UK National Debt Options

[Dominus]

whilst countries engaging in retrenchment contracted their GDP over the same time period.

Except that the countries who actually cut stuff aren't contracting.

Retrenchment removes cash from the economy, which has a recessionary influence. It stretched out NZ's experience of the Great Depression, and caused a recession as a result of the budget cuts in the 1991 that hit beneficiaries disproportionately.

In current times, note the effects of austerity on all of the Eurozone countries - particularly Portugal, Ireland, Spain and Greece. I wonder how many others there are?

[Roger Mellie]

British manufacturing went pretty much everywhere except Britain.

I guess the "magic of the marketplace" sent the jobs elsewhere.

Aye. I guess British workers don't want to be paid 50p/hour! Only thing like 5% of the workforce is employed in manufacturing sector now-- 50 years ago it was five times that many.

After de-industrialisation of 1980s, he went hi-tech; until Blair thought it was a good idea to outsource to India and other parts of Asia.

Britain still has some manufacturing, and there are signs of optimism. My region, the East Midlands, has seen an increase in manfacturing sector of late: Triumph, Caterpillar, Boots, Speedo, Players and Rolls Royce all have factories in the region (Raleigh still has some activity here too). Toyota plant has seen a large increase in production, owing to the Japanese tsunami, plus Siemens is moving to an expanded factory outside Lincoln and there's a ZF factory in E Mids too. Also there's been an increase in light manufacturing in the region.

This post has been edited by Roger Mellie: May 14 2013, 19:43

[Parsifal]

British manufacturing went pretty much everywhere except Britain.

I guess the "magic of the marketplace" sent the jobs elsewhere.

Aye. I guess British workers don't want to be paid 50p/hour! Only thing like 5% of the workforce is employed in manufacturing sector now-- 50 years ago it was five times that many.

Britain still has some manufacturing, and there are signs of optimism. My region, the East Midlands, has seen an increase in manfacturing sector of late: Triumph, Caterpillar, Boots, Speedo, Players and Rolls Royce all have factories in the region (Raleigh still has some activity here too). Toyota plant has seen a large increase in production, owing to the Japanese tsunami, plus Siemens is moving to an expanded factory outside Lincoln and there's a ZF factory in E Mids too. Also there's been an increase in light manufacturing in the region.

It's not just manufacturing. Millions of white collar jobs have been sent to places like India and China (call centers, help desk support, backoffice legal work, accounting, data processing, IT and computer science jobs). That includes jobs for high-end technology folks with masters and doctoral degrees. All thanks to technology advancements together with globalization. Is it any wonder that we have high unemployment in North America and Western Europe? If these people had jobs they would be paying taxes which would put a significant dent in the national debt.

[Roger Mellie]

True enough Parsy. It also doesn't help that workers in those countries are prepared to work for a lot less than the minimum wage here, near-as-dammit slave labour; keeps the "human resources" cost down for multi-nationals.

In addition reuglation and red-tape chokes buisnesses here.

This post has been edited by Roger Mellie: Jul 1 2012, 18:22

[Parsifal]

True enough Parsy. It also doesn't help that workers in those countries are prepared to work for a lot less than the minimum wage here, near-as-dammit slave labour; keeps the "human resources" cost down for multi-nationals.

Globalization is creating an equilibrium in wages between the "West" and the third world with real wages in the West going down faster than wages in the third world going up. Maybe there is justice in that, but so it is. The world is drifting toward one mega-plutocracy with multi-nationals out-muscling national governments.

[Roger Mellie]

Again true enough. That plutocracy will manifest itself in global governance, with a global tax system, and global laws-- people ought to understand this. (They would surely see the EU and our 'leaders' in a different light? Or maybe not!)

There's a difference between capitalism and corporatism...

This post has been edited by Roger Mellie: Jul 2 2012, 18:03

[Parsifal]

There's a difference between capitalism and corporatism...

Interesting point.

[Roger Mellie]

There's a difference between capitalism and corporatism...

Interesting point.

Glad you agree It's one lost on many anti-capitalist protestors, who are actually protesting against corporatism!

[sanitynotincluded]

whilst countries engaging in retrenchment contracted their GDP over the same time period.

Except that the countries who actually cut stuff aren't contracting.

Retrenchment removes cash from the economy, which has a recessionary influence. It stretched out NZ's experience of the Great Depression, and caused a recession as a result of the budget cuts in the 1991 that hit beneficiaries disproportionately.

In current times, note the effects of austerity on all of the Eurozone countries - particularly Portugal, Ireland, Spain and Greece. I wonder how many others there are?

The problem with this is that you are failing to distinguish between austerity via spending cuts and austerity via tax increases.

Spanish public spending is fractionally higher than in 2008, their austerity such as it is consisting of tax increases. (Perhaps a telling sign as to why they're doing even worse than the UK or USA.) The extent of Greek spending cuts is to go back to 2007 levels. Their austerity consisting primarily of fantasy and kidding themselves. Portuguese spending is marginally above 2008 levels in both nominal and real Euros, again their austerity consisted primarily of tax hikes, not actual cuts in spending. Irish government spending dipped in 2010, but barely below 2008 levels, and never even to 2007 levels, but in 2011 it was back up higher than ever before.

Your examples serve to demonstrate that tax hike driven austerity has shitty results, but then I never thought otherwise. Where governments have actually cut expenditure, they have performed much better (see estonia).

[Roger Mellie]

It's little wonder the Greek economy is screwed, if they insist on smashing plates after every meal.

[Dominus]

whilst countries engaging in retrenchment contracted their GDP over the same time period.

Except that the countries who actually cut stuff aren't contracting.

Retrenchment removes cash from the economy, which has a recessionary influence. It stretched out NZ's experience of the Great Depression, and caused a recession as a result of the budget cuts in the 1991 that hit beneficiaries disproportionately.

In current times, note the effects of austerity on all of the Eurozone countries - particularly Portugal, Ireland, Spain and Greece. I wonder how many others there are?

The problem with this is that you are failing to distinguish between austerity via spending cuts and austerity via tax increases.

Spanish public spending is fractionally higher than in 2008, their austerity such as it is consisting of tax increases. (Perhaps a telling sign as to why they're doing even worse than the UK or USA.) The extent of Greek spending cuts is to go back to 2007 levels. Their austerity consisting primarily of fantasy and kidding themselves. Portuguese spending is marginally above 2008 levels in both nominal and real Euros, again their austerity consisted primarily of tax hikes, not actual cuts in spending. Irish government spending dipped in 2010, but barely below 2008 levels, and never even to 2007 levels, but in 2011 it was back up higher than ever before.

Your examples serve to demonstrate that tax hike driven austerity has shitty results, but then I never thought otherwise. Where governments have actually cut expenditure, they have performed much better (see estonia).

You're being highly selective in the 'examples' you cite from my last post - pay attention to the fact that I cited New Zealand in the 1990s - austerity was solely from spending cuts and it provoked a recession.
Removing money from the economy has recessionary influence, whereas using money to stimulate demand inhibits recessions, and can even trigger growth in demand followed by growth in the economy.

One thing that has been said a great deal in southern hemisphere press commentary on the Euro-crisis has been the effect that tax dodging has had in Italy, Greece and to a lesser extent Spain and Portugal. Instead of merely increasing the taxes, these countries should be cracking down on tax cheats and making them pay their way. According to data I've seen, Italy would swing from the current deficits right into surpluses (c 120 Billion Euro) if they decreased the incidence of tax dodging by about half.

[sanitynotincluded]

You're being highly selective in the 'examples' you cite from my last post - pay attention to the fact that I cited New Zealand in the 1990s - austerity was solely from spending cuts and it provoked a recession.

Except that it didn't. New Zealand GDP moved into positive growth in 1991 and remained there until 2007-2008. I didn't include New Zealand, because the spending information wasn't easily accessible, but if you're hingeing your argument on New Zealand, then it is a fiction.

Removing money from the economy has recessionary influence, whereas using money to stimulate demand inhibits recessions, and can even trigger growth in demand followed by growth in the economy.

That accepts the fallacy that government spending is money into the economy while private spending is money taken out of the economy. In reality, governments spend money a lot less effectively than the private sector, and the money governments spend is sucked out of the productive sectors of the economy.

One thing that has been said a great deal in southern hemisphere press commentary on the Euro-crisis has been the effect that tax dodging has had in Italy, Greece and to a lesser extent Spain and Portugal. Instead of merely increasing the taxes, these countries should be cracking down on tax cheats and making them pay their way. According to data I've seen, Italy would swing from the current deficits right into surpluses (c 120 Billion Euro) if they decreased the incidence of tax dodging by about half.

The left wing media (and indeed politicians like Cameron) like to make a big deal about people "not paying their fair share" because it provides a smoke screen. Close down the options for people to legally contain their tax liabilities, and they just sit on their savings. Less jobs at the bottom and a contracting tax base are the result.

I've never understood why the left love the idea that taxing tobacco discourages smoking, that taxing petrol discourages driving and so on, but utterly reject the concept that taxing income discourages economic activity.

[Humpty Dumpty]

It's little wonder the Greek economy is screwed, if they insist on smashing plates after every meal.

Perhaps it is something the UK should adopt to bring prosperity back to the Potteries and Stoke-on-Trent!

[Roger Mellie]

Perhaps it is something the UK should adopt to bring prosperity back to the Potteries and Stoke-on-Trent!

Only way that would happen, is if British workers were happy to be paid as 'much' as their Chinese counterparts

[Parsifal]

Instead of merely increasing the taxes, these countries should be cracking down on tax cheats and making them pay their way.

Oh that will never happen. Increasing taxes usually puts the tax burden on the middle class while cracking down on tax cheats will cause the rich to pay more. Think of something else.

I've never understood why the left love the idea that taxing tobacco discourages smoking, that taxing petrol discourages driving and so on, but utterly reject the concept that taxing income discourages economic activity.

It's not hard to understand. You don't think that taxing tobacco reduces smoking and taxing petrol discourages driving? Petrol is MUCH cheaper in the US than in Europe and I don't doubt that Americans drive a lot more than Europeans do.
It's true that taxation has an inhibiting effect on everything except land. A tax on land is the only tax that will not inhibit economic activity because land is a necessary resource and it is in (very) limited supply.

As for taxing income it depends on which form of income you're taxing. It has been shown over and over again that taxing wages (real income) has an inhibiting effect (wage earners who need their wages to live on have less money to spend on consumer goods and services) while taxing unearned income (capital gains, dividends, interest, inheritance) has no such effect (just less money to park in Switzerland and the Cayman Islands). I agree though that taxing the latter may have a negative effect on the private jet and yacht industries.

The way it shakes out is like this:

The first thing that should be taxed is land. (Horrors!!!)
Then unearned income (capital gains, etc.)
The last thing that should be taxed, if at all, is wages.

Of course the system has been rigged to turn that upside down.

This post has been edited by Parsifal: Jul 14 2012, 02:28

[Dominus]

You're being highly selective in the 'examples' you cite from my last post - pay attention to the fact that I cited New Zealand in the 1990s - austerity was solely from spending cuts and it provoked a recession.

Except that it didn't. New Zealand GDP moved into positive growth in 1991 and remained there until 2007-2008. I didn't include New Zealand, because the spending information wasn't easily accessible, but if you're hingeing your argument on New Zealand, then it is a fiction.

You are indebted to your memory for your jests and your imagination for your facts. Unlike you, I use the New Zealand Department of Statistics data - they have economic data concerning GDP growth in excel spreadsheets accessible from here.
In 1989, GDP changed by -0.39%, in 1990, GDP changed by +0.85%, in 1991, the change was -0.59% and in 1992 the total change was -1.22%. Positive growth did not resume until 1993.

Removing money from the economy has recessionary influence, whereas using money to stimulate demand inhibits recessions, and can even trigger growth in demand followed by growth in the economy.

That accepts the fallacy that government spending is money into the economy while private spending is money taken out of the economy. In reality, governments spend money a lot less effectively than the private sector, and the money governments spend is sucked out of the productive sectors of the economy.

I made no mention of who removed the money - you made an assumption on that front. I stated that the removal of money is a recessionary influence - it decreases demand because there is less money available to purchase anything.
Retrenchment in either government or private sector can cause the problems.

One thing that has been said a great deal in southern hemisphere press commentary on the Euro-crisis has been the effect that tax dodging has had in Italy, Greece and to a lesser extent Spain and Portugal. Instead of merely increasing the taxes, these countries should be cracking down on tax cheats and making them pay their way. According to data I've seen, Italy would swing from the current deficits right into surpluses (c 120 Billion Euro) if they decreased the incidence of tax dodging by about half.

The left wing media (and indeed politicians like Cameron) like to make a big deal about people "not paying their fair share" because it provides a smoke screen. Close down the options for people to legally contain their tax liabilities, and they just sit on their savings. Less jobs at the bottom and a contracting tax base are the result.

Ignore the guff about paying of fair shares - pay attention to the fact that the respective legislatures pass laws concerning their tax rates - earn $x and pay a rate of y%. Enforce the payment of the specified rates and punish tax fraud. NZ does - our IRD went after the major banks who had been fiddling their taxes - and it won all the way through the courts and forced the banks to pay their tax bills in full, in accordance with the law.

Greece can go even further - cracking down on benefit fraud. Sure, if you're unemployed, I don't mind your gaining access to a benefit system. But I seriously object to dishonesty and fraud like that demonstrated by the residents of the Greek island of Zakynthos, where there are persons registered as being blind at a rate 10 times that of the rest of Europe - they have taxi drivers who are registered as blind!

I've never understood why the left love the idea that taxing tobacco discourages smoking, that taxing petrol discourages driving and so on, but utterly reject the concept that taxing income discourages economic activity.

It compares well with the right wing who believe that money in the government's hands hinders the economy, but by cutting taxes for the rich, the economy will transform and become more efficient. This the much touted 'trickle-down-effect' which has never worked - but right wingers still dream about.
Also it compares with the right wing idea that the private sector is more efficient than the government sector while blithely ignoring the fact that efficiency is a trade-off for something else - resilience.

[Parsifal]

You're being highly selective in the 'examples' you cite from my last post - pay attention to the fact that I cited New Zealand in the 1990s - austerity was solely from spending cuts and it provoked a recession.

Except that it didn't. New Zealand GDP moved into positive growth in 1991 and remained there until 2007-2008. I didn't include New Zealand, because the spending information wasn't easily accessible, but if you're hingeing your argument on New Zealand, then it is a fiction.

You are indebted to your memory for your jests and your imagination for your facts. Unlike you, I use the New Zealand Department of Statistics data - they have economic data concerning GDP growth in excel spreadsheets accessible from here.
In 1989, GDP changed by -0.39%, in 1990, GDP changed by +0.85%, in 1991, the change was -0.59% and in 1992 the total change was -1.22%. Positive growth did not resume until 1993.

Always take his "facts" with a grain of salt. They're usually fake.

Also it compares with the right wing idea that the private sector is more efficient than the government sector while blithely ignoring the fact that efficiency is a trade-off for something else - resilience.

Even Medicare, the government-run medical insurance plan for seniors, is more efficient than private insurance, which is partly why Republicans want to get rid of it.

[sexxiiijames]

It's sad and annoying what Labour did. Spend spend spend for years. This allowed people to get use to a way of life. Benefits were easily fiddled, new schools, new hospitals, new everything. Then came the crunch. The Conservatives are made to look like the baddies for stripping people of what they have, but it has to be done. You have to live within your means. This country borrows not far off of £200,000,000,000 A YEAR to pay for its luxuries that it cannot afford, outside all the revenue it has. Spending needs to be reigned in. It is and will be hard, but you can't continue the way we were.

[Roger Mellie]

You don't think that taxing tobacco reduces smoking and taxing petrol discourages driving? Petrol is MUCH cheaper in the US than in Europe and I don't doubt that Americans drive a lot more than Europeans do.

What's public-transport provision like in the USA though? In NYC you have your subway, and decent bus-service I imagine. Yet in some parts of the USA, you may have no choice but to drive, to go about your business. Say if you want to get from one end of Montana to the other, is there a high-speed train service that takes you there?

And at the risk of sounding like a stuck record, you are talking about Europe as if it's one homogeneous lump again. Which "Europeans" are you talking about here? In the Netherlands maybe, where cycling is a national hobby, well-used trams in larger towns and the country has a comprehensive cross-country high-speed rail network. In contrast Luxembourg and the Isle of Man have car-ownership rates that are on par with the USA. Go to rural Finland or Norway, and they drive just as much as their American rural counterparts. Yet fuel on Isle of Man and Norway is amongst the most expensive in Europe. Which leads me on to my next point...

Fuel prices vary across the continent too. One litre of diesel would cost you cost the equivalent of 1.20/litre in Hungary, in Norway this would be 1.75/litre (prices in worked out in Euros). E24.75 difference, if you were filling up a 45l tank from empty! Makes a difference, if you're doing say 10,000 miles a year. Although I suspect Hungary's price is still more expensive than the USA's? Plus different countries have different forms of vehicle tax beyond that (EG we have vehicle-excise duty in the UK, so-called "road fund" tax)

Also there's fuel consumption to factor in. I'm told by American friends, a 1.9-litre engine is considered 'small' over there? Someone over in the USA does 15,000 miles in a 4 litre 'gas-guzzlers'; then doing 15,000 miles in my 80mpg 1.9 TDI car, probably works out cheaper in terms of fuel bills!

Whether people are disuaded from using their cars: I think it has more to with whether there are alternatives. People will take the quickest, most convenient and cheapest way of getting from A to B; if that way is car, then people will drive, regardless of fuel tax. Having said that, you can end up with the golden goose effect. There comes a point if you put the tax up too high, then many people will give up driving altogether; so from the govt from having n people regularly supplying £x to treasury annually, it then goes down to £0. Thence it has a negative (in)direct effect on the rest of the economy.

This post has been edited by Roger Mellie: Jul 14 2012, 19:26

[Parsifal]

You don't think that taxing tobacco reduces smoking and taxing petrol discourages driving? Petrol is MUCH cheaper in the US than in Europe and I don't doubt that Americans drive a lot more than Europeans do.

What's public-transport provision like in the USA though? In NYC you have your subway, and decent bus-service I imagine. Yet in some parts of the USA, you may have no choice but to drive, to go about your business. Say if you want to get from one end of Montana to the other, is there a high-speed train service that takes you there?

Your understanding of the public transport system in the US is quite accurate. However, it appears that your understanding of the history and the politics behind it is probably non-existant.

It's a long and complex story so I'll try to give you the quick-notes version. Although the US is a vast country that spans a continent, certain very powerful industries in the US have been very successful in obstructing the development and expansion of good fast public transportation (short of air travel). First and foremost, of course, is the automobile industry. Ever heard of General Motors? The airlines as well. There are very strong political forces in the country pulling travelers to automobiles and air travel. Plus the US, I believe, has a far stronger sense of individual rights and is less egalitarian than most European countries. It's difficult to get Americans out of their cars.

Just to give you an idea of the kinds of things that have gone on in this country, back in the 1950s GM would buy municipal streetcar (tram) lines so they could rip them up and replace them with (air polluting) GM buses.

Part of the reason why Amtrak has such poor service (compared with many/most European railroads) is because Republicans in Congress like to submit a federal budget every year that they control the House with $0 allocated to Amtrak. The Democrats then vote the Amtrak budget back in.

Did you say something about high-speed train service? Not if the Republicans get their way. It currently takes 17 hours to go by rail from New York to Chicago. High-speed rail service at speeds like the TGV would get you there in 7 hours. New York to Chicago is a very lucrative and competitive airline route. With the nation's air traffic at close to full capacity and the flying experience near miserable (unless you fly first class) the country desperately needs better rail service. And the two cities are within driving distance too. Nope, the automobile and airline industries are too powerful. And that is part of the reason why gasoline/petrol taxes are so low here and thus the final price.

The California legislature last week past legislation (and approval of a bond sale) to build the first leg of a high-speed rail line between San Francisco and Los Angeles. Guess which party bitterly opposed it. Governor Brown had to do some serious lobbying (and probably horse trading) to get the bill passed.

So, Americans will seemingly forever be bound to their automobiles for transportation. Even in the Northeast Corridor (Washington, DC - New York - Boston) public transportation is nowhere near on a par with most (all?) of western Europe. It's not so much the distances that compel many (most?) Americans to travel by car. And yes, there is that too. Rather, it's been deliberately set up that way by some very powerful industries with the help of their enablers in Congress. (Campaign contributions never hurt. )

And at the risk of sounding like a stuck record, you are talking about Europe as if it's one homogeneous lump again. Which "Europeans" are you talking about here? In the Netherlands maybe, where cycling is a national hobby, well-used trams in larger towns and the country has a comprehensive cross-country high-speed rail network. In contrast Luxembourg and the Isle of Man have car-ownership rates that are on par with the USA. Go to rural Finland or Norway, and they drive just as much as their American rural counterparts. Yet fuel on Isle of Man and Norway is amongst the most expensive in Europe. Which leads me on to my next point...

You know full well that I understand the cultural and economic differences of the various Eurpean countries and will refer to "Europe" only when appropriate. So you can stop accusing me of talking about Europe as if it's one homogeneous lump. (And yes, it does make you sound like a stuck record. ) I believe that by saying that petrol is MUCH cheaper in the US than in Europe and I don't doubt that Americans drive a lot more than Europeans do I was accurate (minus one or two economically minor countries if at all - sanitynot likes to bring up Estonia a lot these days. ).

This post has been edited by Parsifal: Jul 15 2012, 01:03