shuggy's blog
We can get a long way to solving the deficit problem by auctioning tickets to watch the executions of Blair, Brown, Mandelson, Campbell....
I think Chris' point is that the £12.5 trillion is out there and available to lend to/buy gilts from the govt to cover the gap between tax yields and spending. Without this, we're not just in deep-do-do, we're dead and buried.The 50% income tax band would then be thoroughly irrelevant - the equivalent of worrying about deckchair placement on the Titanic.
But the mere fact the money is available to buy UK gilts, doesn't mean that it will necessarily be used to do so, or at least not necessarily at a rate advantageous to the govt.
Consider the little ray of sunshine that is Willem Buiter, ex member of the MPC, Professor @ the LSE and FT blogger:
"Under the best possible scenario, taxes will have to be raised and/or public spending cut on a permanent basis by between 5 and 6 per cent of GDP to regain fiscal sustainability. The necessary permanent fiscal tightening could easily be larger. The pain will be widely felt. The ambition to bring British infrastructure back up to the level it achieved at the end of the 19th century has been postponed by another quarter-century. Education and health will suffer....If the necessary fiscal tightening is not forthcoming because different groups and vested interests are engaged in a war of attrition aimed at shifting the fiscal burden to the other guy, markets could easily panic and Britain could face an emerging market-style “sudden stop”, with the rest of the world withholding financing from its public and private sectors.....I would consider the case for a government of national unity."
Why does earning £150k a year suddenly make someone upper class and therefore fair game in the politics of envy?
Furthermore, not everyone who earns that amount of money is a risk taker who abused shareholders' trust and put the financial system at risk. Some people worked hard and made other sacrifices. Taking on assignments in countries where nobody wants to work and being away from families is one example.
Finally, it would be really nice if someone could point to all that extra money that has been spent on public services and show that we got real value for money. It might make paying the increased taxes now, rather than making cuts, palatabale.
Other than that rant, good points.
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I agree with Chris Dillow. This is a damn good post.
I even agree that the disaster is not entirely Gordon Brown's fault. That the ship went down was not entirely the fault of the Captain of the Titanic either. He just set the wrong policy of speed in the fog, and did not know how vulnerable his ship was.
As for comparing this debacle with Blair not finding WMD in Iraq, Shuggy is suggesting that history repeats itself the first time as farce and the second time as tragedy. A very anti-Marxist view?
Shuggy, apropos Maria, above, and her very kind offer perhaps you could ask her to pass on the solution to our economic woes if she should find it.
Mr. McMenamin is surely right to point out that global savings are not *necessarily* going to come our way. Like you , me and presumably Chris Dillow, doing our shopping, savers, or teh guardians of our savings, are going to look around and given recent experiences, they are going to look very hard.
Not the least of the irritations concerning the new tax band is that it will produce little or no extra money.
Your forecast for the future is spot on. Labour is doomed. This is not, I think, a case of an administration simply running out of time, as per John Major and sundry others in the past. This is a situation for the Labour party in which your use of the word 'catastrophic' is an understatement, more like nuclear devastation, would be my phrase. I would not be surprised to see labour reduced to under 100 seats in the next parliament. I suspect that whilst the Tories will obviously do well, there could be a resurgence for the LibDems as the 'new' party of the Left. In the meantime, the old Left will be rent with fury and virulent accusations and may well degenerate into a 'Judean People's Liberation Front' vs, the 'Front for the Judean People's Liberation' situation.
As I remarked elsewhere, the only gleam of hope for the Left is the undoubted fact that the Tories will make a cock of it!
Blair hadn't found WMD by the time of the last election - but he won it anyway. True, it's probably too late for Gordy but I'm not convinced of a Tory landslide either.
Simple answer, Shug - vote SNP.
"hapless".
Pretty much the right word for Gordo. I keep wanting to feel sorry for him - until I remember.
Gordo is Neville Chamberlain to Tony's Baldwin. Baldwin was a brilliant politician who could grasp the mood of the public and would always tell them what they wanted to hear. He won three elections (admittedly only 2 in a row) then handed over power to NC as the storm clouds were rising. Blair similarly stepped off the deck just before the water reached it.
Both Blair and Baldwin were disastrous leaders, but it was left to others to pick up the problems they left behind.
However Gordo was at #11 for all those Blair years. It's as if Neville Chamberlain had been Foreign Secretary since 1931.
I think Chris' point is that the £12.5 trillion is out there and available to lend to/buy gilts from the govt to cover the gap between tax yields and spending.
Yeah - I wasn't really disagreeing with this - only making a point about its political significance.
Simple answer, Shug - vote SNP.
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I've found it rather weird hearing employees of bankrupt banks, waiting for their hundreds of thousands of pounds payoff from the taxpayer, complaining about the 50p rate.
I'm also not sure why 40p is the perfect rate, as opposed to 30p or 50p. But given that neither does the Treasury, it does seem a rather desperate measure.
But then again these are desperate times and if you're earning £150,000 then another few thousand in tax is not the end of the world.
If it really won't raise any revenue then it is pointless.
"I feel entirely unqualified to argue with a man who includes a book about econometrics..": why? Macroeconomics is to Microeconomics as Astrology is to Astronomy. And even astronomers have to resort to mysterious "dark matter" to explain the embarrassing failure of their sums to add up.
Is micro-economics anymore grounded in fact than macro-economics?
You can at least bribe people to pretend micro-economic theories are correct.
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