a grant or two to suggest the policy that has already been adopted.

Shame really, eh?

Snippa’s got himself into a tangle here

It’s rather fun to see him not grasping his own points about MMT. Fun in that sense of someone trying to hit the nail and getting thumb:

The government should run a permanent spending surplus, the Liberal Democrats have said in a bid to position themselves as the toughest party on public finances.

Laying out the party’s economic pitch in a speech in Leeds, deputy leader Ed Davey insisted the Conservatives and Labour were offering “fantasies” which would wreck the public finances.

Sir Ed said that if they got into government, the Lib Dems would run a 1 per cent surplus on current spending – meaning that day-to-day costs of public services would be lower than the amount raised in taxes. He claimed a “Remain bonus” would help shore up state finances.

Borrowing would only be allowed to pay for capital investment projects judged by an independent watchdog to generate more money for the taxpayer than their initial cost.

OK, that’s Ed Davey’s claim about what the Lib Dems would do which is, apparently, horribly neoliberal:

First, it means that the government will perpetually reduce the UK’s money supply, because government spending creates that supply.

Umm, why? I anyone aware of any MMT injunction that says that it’s only current spending which increases that money supply? Does investment not do so as well?

For example, “investing” in better schools by raising teacher pay. Does this increase the money supply or not? And there’s not much in Keynesian thinking which says that the stimulatory effect of investment is lower than current spending. Almost the opposite in fact.

That guarantees either vulnerability to commercial banks, who will have to lend more to make good this deficit and so make the economy more unstable at a time when we know private debt is already dangerously high, or it means there will be credit squeezes.

Which is that getting the balls tangled in the mangle. Because if banks do create credit – they do – then we’re not reliant upon government spending for our money supply, are we? Or, if we want pendantry, then we’re relying upon government only for the narrow, base, money supply. M0, not M4. But if that’s true then a reduction in government spending doesn’t reduce the money supply, does it?

Second, it means that the government will run perpetual austerity.

No, that depends upon how much investment they’re going to do, doesn’t it? Government borrowing for investment is indeed expansionary, not contractionary.

Third, this means that what the LibDems are saying is that in the event of another crash resulting in reduced government revenue, as happened in 2008, they will cut all spending to balance the books,

Not necessarily, they might go and announce a massively expansionary investment program. Like, say, the Green New Deal.

Fourth, it means that spending policies – like the Green New Deal – would have to pass commercial viability tests, no doubt enforced by an unaccountable ‘great and good’ drawn from the ranks of commerce because politicians like the LibDems clearly do not have any confidence in their own judgement (which begs the question as to why we should when they don’t?), when such a criteria would clearly not be fit for this purpose.

How dare you ask whether my plan to piss everyone’s money up against the wall is worth it!

And it shows not the slightest understanding of economics, the role of government in society or the nature of money and its relationship to tax.

That’s about Ed or Snippa?

Well, yes, it is, it is

Ignorance when mixed with prejudice and wealth is a toxic combination

Which is why we should probably avoid analysis like this:

Let’s also ignore the fact that most wealth is utterly dependent on state support for its existence. Without copyright, patent and other now hopelessly biased and prejudiced intellectual property law much of this wealth would not have accumulated. Let’s also ignore then, as the FT does, that almost all this wealth results from market failure.

Intellectual property law is a response to a market failure. For, without property rights to IP, fewer than the optimal number of people would create less than an optimal amount of it.

We can, of course, echo Tonto and ask “Whose optimal, paleface?” but this is the underlying point being made.

It costs a lot to develop an idea, design, book. Once created and perfected it is trivially easy to copy. Thus those who would create are put off doing so by the difficulty of profiting from having done so. Thus we create, out of nothing, that IP. In order that people may profit, thus they have the incentive to create.

That is, IP law is a response to market failure. And if you don’t know that then you’re really not up with the basics of the subject under discussion.

But then Snippa…..

Declaring victory to be defeat

Regular real pay remains below its pre-crash levels.

OK.

Unemployment has fallen slightly

Well, actually it has more than halved but OK.

UK productivity growth has flatlined since 2008

Yep, and ain’t it great that the Thatcher Revolution worked?

So, what is it that happened in the early 80s? No, not how it happened or why, but what? Correct, recession and soaring, soaring, unemployment.

So, what happened in 2008 and onwards? Recession and rising, not soaring, unemployment.

The loss in output was about the same each time. But in the early 80s unemployment rate went up to 11.7% (according to FRED). In the 2010 sorta period to 8.11. Why?

Because of the changes in the structure of the British labour market. Everything was much, much, more flexible. Therefore a fall in output – which is what a fall in GDP is – led not to everyone being turfed out on their ear. Instead of 12% of the population moving to zero income the paid was spread more widely. Everyone got a delay in the rise of their income – unemployment rose less.

Unless you think we’ve killed the business cycle this is to be applauded. In the bad times everyone takes a little slap instead of a few taking the full hit.

Great eh? The signal of the victory of the Thatcherite labour market being exactly that unemployment didn’t rise so much because wages fell.

Low productivity growth simply being the same thing, labour usage hasn’t fallen as output does.

Of course, given that this is Spud here the the victory is being claimed as a defeat.

Senior Lecturer emeritus decides to do long term economic comparison without accounting for inflation

This is very good, very good indeed:

In that time according to the House of Commons Library net total government borrowing has been £1,618 billion: £155 billion of borrowing predated that period, most paying for WW2.

Of that sum 67.5%, or £1.092 billion was borrowed by the Tories. 32.5% or £526 billion was borrowed by Labour.

The Tories have been in office for longer, of course. Restated per year the Tories have borrowed £24.3 billion a year on average in historic prices.

Labour has borrowed £18.8 billion a year on average.

Labour repaid debt in 7 years. The Tories in just 4.

In current prices Labour has borrowed approximately £28 billion a year and the Tories £33.6 billion.

The Tories are always the party that borrows most.

Tories have been the most recent office holders. Money is worth less now than it used to be. Thus, without adjusting for inflation, we have no information here. Only partisan propaganda.

In an election where lies will play an important part in the messages some parties will deliver some facts will help. Start with these.

Well, yes, why don’t we start with facts.

We could even think about starting with an interesting question. If borrowing pays for itself through increased growth and thus tax revenues why is there a net debt?

Billionaires are a market failure now

Richard Murphy says:
November 13 2019 at 7:05 am
Hell no

Rational economics addressing the market failure that lets billionaires happen

One analysis has it that the annual consumer value of the simple existence of the google search engine is $18,000 per person per year.

Larry and Sergey have a few tens of $billions each as capital, not annual, sums.

There are 7 billion people in the world.

The Waltons, the children of Sam, have $150 billion in that one off stack of wealth. The existence of Walmart is said to produce an annual consumer benefit to US peeps alone of $260 billion a year.

Bill Nordhaus, the economics laureate a couple of years back, did a paper showing that entrepreneurs, on average, capture 3% of the total value created by their innovations.

I’m not seeing markets failing here, I’m seeing them work.

Language inflation

It’s a strange morning for politics. It’s time to reflect on the ultra-right of British politics in the form of the Brexit Party has announced its alignment with what is now the far-right in the form of the rump of the Tory Party

If we’ve already used far- and ultra- then what do we say about UKIP etc?

As to what he’s complaining about, it’s the idea that political parties might collaborate in order to gain the best effect.

You know, entirely unlike that progressive alliance of Lib Dems, Greens, PC and all that he was praising two days back.

As we all know, when you’re praising who is doing it, not what is being done, then you’re being a hack.

Fascinating

Charles Adams says:
November 10 2019 at 3:43 pm
Wow I was shocked by those wealth numbers and went away to read the ONS report which shocked me even more.

Private pensions must be the biggest financial deceit ever inflicted on the majority of citizens without them realising the injustice.

Over 5 trillion in private pension wealth with 50% owned by the top 10% of households. The bottom 40% with nothing. And those top 10% got their 2.5 trillion tax free! And there it sits invested in fossil fuel companies that spew carbon carbon that is increasingly disrupt the lives of those 40%.

I am sure you have called for this Richard but we really need to make sure that no pension funds can invest in direct polluters or at least to remove their tax break and fast.

Longer term we really need to look at a fair and ethical way to redress the inequality in private pension provision. For example, is there any good reason why the private pension gini should be allowed to be higher than the income gini? Tax policy could be used to engineer a democratically agreed distribution.

Reply
Richard Murphy says:
November 10 2019 at 5:43 pm
Charles

I see this as a big direction fo travel for my work – and am having meetings on possible academic tie-ups for it this week

Generally, I am moving away from tax. I will still use it but the research focus is moving to green / accounting / investment / capital allocation / decision criteria

After 7 academic papers this year (six approved, one in resubmission), five chapters and four working papers I seem popular as a research partner

Dop you ant to join in Charles? That Gini thinking is neat and could be developed into something quite neat

A social policy journal might like it. I have some stuff heading in tat direction right now

That last typo is just lovely.

But what’s truly gorgeous is how neither of them have woken up to lifecycle effects. Pensions wealth will be greatest at the moment of retirement. The young generally have saved little toward one, the old are spending it down.

So, what concentration of pensions wealth would we actually expect? That is, because people both age and save, what should the gini of the pensions distribution be?