Politics, politics, politics (so long and thanks for all the fish)

[Kompakted]

Even though the corporate tax rate has gone up to 25%, it is still (I believe - and feel to correct me because I could well be wrong) the lowest corporate tax rate of all the G7 countries? Put it this way, I'll bet there's a few extra bob down the back of that sofa!

Its not particularly helpful to compare the UK with other G7 economies as our economic structure is actually very different. C. 95% of UK registered businesses (off top of my head) are in the SME category and dominated by service sector. The really large corporate sectors in the UK, e.g. banking and energy have had windfall type taxes imposed on top of corporation tax rate. I'd also add that corporation tax is very sensitive to laffer type principles in that lower rates of corporation tax can attract foreign investment, assets and jobs which increase not only the actual end take from corporation tax itself but other tax takes like income tax and VAT. If you look at economic growth rate of countries like Luxembourg for example it's often off the chart compared to countries like the UK and Germsny and that's because these countries will have a tonne of economic activity generated in the UK or Germany but reported financially in Lux for tax purposes.

 

[Mikey10]

I imagine the way the new government have started if the tories stop eating themselves, make a sensible leadership choice and do some sort of deal with Farage that huge labour majority could well evaporate at the next election. I'm actually quite surprised. Most business leaders were looking forward to a change of government but that good will has largely evaporated. The overly negative tone and outlook has impacted the growing economy confidence.

I get that it was tempting to maximise blame on the outgoing government for hard economic yards that remain post-covid and in the current geo-political environment, but claiming there was this hugely unexpected black hole in uk government spending when pretty much every economist has been pointing to it in at least broad terms for the best part of a year makes them look like amateurs because they've overegged it to the point where the markets actually believe Reeves and Co are genuinely shocked at what they've got to deal with rather than politicking. Similarly, most of us expected Labour to abandon their "fiscal rules" once in power similarly to how Starmer threw out his socialist manifesto he sold to Labour members as soon as he got the top job.

Currently there's no sign of that and even Starmer today in his "sausage" speech was talking about fully costed budgets being a hard rule when no country on this planet runs a fully costed budget.

We shall have to see.....they're still learning clearly.

The Tories were still blaming Labour for their financial inheritance 14 years after being in government, so it’s hardly surprising that Labour (which has inherited an infinitely worse economy) is still referencing the Tories’ mess less than 3 months into their government.

The grown-ups are in charge now. It’s not going to happen overnight, but I am convinced they will make the country a better place. They are getting on with things at quite a pace, which is heartening. They’ll make mistakes, for sure; that comes with the territory. But this time in three or four years we’ll see public services in a much better place, a country which is kinder in its outlook, and which has regained some of its respect on the international stage.

 

[Mikey10]

Our leaders speech


1) fudge the pensioners
2) 14 years blah blah
3) You’re all far right thugs, unless you’re Muslim
4) 22BN hole that we can’t prove
5) Release the Sausages.

What an inspiration.

1) With the triple lock, the average pensioner will see their pension rise significantly next year. Inflation is not at the level it was and so prices will not rise at the rate they have been. Everyone is having to take a hit thanks to Cameron, Johnson and Truss. Unfortunately pensioners aren’t immune from that.
2) Despite what populists like Farage say, it’s impossible to change overnight the deep-rooted structural problems caused by the after-effects of the failed policies of austerity and Brexit. So the disaster of the last 14 years is, unfortunately, going to leave a mark on our future for a few years to come.
3) The issues with immigration (both legal and illegal) were addressed and the beginnings of a sensible path forward marked out, thankfully without the overtly racist tones used by the last governments.
4) It’s widely recognised (by the OBS amongst others) that the last government’s figures simply don’t add up. Most agree that the deficit in their calculations is around £20 billion.
5) Wow! People do still read The Daily Mail website and think what is there constitutes news. Astonishing.

 

[Rorschach]

The problem with this kind of aggressive taxation approach is that when you're that aggressive you'll get avoidance and it's not that difficult to avoid tax if you're wealthy and can afford good lawyers and accountants. For example to avoid wealth taxes you simply don't own assets yourself but have assets owned by companies or trusts with an underlying contractual agreement that you have use of the asset and overriding voting rights over the trust or company in question.

Now you can clamp down on these schemes but that means these structures aren't available for non tax avoidance economc activity and ultimately we get back to the fact that if you want to aggressively tax and aggressively enforce taxation you need to limit freedoms and impose stare surveillance of private assets - which is why so many aggressively socialist governments become authoritarian.

If you want a free society and free markets you have to accept that some people will do better than others and some people will do particularly exceptionally well for themselves.

Tell me about it. This is my job.

To be clear though I don't want free markets. I want the end of capitalism.

 

[SpurMeUp]

What is the difference between UBI and paying people who are out of work? Isn’t it just guaranteeing people doll money?

Are people happier and more productive in work or not working?

What have we learned from state run economies over the past 100 years?

@Rorschach I like the premise, how do you define capitalism and end it?

Can we agree that Brexit is costing the UK? @Kompakted we might be paying the NHS more money post Brexit but the national debt and need to balance the books is stark.

Lol at those who have listened to pod casts that find a measure abhorrent. Blaming GDP for economic woes, is akin to blaming Degrees Celsius for climate change.

The reality of government run organisations is almost always waste and inefficiency. Not just in the UK. I don’t think the NHS is as bad as many make out, it is probably one of the better government run organisations. But there isn’t a doubt that privately run companies are more efficient and use resources more effectively. Which begs the question: why can’t nationally owned organisations be setup to run like private entities? They can. And in France for example such companies exist generating revenue for the tax payer.

 

[thfcsteff]

I don't personally like the public/private debate in relation to anything.

In healthcare the comparison is always (and perhaps understandably) made with America. During Covid pandemic, the performance of our health & social care system was compared unfavourably with particularly the German, Japanese and South Korean systems. But of course none of those three countries operate a free-at-the point of service universal system. They do all supplement their essentially private health & social care systems with state-backed safety net for those that need it and all three offer consistently better health & social care outcomes than we receive in the UK.

I don't have an aversion to public ownership, of for example, utilities or rail, but as a child of the 80s with Scottish mother and London the constant trips to see family using British rail and memories of constant power cuts growing up tell me that public ownership isn't a panacea to fix all problems.

The important thing for me isn't ownership or sector, it's how do we deliver good outcomes.

On public sector pay, we need to talk about the elephant in the room: pensions. Public sector pensions are defined benefit schemes underwritten by the government. So if you pay nurses £73K a year you are committing to underwriting what will likely be hugely significant scheme shortfalls for what will end up being millions of people (when we say there are 800K nurses in the UK obviously this is a revolving conveyor belt of people moving in and out of these posts and picking up pension entitlements as they go).

So the cost of paying a nurse £73K a year to the NHS is an order of magnitude higher than the cost of a private sector employer paying someone the same wage.

I don't believe the alternatives you've put forward are a different system they are all possible in the current "system" and as per reference to BR, public owned utilities etc, have all been in place in previous decades.

I appreciate the careful and detailed response.
I'm sure this conversation will continue.

To briefly answer the British Rail topic/public ownership panaceas...again, I agree, there are no panaceas of that nature today. I would say that as the 80s progressed, there was an increasing lack of funding due to the wishes of the incumbents at the time to take it out of nationalized hands/industry.

One other thing to note is that I agree with your last sentence; you're right. The question is whether we will see the likes of any of that again? My feeling is we won't.

 

[Gutter Boy]

What is the difference between UBI and paying people who are out of work? Isn’t it just guaranteeing people doll money?

Are people happier and more productive in work or not working?

What have we learned from state run economies over the past 100 years?

@Rorschach I like the premise, how do you define capitalism and end it?

Can we agree that Brexit is costing the UK? @Kompakted we might be paying the NHS more money post Brexit but the national debt and need to balance the books is stark.

Lol at those who have listened to pod casts that find a measure abhorrent. Blaming GDP for economic woes, is akin to blaming Degrees Celsius for climate change.

The reality of government run organisations is almost always waste and inefficiency. Not just in the UK. I don’t think the NHS is as bad as many make out, it is probably one of the better government run organisations. But there isn’t a doubt that privately run companies are more efficient and use resources more effectively. Which begs the question: why can’t nationally owned organisations be setup to run like private entities? They can. And in France for example such companies exist generating revenue for the tax payer.

The different to dole is 1) its slightly larger - enough to cover accomodation, food and fuel.

And 2) its available to everyone all the time. That means everyone has the ability to be able to not work, but continue living e.g. when they have pre-school children, other caring responsibilities, want to walk out of an abusive relationship, their employers are being exploitative, or they want to do something unpaid in arts/culture/community work that otherwise doesn't pay

 

[SpurMeUp]

The different to dole is 1) its slightly larger - enough to cover accomodation, food and fuel.

And 2) its available to everyone all the time. That means everyone has the ability to be able to not work, but continue working e.g. when they have pre-school children, other caring responsibilities, want to walk out of an abusive relationship, their employers are being exploitative, or they want to do something unpaid in arts/culture/community work that otherwise doesn't pay

It would probably disincentivise working to some degree then, if it covered living expenses. Would that be a good thing?

 

[Kompakted]

Tell me about it. This is my job.

To be clear though I don't want free markets. I want the end of capitalism.

Capitalism means the private ownership of capital. Nothing more nothing less. I know it's taken on a wider negative association in some circles but what you're advocating for there isn't just an end to corporate fat cats but an end to personal and individual financial freedom. You know we don't actually live in a capitalist country, the UK has a mixed-market economy and it's largest employer is the NHS. It may not be perfect but free market capitalism has lifted swathes out of poverty, ended the rigid class system (where the wealthy were all inherited peers) and ultimately ended state-to-state conflict in the developed world.

 

[Kompakted]

The Tories were still blaming Labour for their financial inheritance 14 years after being in government, so it’s hardly surprising that Labour (which has inherited an infinitely worse economy) is still referencing the Tories’ mess less than 3 months into their government.

The grown-ups are in charge now. It’s not going to happen overnight, but I am convinced they will make the country a better place. They are getting on with things at quite a pace, which is heartening. They’ll make mistakes, for sure; that comes with the territory. But this time in three or four years we’ll see public services in a much better place, a country which is kinder in its outlook, and which has regained some of its respect on the international stage.

Labour haven't inherited an infinitely worse economy, that's the point. There was a lot of market confidence in the UK with the change of government. A feeling that actually, the underlying structural foundations of the UK economy are very sound: very high employment, a stable and buoyant property market, significant domestic and foreign business investment, thriving tech and service sectors and with brexit done with, the SNP collapse seemingly ending any significant debate about Scottish independence and the change in Westminster government, the UK was genuinely seen as a beacon of potential stability and economc growth in an otherwise uncertain and flat-lining developed world.

That might still happen, but the new government has surprised many with their negativity and growth and investment has slowed as a result. As we've seen with Liz Truss, it's sometimes not actually the soundness of your economic arguments that matter, but market confidence in them. Labour are in danger of engineering a feeling of negativity in the UK that may actually create some of the economic stagnation they claim they inherited.

The financial crash in 2008 was just that, a complete crash of the economy. Banks running out of money, businesses going bust left right and centre and Homes being repossessed and people being kicked out of the street as bank administrators recalled loan after loan. The government bailout to end all bailouts.

The situation inherited in 2010 was genuinely dreadful and we still haven't recovered. The government still have stakes in some banks. The government still own and operate UKAR, which is a government owned scheme managing all the bad assets from the likes of Northern Rock, Bradford & Bingley and the Halifax that none of the solvent banks wanted to take on.

Let's talk about interest rates. Interest rates have remained flatlined ever since the crash and it's only the recent inflationary pressures that have created the conditions for a stabilisation back up to anywhere near like historically normal levels. And yes, low interest rates have been great for borrowers, but as the years have crept on, we've been storing up a pensions crisis for the future as savings growth has been negligible for getting on 15 years now. Pension schemes have had to invest in far more volatile assets than traditionally and people have lost chunks as a result.

The scars of the financial crash and the resulting austerity measures are still very much visible. 2010 was the worse peace-time economc inheritance ever left by a departing government in this country. The legacy of the decisions taken over Iraq and Afganistan meant it was also one of the worst geo-political inheritances also. It's a reason why Blair and Brown are deeply unpopular.

 

[SpurMeUp]

Labour haven't inherited an infinitely worse economy, that's the point. There was a lot of market confidence in the UK with the change of government. A feeling that actually, the underlying structural foundations of the UK economy are very sound: very high employment, a stable and buoyant property market, significant domestic and foreign business investment, thriving tech and service sectors and with brexit done with, the SNP collapse seemingly ending any significant debate about Scottish independence and the change in Westminster government, the UK was genuinely seen as a beacon of potential stability and economc growth in an otherwise uncertain and flat-lining developed world.

That might still happen, but the new government has surprised many with their negativity and growth and investment has slowed as a result. As we've seen with Liz Truss, it's sometimes not actually the soundness of your economic arguments that matter, but market confidence in them. Labour are in danger of engineering a feeling of negativity in the UK that may actually create some of the economic stagnation they claim they inherited.

The financial crash in 2008 was just that, a complete crash of the economy. Banks running out of money, businesses going bust left right and centre and Homes being repossessed and people being kicked out of the street as bank administrators recalled loan after loan. The government bailout to end all bailouts.

The situation inherited in 2010 was genuinely dreadful and we still haven't recovered. The government still have stakes in some banks. The government still own and operate UKAR, which is a government owned scheme managing all the bad assets from the likes of Northern Rock, Bradford & Bingley and the Halifax that none of the solvent banks wanted to take on.

Let's talk about interest rates. Interest rates have remained flatlined ever since the crash and it's only the recent inflationary pressures that have created the conditions for a stabilisation back up to anywhere near like historically normal levels. And yes, low interest rates have been great for borrowers, but as the years have crept on, we've been storing up a pensions crisis for the future as savings growth has been negligible for getting on 15 years now. Pension schemes have had to invest in far more volatile assets than traditionally and people have lost chunks as a result.

The scars of the financial crash and the resulting austerity measures are still very much visible. 2010 was the worse peace-time economc inheritance ever left by a departing government in this country. The legacy of the decisions taken over Iraq and Afganistan meant it was also one of the worst geo-political inheritances also. It's a reason why Blair and Brown are deeply unpopular.

I would also point the finger at the right-wing press and commentators for the negativity. Can you appreciate the irony of being so negative on the current government, whilst criticising them for being so negative!?

 

[Gutter Boy]

It would probably disincentivise working to some degree then, if it covered living expenses. Would that be a good thing?

Probably. For most of human history, we've worked an average of about 17 hours a week. The post-industrial 35/40 hours thing is an anomaly. So it would probably tip things back to 'normal'.

Very few would do nothing and thereby have no luxuries.

It would also be recognising all the unpaid work we all currently do - childcare, other care, creative work, sports/youth/community coaching etc.

 

[Kompakted]

What is the difference between UBI and paying people who are out of work? Isn’t it just guaranteeing people doll money?

Are people happier and more productive in work or not working?

What have we learned from state run economies over the past 100 years?

@Rorschach I like the premise, how do you define capitalism and end it?

Can we agree that Brexit is costing the UK? @Kompakted we might be paying the NHS more money post Brexit but the national debt and need to balance the books is stark.

Lol at those who have listened to pod casts that find a measure abhorrent. Blaming GDP for economic woes, is akin to blaming Degrees Celsius for climate change.

The reality of government run organisations is almost always waste and inefficiency. Not just in the UK. I don’t think the NHS is as bad as many make out, it is probably one of the better government run organisations. But there isn’t a doubt that privately run companies are more efficient and use resources more effectively. Which begs the question: why can’t nationally owned organisations be setup to run like private entities? They can. And in France for example such companies exist generating revenue for the tax payer.

I didn't really want to get into any debate on brexit but compared to the claims made on both sides of those that have a strong view (the negative impact claimed by "remainers" and the positives claimed by "leavers") the most remarkable thing for me about brexit is how little impact there has been. There's not a single headline economic metric I can think of that hasn't just kept following pre-brexit debate and global trends as though nothing happened.

If you want to get into downsides, I think the Truss mini budget showed how an isolated economy can be negatively priced rapidly by markets without the safety net of being part of a wider structure. The German government announced a similar economic package to Truss around the same time and while there was some brief volatility in German bond and pension markets and an increase in interest rates it wasn't as stark as in the UK and settled more rapidly. Although whether that's a brexit factor or a Truss personality/confidence factor is open to debate. Market pricing returned fairly rapidly to normal following Hunt's appointment for example but I do suspect there could be some greater underlying volatility potential in the UK economy in that UK government interventions are not smoothed out by the overarching influence of EU structures.

Generally in the EU directives are issued and memberstates have years to implement them and so you're able to broadly predict what every major European economy was going to do regardless of who was voted into power - as they'd ultimately be beholden to EU law - something that can be seen as a positive or a negative based on your point of view, which is the brexit debate in a nutshell.

 

[Kompakted]

I would also point the finger at the right-wing press and commentators for the negativity. Can you appreciate the irony of being so negative on the current government, whilst criticising them for being so negative!?

The press across the board are responsible (or irresponsible) to a significant degree. Rewinding back to the financial crash, in the UK it the run on Northern Rock was kicked off by a press article which sparked public panic and had people kept their deposits in the bank it might have survived and it might not have kicked off the mass panic that caused the wobble to turn into a full blown crisis.

 

[Rorschach]

Capitalism means the private ownership of capital. Nothing more nothing less. I know it's taken on a wider negative association in some circles but what you're advocating for there isn't just an end to corporate fat cats but an end to personal and individual financial freedom. You know we don't actually live in a capitalist country, the UK has a mixed-market economy and it's largest employer is the NHS. It may not be perfect but free market capitalism has lifted swathes out of poverty, ended the rigid class system (where the wealthy were all inherited peers) and ultimately ended state-to-state conflict in the developed world.

That is a rather benign view of capitalism that I wouldn't share but we'll have to put a pin in that until I get new computer and can respond at length.

Whatever your view on it capitalism by its inherent nature must have perpetual expansion. It must have an ever-increasing production of commodified goods, whether we need them or not. To succeed at this it requires an ever increasing quantity of inputs, namely labour and nature, or the cheapening of these inputs. To date this mostly meant taking these from the global south but we have reached the limit on this colonial exercise too. We have run out of roadway a long time back and have overshot the capacity of the planet to sustain this expansionist system. We are headed for a fall whether we like it or not.

 

[Kompakted]

Just on the grown ups being in charge now - that was also the hope across the board, that Labour did finally represent a set of grown ups taking office seriously. I'm afraid that the impression from public to business is currently a collective head in hands as all the stories about lord Ali being given a free pass to parliament after throwing money and favours around the labour top table, the donation declaration rows, Starmer and his wife doing a round trip of corporate boxes on the take - it is absolutely extraordinary in my view that having attempted to distance themselves so drastically from the tory shambles of the last few years they've got into office and allowed a complete circus act to develop immediately. You really couldn't make it up.

 

[SpurMeUp]

That is a rather benign view of capitalism that I wouldn't share but we'll have to put a pin in that until I get new computer and can respond at length.

Whatever your view on it capitalism by its inherint nature must have perpetual expansion. It must have an ever-increasing production of commodified goods, whether we need them or not. To succeed at this it requires an ever increasing quanity of inputs, namely labour and nature, or the cheapening of these inputs. To date this mostly meant taking these from the global south but we have reached the limit on this colonial exercise too. We have run out of roadway a long time back and have overshot the capacity of the planet to sustain this expansionist system. We are headed for a fall whether we like it or not.

This a Marxist premise from all the way back in 1848! My question to you is, where do we freeze human expansion? Would you have stopped our quest for growth and development in the eighteen hundreds? Or mid-twentieth century or now? Would you want to freeze human growth (in the biggest sense) now, when we are so polluting? Don't we need to innovate, develop and change now more than ever?

Shouldn't the narrative be about expansion into the appropriate areas? About harnessing our existing structures of eduction, commerce, innovation, and knowledge sharing but in the appropriate direction? We don't want to shut down growth, but direct it better.

 

[markysimmo]

Just on the grown ups being in charge now - that was also the hope across the board, that Labour did finally represent a set of grown ups taking office seriously. I'm afraid that the impression from public to business is currently a collective head in hands as all the stories about lord Ali being given a free pass to parliament after throwing money and favours around the labour top table, the donation declaration rows, Starmer and his wife doing a round trip of corporate boxes on the take - it is absolutely extraordinary in my view that having attempted to distance themselves so drastically from the tory shambles of the last few years they've got into office and allowed a complete circus act to develop immediately. You really couldn't make it up.

Obvious to me it would happen as they are all as bad as each other

 

[Gutter Boy]

This a Marxist premise from all the way back in 1848! My question to you is, where do we freeze human expansion? Would you have stopped our quest for growth and development in the eighteen hundreds? Or mid-twentieth century or now? Would you want to freeze human growth (in the biggest sense) now, when we are so polluting? Don't we need to innovate, develop and change now more than ever?

Shouldn't the narrative be about expansion into the appropriate areas? About harnessing our existing structures of eduction, commerce, innovation, and knowledge sharing but in the appropriate direction? We don't want to shut down growth, but direct it better.

We're currently consuming what it would take 1.6 earths to sustain. If everyone lived at western levels, we'd need 8 earths.

Degrowth is the only solution, unless we can quickly find 7 spare planets to take over and colonise for their resources.

We need to prioritise happiness, quality of life and time as our collective ambitions; not profit, consumption and how quickly we can burn dinosaurs

 

[SpurMeUp]

We're currently consuming what it would take 1.6 earths to sustain. If everyone lived at western levels, we'd need 8 earths.

Degrowth is the only solution, unless we can quickly find 7 spare planets to take over and colonise for their resources.

Give exact examples of degrowth, not just sound bites. What are you suggesting exactly?

We need to prioritise happiness, quality of life and time as our collective ambitions; not profit, consumption and how quickly we can burn dinosaurs

As though anyone would disagree. What are you suggesting?