Thoughts on whether a new prime minister will find a cure Britain's pathologies, what the gilt market says about British institutions, and the winners and losers in the AI race
Surely, a start would be to make any news media operating in the UK legally bound to be geographically based in the UK, and taxed in the UK. I realise this would hit the best newspaper, the Financial Times, but such a move is likely to temper the misinformation deliberately spread by the Daily Mail, the Daily Express, and even the Times.Now that we know how Christopher Harborn, a crypto billinaire resident in Thailand, is funding the political party Reform, the idea of permanent present in the UK becomes even more attractive. Second step: taxation of land values, which would make some sorts of speculation more difficult.
Simon, thankyou for your comments on this issue here and last week. I am not a Labour voter but am very uncomfortable with what is happening for a number of reasons. First of all, I am old enough to member the Wilson governments Wilson was a very able man but faced the hostility of his own leftwingers; Ray Gunter, Ian Mikardo, Michael Foote etc. I think all of them were quite serious and sincere but really did not understand the huge problems of post-war Britain. Of course the right-wing press were also savage. Much the same was true of Blair although his charisma and unique talent went along with an exhausted Tory party and, in my view, some very talented colleagues to fill ministries. Now Starmer is facing the same attacks and I know some Corbynites who were never going to give Starmer a chance and I think their stance may be multiplied considerably throughout the country. What some of the right-wing press is prepared to write should ,I think, be regarded as treason and neither economics nor the truth has been a strong point for Farage. In addition, most voters, I think, just assume that blaming the preceding government is just what parties always do. That is correct but how many of them can genuinely assess how much damage Johnson and Truss left, let alone how enormous is the damage from Brexit. How many of them noticed in the Press that our economy in the first three months (the latest available) has actually outpaced our European competitors and the reality that NHS lists, though still very long, are falling and would fall more rapidly if doctors would refrain from strikes. In addition, I see very little discussion of how Starmer`s burden is increased by Putin in the East and Trump in the west. Would Streeting or Trump bring them to heel? I doubt it. So we are left with the complaint that Starmer has no charisma. Who has charisma and what do people mean by it. Farage can hold an audience but without offering any credible solutions I suppose by some definitions Johnson had charisma when not hiding in fridges. The other complaint is that Starmer has no "vision". I have no doubt he is clear about much of what is needed but do we want "vision"? Hitler, Genghis Khan, and Vladimir Putin all had vision. I`d say that is precisely what we don`t want. Sorry to have taken up so much space but I feel quite strongly about it and of course no one has to read it.
Great installments. Great point about Chinese AI. As for the UK, how does one create growth after lopping off the limbs of Europe, and public services? I thought that it would be impossible to recover from Brexit. I fear it's true. Implementing the kind of reforms we discussed in Public Net Worth seems one of the only opportunities, along with supercharging research, and I don't see the will for either thing, both being extremely difficult. I'd love to hear your thoughts on how Britain builds growth, taking into account that American growth has benefitted many fewer than the WSJ journal, in all its nonsense, claims.
A really interesting and significant analaysis of Britain's tax and spend equation. I have long felt that the eternal cry from the Left "Tax the rich to pay for public services" ignored the inconvenient fact that there aren't enough of them (let alone their propensity to leave). I am prepared to believe that the average European employee pays a higher level of tax than in the UK but was unaware that the same is true of the average US worker (as per the table). When will politicians of any hue level with us?
Brilliant, as always. I would add that not only Britain spends less on public services than its peers, but that (anecdotally at least) what it spends is mismanaged, and any increase would surely be as well.
Margaret Thatcher's? Catch up! Would I lend to Britain yes, as many millions do. The bond markets greedy grab of higher interest rates is shere nonsense – we've never defaulted. It's always a short-term smash ground. Of course the piper pays the tune, but taking over the whole orchestra e.g. the UK's economic policy, is wholly disproportionate.
Burnham and Streeting represent different parts of England. Neither appeals much in Wales, Scotland and Northern Ireland. The rise and rise of Farage understandably means Brussels will be wary of any agreement which that bantering nihilist will rip up on Tag Eins of his ‘new order’.
Well if the Labour leadership was to be “honest with the electorate” it would tell the people that they will pay for these strategies in the same way they pay for everything – instructing the Bank of England (or agents) to credit private bank accounts on behalf of the H.M. Treasury.
Simple.
The question really should be whether there will be available productive resources available to shift into these areas of focus and if there are not then what additional policies will be required (such as taxation) to allow the government to deploy the necessary resources without provoking inflationary pressures (arising from a price bidding war for the use of resources already in existing use).
It is obvious that “Without a jolt to the economy from tens of billions of pounds of extra spending … growth will remain sloth-like, only inching ahead.”
Doing the right thing is not impossible, just difficult. In the 1980s, I worked for a political consultant who advised presidents and prime ministers that people are willing to make sacrifices for long-term gains, but it needs to be clearly explained why they are doing it. It used to work: Reagan's collaboration with Paul Volcker to beat inflation though tight monetary policy, plunging the U.S. into deep recession, comes to mind. No one has tried that approach (or a fiscal equivalent) in the U.S., Britain or Europe a long time. I doubt Starmer, who is on the brink of a leadership challenge, is on a position to do it. But his successor might be.
The 9pp gap between what Britain taxes and what Continental Europe taxes is the single number that explains every political failure of the last decade. The gap is politically unfixable because the coalition required to close it doesnt exist in British politics. Raising taxes by 9 points of GDP requires either a right-wing government willing to tax its own base or a left-wing government with enough mandate to survive the backlash. Every government discovers the gap, promises to address it, and leaves office with it unchanged or wider because the electoral system keeps producing governments too weak to raise taxes and too responsive to cut services.
The AI section makes the fiscal trap even more acute than the tax data alone suggests. Competing in the AI race requires exactly the kind of sustained public infrastructure investment that the 9pp gap prevents. Falling behind on AI reduces future productivity growth which reduces the future tax base which widens the gap further. Britain is trying to close a structural deficit while competing in a technology race that demands structural investment it cant afford, and each year of delayed AI deployment makes the deficit harder to close because the productivity dividend that would have helped fund the closure never arrives. the two crises are feeding each other and the political system is treating them as separate problems with separate solutions.
Surely, a start would be to make any news media operating in the UK legally bound to be geographically based in the UK, and taxed in the UK. I realise this would hit the best newspaper, the Financial Times, but such a move is likely to temper the misinformation deliberately spread by the Daily Mail, the Daily Express, and even the Times.Now that we know how Christopher Harborn, a crypto billinaire resident in Thailand, is funding the political party Reform, the idea of permanent present in the UK becomes even more attractive. Second step: taxation of land values, which would make some sorts of speculation more difficult.
Simon, thankyou for your comments on this issue here and last week. I am not a Labour voter but am very uncomfortable with what is happening for a number of reasons. First of all, I am old enough to member the Wilson governments Wilson was a very able man but faced the hostility of his own leftwingers; Ray Gunter, Ian Mikardo, Michael Foote etc. I think all of them were quite serious and sincere but really did not understand the huge problems of post-war Britain. Of course the right-wing press were also savage. Much the same was true of Blair although his charisma and unique talent went along with an exhausted Tory party and, in my view, some very talented colleagues to fill ministries. Now Starmer is facing the same attacks and I know some Corbynites who were never going to give Starmer a chance and I think their stance may be multiplied considerably throughout the country. What some of the right-wing press is prepared to write should ,I think, be regarded as treason and neither economics nor the truth has been a strong point for Farage. In addition, most voters, I think, just assume that blaming the preceding government is just what parties always do. That is correct but how many of them can genuinely assess how much damage Johnson and Truss left, let alone how enormous is the damage from Brexit. How many of them noticed in the Press that our economy in the first three months (the latest available) has actually outpaced our European competitors and the reality that NHS lists, though still very long, are falling and would fall more rapidly if doctors would refrain from strikes. In addition, I see very little discussion of how Starmer`s burden is increased by Putin in the East and Trump in the west. Would Streeting or Trump bring them to heel? I doubt it. So we are left with the complaint that Starmer has no charisma. Who has charisma and what do people mean by it. Farage can hold an audience but without offering any credible solutions I suppose by some definitions Johnson had charisma when not hiding in fridges. The other complaint is that Starmer has no "vision". I have no doubt he is clear about much of what is needed but do we want "vision"? Hitler, Genghis Khan, and Vladimir Putin all had vision. I`d say that is precisely what we don`t want. Sorry to have taken up so much space but I feel quite strongly about it and of course no one has to read it.
Great installments. Great point about Chinese AI. As for the UK, how does one create growth after lopping off the limbs of Europe, and public services? I thought that it would be impossible to recover from Brexit. I fear it's true. Implementing the kind of reforms we discussed in Public Net Worth seems one of the only opportunities, along with supercharging research, and I don't see the will for either thing, both being extremely difficult. I'd love to hear your thoughts on how Britain builds growth, taking into account that American growth has benefitted many fewer than the WSJ journal, in all its nonsense, claims.
"an obsession with keeping taxes low"
what a joke. taxes as a share of GDP in the UK are the highest since WW2.
your table compares UK taxes to only 10 countries, when there are around 40 in the OECD.
A really interesting and significant analaysis of Britain's tax and spend equation. I have long felt that the eternal cry from the Left "Tax the rich to pay for public services" ignored the inconvenient fact that there aren't enough of them (let alone their propensity to leave). I am prepared to believe that the average European employee pays a higher level of tax than in the UK but was unaware that the same is true of the average US worker (as per the table). When will politicians of any hue level with us?
Brilliant, as always. I would add that not only Britain spends less on public services than its peers, but that (anecdotally at least) what it spends is mismanaged, and any increase would surely be as well.
Margaret Thatcher's? Catch up! Would I lend to Britain yes, as many millions do. The bond markets greedy grab of higher interest rates is shere nonsense – we've never defaulted. It's always a short-term smash ground. Of course the piper pays the tune, but taking over the whole orchestra e.g. the UK's economic policy, is wholly disproportionate.
Burnham and Streeting represent different parts of England. Neither appeals much in Wales, Scotland and Northern Ireland. The rise and rise of Farage understandably means Brussels will be wary of any agreement which that bantering nihilist will rip up on Tag Eins of his ‘new order’.
Progressive journalists in Britain so easily become willing mouthpieces for mainstream economic lies
https://billmitchell.org/blog/?p=61814
Well if the Labour leadership was to be “honest with the electorate” it would tell the people that they will pay for these strategies in the same way they pay for everything – instructing the Bank of England (or agents) to credit private bank accounts on behalf of the H.M. Treasury.
Simple.
The question really should be whether there will be available productive resources available to shift into these areas of focus and if there are not then what additional policies will be required (such as taxation) to allow the government to deploy the necessary resources without provoking inflationary pressures (arising from a price bidding war for the use of resources already in existing use).
It is obvious that “Without a jolt to the economy from tens of billions of pounds of extra spending … growth will remain sloth-like, only inching ahead.”
______________________________________
Modern Monetary Theory in Canada
http://mmtincanada.jimdo.com/
Doing the right thing is not impossible, just difficult. In the 1980s, I worked for a political consultant who advised presidents and prime ministers that people are willing to make sacrifices for long-term gains, but it needs to be clearly explained why they are doing it. It used to work: Reagan's collaboration with Paul Volcker to beat inflation though tight monetary policy, plunging the U.S. into deep recession, comes to mind. No one has tried that approach (or a fiscal equivalent) in the U.S., Britain or Europe a long time. I doubt Starmer, who is on the brink of a leadership challenge, is on a position to do it. But his successor might be.
The 9pp gap between what Britain taxes and what Continental Europe taxes is the single number that explains every political failure of the last decade. The gap is politically unfixable because the coalition required to close it doesnt exist in British politics. Raising taxes by 9 points of GDP requires either a right-wing government willing to tax its own base or a left-wing government with enough mandate to survive the backlash. Every government discovers the gap, promises to address it, and leaves office with it unchanged or wider because the electoral system keeps producing governments too weak to raise taxes and too responsive to cut services.
The AI section makes the fiscal trap even more acute than the tax data alone suggests. Competing in the AI race requires exactly the kind of sustained public infrastructure investment that the 9pp gap prevents. Falling behind on AI reduces future productivity growth which reduces the future tax base which widens the gap further. Britain is trying to close a structural deficit while competing in a technology race that demands structural investment it cant afford, and each year of delayed AI deployment makes the deficit harder to close because the productivity dividend that would have helped fund the closure never arrives. the two crises are feeding each other and the political system is treating them as separate problems with separate solutions.