[Closed] Economic Growth?*

And Elf is right - you are patronising and sneering

That's three in a week. Once again, chapeau!

I've offered you the opportunity to come and see the reality for yourself

Elf - what will he see if he come down to visit you? Deprivation? Poverty? I'm sure he knows these things are a problem.

I'm sure you will admit that the current political climate (as in, the one the electorate have voted for these last ooh, 30 years) is not particularly receptive to spending billions on social housing - which is a terrible shame imo but there you go. The lack of social housing provision and its associated issues goes way beyond the Olympics.

I don't know their plans for 'regeneration' in detail, but I'm not going to assume they'll fail because other plans in the past have. I'm not so pessimistic as to let it over-ride logic.

And Elf is right - you are patronising and sneering

I think he's been reasonable, but perhaps not quite reasonable enough - neither has Elf tbh, but I do not blame him for being passionate, in fact I admire him for it.

This has been an excellent thread for the neutral spectator.

I was pleased of the opportunity to explain some bits of what I do.

Funny you should say that really, because when I read it last night I thought "ah, so that's what he does". Up until then I thought you just spent all day pimping your barn and shooting stuff 😉

Always nice to read a thread where someone has some knowledge of the subject.

Tht truth hurt Flash? The evidence is there for all to see - the austerity package is making things worse. Growth down, deficit up, unemployment up. manufacturing down, exports down.

And Elf is right - you are patronising and sneering

TJ, is what you meant to say: "[b]In my opinion[/b] you are patronising and sneering" as opposed to stating it as some kinda fact?

When people dont understand things they fear and attack them.

this does happen, some over the top examples for you... racism, religion and homosexuality.

EDIT - your post above this comes across as patronising in my opinion TJ.

Up until then I thought you just spent all day pimping your barn and shooting stuff

Applauds 😆

Elfinsafety - Member
yap yap yap yap yap yap.....but I'm not holding my breath......yap yap yap

If only you would.

No, tJ, not my point. My point was that you're like a broken record. Go and ride your bike instead.

Here is one of the alternative takes on the olympics legacy

http://www.clubplan.org/cms/page.asp?org=2673&name=Olympics1

My point was that you're like a broken record.

Haven't you got a few thousand boxes of plastic-coated paperclips to move on? Staggering to hear you of all people accuse someone of sounding like a broken record.

Darcy, note how little, if at all, I get involved in this sort of thread these days. I was boring myself, let alone everyone else!

Need any more post-its? 🙂

Need any more post-its?

Only if you've got the new extra sticky ones 😉

CaptainFlashheart - Member

No, tJ, not my point. My point was that you're like a broken record. Go and ride your bike instead.

CaptainFlashheart - Member

Darcy, note how little, if at all, I get involved in this sort of thread these days. I was boring myself, let alone everyone else!

this is a good point which I accept

TandemJeremy - Member

Public sector borrowing has increased over the year. This month more money was borrowed that the same month last year - this is the cost of the austerity package. Its what every person with any sense knew would happen. Cuts at this point of the economic cycle mean increased government spending as tax receipts fall and unemployment rises.

These cuts are nothing to do with cutting the deficit - they are about politically motivated desire to reduce the public sector.

CaptainFlashheart - Member

Do you never get bored of it all, TJ?

If not, do you think you could for a while?

Yes TJ, don't you ever get bored with undermining the Tory Party's carefully crafted myth's, with your irritating and awkward facts ?

Tories like Flashheart find it most annoying and would much rather you stopped doing it. Specially when they themselves are completely incapable of providing any sort of argument to counter your claims, and rely so heavily on people being ignorant and misinformed.

And just for Zulu-Eleven, the archetype misinformer, from the newspaper for which his political guru Dan Hannan writes :

[url= http://www.telegraph.co.uk/finance/jobs/8634126/UK-unemployment-What-the-experts-say.html ]UK unemployment: What the experts say[/url]

Quote :

[i]"The jobs figures are getting "weaker" and pay growth remains muted, meaning unemployment is headed upwards, experts say."[/i]

If you are worried about [url= http://www.eurosurveillance.org/ViewArticle.aspx?ArticleId=19830 ]tuburculosis[/url] you need to look at prison conditions, the health of sex workere, testing of immigrants, the health of drug users and then possibly, housing. You need to look at the way people live rather than the places they live in.

Yes Britain needs social housing, it also needs greenbelt land freeing off and the breaking of the house builders' cartel that controls existing building land. "Quand le batiment va bien, tout va bien" (when building industry is doing well the economy does well). At present the sector is being strangled by a lack of reasdonably priced land due to greenbelt policy and the pattern of ownership (cartel).

Imposing environmental standards on property at sale would also bring down house prices, create jobs in renovation and reduce emissions. No doubt the renovation of some preoperty would not be viable and demolition and sale of the land would be the only option - renewal of the housing stock so desperately needed.

Again - unemployment has [b]not[/b] gone up TJ

Which somewhat shoots through your hyperbole!

Hello eveyone, glad to see we've all moved on after last weeks long dark teatime of the soul.

70 miles round Anglesey on Sunday, Nantille Ridge on Monday, 40 odd miles round the Llyn yesterday and off up Tryfan and the Glyders this morning.

Eggs for brekkie too.

Carry on!

Someone stole Stoner's forum glitchy bumpy multiple of fortiness.

I got up early and did a nice long-way-round commute up a couple of big hills. I'm starving now though and it's another 10 mins until the canteen's doing breakfast.

Still it could be worse, I could be arguing the toss to no end on a cycling forum...

Still it could be worse, I could be arguing the toss to no end on a cycling forum...

Puhleeeassse.

Don't let us stop you not being here. 🙂

I'm really starting to get concerned about some of you lot.

You are aware that its summer outside and the weathers lovely? I went out for a nice sunny, hilly jaunt on the road bike last night, then met my beloved for a couple of pints sat outside the pub. It was a really nice evening. 15 mile sunny commute this morning too. Smashing!

Could I respectfully suggest that maybe some of you need to get out a bit more 😉

You are aware that its summer outside....

It is? Grey and bits of rain here.

+1 wot binners said.

I'm off to Scotland soon to visit my ancestors, going to unplug from the Matrix for a couple of weeks.

It's hot as bu99ery here humid too. Just as well I'm in an aircontastic airport lounge with a frosty Asahi. 🙂

See? People are out there doing great things whilst you lot fling metaphorical excrement at each other.

It's sadder than my mum's funeral on here at times, it really is.

As a great man once said, 'It's not like you've been captured by Barbary Corsairs'.

Going back to the OP. Everyone seems to be of the opinion that government needs to spend to get out of this mess but the previous government pumped £200bn into the economy with QE to create a 1.2% growth. If the government was to do that now they would either have to do more QE and risk creating yet more inflation that is already hitting businesses and creating redundancies as well as joe public with their static income worth less with each price increase.
They could increase taxes on businesses and the rich. The rich will move their money else where. SME businesses that create a third of GDP and over half of the UK employment are struggling to make a profit as it is so it will have little effect on the treasury income but will increase redundancies as the previous 1% on Corporation and NI had already done so. Those businesses that start to make a loss then carry their losses back to previous years and reclaim some of their taxes paid in previous years. The treasury income starts to decrease but it has committed to projects to increase employment so must borrow the money and pay interest on it to fund them.
It's a difficult task that goes way beyond you balancing your bank account. I think we will have years of slow growth ahead of us but trying to spend our way of it is a short term fix creating longer term problems. If it was me I would be looking at changing the future industries of the UK away from retail to more hi-tech manufacturing creating tax breaks for those industries and subsidies for students studying those fields to create investment into the UK with a skilled workforce ready to call on. When the tax breaks end for these industries a percentage of their taxes should be earmarked for investment into new technolgy markets creating more investment into the country as the next wave of technology is realised.

As a great man once said, 'It's not like you've been captured by Barbary Corsairs'.

HMHB FTW! 😉

craigxxl - don't be coming around these parts with your thought-through, well-reasoned and rational posts!!! 😉

Summer? It's rained almost continuously for the last three days. Stopped now though!

I think all arguments about economics are summed up by this little gem:

[img] [/img]

Binners, Sorry I'll not do it again 🙁

They could increase taxes on businesses and the rich. The rich will move their money else where

Is there any evidence to show that the rich will move overseas if they are taxed more heavily? Perhaps the super-rich without businesses here will, but how can a doctor or an accountant or corporate lawyer up sticks away from their clients?

50% tax on the top slice of top incomes doesn't seem too much, especially as the richest 10% of earners are earning proportionally much more than the rest of us, than was the case 20 years ago.

Plenty of companies have moved their head offices to over countries that offer better tax rates cutting off our revenue stream. Gambling businesses moved to low rate tax havens and they now need a licence to operate in the UK which is much lower than the taxes we would have collected.

craig - and there are plenty of ways of dealing with that. We have very soft regulations and enforcement of tax avoidance / dodging. tighten up on that would stop a lot of this.

I dont want to pay any more tax and I'm not going to vote for it.

Is there any evidence to show that the rich will move overseas if they are taxed more heavily?

Did this not happen in the UK in the 70s? Brain drain?

When Lawson dropped the 60% top rate to 40% in 1988, the total tax take went up, and the share paid by higher-rate taxpayers actually increased as a result.

QE was having a positive effect on the economy, and there was always the option (Darling's 'trap door' oo-er) to cut should this not work. Slasher Osborne has taken a route with no way out, and it's not working. IMF research has also shown that cutting is bad for growth.

The IMF estimate that if other countries are cutting at the same time, if interest rates cannot fall and if the currency does not depreciate, then spending cuts of 1% of GDP subtract 2% from growth.

[url= http://duncanseconomicblog.wordpress.com/2011/02/15/the-dangers-of-spending-cuts-some-advice-from-the-imf/ ]The dangers of spending cuts[/url]

Importantly (and something you never hear about) our debt maturity profile is longer than almost every other developed country:

[url= http://duncanseconomicblog.wordpress.com/2011/04/07/britain-is-not-portugal-the-importance-of-debt-maturity/ ]The Importance of Debt Maturity[/url]

According to the Debt Management Office, the average maturity of UK sovereign debt is 14 years. In the US, it’s about four years. In France and Germany it’s six or seven. Greek debt has an average maturity of just under 8 years. As I mentioned yesterday, they have about 10% of their debt coming due in the next few months.

That makes an enormous difference to the amount of gilts we need to ask the debt markets to buy in a given year. It also means that even fairly large increases in funding costs will only have a gradual effect on the cost of servicing UK debt. That burden is still lower today, as a share of total spending, than it was for most of the 1980s and 1990s.

For Greece, debt servicing costs now account for just under 12% of GDP. In the UK, it’s costing less than 3% of GDP.

This means that while we have to get into more debt to fund the deficit, we have to refinance much less existing debt. The long debt profile means that less of the old debt is due each year so cutting to reduce the deficit in 5 years is farkin stupid from an economical point of view, but not from and ideological one...

The Adam Smith Institute stated in a 2010 report that "The 1997 Budget in Ireland halved the rate of taxation of realized capital gains from 40% to 20%. The then Minister for Finance, Charlie McCreevy, was heavily criticized on the grounds that this change would reduce revenues. He countered by predicting that revenues would rise substantially as a result of the lower tax rate. Revenues rose considerably, almost trebling in fact, and greatly exceeded official predictions."[24]

However: "[b]The effects of the credit bubble in the Republic of Ireland have not been included in this research,[/b]"

Dull as it might sound, I think the subject of tax rates is quite interesting 😳

Research, quantification and empirical data

A possible non-symmetric Laffer Curve with a maximum revenue point at around a 70% tax rate.
[edit]Research on revenue maximising tax rate
Economist Paul Pecorino argued in 1995 that the peak of the Laffer curve occurred at tax rates around 65%.[19] A 1996 study by Y. Hsing of the United States economy between 1959 and 1991 placed the revenue-maximizing tax rate (the point at which another marginal tax rate increase would decrease tax revenue) between 32.67% and 35.21%.[20] A 1981 empirical study published in the Journal of Political Economy found that the point of maximum tax revenue in Sweden in the 1970s would have been 70%.[21] A recent paper by Trabandt and Uhlig of the NBER found that the US and most European economies are on the left of the Laffer curve (in other words, that raising taxes would raise further revenue).[22] The New Palgrave Dictionary of Economics reports that for academic studies, the mid-range for the revenue maximizing rate is around 70%.[23]
However, a study by Teather and Young of the Adam Smith Institute using evidence from the Republic of Ireland has suggested that the optimal rate for capital gains tax, as opposed to income tax, may be around 20%, but this is at least partly due to savvy taxpayers holding onto assets in anticipation of tax rates being lowered in the future.[24] A 2007 study by the American Enterprise Institute, a right leaning think tank, found that the revenue maximizing rate for corporate taxes in OECD countries was about 26%, down from about 34% in the 1980s.[25]

http://en.wikipedia.org/wiki/Laffer_curve

[img] [/img]

Stoner, I find it hard to believe that all the different factors in different economies would mean they'd all follow that curve closely!

I've just had a lovely BBQ Pork Bun and some fried tofu noodles. Might have another beer now.

Indeed of course they dont.

That's a theoretical curve. And there's probably a curve for each tax in each country. If you read earlier in the article it refers to "infinite number of laffer curves".

The only real way of identifying a particular laffer curve is to experiment on the people and record what happens! 😉 hence why I quoted some empirical work.

Frankly, the issue of tax is a bit of a red herring particularly in the context of inequality of income. What is remarkable about income distribution in the UK is the fact that it has been so stable since the 1980's. Direct taxes have been broadly progressive but indirect taxes have worked in the opposite direction. Improvements in equality have tended to come from the benefits system - surely this can't be a good thing?

But anyone thinking that econ recovery is going to be quick will be mistaken and Ed Balls-up frankly needs to be told to STFU. The painful process of replacing excess government involvement in the economy with more sustainable private investment cannot happen overnight despite what any politician may claim.

The laffer curve vs reality:

[img] [/img]

[img] [/img]

[url= http://economistsview.typepad.com/economistsview/2007/07/yet-again-tax-c.html ]Tax cuts do not pay for themselves[/url]

[url= http://www.angrybearblog.com/2007/07/effective-corporate-tax-rates-for.html ]And more[/url]