Yesterday, Sunak announced that the economy is pointing in the right direction.

Mind you, they can’t talk as regards health services. Fine if you can pay or have insurance. They have Biden and Trump. You know what ? I think I’d prefer Sunak.

The U.K. as it appears to the New York Times

Katie59

www.theguardian.com/commentisfree/2023/jan/26/britain-rich-pensioners-state-pension-age-68-poor

I dont often agree with opinions in the Guardian this is an exception a great many pensioners don’t need even more, the pensions paid to then would be much more useful directed towards those that are struggling.

Yes, the government could claw back the triple-lock bribe for all pensioners and just give it to those that are struggling...

Wasn't it said that it was cheaper to just pay these increases to all pensioners, who will then - if their income is over the thresh-hold pay tax?

This is sticking-plaster stuff. Cut a bit off here, to stick it on there.

Surely the problem is the basic inequality of the whole economic system - the ever-widening gap between the very wealthy and the very poor (by comparison)?

If you take from the comparatively wealthy pensioners and re-distribute to those that are struggling (admin costs?) sure, they'll be a bit better off - but they will still struggle (just not quite so much) because of the fundamental inequality embedded in our free-market economic system?

It must be possible to have a more equitable economic system without inhibiting entrepreneurs on the one hand or punishing Mr / Mrs Average on the other?

www.theguardian.com/commentisfree/2023/jan/26/britain-rich-pensioners-state-pension-age-68-poor

I dont often agree with opinions in the Guardian this is an exception a great many pensioners don’t need even more, the pensions paid to then would be much more useful directed towards those that are struggling.

'Well being' covers far more than our not particularly good welfare benefits. As HPQ says, many people are struggling to afford more than just the basics. They're not offering much of an inducement to the private sector to invest...

That all depends how far you take “well being” compared with other nations the UK has a pretty good welfare system, many countries, health care, even state pensions are means tested, only the lowest income get support.

Surely "economic well-being" matters - because if people aren't spending because they don't earn enough to manage anything other than the essentials, these companies and organisations won't thrive?

Couldn't agree more, Dickens. It is so blindingly obvious. If people are concerned about paying their mortgage they will not be spending capital (or borrowing money) to buy say, new wardrobes, new kitchen, new carpets etc. If more people are in rented property than in previous generations they are not spending money on improvements on a property that they may have to leave, so no spending at the garden centre, no new carpets, nothing bought that you can't take with you. We are on a fixed income, but accept that we are quite comfortable, but have decided against buying a new dining table and chairs which we had fancied; we will make do with what we have. We used to eat out quite often, now we still do, but considerably less. Small examples, but multiply it across the country and you get the gist. All the fiddling with taxes which is being rumoured will not affect our spending (or lack of).

Surely "economic well-being" matters - because if people aren't spending because they don't earn enough to manage anything other than the essentials, these companies and organisations won't thrive?

Absolutely, Dickens. This seems so glaringly obvious that one wonders why politicians and commentators don't point it out regularly.

One of the heterodox economists' criticisms of 'orthodox' economics is that it is based on theory and mathematical models based on theory, instead of empirical observation of how economic actors actually behave. I think non economists are blinded by the esoteric orthodox economic commentary and believe that something which appears to be so complex is beyond the application of common sense...

Unless said investors are only interested in the export market?

Oh yes, those wonderful trade deals that our current governments have negotiated for us. How attractive they must be to investors 🤣🤣🤣

I'm entirely in agreement with you, Dickens

Katie59

Investors care less about the “economic well-being” of the UK, (unless there is civil unrest) they want a secure investment for their money. They support a fair distribution of money and a taxation system where those that can afford to do pay.

What sort of companies / organisations do investors invest in, in the UK - either foreign or domestic investors?

Surely "economic well-being" matters - because if people aren't spending because they don't earn enough to manage anything other than the essentials, these companies and organisations won't thrive?

Unless said investors are only interested in the export market?

“By 'growth' I mean creating economic activity which supports job creation, payment of real living wages and a decent standard of living for all citizens. What do you mean by 'growth', Katie59?”

Investment that improves the economic output of the UK

Investors care less about the “economic well-being” of the UK, (unless there is civil unrest) they want a secure investment for their money. They support a fair distribution of money and a taxation system where those that can afford to do pay

As an example Greece could not balance its books a few years ago, loans were arranged with the European Bank on condition that benefits were cut and taxation reformed. The people had to accept those terms they did not like it but it happened anyway, many other countries have had to do the same.

The UK cannot buck that market, the Magic Money Tree has limitations, we could borrow more to create growth but we have not been doing that, borrowing/QE has predominately been for social improvement. As Murphy points out the UK is not obliged to include QE as borrowing, it does so to retain the confidence of financial markets by being transparent.

If you were to read it again you'd see that Murphy suggests that there could be no need to use the financial markets at all. See his commentary on diagram #2.

It’s not about economic theories it’s about balancing the budget, successive governments have failed to do that for many years, for political gains they have been spending too much on social improvement and neglecting growth.

I agree, I'm sure most people will agree, that governments have failed to spend on 'social improvements' but that has nothing at all to do with 'balancing the budget', though it certainly does neglect growth, in that state spending, as Murphy's piece demonstrates, is a driver of growth.

By 'growth' I mean creating economic activity which supports job creation, payment of real living wages and a decent standard of living for all citizens. What do you mean by 'growth', Katie59?

Katie59

IHT only applies to the few estates that are over £1m per couple, ( is it 4% actually pay IHT)

We will be exempt then. 🤣
One of the 96% of households that won’t be affected!

Whitewavemark2

MaizieD

GrannyGravy13

Katie59 taxation does not fund Government spending.

Quite right, GG13. Which is one reason why I posted the Murphy piece which demonstrates which way money flows through the economy.

Other economic theories are available 😄

Are you channeling a former poster, Wwmk2? 😆

It's not a theory, it's a description of reality

The USA does very well economically. Mind you, you wouldn’t want to get sick there if you haven’t got a very good income.

Whitewavemark2

MaizieD

GrannyGravy13

Katie59 taxation does not fund Government spending.

Quite right, GG13. Which is one reason why I posted the Murphy piece which demonstrates which way money flows through the economy.

Other economic theories are available 😄

It’s not about economic theories it’s about balancing the budget, successive governments have failed to do that for many years, for political gains they have been spending too much on social improvement and neglecting growth. Many of those social benefits are given away to voters who can well afford to pay, other countries have income/asset thresholds above which social benefits cease.

MaizieD

GrannyGravy13

Katie59 taxation does not fund Government spending.

Quite right, GG13. Which is one reason why I posted the Murphy piece which demonstrates which way money flows through the economy.

I accept that Taxation does not fund Government spending, just like any business you have to invest to get a return, the return comes back in taxation, that helps fund further investment.

The UK can borrow or create money but it has to be done responsibly, the international financial markets judge what is responsible and what interest rate it is willing to lend at.

The UK cannot buck that market, the Magic Money Tree has limitations, we could borrow more to create growth but we have not been doing that, borrowing/QE has predominately been for social improvement. As Murphy points out the UK is not obliged to include QE as borrowing, it does so to retain the confidence of financial markets by being transparent.

I have every confidence that a Starmer led government will continue that policy.

Curtaintwitcher

It's strange how most women are housewives and have to balance a household budget....so much for this, so much for that,etc. We try to keep a bit in reserve for unexpected emergencies.
It sounds simple, so why do successive governments keep making such a mess of the nation's budget?
Put simply...domestic expenditure should take priority. If something unexpected comes up and there is no money to spend on it....then borrowing is an option but there needs to be a limit on the amount.

Look at Sterling Flow by Murphy. I think maizie has put a link on page 1 of this thread.

That will help you understand why a state’s economy is not the same as a household budget.

The trouble is that by Thatcher saying it is, it was such an attractive and easy way of thinking that is how Sterling is managed in the economy, but she was (and almost certainly knew she was) wrong when saying so.

It was such good propaganda to try to convince people to accept a smaller state, which Thatcher was fully signed up to.

It's strange how most women are housewives and have to balance a household budget....so much for this, so much for that,etc. We try to keep a bit in reserve for unexpected emergencies.
It sounds simple, so why do successive governments keep making such a mess of the nation's budget?
Put simply...domestic expenditure should take priority. If something unexpected comes up and there is no money to spend on it....then borrowing is an option but there needs to be a limit on the amount.

MaizieD

GrannyGravy13

Katie59 taxation does not fund Government spending.

Quite right, GG13. Which is one reason why I posted the Murphy piece which demonstrates which way money flows through the economy.

Other economic theories are available 😄

GrannyGravy13

Katie59 taxation does not fund Government spending.

Quite right, GG13. Which is one reason why I posted the Murphy piece which demonstrates which way money flows through the economy.

Freya5

Whitewavemark2

As someone said “the Tories could all sit around the same table in their subsidised restaurant” - that is if they could stand each other!

Im sure Labour acolytes will be just as happy sitting around their subsidised tables, in Houses of Parliament, drinking their subsidised red wine.

Yeah but historically and to date Labour don't have their noses in the trough even half as much as the Tories. They also seem to manage not to sexually assault someone weekly.

Katie59 taxation does not fund Government spending.

GrannyGravy13

Chocolatelovinggran we are also in the SE, and have already warned the AC that they will have an IHT bill, unless the thresholds are changed PDQ.

Money has to be found for increased services we all say we want Inheritance Tax is one potential source, a tax that only 4% of estates pay is ridiculous .

It will be very unpopular but then all taxes are unpopular.

Chocolatelovinggran we are also in the SE, and have already warned the AC that they will have an IHT bill, unless the thresholds are changed PDQ.

Very true.