Is wealth inequality causing the big issues of our day?

A state doesn't have to live within its means. How would you define its means anyway? A state's "means" isn't the same as the amount of tax it collects because taxes can be increased or decreased - there will still be the same amount of money/assets, but it will be spent differently. One of the major reasons for taxation is redistribution of wealth.

The state could create its own money or it could borrow, i which case the borrowing becomes somebody else's investment.

David49

Whitewavemark2

Menopauselbitch

The wealthy are already pay your 60% tax. I would not like to earn less than half of what I worked for

The point being that they dont work for it. It is what is known as passive income.

The classic is the self employed craftsman who only works 3 days a week because then he doesn't have to charge VAT or go into the 40 % tax bracket.

It's hardly surprising, no incentive to put in more effort.

But does your craftsman own sufficient assets to be able to survive on an extremely large income without getting out of bed.

That is what we are talking about.

David49

"TBh I have seen many threads which argue the case for MMT and Murphy’s case for it, but not so much his argument against wealth tax - because I think he is against them - but happy to be corrected."

Why should we have confidence in economists their ideas have got us into the situation we are in now, a state has to live within its means, you can borrow to expand the economy, which is exactly what the UK has not been doing.

Economists advise governments, banks and work on the city etc.

Governments make the decisions which for good or ill we all have to live with.

Interesting................. why does White wave mark assume that GNs - or some of them at least - are not in the wealth bracket she/he is describing?

rowyn

Interesting................. why does White wave mark assume that GNs - or some of them at least - are not in the wealth bracket she/he is describing?

Well, I guess there may be a billionaire posting regularly on GN, but I would bet a bit of money that there isn’t.

Inequality affects social cohesion.

One of the stereotypical British values is fairness. It's fair that people who work more should earn more. It's also fair that people with almost no money, who might still work hard, should be able to access basic services.

It's not fair that people should be dying because medical waiting lists are so long and they don't get seen until it's too late, while others can use their wealth to access the latest technology and drugs with no wait.

So there's a problem. Ideas of fairness collide. I've been reading a lot about Lancashire (inc Manchester) in the early Industrial Revolution. Inequality was massive. The People's History Museum in Manchester has some of the local records which show the differences. We aren't anywhere near those levels of inequality, but there's no doubt that inequality is increasing - and I have some sympathy for the people in the "red wall" who have been shouting about it, but nobody has been listening. Incidentally, does anybody else read John Harris in the Guardian, who has been writing about social cohesion and neglected former industrial towns for ages?

twaddle

A state doesn't have to live within its means. How would you define its means anyway? A state's "means" isn't the same as the amount of tax it collects because taxes can be increased or decreased - there will still be the same amount of money/assets, but it will be spent differently. One of the major reasons for taxation is redistribution of wealth.

The state could create its own money or it could borrow, i which case the borrowing becomes somebody else's investment.

Of course it's means are the amount of tax raise, it can borrow or create money to increase growth and gather more revenue it can then spend more.

We have already borrowed/created 100% of our GDP but we have spent far too little on growth. We need to be a lot more productive as a nation of our lenders will loose confidence

What do you think we could produce? We can't turn the clock back because we no longer have a competitive edge with most manufactured goods. We need to develop new goods, which will primarily be services and require a highly skilled and educated workforce.

We now have a situation where people like nurses are being dragged into the 40% tax bracket. 50k a year no longer means you are well off, probably a little better off than average, and the jump from 20% to 40% is a big hike in taxes.
I think we need to look at income tax and go for a system that helps the lower paid and the middle class. In the interests of fairness, I'd keep the 45% top rate for people earning over 125k a year. However, I would increase the tax threshold from 12.5 k to 16k a year, have a 10% band for the next 4k, 20% for 20k to 60k, and then 30% from 60k to 125k.

I’ve been listening to some economists about the issue of growing inequality in the U.K.

So post war the government (meaning us as a nation) owned a huge amount of our own resources like housing, energy, water, transport, communication etc. our government was relatively wealthy and able to support its population during times of crises because it owned so much resource.

Fast forward to now. We own nothing. So energy is now in the hands of the wealthy, water likewise and property is becoming more and more unaffordable both to the working class but increasingly the middle classes. So our government has gone from being relatively wealthy to struggling, particularly as a result if the two crises over the past couple of decades.

Iran has meant that the cost of living is going to increase and with many families already in difficulties, this is going to mean real hardship..
What our government has done recently is to try to cushion the effect of each crises - furlough payments and price capping. But what it in effect means that not only are we paying higher prices for stuff like energy which is kept capped, but the government (meaning the tax payer) is making up the difference, and it is all going into the vastly wealthy hands.

Inequality is getting wider and wider.

twaddle

What do you think we could produce? We can't turn the clock back because we no longer have a competitive edge with most manufactured goods. We need to develop new goods, which will primarily be services and require a highly skilled and educated workforce.

You have encapsulated the problem exactly we are stuck with old technology that is not competitive and have EV not invested in new tech, the UK has fallen behind. Successive governments have not enabled development of new industries and it doesn't look like there is going to be a change anytime soon.
£100 billion spent on developing industry instead of HS2 would have been really useful, instead we spend £100 billion a year on interest just to stand still. If the present Labour government did decide to borrow more it certainly won't be spent to improve growth.

Ignore EV

rowyn

Interesting................. why does White wave mark assume that GNs - or some of them at least - are not in the wealth bracket she/he is describing?

Do you get the impression there are excessively rich people on here?

Whitewavemark2

I’ve been listening to some economists about the issue of growing inequality in the U.K.

So post war the government (meaning us as a nation) owned a huge amount of our own resources like housing, energy, water, transport, communication etc. our government was relatively wealthy and able to support its population during times of crises because it owned so much resource.

Fast forward to now. We own nothing. So energy is now in the hands of the wealthy, water likewise and property is becoming more and more unaffordable both to the working class but increasingly the middle classes. So our government has gone from being relatively wealthy to struggling, particularly as a result if the two crises over the past couple of decades.

Iran has meant that the cost of living is going to increase and with many families already in difficulties, this is going to mean real hardship..
What our government has done recently is to try to cushion the effect of each crises - furlough payments and price capping. But what it in effect means that not only are we paying higher prices for stuff like energy which is kept capped, but the government (meaning the tax payer) is making up the difference, and it is all going into the vastly wealthy hands.

Inequality is getting wider and wider.

I’d be interested to know which economists because the orthodoxy or heterodoxy of their economic beliefs will significantly influence their analysis.

So post war the government (meaning us as a nation) owned a huge amount of our own resources like housing, energy, water, transport, communication etc. our government was relatively wealthy and able to support its population during times of crises because it owned so much resource.

This is baffling. The UK was broke at the end of WW2. That is a fact which, to my knowledge, no one disputes. The government was in over all ownership of none of the listed resources (although many were municipal enterprises). If this is meant as a contrast to our current state of government ownership of resources it is a very strange one.

Where is the explanation of how the penniless postwar government managed to end up owning all the cited resources?

Surely having spats over which wealth tax is used is pointless. How it starts will not be how it finishes. All policies evolve: this would too.

I have just come across The Deaton Report about inequality in the U.K. I have looked at the summary and it makes sobering reading.

I think all the political parties would do well to take this on board and formulate policies around this.

The headline summary

1. The U.K. is one of the most unequal societies second only to the USA

2. Regional inequality is extremely severe

3. Health inequality is widening

4. Wealth and housing is driving inter generational inequality

5. Education and labour markets drive inequality

6. Inequalities are interconnected.

One of the main Policy recommendations is

Progressive taxation of wealth, inheritance and capital gains.

Sir Angus Deaton a Nobel laureate and Scot is an economics professor and emeritus professor - Princeton.

Whitewavemark2

I have just come across The Deaton Report about inequality in the U.K. I have looked at the summary and it makes sobering reading.

I think all the political parties would do well to take this on board and formulate policies around this.

The headline summary

1. The U.K. is one of the most unequal societies second only to the USA

2. Regional inequality is extremely severe

3. Health inequality is widening

4. Wealth and housing is driving inter generational inequality

5. Education and labour markets drive inequality

6. Inequalities are interconnected.

One of the main Policy recommendations is

Progressive taxation of wealth, inheritance and capital gains.

Sir Angus Deaton a Nobel laureate and Scot is an economics professor and emeritus professor - Princeton.

However eminent the professor is there is far more inequality in developing countries. All western countries have a welfare system there should be no abject poverty where citizens have nothing.
There may well be migrants that enter seeking a better life with nothing, they are fleeing worse conditions, should citizens support unlimited migration.?

Post WW2 the U.K. nationalised

Coal, gas, electricity, trains, buses, canals, GPO, millions of council houses, telecoms. A lot if farm land.

In effect the British people owned the basic assets. The wealth represented by these assets were owned by us. So in times of crises the U.K. government was in a position to at least protect its citizens from the worst effects.

Thatcher sold it all off

Now the U.K. government is in real schtook and from what I am reading things are going to become extremely difficult over the next few months with some economist talking about a war time economy😮😮

What is interesting is that the USA is now the biggest producer of oil in the world, but Trump cannot protect his MAGA base from ever increasing price rises because the USA does not own the oil produced. That is in the hands of the ultra-wealthy - like Trump.

Regarding economists - I have recently been reading the French economist Gabriel Zukman.

Whitewavemark2

Post WW2 the U.K. nationalised

Coal, gas, electricity, trains, buses, canals, GPO, millions of council houses, telecoms. A lot if farm land.

In effect the British people owned the basic assets. The wealth represented by these assets were owned by us. So in times of crises the U.K. government was in a position to at least protect its citizens from the worst effects.

Thatcher sold it all off

Now the U.K. government is in real schtook and from what I am reading things are going to become extremely difficult over the next few months with some economist talking about a war time economy😮😮

The question remains unanswered.

How did a penniless country manage to nationalise so many enterprises?

I ask it because we are constantly being told that we cannot renationalise utilities because we cannot afford it.

Why is postwar Britain used as an exemplar of national wealth when the origin of its supposed asset wealth is ignored?

As if the nationalisation fairy just waved a magic wand and, hey presto, the government owned all those utilities.

Well, I think we know how it happened. To me at present the much more interesting question is why it happened.

Whitewavemark2

Well, I think we know how it happened. To me at present the much more interesting question is why it happened.

This is what I cannot understand. Why is the role of money being totally ignored?

The thesis is that Britain was asset rich after WW2 and so could support its population. A thesis which ignores the fact that the UK was dirt poor at the end of WW2, as it is claimed to be now every time the question of renationalisation is aired. You don”t think the ‘how’ is significant to our current position?

MaizieD

Whitewavemark2

Post WW2 the U.K. nationalised

Coal, gas, electricity, trains, buses, canals, GPO, millions of council houses, telecoms. A lot if farm land.

In effect the British people owned the basic assets. The wealth represented by these assets were owned by us. So in times of crises the U.K. government was in a position to at least protect its citizens from the worst effects.

Thatcher sold it all off

Now the U.K. government is in real schtook and from what I am reading things are going to become extremely difficult over the next few months with some economist talking about a war time economy😮😮

The question remains unanswered.

How did a penniless country manage to nationalise so many enterprises?

I ask it because we are constantly being told that we cannot renationalise utilities because we cannot afford it.

Why is postwar Britain used as an exemplar of national wealth when the origin of its supposed asset wealth is ignored?

As if the nationalisation fairy just waved a magic wand and, hey presto, the government owned all those utilities.

Correct me if I'm wrong, but I understood that the government compensated shareholders with government bonds and that inflation was managed with Marshall Plan money (and other). The government was in trouble about two years after the war and people were becoming impatient because rationing was as strict as ever and life wasn't improving.

MaizieD

twaddle

GrannyGravy13

The problem with resenting paying taxes arises when government after government squanders ££££’s on vanity projects like HS2…

Yep! That's the problem with Conservative governments!

I hate to point this out, but HS2 was initiated by a Labour government.

There was a 'point' to it; to relieve congestion on the West and East coast mainline routes, which were to continue taking freight and 'ordinary' passenger traffic while HS2 was for fast services to connect the north and south.

IMO it has suffered from poor procurement and profiteering, as well as delays in the planning process. It's now a bit pointless as it has to stop short of 'the North'.

I stand corrected.

I agree that once anything north of Birmingham was scrapped, it became pointless.