£18bn cuts to public services

Taxes originated to allow kings and chiefs to raise armies and wage war while maintaining the elite's lifestyle with serfs or slaves. Now within a democracy, the population is supposed to elect governments to distribute the country's wealth fairly to benefit the majority, and not to wage political wars or pursue irrational economic theories. Why do the turkeys among us keep voting for Christmas?

It doesn’t really matter wether spending precedes taxation, the money goes round in circles. If at he end of the year taxation has not equaled spending plus repayments more has to be borrowed to fill the gap. The UK has not reduced it borrowing for 20 yrs and I don’t expect Truss to achieve a reduction in 2 yrs.

The proceeds of taxation or spending does get distributed to the majority, that does not mean that everyone gets all they need.

Katie59

It doesn’t really matter wether spending precedes taxation, the money goes round in circles. If at he end of the year taxation has not equaled spending plus repayments more has to be borrowed to fill the gap. The UK has not reduced it borrowing for 20 yrs and I don’t expect Truss to achieve a reduction in 2 yrs.

The proceeds of taxation or spending does get distributed to the majority, that does not mean that everyone gets all they need.

It does really, because if a government tried to base its spending on tax revenue, it would be unable to plan ahead because tax revenue varies from year to year.

That is why spending is raised from the bond market, and not tax, the government has control of the income, and therefore planning is easier.

Katie59

It doesn’t really matter wether spending precedes taxation, the money goes round in circles. If at he end of the year taxation has not equaled spending plus repayments more has to be borrowed to fill the gap. The UK has not reduced it borrowing for 20 yrs and I don’t expect Truss to achieve a reduction in 2 yrs.

The proceeds of taxation or spending does get distributed to the majority, that does not mean that everyone gets all they need.

It does matter, because politicians use the excuse that 'we don't get enough from taxation', to cut public services, and use the 'spending' of tax as a measure of a party's economic competence. This seriously affects the political choices that voters make.

Snap?

I'm not an economist, but I imagine that our country's economy loses more through the spending (abroad) of the wealthy than it does through the spending of the poorest, whose meagre income, even if it comes from benefits, is likely to go straight back into the domestic economy from which it came in the first place. A form of financial recycling.

Is that right?

That's my understanding, too, Oldnproud. And I have no qualifications in economics!

Oldnproud

I'm not an economist, but I imagine that our country's economy loses more through the spending (abroad) of the wealthy than it does through the spending of the poorest, whose meagre income, even if it comes from benefits, is likely to go straight back into the domestic economy from which it came in the first place. A form of financial recycling.

Is that right?

Yes I’m sure that’s right. Well at least economists argue that this is the case

Economic competence has not been high on polititians achievements for many years and certainly not now. Don’t blame the wealthy we all spend money abroad, the import/export gap is very large everyone is guilty.

Katie59

Economic competence has not been high on polititians achievements for many years and certainly not now. Don’t blame the wealthy we all spend money abroad, the import/export gap is very large everyone is guilty.

Oh it isn’t blaming the wealthy, but research has shown that an economy grows quicker if the poor/ middle band of earners have extra cash the economy grows more quickly.

Oldnproud

I'm not an economist, but I imagine that our country's economy loses more through the spending (abroad) of the wealthy than it does through the spending of the poorest, whose meagre income, even if it comes from benefits, is likely to go straight back into the domestic economy from which it came in the first place. A form of financial recycling.

Is that right?

I think it's what economists call 'the marginal propensity to spend'. In other words, the wealthy don't spend as much of any extra they get as they tend to hoard their wealth, whereas the 'poor' do spend it, all of it, because they need it to live on.. And yes, it goes back to circulate in the domestic economy. That was one of the rationales for welfare benefits, it kept at least some money circulating in the economy. I don't think you have to be an economist to work that out, it's just common sense.

"Economic growth accompanied by worsening social outcomes is not success. It's failure." Jacinta Ardern.

New Zealand has got a much stronger economy and lower borrowings so she can well afford more spending. They also did not have the disastrous Covid spending that we had, the big downside is that about half their trade is with China, a recession there would hurt.

What you say is not relevant to the point she is making Katie59

The most disastrous thing about the UK's covid spending wasn't the money, which isn't a debt, because that is just accounting fiction, it was the way it was spent. £billions fraudulently claimed and not recovered, £billions spent on Track and Trace, including the development of a useless 'app' and £1,000s a day on 'consultants, goodness knows how much on contracts with tory cronies for useless PPE by way of the VIP lane, and 'Nightingale hospitals unused because there was no-one to staff them. In a word, government incompetence and corruption.

New Zealand, let us remember, hadn't cut its ties to its biggest and nearest trading partner and market with a resultant annual loss of 4% of GDP...

Nor did they elect a corrupt, idle, money grabbing charlatan for PM...

RichmondPark1

"Economic growth accompanied by worsening social outcomes is not success. It's failure." Jacinta Ardern.

Is that a recent quote Richmond?

DaisyAnne

RichmondPark1

"Economic growth accompanied by worsening social outcomes is not success. It's failure." Jacinta Ardern.

Is that a recent quote Richmond?

I don’t understand why it’s relevant when it was said, I’m sure she hasn’t changed her mind since?

Totally odd. What has me asking a question of someone else got to do with you? It was obviously relevant to me, or I wouldn't have asked it.

Why have we suddenly got people who want to dictate how we think and what posts we make, for heaven's sake?

DaisyAnne

Totally odd. What has me asking a question of someone else got to do with you? It was obviously relevant to me, or I wouldn't have asked it.

Why have we suddenly got people who want to dictate how we think and what posts we make, for heaven's sake?

I’m not going to dignify such a stupid comment by responding.

Good. I am glad you realise your comment was stupid - although I wouldn't have gone that far.

What reply did you expect? I still find it totally odd.

DaisyAnne

Good. I am glad you realise your comment was stupid - although I wouldn't have gone that far.

What reply did you expect? I still find it totally odd.

Katie59

It doesn’t really matter wether spending precedes taxation, the money goes round in circles. If at he end of the year taxation has not equaled spending plus repayments more has to be borrowed to fill the gap. The UK has not reduced it borrowing for 20 yrs and I don’t expect Truss to achieve a reduction in 2 yrs.

The proceeds of taxation or spending does get distributed to the majority, that does not mean that everyone gets all they need.

That's not true. Spending doesn't need to be balanced at the end of an accounting period. Interest needs to be paid and that, in theory, is all. Debts can often be reduced by inflation, as anybody who took out a mortgage in the 60s has experienced.

Katie59

Economic competence has not been high on polititians achievements for many years and certainly not now. Don’t blame the wealthy we all spend money abroad, the import/export gap is very large everyone is guilty.

If we didn't buy goods which could be produced more efficiently and cheaply abroad, we'd be worse off.

DaisyAnne

Good. I am glad you realise your comment was stupid - although I wouldn't have gone that far.

What reply did you expect? I still find it totally odd.

It wasn't Casdon's comment which was stupid (or insulting).