Zombies Margaret Thatcher

[peterms]

so do you think that cutting tax for rich folk would be a good thing to help with growth? and if not, why not?

It would to an extent help with growth, though as VC says above, they would spend less of it, so the effect would be less. It would also increase inequality yet further, and so is damaging from that perspective. If we had a choice only of doing nothing at all or giving rich people more money, we would get more economic activity from giving them money; but as between giving more to poor people or rich people, it's a no-brainer.

It came from the Gov't (BofE) buying government bonds from private sector companies like banks and insurance companies and pension funds, which increased the demand for the bonds, by definition, thus raising their value and price, after which they become a less attractive investment for those banks and insurance companies, who then sell the bonds and invest the proceeds or lend to customers (or that was the plan). The idea being that with more lending to companies and people, the loan interest rates drop, so they spend more and the economy recovers as a result.

It gets round the EU rules (the Maastricht Treaty forbids governments from using their central bank to finance their deficits.) because the Gov't is not directly creating the money to cancel debt, but creating money for institutions to lend, to stimulate the economy.

The key point is that the government is creating money (from nothing) in order to do this. Using the secondary markets as you say complies with Maastricht, but as you recognise, is a device. The end result is that government bonds have been bought, using "money" which didn't exist the day previously.

It's not really working, what they're doing. They mess everything up. I'm with you on infrastructure and environmental work being done, and boosting manufacturing. I'm not with you on creating money to directly pay off the debt, because it's forbidden and has in itself adverse consequences.

The whole debt thing is an interesting discussion. There's a blog post here that argues that the purpose of government debt is simply to offer safe investments for the private sector, not to "fund" government spending.

[drat01]

I have no affiliation to either really, politician to me are as bad as each other a necessary evil.

Surely a very simple way of looking at it would be Labour spent what they didn't have for too long, even to the existent of leaving a piss taking letter upon leaving?

I'm interested to hear your views on that really, i appreciate that the current lot are hardly setting the world alight. They are however, trying to do one thing i agree with is sorting benefit being more than having a job, far too long its been easy to live off the state and any fool would do it if they got paid more than working.

I assume you'll argue thats the Tory's fault too, they set it up before Labour were in power for Labour then to do nothing about it when they were?

This again may sound over negative to one side and vise versa, its really not it just interests me how people can be so hard on either side, and ignore their preferred parties failings. The Torys will **** up their current term and Labour will be back in, so on and so fourth etc etc..

So fourth? - pah that's what's wrong the education system :-))

But seriously your points don't fit with my way of thinking, sorry. You say that Labour spent what wasn't theirs. There wasn't a massive investment in Labour junkets etc as far as I can remember. To use the favoured "ahh but..." type of argument how can you then reconcile incidents like Osborne going to watch his team Chelsea in the champs league final at the tax payers expense? Trivial in terms of monies in the whole scheme of it but really did a multi millionaire have to charge the 1000 pounds back to the state? No doubt there will be incidents where Labour spent monies for their own politicians but the way I read your comment is that this was only a Labour thing which is not the truth.

The Tory gvmt are lending more now etc and the whole myth of differences that the Tory party are supposed to be making is well documented on various threads. You mention jobs and benefits which is a particular annoyance in how that is often wrongly reported. Again this has been covered on many occasions but workers rights are being greatly impacted once again under a Tory Gvmt something I do not think is acceptable at all. Add to that the management by fear mentality that seems to be the norm now, zero hours contracts, removal of valid benefits for invalids etc etc etc and I will not subscribe to any idea that this "lot" are making things better.

As for one side versus another as I have said I look at what each of the parties will and have typically done before to help me, my family and the environment that they have to live in. Again as said the Tory party has never really changed, from being a selfish cruel even party with little in the way of a social conscience and primarily a desire to look after its own supporters at the expense of all others. I have been voting since 1978 so have seen quite a few changes in all of the other parties, some good some bad and some ridiculous (Clegg hang your head in shame), but throughout that the Tory party has remained consistent with a desire to kill off entities like the NHS despite their public denials.

No political party will have all of the answers nor will they be "run" for a better word by the best people but it's about which of the cocktails tastes the best of a bad bunch. It seems that the Tory party is always sour and nasty, but that is just my view

Edited January 3, 2013 by drat01

[blandy]

If you give money to poor people they spend it and it is recycled into the economy. If you give money to rich people they stash it away in Switzerland.

Giving "ordinary" people a grand each would stimulate the economy a hell of a lot more than lining the pockets of bankers (quantitative easing).

Is that really true? (depending where you draw the lines for Rich/Poor). I mean do footballers spend a lot of money? Course they do.

I've been to that London, I stopped in Chelsea for a Cup final, or it might have been the Semi, and there were folk all over the place driving about in posh cars, drinking posh drink, living in posh houses. I deduced that they were Rich. I did so by observing them spending all that money and driving their Lambourghinis and Porkers (while I doffed my northerners cap). They spend a ton of money.

If the middle classes were given more money, then they'd spend it on sending tarquin and jemima to private school, or going ski-ing or on 4x4s or whatever.

It doesn't work as trickle down, but that's another subject.

I think it's more a case that if people get extra money, they will spend it if they were already struggling to get by, they will splash out if comfortable, or they will barely notice if they're stinking rich, anyway.

The exception is for people with large debt, or concerns over their jobs, who may save it. That isn't the "rich".

Taking the discussion that's been going on to it's extreme, the Gov't would cancel all taxes down to a very low amount, just print it's own money and watch while we all went giddy with disbelief and spending sprees.

[blandy]

...the Tory party is always sour and nasty, but that is just my view

It isn't just your view, fortunately, Ian

[Awol]

If we had a choice only of doing nothing at all or giving rich people more money, we would get more economic activity from giving them money; but as between giving more to poor people or rich people, it's a no-brainer.

I think this gives an interesting and entirely unintentional window into the differing views of what we might - just about - still be call traditional left and right.

You think taking less money off people in tax is akin to actually giving them money. I start from the premise that it is their's to begin with and that tax payers of whatever financial standing don't simply exist to be milked according to the whims of politicians.

[peterms]

Is that really true? (depending where you draw the lines for Rich/Poor). I mean do footballers spend a lot of money? Course they do.

I've been to that London, I stopped in Chelsea for a Cup final, or it might have been the Semi, and there were folk all over the place driving about in posh cars, drinking posh drink, living in posh houses. I deduced that they were Rich. I did so by observing them spending all that money and driving their Lambourghinis and Porkers (while I doffed my northerners cap). They spend a ton of money.

Yes, they spend a lot. But if you give £1bn to them and the same to the poor, then more of the money will be spent by the poor.

Taking the discussion that's been going on to it's extreme, the Gov't would cancel all taxes down to a very low amount, just print it's own money and watch while we all went giddy with disbelief and spending sprees.

Why would you do that? Keep government spending the same by printing money, while massively increasing consumer spending by not taxing? That's exactly the point about allowing spending power to outstrip the productive capacity of the economy, which you keep on suggesting is the only place this ends. The point is that creating extra money while there is spare capacity in the economy is not inflationary. To increase spending when the economy is at full capacity will lead to inflation.

It's like saying there are unsold seats in a football ground, so let people in for nothing, and getting the answer that you can't, because allowing an infinite number of people into the ground will cause death and disaster. It's not what is proposed, but a complete distortion of the proposition.

[peterms]

I think this gives an interesting and entirely unintentional window into the differing views of what we might - just about - still be call traditional left and right.

You think taking less money off people in tax is akin to actually giving them money. I start from the premise that it is their's to begin with and that tax payers of whatever financial standing don't simply exist to be milked according to the whims of politicians.

To hold that view, it is necessary that you think that whatever people have as income or wealth is theirs as of right, with no obligation to contribute towards the massive social and economic infrastructure which has enabled them to get it (assuming we're not talking about bands of brigands in a place with no laws). People in fact earn money because there is an education system, transport, healthcare, a legal system, police and regulatory authorities, and all the other things without which it would be pretty hard to make or grow anything and exchange it for money on anything other than a very primitive level.

Some people choose to pretend that their money has appeared due only to their own efforts, as though all this social infrastructure just appeared at no cost like overnight dew, or that it has absolutely no connection with them being in a position where they have acquired assets or income, and that governments come along later, after they have made their money by the sweat of their brow, and steal some of it in return for nothing.

It's a very curious view, and I don't profess to understand it. It seems to depend heavily on wilful blindness towards a great many very obvious things.

It would be very interesting to see someone who doesn't think they should pay tax - Starbucks, for example - make any money at all in the absence of a system of enforcing property rights and contract, providing transport infrastructure and refuse disposal, maintaining a currency, educating potential staff and consumers, and all the rest.

[Dr_Pangloss]

Yes, they spend a lot. But if you give £1bn to them and the same to the poor, then more of the money will be spent by the poor.

The point is that creating extra money while there is spare capacity in the economy is not inflationary. To increase spending when the economy is at full capacity will lead to inflation.

.

Yes theoretically printing money is only inflationary if people spend it, and if that spending exceeds the economy's productive capacity.

The issue is how one reliably estimates potential GDP...... Extracting a simple trend over a long time horizon is certainly not a good way to do it....

Edited January 3, 2013 by Dr_Pangloss

[snowychap]

Is that really true? (depending where you draw the lines for Rich/Poor).

I think the point being made was that it is generally held that the marginal propensity to consume decreases as incomes rise.

[Demitri_C]

""If you give money to poor people they spend it and it is recycled into the economy. If you give money to rich people they stash it away in Switzerland.""

Or they will spend it on booze and drugs, good logic that

[drat01]

""If you give money to poor people they spend it and it is recycled into the economy. If you give money to rich people they stash it away in Switzerland.""

Or they will spend it on booze and drugs, good logic that

Sorry Dem but what a complete and utter crock of shit thing to say

Maybe you should read the Indy today about the complete and utter bollox that is spouted along those lines and benefit claims

link

[peterms]

""If you give money to poor people they spend it and it is recycled into the economy. If you give money to rich people they stash it away in Switzerland.""

Or they will spend it on booze and drugs, good logic that

When Tony talks about keeping coal in the bath, he's having a laugh, and sending up ignorant, vacuous social stereotyping. Are you doing the same?

[blandy]

Taking the discussion that's been going on to it's extreme, the Gov't would cancel all taxes down to a very low amount, just print it's own money and watch while we all went giddy with disbelief and spending sprees.

Why would you do that? Keep government spending the same by printing money, while massively increasing consumer spending by not taxing? That's exactly the point about allowing spending power to outstrip the productive capacity of the economy, which you keep on suggesting is the only place this ends.

You keep saying I keep suggesting something, which I haven't once suggested. Please stop. For clarity, when I said "if you take it to it's extreme" I am not suggesting that is a course of action that should be followed, or that the consequences of such an extreme course of action are something that I think you or I want to see.

What I am trying to do is to say that arguments like for example "create more money" have to be accompanied with limits. You can do it up to a point, but can't just do it without restriction, because if you did there'd be adverse consequences.

That seems to be the case with many of the economic levers.

There are also complications with, say, cutting taxes, which is what I was getting at with my question "so would you cut taxes for the rich?" - which you kind of sidestepped, because of these "other issues" - Yes it would help wioth the economy, as you agreed, but the problem as you identified is the impact on "fairness" in society. Things that might work economically might also disprupt other aspects of our life, and equally things which might not work economically (and might be bad, economically), might actually address problems with the rest of life.

The point is that creating extra money while there is spare capacity in the economy is not inflationary. To increase spending when the economy is at full capacity will lead to inflation.

It's like saying there are unsold seats in a football ground, so let people in for nothing, and getting the answer that you can't, because allowing an infinite number of people into the ground will cause death and disaster. It's not what is proposed, but a complete distortion of the proposition.

That's a good analogy. I think we are actually of the same view, aren't we? - you can give some people free tickets, but not everyone. You can create some new money, but can't do so without limits, because if you take it to extreme, then problems happen.

Sorry Dem but what a complete and utter crock of shit thing to say

Maybe you should read the Indy today about the complete and utter bollox that is spouted along those lines and benefit claims

link

I thought Dem was taking the mick out of the rich, not the benefits folk - you know, Rich cocaine snorting, champers swiggers. Maybe I'm mistaken?

[Richard]

I think this gives an interesting and entirely unintentional window into the differing views of what we might - just about - still be call traditional left and right.

You think taking less money off people in tax is akin to actually giving them money. I start from the premise that it is their's to begin with and that tax payers of whatever financial standing don't simply exist to be milked according to the whims of politicians.

Just "like" does not do this post justice for me

Really top post Awol

[Demitri_C]

"Sorry Dem but what a complete and utter crock of shit thing to say"

Peter, Drat

Just as stupid as the above poster saying all the rich will invest in it all in offshore swiss accounts. Of course I dont agree that the poor would all spending it on booze and drugs, but I was using a example of that same logic with the poor, by using that ignorant example.

He said the poor would boost the econmy by spending, but the rich wouldnt as they will just invest it into banks, which isnt true, Some would but not all. just like the poor some would waste it on drugs and smoking. The rich,they could boost the economy by opening new businesses, creating jobs etc. to help the economy

Its a biased view thats my point, you cant single all the rich out in one big group in a negative way but spin it that the poor would do good with the extra £1000

Edited January 4, 2013 by Demitri_C

[Demitri_C]

Also agree with AWOL 100%

Yes pay more but bloody hell make it fair and dont punish them for making their ends meat.,they earned it

[drat01]

..... Sorry forget it. I can see arguments coming as a result

It's clear to me that many on the right clearly show very selfish attitudes which aligns them to typical Right wing thinking

Edited January 4, 2013 by drat01

[Demitri_C]

I dont know if that was in response to me mate but I have no desire to argue with you whatsoever, I find your posts a good read even if I dont agree with some things. For me its just a good debate between posters, don't take it personally

[snowychap]

The rich,they could boost the economy by opening new businesses, creating jobs etc. to help the economy

They could already do that if they so wished but, at an increasing level, it would seem that they aren't domestically.

Its a biased view thats my point, you cant single all the rich out in one big group in a negative way but spin it that the poor would do good with the extra £1000

I don't think the point was about 'doing good' in any kind of moral sense but rather if the desired effect of the policy is to increase demand/consumption then it is more likely to happen by giving the same £x to those in the lowest income decile than those above.

Edited January 4, 2013 by snowychap

[blandy]

...some would waste it on drugs and smoking...

You say that, like it's a bad thing.