Cameron's economic policies will kill, not cure - look what's happened to Ireland

[littlebabyjesus]

I wouldn't adjust for inflation – defeats the purpose, turning housing into an inflation-proofed investment: if you want one of those, govt stocks should be your option. I also wouldn't allow for the deposit. Whether or not you borrowed to buy or paid cash should be of no concern – allowing you to keep the deposit would specifically allow rich people to speculate and avoid the tax – also defeats the purpose. (Remember the tax is only on profit, not the whole price – and if you are just moving home, you're allowed to take off the price of the place you buy as well. This is only directed at profit.)

The problem with only allowing receipts to be taken into account is that this doesn't allow for people doing up a place themselves.

ETA:

Unless you paid more than 100% deposit, you would always be allowed to keep the deposit anyway.

 

[ymu]

You have to adjust for inflation, or houses will eventually cost the same as a mars bar.

There's no reason for any profit to be kept. None whatsoever. Noone needs to be paid to have a roof over their head.

 

[littlebabyjesus]

You have to adjust for inflation, or houses will eventually cost the same as a mars bar.

No, when taxing the profit on a sale, you don't adjust for inflation. That would not mean houses would eventually cost the same as a mars bar. It would mean that, for instance, if you inherited your parents' house, which they bought in the 1970s for a few thousand, you'll be paying a lot of tax if you decide to sell it. Which is all fine and good as far as I'm concerned.

 

[littlebabyjesus]

dp grrr

 

[ymu]

No, when taxing the profit on a sale, you don't adjust for inflation. That would not mean houses would eventually cost the same as a mars bar. It would mean that, for instance, if you inherited your parents' house, which they bought in the 1970s for a few thousand, you'll be paying a lot of tax if you decide to sell it. Which is all fine and good as far as I'm concerned.

Yeah - sorry, getting mixed up with house prices remaining literally static.

Point still stands though. The housing market must go up with wage inflation to be stable. If that were the case, a 10% deposit in 1990 would be a 5.4% deposit today (according to this calculator - not based on wage inflation though). Adjusting for inflation is not the same as earning interest - interest is designed to keep pace with inflation at a minimum (so that the lump sum maintains the same value instead of eroding), and generally to make a profit on top of that.

 

[DownwardDog]

Oh and any surveyor found to have knowingly falsified a survey would go to jail, along with the person they falsified the survey for. Surveying and valuation are indeed subjective, but they are not that subjective. Also, there would be only one survey – it would be paid for by the vendor, but it would also be available to the purchaser. That ought to minimise the chances of fraud.

I've noticed that a powerfully recurrent theme of U75 Gedankenexperimenten about more just societies is people getting locked up and/or executed.

 

[littlebabyjesus]

I believe I am right in saying that since 1945, interest rates on most investments have not kept pace with inflation. That's how we paid down the war debt.

 

[littlebabyjesus]

I've noticed that a powerfully recurrent theme of U75 Gedankenexperimenten about more just societies is people getting locked up and/or executed.

You don't think corruption by a registered professional should be a criminal offence? Your point is ludicrous.

I've posted at length elsewhere about how I would replace prison as a punishment for all but a few. If you prefer, we can go with my preferred punishment – a professional found to have abused their position for profit is barred for life from any such position of responsibility and sentenced to x years working on minimum wage.

My modest proposal for tax reform here is just that, modest – there is no reason whatever why it could not be introduced tomorrow within the existing framework of society. This thread probably isn't the place for the transformative ideas I have about society and capital.

 

[Idris2002]

I've noticed that a powerfully recurrent theme of U75 Gedankenexperimenten about more just societies is people getting locked up and/or executed.

Yes, but only the right people.

 

[moon23]

Yes, but only the right people.

Yes only those who abuse the system in place to ensure equality.

 

[butchersapron]

Yes only those who abuse the system in place to ensure equality.

I reckon there's 7 thing wrong with this. You?

 

[Blagsta]

One that examines whether you think we need to preserve the foundations of the current model of capitalism. Namely access to currency.

What the fuck? Are you pissed?

 

[Blagsta]

I just want to understand Blagsta's reasoning. I'm not presuming that it's going to be wrong headed or making any presumptions about it.

You want to understand my reasoning for not wanting society to collapse into chaos?

 

[rich!]

Because they specialised into high-tech manufacturing, and benefit from cheap exports thanks to being the Eurozone.

Also, their government puts massive amounts of money into R&D without expecting a return. Never try competing with a German company that's in a sector DLR work in - they get the R&D output for free...

 

[littlebabyjesus]

Also, their government puts massive amounts of money into R&D without expecting a return. Never try competing with a German company that's in a sector DLR work in - they get the R&D output for free...

Exactly. Government investment. That is the key. Withdrawing government support does not 'provide space' for the private sector to thrive as Cameron seems to be claiming. It leads to a decline in the private sector.

 

[ymu]

The chancellor's plan to cut benefits came as the OECD, the west's leading economic thinktank, warned that G7 countries may have to delay their deficit reduction plans as the pace of economic recovery has slowed.

http://www.guardian.co.uk/politics/2010/sep/09/george-osborne-cut-4bn-benefits-welfare

More detail on that.

In a marked change of view from its support in the spring for immediate fiscal belt-tightening, the Organisation for Economic Cooperation and Development advised its rich-country members that they should consider postponing retrenchment if the recent weakness in activity persisted.

The OECD's caution came as the UK registered its worst-ever trade deficit in goods and services of £13.2bn and ratings agency Standard & Poor's said the coalition's austerity programme could trigger a wave of home repossessions.

The chancellor seized on OECD recommendations earlier this year as backing for his austerity programme – an initial £6bn of cuts announced in May to be followed by a spending review next month that will cut spending by Whitehall departments by an average of 25% during the course of this parliament.

However, the U-turn by the Paris-based thinktank has left its stance closer to that of the outgoing Labour government, which argued that action to tackle the deficit ought to wait until economic recovery was assured.

...

"Recent high-frequency indicators point to a slowdown in the pace of recovery of the world economy that is somewhat more pronounced than previously anticipated," the OECD said.

"It is not yet clear whether the loss of momentum in the recovery is temporary … or whether it signals greater underlying weaknesses in private spending at a time when public support is being removed." [well duh - ymu]

Useful comment piece here also.

Such an outcome is much to be desired but, as today's trade figures show, it remains a long way off. Far from benefiting from the 20% drop in sterling over the past three years, the trade gap in the three months to July was the worst on record. Only the efforts of the City, which boosted the UK's surplus in service sector trade, prevented an even worse outcome. Not much sign of rebalancing there.

Finally, there's the issue of whether the state of the public finances permits Osborne to revise his draconian plans. The chancellor's argument back in May was that the UK risked becoming the next Greece unless the new government started to clear up the mess left by Labour immediately. That argument always seemed far-fetched and looks even less compelling today, with markets far more concerned about growth and possible deflation than they are about sovereign risk.

To sum up, then: the world economy is clearly slowing; both the OECD and the International Monetary Fund are now warning against over-aggressive tightening of policy; Britain's economy is both unbalanced and weakening; and in less than six weeks' time the government is planning to announce the biggest programme of spending cuts since the 1930s. Osborne has now been given a perfect excuse for moderating his plans. If he carries on regardless, he risks making the biggest economic blunder since John Major took Britain into the Exchange Rate Mechanism.

 

[Sesquipedalian]

Good article by Johann Hari. He's been on fine form recently.



Nothing to add, really. Nail, head. Good straightforward resource for explaining the anti-cuts agenda.

Thank you for an excellent post.
I will read it when i am not in Chardonnay !
(And i will look at the rest of the Thread as well.)

 

[moon23]

Exactly. Government investment. That is the key. Withdrawing government support does not 'provide space' for the private sector to thrive as Cameron seems to be claiming. It leads to a decline in the private sector.

I think it's useful when Government provides some support for business so long as it's not simply to pursue a protectionist policy. Funding Universities to provide Research is a good example of where some State money might be acceptable. Providing tax breaks to small businesses that create jobs might be another.

 

[littlebabyjesus]

I think it's useful when Government provides some support for business so long as it's not simply to pursue a protectionist policy. Funding Universities to provide Research is a good example of where some State money might be acceptable. Providing tax breaks to small businesses that create jobs might be another.

The German government does more than just provide tax breaks. It provides direct funding and investment in small and large businesses. It actually makes money out of the success of German businesses as it takes shares in them as they are starting up or when they need extra money to expand.

It is a totally different model from the one you are suggesting, one in which there is not such a sharp distinction between public and private – the social market. Personally, I would like to see a social market in the context of a mixed economy in which essential services are entirely owned by the people who depend on those services, and in which the leeching shareholder class has been eliminated entirely. That may be a long way off, but at the very least, if you wish to see change within capitalism as currently formulated, have a proper look at those who have been the most successful at it. Laissez faire does not work. Anywhere. Even the US, which some like to think of as laissez faire, is nothing of the kind, except that their model of government intervention intervenes through the military. Given the choice, I'd rather follow Germany, if it's all the same with you.

 

[little_legs]

hari ripped into clegg in today's indy: http://www.independent.co.uk/opinio...dash-the-man-who-betrayed-us-all-2131652.html

 

[shagnasty]

From what i have been reading ireland is on the brink of a greek style bail out .and the budget coming up which will cut further than the last is this what britain has to look forward to

 

[butchersapron]

Ireland is the way to go says Osborne

Look and learn from across the Irish Sea: A generation ago it would have seemed ridiculous to go to Ireland for economics lessons. Not any more

 

[Streathamite]

Ireland is the way to go says Osborne

tbf, 'said osborne' would be nearer the mark, given the 2006 date on the piece. still nicely nailed tho'!

 

[littlebabyjesus]

tbf, 'said osborne' would be nearer the mark, given the 2006 date on the piece. still nicely nailed tho'!

Hmmm. I wouldn't blame him too much for falling for the confidence trick that was the 'success' of Iceland and Ireland. He would be far from alone.

But if he had honestly fallen for it, he would now be examining how he had been wrong and adjusting his outlook accordingly – learning the lesson that low-tax, debt-driven growth is not sustainable.

However, he wasn't looking at it like that. His preference for a low-tax, small-state regime comes first, before the evidence. He thens scans around for evidence that supports his already formed ideology. So, he now simply drops talk of Ireland as the model to follow and switches his attention elsewhere. Problem is, there is no successful model that shows that what he is proposing works. The closest he could find was Canada a few years ago. Interesting how he can abandon a model taken from the present and go for one from the past. But Canada, as a net exporter of energy and resources, is a very different beast from the UK.

Osbourne is either a fool or extraordinarily dishonest. My guess is that he is a bit of both.