Today it’s Restore Britain's turn to release policy slop in the form of their new economics paper. Brandolini's law springs to mind. The amount of energy needed to refute bullshit is an order of magnitude bigger than that needed to produce it. What strikes me is how muddled it is. Certainly it's good that they've set out their general economic principles, but to then make fag packet calculations on budgets is just tiresome for those of us hoping for something more credible and serious.
One aspect of removing people from a country in large numbers is the reduction in demand for services.
That reduction leads to lower costs.
Why build houses if 10 million people leave?
Remove 14% of housing demand - the effect will be lower demand, lower prices. So why does Restore talk about building houses?
The result of a smaller population is less schools less university’s less shops less garages etc etc?
The last time a population receded considerably (in the UK) was the result of the Black Death in the 14th century.
When the Black Death ended the poor increased their wealth as the rich (mostly royalty) had to pay more for services provided by the poor as there were fewer people.
The new world we will see will make greater use of technology and AI.
The UKs efficiency is extremely poor against other countries.
Look at Singapores where labour is twice as efficient as the UKs workforce.
There is considerable slack in the UK labour force even before AI and robotics investment occurs!
So normal economic rules are not going to exist in a new world of super efficiency (compared to today).
Elon Musk has even said there may be no need for wages in 10 years (or so) as costs of products, housing and energy slump.
An exaggeration perhaps, but you can begin to understand how our view on money won’t be as important as it is today.
How the new economics will look, then, is way beyond my capacity.
There is no way out of our economic death spiral which doesn't involve both massive cuts to welfare and the cancellation of a huge part of the public debt - about two thirds - not owned by foreigners.
"public sector pensions have accrued rights, and thus any changes necessitate long transitions, and do not generate and short to mid term savings."
But they don't have rights to any particular tax rates.
At the moment income from employment is taxed at much higher rates than other income because of NICs. Pension income attracts the same income tax rates as employment income but no NICs. Savings income also doesn't suffer NICs but has additional allowances, including ISAs, and as a result anybody paying tax on investment income is either rich or stupid.
If it is already the case that different types of income are taxed at different rates why not add additional taxes to public sector pension income?
How arrogant. I am not wealthy, I pay tax on savings income as well as investing in ISAs. You do know that the maximum you can open in any one year is £20K, don't you? I have to spread my savings to try to get a broad level of interest but it results in paying tax. If I have an investment maturing that is worth £40K, what do I do with the £20K I can't put in an ISA, genius?
Why? Because the Public Sector is the last bastion for trade unions and they will fight any changes to Public Sector pensions to the death. This needs to be dismantled slowly by ceasing this scheme for new entrants and biting the bullet for the time being on existing members.
The savings are there to be made, but as you point out, it requires significant more thought on policy and execution to be realized.
My comment is in the odd collection of tax priorities.
Business rates is the most distortive and negative tax we have. It is a tax on improvement and efficiency and an upfront cost to business before any profits are made. Even Tony Blair recognizes that it needs reform or removal and is unlikely that its removal would result in any lost revenue for hmrc. It should be one of the first taxes to go - along with stamp duty. If we want to rejuvenate high streets, encourage self reliance and entrepreneurship it has to be a priority for removal.
Cutting vat is a proxy boost to corporation profit as savings are unlikely to be passed onto consumers. As corporation tax is already being reduced why not target something else like CGT which is again another negative and distortive tax that raises little revenue for hmrc. Growth comes from investment, if that is the goal, abolish cgt
Inheritance tax. Much better to adopt the Italian system where tax liability falls on beneficiaries rather than the estate, raise the tax threshold for families and exclude areas that the state wishes to encourage eg government bonds and shares in British companies. This is better than outright abolishment as it creates incentives aligned with the growth and investment policy whilst enabling most people to pass their home onto their children - which is the primary concern.
Pete, are you the love child of a policy wonk and a Swiss Army knife? Your breadth of output and competence is astounding.
I like that!
Depressing.
Reform in slop shocker, whatever next?
Unfortunately we live in a dumbed down world where this IS policy. Grim stuff.
This is from Restore, not Reform.
One aspect of removing people from a country in large numbers is the reduction in demand for services.
That reduction leads to lower costs.
Why build houses if 10 million people leave?
Remove 14% of housing demand - the effect will be lower demand, lower prices. So why does Restore talk about building houses?
The result of a smaller population is less schools less university’s less shops less garages etc etc?
The last time a population receded considerably (in the UK) was the result of the Black Death in the 14th century.
When the Black Death ended the poor increased their wealth as the rich (mostly royalty) had to pay more for services provided by the poor as there were fewer people.
The new world we will see will make greater use of technology and AI.
The UKs efficiency is extremely poor against other countries.
Look at Singapores where labour is twice as efficient as the UKs workforce.
There is considerable slack in the UK labour force even before AI and robotics investment occurs!
So normal economic rules are not going to exist in a new world of super efficiency (compared to today).
Elon Musk has even said there may be no need for wages in 10 years (or so) as costs of products, housing and energy slump.
An exaggeration perhaps, but you can begin to understand how our view on money won’t be as important as it is today.
How the new economics will look, then, is way beyond my capacity.
There is no way out of our economic death spiral which doesn't involve both massive cuts to welfare and the cancellation of a huge part of the public debt - about two thirds - not owned by foreigners.
"public sector pensions have accrued rights, and thus any changes necessitate long transitions, and do not generate and short to mid term savings."
But they don't have rights to any particular tax rates.
At the moment income from employment is taxed at much higher rates than other income because of NICs. Pension income attracts the same income tax rates as employment income but no NICs. Savings income also doesn't suffer NICs but has additional allowances, including ISAs, and as a result anybody paying tax on investment income is either rich or stupid.
If it is already the case that different types of income are taxed at different rates why not add additional taxes to public sector pension income?
How arrogant. I am not wealthy, I pay tax on savings income as well as investing in ISAs. You do know that the maximum you can open in any one year is £20K, don't you? I have to spread my savings to try to get a broad level of interest but it results in paying tax. If I have an investment maturing that is worth £40K, what do I do with the £20K I can't put in an ISA, genius?
Why? Because the Public Sector is the last bastion for trade unions and they will fight any changes to Public Sector pensions to the death. This needs to be dismantled slowly by ceasing this scheme for new entrants and biting the bullet for the time being on existing members.
The savings are there to be made, but as you point out, it requires significant more thought on policy and execution to be realized.
My comment is in the odd collection of tax priorities.
Business rates is the most distortive and negative tax we have. It is a tax on improvement and efficiency and an upfront cost to business before any profits are made. Even Tony Blair recognizes that it needs reform or removal and is unlikely that its removal would result in any lost revenue for hmrc. It should be one of the first taxes to go - along with stamp duty. If we want to rejuvenate high streets, encourage self reliance and entrepreneurship it has to be a priority for removal.
Cutting vat is a proxy boost to corporation profit as savings are unlikely to be passed onto consumers. As corporation tax is already being reduced why not target something else like CGT which is again another negative and distortive tax that raises little revenue for hmrc. Growth comes from investment, if that is the goal, abolish cgt
Inheritance tax. Much better to adopt the Italian system where tax liability falls on beneficiaries rather than the estate, raise the tax threshold for families and exclude areas that the state wishes to encourage eg government bonds and shares in British companies. This is better than outright abolishment as it creates incentives aligned with the growth and investment policy whilst enabling most people to pass their home onto their children - which is the primary concern.
Pete, I wish you could work with these parties on the right to create solid, workable policies, your knowledge is astonishing.
Can I ask if you've ever approached them or they you?
I'm persona non grata on the right.
That's sad to hear, what a waste.
BTW Pete we have a new record out, is there an e-mail I can send it to?
Maybe even do a review on here, that would be amusing. Thanks.