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Labour Leader: Keir Starmer VI

Discussion in 'off topic' started by PsB, Jan 14, 2022.

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  1. PsB

    PsB Citizen of Nowhere™

    And you seem to have misread mine: the UK had an opt out from the euro. A permanent one. Discussing the dangers of the euro for the UK was (is) as relevant as complaining about Schengen. Comparing the situations of the UK and Greece makes no sense at all, sorry.
     
  2. Sue Pertwee-Tyr

    Sue Pertwee-Tyr Pending

    Ironically, of course, were we to apply to rejoin now, we'd be obliged to join the Euro. It's why I don't favour 'rejoin' and from our present position would now prefer us to join the EEA. Given our historical orneriness wrt Europe, it's probably where we should have been all along.
     
  3. ks.234

    ks.234 pfm Member

    Maybe I expressed myself badly. It was not my intention to compare Greece and the U.K. directly, I was attempting a kind of thought experiment to say that if we decided to opt out of the opt out, we could face similar problems to Greece*. My point was more about being aware of potential problems with the EU, to say that it is not 100% milk and honey. I was reacting to someone else’s comment about being and not being fully behind the EU.

    I did stand firmly behind Remain, but with our opt out and with an understanding that the EU project as a whole has it’s flaws.

    I think my starting point was that the ongoing Brexit debate leaves very little room for nuance. One is either for Brexit or for the EU. It should be possible to be against Brexit and still express concerns about the fundamental structure of the EU.


    (*I say ‘could’ because Greece also had it’s own structural problems prior to joining the Euro.)
     
  4. PsB

    PsB Citizen of Nowhere™

    Okay, but why pick Greece? Why not pick Belgium (another kingdom with fractured constituent parts), Denmark (another kingdom with opt outs), the Netherlands (another kingdom with a fine trading history that has dealt with losing its empire and seems to cope rather well with being in the EU) or France (another nation adjusting to loss of empire)?

    It's all very academic now, as the UK is firmly out of the EU.
     
  5. ks.234

    ks.234 pfm Member

    Unfortunately, thanks to our handling of Brexit and the narrative of entitlement with which leave negotiations were managed, I suspect any attempt to rejoin anything European would be met with raucous laughter from the other side of the channel so loud it would be heard in Kent
     
    Nye Samuel likes this.
  6. notaclue

    notaclue pfm Member

    He's closing in at 1 point a day. 20 points ahead by the end of the month, at this rate...

    LAB: 40% (+2)
    CON: 29% (+1)
    LDEM: 11% (-2)
    GRN: 6% (-1)
    REFUK: 6% (+2)

    via @YouGov

    Prime Minister Starmer? Could be.
     
  7. Seanm

    Seanm pfm Member

    Maybe. Who knows. But more likely IMO is that unless Labour start to offer a positive programme their numbers will fall back to the mid-30s or below, and the Conservatives' will start to recover once the papers decide that they've taken enough punishmentg. It's all in the hands of the press as long as it suits Labour for that to be the case.
     
    Sue Pertwee-Tyr likes this.
  8. Tony L

    Tony L Administrator

    If you added the preface ‘immediate’ to ‘government spending’ you would be correct to my understanding. A deficit can be run, even maintained, but it is one factor of many and if you allow it to balloon then the price is inflation. The whole thing is a balance both in Keynesian economics and in MMT. The notion you don’t need to tax for government spending is ridiculous. Yes, you can certainly offset it in the form of a maintainable future debt to be paid back with the taxation the newly created employment creates (i.e. effectively free money), but it is still paid by taxation. A healthy economy can certainly run far higher levels of debt that the right-wing orthodoxy dictates, a look back at both UK and US history suggest the golden age was one of high debt, high taxation and high productivity.

    PS Remember I’m a IT geek so I’m pretty pedantic on this stuff. Variables need declaring accurately! All the things Kelton articulates interact and I suspect some on the left are trying to read way too much into some aspects of her language.
     
  9. ks.234

    ks.234 pfm Member

    If it’s so ridiculous it should be easy to demonstrate the evidence that our government spending does depend on tax?

    Our government can, and does, spend without recourse to tax. What is the evidence to the contrary? What is the evidence that tax does fund government spending?

    I am well aware of the variables and the need to control inflation, and the need to control government spending in order to maintain a healthy economy, but government spending happens first and it happens without the need for a piggy bank full of tax £’s to raid in order to finance spending.
     
  10. Tony L

    Tony L Administrator

    The very fact tax exists proves this, it serves no other purpose other than funding government spending! Where you seem to be getting confused is between the moment of creation (that aspect is as you say, it is “created” onto the balance sheet) and what happens afterwards over time. The variables in play (taxation, employment, inflation, public sector debt/surplus, private sector debt/surplus etc) all interrelate. They can be nudged to some degree, but it is a very complex system and there is certainly no way to avoid the concept of taxation!

    PS Do listen to MatthewR on this. He is way more articulate and knowledgeable than I am. I do however think I grasp the most basic mechanisms/variables in play and recognise the complexity of the interrelationships between them.
     
  11. Sue Pertwee-Tyr

    Sue Pertwee-Tyr Pending

    I haven't yet read the Skelton book, and most of what I've gleaned about MMT has been from here, but I can see Tony's point that while the government spending doesn't directly depend on tax receipts in the way that our personal spending depends on salary receipts, the tax receipts are still necessary to keep the financial wheels going round.

    Perhaps an analogy with a slightly different sort of household economics (yes, I know...):

    We still have one of those once-fashionable 'current account mortgages'. We're down to the last few grand to repay, but our loan facility still stands at what we originally borrowed. So our domestic outgoings don't depend on our previous month's salary - we can spend up to our pre-agreed borrowing limit at no notice, but sooner or later the bank is going to want repayment and our ongoing salary receipts do set a sensible limit on what we spend. So I'd be very unwise to splash it all on a new Aston Martin because somewhere down the line there'd need to be a reckoning up.

    In that last respect, it's different, because the government can literally create the money, but there's still a reckoning if tax receipts don't come in to back it up. So if the government abolished taxation and just spent, the reckoning would likely come in the form of inflation, due to devaluation of the currency and other factors. So taxation is still necessary, essential even, it's just that cause and effect are reversed in the Monetarist ideology and, under MMT or Keynes, in the short to medium term taxation doesn't need to cover the liabilities.
     
  12. ks.234

    ks.234 pfm Member

    Where does Matthew say that tax funds spending? You seem to believe that tax does fund spending but have no evidence. As long ago as 1945 the then chair of the New York Federal Reserve said that the idea of tax as revenue is “obsolete”.
     
  13. Tony L

    Tony L Administrator

    In your world what does tax exist for? Why does anyone pay it?
     
  14. paulfromcamden

    paulfromcamden Baffled

    There's (inevitably) a wiki entry on this:

    According to the proponents of the chartalist theory of money creation, taxes are not needed for government revenue, as long as the government in question is able to issue fiat money. According to this view, the purpose of taxation is to maintain the stability of the currency, express public policy regarding the distribution of wealth, subsidizing certain industries or population groups or isolating the costs of certain benefits, such as highways or social security.

    https://en.wikipedia.org/wiki/Tax#Purposes_and_effects

    Personally I take it all with a very large pinch of salt. Ask any two economists a question and you'll get three different answers...
     
  15. Spraggons Den

    Spraggons Den pfm Member

    A bit glib even by your standards…….or we could have:

    Can't you hear that rooster crowin'?
    Rabbit runnin' down across the road
    Underneath the bridge where the water flowed through
    So happy just to see you smile
    Underneath the sky of blue
    On this new morning, new morning
    On this new morning with you

    Can't you hear that motor turnin'?
    Automobile comin' into style
    Comin' down the road for a country mile or two
    So happy just to see you smile
    Underneath the sky of blue
    On this new morning, new morning
    On this new morning with you

    Who knows what the future holds?
     
  16. ks.234

    ks.234 pfm Member

    I’ve already answered that question in brief. I am quite happy to give a much fuller answer if you wish, but I am still need to know why you cling to the idea that tax does fund spending.

    You say you’re an IT Geek, so I now offer you logic. You have conceded that government is the thing that creates the money. Government used to create money with a printing press, but now it does it with the stroke of a keyboard. We know this is what happens because the Bank of England says so.

    Therefore, as the sole and sovereign issuer of money, logically our government cannot run out of money. It can issue as much money as it likes. It chooses not to for a host of very good reasons one of which is inflation.

    We know that government can spend as much as is needed because that’s what it does in times of need. In the last World War we issued as much money as was needed to fund the war, any shortages were down to a shortage of available resources, not a shortage of cash. And we had actual proper full employment. Full employment and lots of cash is a recipe for inflation. Inflation was controlled, in part, by issuing bonds at very attractive terms to ordinary people so that they saved and didn’t spend. The government was not worried about paying back the promise on the bonds, because it issues the money.

    In support of the idea that government issues money electronically and is not dependant on tax to do so, I have given you Stephanie Kelton, The Bank of England, Beardsley Ruml and now I’ve given you logic.

    I have yet to hear what it is you are relying on to say that this idea (specifically the idea that tax does not fund our government spending) is “ridiculous”?
     
  17. ks.234

    ks.234 pfm Member

    Don’t ask an economist!
     
  18. Tony L

    Tony L Administrator

    You haven’t done that at all. To my eyes you have a fundamental misunderstanding of economic theory including Keynesian and the MMT derivative you support in not grasping the key relationships between public and private sector surpluses/deficits, inflation, taxation, employment etc. It is all very carefully balanced. Think of public spending as money you can create out of thin-air without consequences and you are right into Zimbabwe territory where I can cash in my $5 Billion note for a box of 6 eggs.
     
  19. ks.234

    ks.234 pfm Member

    Yes, you may be right. Your understanding of economic thinking might be vastly superior to mine.

    If fact, it has been on the assumption that I know nothing about Keynesianism or MMT that I have in fact not mentioned either.

    All I have done is ask you for evidence to support your claim the tax does fund government spending? You’ve done everything you can to avoid addressing that simple question including ridicule and now questioning my ability to understand text. But what you haven’t done is show your evidence for your own thinking behind your belief that tax does in fact fund our government’s spending

    Perhaps you could deploy a little of your superior intellect to show me an MMT thinker who supports your idea that tax does fund our government spending as you insist it does.
     
  20. Cav

    Cav pfm Member

    Something from OBR: A brief guide to the UK public finances (obr.uk)

    Now, this does not actually say that tax is used directly fund Government spending, but it does say it reduces the need for borrowing (or if revenue exceeds expenditure) to form a surplus.

    It might be that the Government borrows all the money it uses to run the country and tax revenue is used to pay some of the interest on that.

    Does not really matter does it?

    Happy not to pay tax if it is not needed.
     
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