How do we improve our tax take?

You sound quite miffed. Don’t be, it was only meant in fun.

I shall now drop the subject .

Thank you for your reply😊

Blimey 😄😄😄 I didn’t ask for a lecture on MMT - you know that I have read quite a bit about it, and have a reasonable grasp, although I continue to have reservations.

That's not the impression your questions gave. I apologise for boring you.

I can't see how being back in the EU but continuing to use sterling would be a problem. We manged fine before we came out.

IIRC, all EU money was disbursed to the UK as euros and changed into sterling. I recall that we were supposed to follow the ECB 'rules' on deficits and general monetarist type policy. But as we were doing that anyway it didn't make much difference. We weren't the only EU state not using the euro.

Blimey 😄😄😄 I didn’t ask for a lecture on MMT - you know that I have read quite a bit about it, and have a reasonable grasp , although I continue to have reservations.

I just wanted a simple explanation as to how the U.K. in the EU would fit into the theory as Sterling/ euro. VAT take/grants etc. as I’m too lazy to work it out myself snd thought you might have it at your fingertips.

But hey-Ho it isn’t really important.

Thanks anyway.

My point being that I was interested in your assertion that you only deal in facts, when MMT is a theory that is based on Keynesianism.

MMT is as much a 'theory' as is Einstein's Theory of Relativity, Darwin's Theory of evolution or Newton's Theory of Gravity, or even Galileo's 'theory' that the earth circles the sun. I can't see you seriously questioning those theories (though I am aware that in the field of science some may have been tweaked over time).

Theory is a difficult word because it has two meanings. In the scientific world it is a proposal which is based on empirical evidence and which has yet to be disproved. The scientific method being to set up experiments/ research to disprove the proposed 'theory'. if it can't be disproved it can be accepted as fact based.

The popular perception of a 'theory' is quite different. It tends to view a theory as something merely speculative with little, apart from the proposer's opinion, to prove it.

The 'Theory' of MMT falls into the first category. It is nothing more than an explanation of how the monetary system of a country with its own sovereign currency actually works. It is entirely evidence based. It is based on the fact that all a country's money is (apart from foreign earnings) issued by the state. Heads of state have issued money for hundreds of years, it's not exactly a new concept. The new concept, introduced permanently in the early 1970s was that the currency 'value' is no longer based on the state's holdings of gold and silver. There is no Gold Standard.

'Money' is now fiat currency based on nothing but trust and the fact that it is the only money accepted by the government for payment of tax and the only money that can be used legally for monetary transactions in the country. The government is able to issue as much of it as it likes (fiat means 'let it be') and it issues it mostly by spending into the economy via its central bank. In our case, the Bank of England. This is a basic and incontrovertible fact.

Of course, the government is constrained by a number of factors when it comes to issuing money, but MMT itself states the basic principle. Can it be disproved?

Banks are able to issue new money in the form of loans under licence from the government, subject to regulation. But although the money that banks issue promotes economic activity they do not add permanently to the county's stock of money because loans are repaid in their entirety (thus destroying the money) and the interest paid on the loan (which is usually more than the rate of inflation) actually tends to remove money from the economy as the profits it generates go in dividends and bonuses to the already wealthy who have a 'marginal propensity to spend' and are more like to save it, thus taking it out of circulation in the economy.

The secondary principle of MMT is that governments spend first and tax to recover some of the money they issued. Not recovering the money would lead to inflation and even hyperinflation. As in those exemplars loved by MMT critics who focus on the issuance of money and ignore the taxation principle, Weimar, Venezuela and Zimbabwe.

A corollary of MMT is that without a government running a deficit the country's money supply for active economic activity diminishes. This is because some money is lost by spending abroad or purchasing foreign goods and some becomes inactive when saved. A government that insists that outgoings must equal incomings (misnamed 'balancing the books') will never be able to expand the money supply enough to accommodate an increase in population or growth in new products and services. A government which runs a surplus, more coming in than going out, will create a shortage of money to drive economic activity. The UK has rarely run a surplus in hundreds of years.

MMT is politically neutral. It can be used by a government of any political colour. It tends to be more favoured by people of 'the left' because it offers ways to support a more equable distribution of resources but it could equally be used to channel money to the already wealthy. In fact, it was during covid when huge amounts of specially created money was poured into dodgy PPE procured for inflated sums by friends and associates of the tories.

What I’m really interested in is how the way the EU operates, fits in with MMT.

The ECB creates and issues the euro for all EU countries which use it. Which means that the individual countries within the eurozone have less control over the amounts of money they might wish to spend and the economic policies they might want to implement. They are constrained by the economic policies of the directors of the ECB.

So, in the case of Greece, which wanted to spend its way out of a recession (Keynesian) , it was forced to implement 'austerity' (monetarist).

If we ever rejoin the EU we should never adopt the euro. Monetary sovereignty is one 'sovereignty' that should never be surrendered.

MaizieD

Whitewavemark2

Well you said that you didn’t deal in theory only facts.

I still don't understand.

What have 'founding fathers' got to do with MMT and what isn't factual about MMT's description of how the monetary system of a state with a sovereign currency works?

And what isn't factual about the data that underpins, for example, Piketty's work on wealth?

Piketty is not unusual in using data to underpin a theory. In fact I think his idea. Of capital accumulation, has similarities to Marx’s capital accumulation model, but I acknowledge that the use of “capital” means somewhat different things.

My point being that I was interested in your assertion that you only deal in facts, when MMT is a theory that is based on Keynesianism.

But What I’m really interested in is how the way the EU operates, fits in with MMT.

MaizieD

^The vast majority of people in the UK benefit at some time from essential services. There will always be a handful who don't think they should pay for everybody else when they could possibly afford to pay for their own security, healthcare, education, etc etc.^

Let's not forget that the wealthy who have made their money from business (and, indirectly, those who make their money from servicing the wealthy) have benefitted from a work force educated free by the state, who are kept healthy by the state financed NHS. They use the infrastructure provided by the state, the forces of law and order paid for by the state, emergency services and much more. And, of course, they benefit from a state tax system which enables them to minimise their contribution to the state provided services.

A business does use infrastructure of course and pays for the privilege through road taxes, business rates and company taxation along the way, they dont get anything for free.

Whitewavemark2

Well you said that you didn’t deal in theory only facts.

I still don't understand.

What have 'founding fathers' got to do with MMT and what isn't factual about MMT's description of how the monetary system of a state with a sovereign currency works?

And what isn't factual about the data that underpins, for example, Piketty's work on wealth?

The vast majority of people in the UK benefit at some time from essential services. There will always be a handful who don't think they should pay for everybody else when they could possibly afford to pay for their own security, healthcare, education, etc etc.

Let's not forget that the wealthy who have made their money from business (and, indirectly, those who make their money from servicing the wealthy) have benefitted from a work force educated free by the state, who are kept healthy by the state financed NHS. They use the infrastructure provided by the state, the forces of law and order paid for by the state, emergency services and much more. And, of course, they benefit from a state tax system which enables them to minimise their contribution to the state provided services.

ronib

Casdon I didn’t think I was either …. Although it does reflect on the less well off too - essential services are in decline and this is more of a problem for anyone staying here permanently.

The vast majority of people in the UK benefit at some time from essential services. There will always be a handful who don't think they should pay for everybody else when they could possibly afford to pay for their own security, healthcare, education, etc etc.

Casdon I didn’t think I was either …. Although it does reflect on the less well off too - essential services are in decline and this is more of a problem for anyone staying here permanently.

I didn’t realise you were the high earners spokeswoman for the UK ronib. Seriously, some are leaving, so the posts they occupied are available for others to fill. There are lots of high flyers, and highly intelligent people filling posts all the time. There isn’t a brain drain.

I think the whole point is that UK State handouts are fast having no appeal for high earners. Compare and contrast with Dubai maybe MaizieD?

Well you said that you didn’t deal in theory only facts.

Um, didnt MMT develop from one of the founding fathers?

I completely fail to understand what you are asking here.

Um, didnt MMT develop from one of the founding fathers?

Also - having wondered past the EU parliament last week and travelled through a lot of Europe, I got to wondering how the grants from the EU, of which there were untold millions towards various projects in the U.K. - how does this fit with MMT?

U.K. contribution based on various things one of which was the vat take.

Paid into the pot then divided out according to an agreed agenda for myriad projects, including extra monies to deprived areas, etc.

When the company is picking up the bill for the expat lifestyle it’s fine, most are not going to be able to do that in retirement. You have to settle down make a new social circle in a new community, most of your work colleagues will have gone off in their own direction

ronib

How does working for a very successful hedge fund fit into your economic theory? MaizieD

How does working for a very successful hedge fund fit your strange defence of the wealthy?

Hedge funds exist to make money for the wealthy. Their well paid administrators, directors, shareholders etc. have access to the same state handouts as the rest of the 'wealthy' and the money they are hedging comes from the same sources, either our state issued money or other states' issued money.

I don't have 'economic 'theory', I look at economic facts.

Top medical care and excellent international schools may well compensate for some disadvantages. After all sadly missing in the UK.

ronib

Have you ever been to Dubai Casdon?

Yes, I’ve been twice, for a holiday, it was interesting. I also have family who lived there for a while. They weren’t, and I wouldn’t be, keen to live there permanently because it’s a restrictive regime, still not a place for women to thrive unless all they want to do is shop and have beauty treatments. I suppose if you are prepared for those restrictions, and like living in a modern city with little culture, mixing with other expats, and having nowhere green to escape it would be okay for a short period. It would be hateful for me, as none of those things appeal to me.

How does working for a very successful hedge fund fit into your economic theory? MaizieD

growstuff

David49

A friends daughter and her husband spent 10 yrs working in Dubai earning mega bucks, 5 yrs ago the job moved to Sydney, still a jet set lifestyle.
Close to retirement now, they plan to settle in Rural Australia, there are some lovely small towns in the leafy part of Victoria without feeling isolated.

Good for them! People have always emigrated to make a fast buck.

I can't imagine anything worse than the ex-pat meetings.

They worked for a UK company, posting sent them to Dubai when that project finished posted to Sydney, no children

Maizie Is it some weird form of Stockholm Syndrome?

I don't get it either. It's not as though they'll ever benefit.

ronib

Not everyone wants to donate half their income to the State growstuff. In reality, it’s difficult to be around the brightest people… and probably difficult for them to be here too.

Well, strangely enough, I always used to reckon that deductions from gross earnings were about 40% and I was never anywhere near being one of the highest earners. How come high earners like it less than somebody whose income was only ever somewhere in the middle?

ronib

Not everyone wants to donate half their income to the State growstuff. In reality, it’s difficult to be around the brightest people… and probably difficult for them to be here too.

What do you mean about it's being difficult to around the brightest people? Who are these brightest people? And why is it so difficult to be around them? TBH, I love having the opportunity to be around them (when I do).

ronib

Not everyone wants to donate half their income to the State growstuff. In reality, it’s difficult to be around the brightest people… and probably difficult for them to be here too.

One day you might understand that the money people have has mostly come from the state. Not only that, but those who have acquired the largest proportion of the state issued money have been helped to do so by the state itself with various tax breaks and a lower rate of tax on some sources of income. That is public money which could be more evenly distributed to give more citizens more comfortable lives. But while the wealthy get wealthier on state benefits, citizens with little or nothing are condemned as scrounging wastrels.

Quoting sob stories about poor wealthy people being taxed out of half of their income is succumbing to the propaganda they pay for to stop people looking too closely at how they acquire, hold and increase their wealth. Empirical research shows definitively that the wealthier people are the less percentage of their wealth they pay. That is the conclusion reached by examining the actual data, not succumbing to propaganda.

I can never understand why people leap to the defence of the wealthy. It’s not as though they need anyone’s help.