Comments by "" (@lonevoice) on "Economics Help" channel.

  1. The problem with the wealthy is that they are unable to spend enough. They always have a surplus that they invest in asset purchases such as property, shares etc. That in turn, through increased competition, pushes up prices. Furthermore, with increasing amounts being used to purchase assets, increasing amounts are being withdrawn from the active economy of jobs, business, services. Over time with the increases in wealth inequality that we have, there is an increasing drain on the active economy as increasing amounts go into asset purchases. This is damaging to the economy and holds back growth. Isn't it also about time that we started to properly tax the UK profits of businesses based in tax havens including a disallowance of intellectual property cost deductions unless they have been already charged to UK taxation. It would be a start but is long overdue. Then there are significant assets in the UK where the owner is either based in a tax haven or can't be properly identified., Surely these need to be taxed. Isn't this an obvious solution or are we so hooked on dirty money or scared about who it might upset?
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  2. This has been a choice. Let's not forget that it is the public that has voted for far right neoliberalism with its austerity, public services decline, lower taxes for the rich, QE for the rich with surging wealth inequality, a surge in house prices and a Wild West lettings market, pitiful levels of investment, immigration on steroids. And on top of this they then gave us Brexit with its 5% drop in GDP. Neoliberalism doesn't work and the sooner we wake up to that fact the better.
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  3. So efficiency savings are the answer. Really? This is the same old misdirection of UK's problems that we have heard time and time again over past decades. Is this what likes of the Daily Mail are peddling?
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  4. UK investment in its own economy has been dire for more than a decade and there are no signs that this is going to change anytime soon. Rachel Reeves recently stated that sterling was not a reserve currency (even though it is) and would not be able to use our own sovereign currency to create money for investment as the US has done.
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  5. Leaving was pure insanity. We had a veto and our own sovereign currency. If we rejoin we are unlikely to get either.
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  6. The UK's unwillingness to train its own has been a theme for a long time. Jeremy Hunt, when he was Health Secretary, said that it cost £200,000 to train a doctor in the UK and that it was cheaper to just bring in a qualified one from abroad. Personally, I was never convinced by that argument. Bringing someone in from abroad often meant that they arrived with their family. They then needed a house, children required education and the family gave rise to additional healthcare costs etc etc. Then on top of that was the questions such as the impact on housing, house prices and rents generally as well as the knock on effect on young, would be medical students, who are then blocked from this career, and the trickle down effect from that.
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  7. My understanding is that a sizeable proportion of MPs at this time held property portfolios so there could have been a conflict of interests. Added to this, there is also a significant influence from rich donors who again had their own agendas. Personally I think that politics needs to be cleaned up but I seem to be alone here.
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  8. I agree. Labour need to be transformative but in reality that's not going to happen. We have our own sovereign currency so can reasonably safely create the money for investment in a similar way to the US provided we are sensible. At present, Rachel Reeves seems to be far too ultra conservative, so it won't happen.
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  9. Yes we probably need a wealth tax. The reality is that the wealthy are unable to spend enough. They always have a surplus and if they are given more then that surplus gets even larger. They then are left with little choice but to buy assets such as shares and property hence prices escalate. With increasing amounts being taken out of the real economy into asset purchases we have an increasing damper on our economic wellbeing.
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  10. Nearly all what we have seen from austerity, Brexit, stagnation in productivity and wages, decline in public services, yet a surge in the wealth of the affluent is all part of the ongoing neoliberalistic project. There are few signs that any of this will change under Labour.
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  11. The rise of neoliberalism across the Western World is seeing a surging wealth inequality and surging asset prices. An increasing proportion of GDP goes to the wealthy and the poorest increasingly struggle. The prospect of a career for the young is increasingly difficult and many find themselves in volatile, unstable work and even renting a property is problematic. Starting a family is near impossible and we see a declining birthrate. The declining birthrate can be compensated for through immigration but if this is blocked then a declining work force may have to be handled through a further delay in the retirement age. Technology may help but in the past, most of the benefits of this have gone to the wealthy. Unless the current neoliberalism trend can be reversed so that wealth inequality is reduced then the prospects for the majority of the population in the future is likely to be pretty grim.
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  12. Good for you. Many aren't so lucky.
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  13. Land prices are far too high and some correction is overdue. This hasn't been helped by lots of competition from private landlords in a sort of Wild West market. The obvious solution here is the introduction initially of some form of rent control to make it less attractive for private landlords. This may then result in lots of properties coming onto the market for sale and government could use this as a transformative opportunity to acquire lots of properties to relet as social housing. They could do this using the approach afforded by modern monetary theory. The constraint here is demand sided inflation and this would be controlled by the Bank of England. This sort of use of MMT is unlikely to be that inflationary.
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  14. The UK has sovereign control over its money supply and based on MMT has ample scope to create money for investment. We certainly need it to improve productivity.
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  15. Why do we have student loans for the young but not healthcare loans for the elderly? The healthcare loans would be repaid from their estate upon death or be written off at that stage.
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  16.  @VincentRE79  Neoliberalism leads to a failure to invest as it relies on private financing rather than state investment. Keynes provided a successful solution with state involvement after the Great Depression and we probably need something similar now. Biden made use of MMT and this approach when he gained power and we can see their success with their current growth.
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  17. The public has had a choice and has voted for austerity, increasing wealth inequality, Brexit, increasing personal debt etc. Since the 1980s the UK has lost most of the industry that it owned, its housing stock etc. Much of this is now owned by the wealthy including foreign investors and there is an increasing drain on the earning capacity of the public within the country, and on the country itself. This could be turned around but there seems to be no interest in doing so at present.
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  18.  @kevinchristian1547  Why does it matter if the materials are sourced from abroad?
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  19. There probably is plenty of scope under MMT for the UK to print money for investment. As was said in the video, inflation is a constraint but at present most of the inflation is a supply sided source rather than a demand sided one. Stephanie Kelton's book "The Deficit Myth" is well worth reading. She was a key part of Biden's economic task force that used MMT to create $1.9 trillion for the covid period including investment. The US, UK and Japan can do this as they have their own sovereign currency but other countries like Greece don't. Some countries such as Argentina do but have to borrow in a foreign currency such as USD so are less able to use MMT.
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  20.  @Nobumblegumforyou  Since Friedman and Hayek in the 1940s and then Reagan and Thatcher in the 1980s, a flawed neoliberalism has swept across the western world delivering the 2008 financial crash and as you say, is still entrenched with us today.
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  21.  @VincentRE79  Not true. We have our own sovereign currency. Theresa May said that there was no magic money tree but when covid came along we created £450bn. This is what the Biden has done as well for investment on a larger scale. Care is needed though not to create inflation but if used for investment rather than extra money in people's pockets, any inflation rise should be minimal and containable.
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  22.  @arranf  That's the point. Land with planning permission granted is hugely expensive. Housing may be expensive but builders only make a narrow margin on their sales. The only scope to reduce prices is to reduce the cost of land.
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  23. I still don't understand government's decision here and they haven't articulated it, so I am left wondering just how much care has gone into their decision making. The one thing that we do know is that travel and transport will be changing in the next decade or so. We will have electric driverless cars and ownership of cars will probably change. With high speed rail, if I wanted to travel from say London to Newcastle I would have got high speed train for most of my journey and then dialled up a driverless car on a mobile phone app for the rest. With no high speed rail, would I have to drive the whole distant and stop half half way to recharge the battery? Is this really preferable or does government have another solution which they haven't disclosed?
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  24. I agree with much of this. It should be noted however that the 3 examples of countries with hyperinflation had a lot of national debt in a foreign currencies, most notably US$, and that makes a huge difference.
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  25. He also slashed corporation tax on the basis that it showed that "Britain was open for business" yet inward investment remained at pitiful levels, apart from a brief spell after the Brexit Referendum when Sterling fell and UK businesses could be bought on the cheap. The corporation tax cuts from 30% to 19% did nothing for our growth and we saw UK debt continue to rise as we failed to get a grip with the deficit. Back in 2010 Germany had a slightly higher debt to GDP ratio (82.4%) than the UK (74.6%) but they didn't go for austerity. They kept their corporation tax rates at around 30% and managed to get their debt under control. Latest figures show German debt at about 67.8% with the UK at 100.1%.
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  26. This is a problem with leaders. They get voted in but we never know what we are really getting or how far they will go. Political / government leadership is a medieval relic that should have been consigned to the past long ago but is still entrenched with us today. Just look at the problems that we get all around the world that we probably wouldn't otherwise get. Norman St.John Stevas gave us something of an example of what we could have. Thatcher kicked him out of her cabinet as being a "wet". She saw the world in terms of black and white whereas he saw it in terms of shades of grey. After that and as Leader of the House of Commons he was able to set. up our modern day cross party system of Select Committees. By the time Thatcher realised what he had done it was too late. It was a system that could challenge the executive. For me though, this is what the executive should be. A smallish cross party board, all with equal rights and ability to say what they like. The politics of this would be allowed to evolve rather than swing about widely. Annual, generally online general elections may also cut out short termism that we are plagued with. The board may elect a chairperson and spokesperson but it is the board that is in control, not a leader. I also see a more stable and knowledgeable civil service as providing the functions of state to the collective board. We need to change and I don't think we have a choice.
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  27.  @gpsoftsk1  Yes. They need to start acting more responsibly. That's what they are there for.
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  28. This whole area has many interconnected factors that need to be considered. Simplistic evaluations of the type that politicians tend to do doesn't work and leads to really big problems further on and that's where we are heading. The first and really obvious one is that we have an aging population with a declining birth rate. With a reduced workforce and increased retirees we face a problem and burden on the working population. How do we deal with that? I suppose there are two main options. The first is that we create a stable housing environment with sensible prices for the young to set up home and start a family. At present, without some drastic changes that isn't going to happen. The second is that we allow immigration but that will involve a massive investment in house building and infrastructure and will meet stiff resistance from the public. There is no immediate solution and politicians are hopeless at planning ahead so we seem to be likely to face a grinding fracture of forces tearing in opposite directions until there is some sort of eventual resolution.
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  29.  @kevinchristian1547  Sorry. I don't follow your logic. There seems to be a lot on unfounded assumptions in there.
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  30.  @slothsarecool  So what's the breakdown and nature of that 11m?
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  31. Great and important video. It certainly made me think. It was so good that I had to watch it twice.
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  32.  @jasonaris5316  No. The danger that needs to be controlled with MMT is demand side inflation. In the UK one of the biggest problems is the many years of under investment and the knock on effect of poor productivity. This is an area where MMT could be quite effective as the money created could be used in major capital investment projects. It would increase spending within the economy relating to the projects but it is often protracted with longer term benefits so is unlikely to create an inflationary surge and any increase would be monitored and controlled by the Bank of England through interest rates and the government through other options.
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  33.  @jasonaris5316  Despite the $1.9 trillion in the US , their inflation levels have been lower than that in the UK. The latest figures show a rate of 3.1% with only about 0.75% being demand sided.
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  34. Is a continuing trade deficit with China too much of a problem? The UK has monetary sovereignty and from what I understand, modern monetary theory suggests that it isn't. Perhaps Tejvan ought to provide his thoughts on MMT.
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  35. Richard Murphy has done a good video debunking the household analogy this morning.
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  36.  @RJ-ry5qu  Thanks. You are right. There are many reasons why the UK is in the economic state that it is in and there is no quick fix. Any improvements are going to take time and will be incremental. Our growing wealth inequality is a really damaging problem for the economy. You have highlighted the fact that the share of the national income cake taken by the top 10% is vast. But that is only a reflection of that part of wealth due to earnings. We saw for example that when Sunak disclosed his Tax Return information his average rate of tax was lower than many ordinary working people and a sizeable proportion related to capital gains. As we know capital gains only arises when a gain arises so can be held back. If it is held back long enough until that person dies then the slate is wiped clean and no capital gains tax arises, only inheritance tax. As we also know, Jeremy Hunt now wants to get rid of inheritance tax. We also saw from Sunak's Tax Return that based on the wealth that he is believed to have most of the gain in the year would have been unrealised capital gains so no tax would have been paid. The problem with the wealthy is that they are incapable of spending enough. They already spend what they want to and the surpluses that they are left with each year find their way into asset purchases such as shares and property. Over the past few decades we have seen a continuous increase in wealth inequality. This acts as a drain on the active economy of jobs, business and services and is becoming increasingly damaging.
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  37. Has inflation halved per Sunak's objectives? In this video Jeremy Hunt states that the objective was based on core inflation and not CPI so inflation hasn't halved: https://www.youtube.com/watch?v=pbUZFssO-ZE&t=231s.
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  38.  @ronaldsimpson8890  The population is easily led. We see it in the UK. We see it in Putin's Russia and we see it time and time again everywhere, now and in the past. Why do you think that non resident oligarchs like to take control of the printed Press? In Thatcher's day the likes of the Daily Mail probably had more influence than it does today.
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  39.  @OckinElf  I agree.
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  40. We have our own sovereign money and like the US can invest for growth. By following the Tory fiscal rules, Labour will fail to achieve much and will rightly be kicked out.
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  41. We need to fix the underinvestment in the UK as well as the level of public services. Without those we will not be able to get any sustainable growth. A cut in taxes will only follow on after that, although with our growing wealth inequality some improvement could probably be achieved with the introduction of a wealth tax. Fortunately the UK does have its own currency and as with QE would be able to create money for investment without too much of a hike in inflation. This is the cornerstone of modern monetary theory and its time has probably come.
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  42. Can we really do much about the size of UK debt? According to latest published government accounts public sector pension debt amounted to 98% of the total gross figure. Some even question whether it should even be included as with many government costs they are just met annually. For example, we don't provide in UK debt for the value of state pensions, we don't provide for the future costs of educating those children currently alive or the future healthcare costs for current UK citizens. All of these four are future liabilities but only one is included in UK debt figures. Then there are UK savings. If you save with a bank then that doesn't find its way into government debt figures but if you buy premium bonds or invest in national savings or buy gilts then these are included in national debt as is the amount of physical cash in the economy. Then on top of this, there is a significant amount of gilts actually held by government, so owing to itself, as a result of QE. These are still included in the debt figures. I do believe that we have scope for investment. We certainly need it in areas such as industry, schools, hospitals, science, infrastructure etc. If there is scope within the economy, i.e. not full employment with usable skills then creating money shouldn't be inflationary and would have to be used in moderation. Beyond that, extra borrowing could be used. The Bank of England will use interest rates to control inflation if necessary. This is better than maintaining austerity with sluggish growth.
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  43.  @slawomirozdoba4605  Sadly or perhaps fortunately, I don't get any of this. I am all in favour of meritocracy and business development. I want to see more of that in the UK As for the idea of communism I haven't a clue as to where you get that idea from. Personally, I just want to see a society and economy that is functional and efficient., The reason that the UK, and many other western countries are struggling is that increasing amounts from the active economy are being diverted into asset prices. I am sure that you will have noticed that asset prices have been soaring right across all western economies. It's the same situation across all of them. Similarly wealth inequality has also soared. The two are connected. In my initial posting I explained how this works. If we ignore it, it will only get worse, and probably far, far worse. If you have a solution, I would love to hear it.
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  44. Healthcare spending will increase with our ageing population and new treatments and expensive drugs becoming available. So why aren't we following what we did with tertiary education? There we introduced student loans. Couldn't we introduce healthcare loans for the elderly. These could then be repaid from their estate when they die or be written off at that stage if their estate is not large enough. Similarly, student debts can be written off.
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  45. Whilst I agree with Labour's intentions to boost public investment and the dire state of public services, Reeves's implementation this was poor in my opinion. For Labour to put themselves forward for government at the last election hamstrung by their set of tax manifesto pledges was insane. They didn't need to do it. The public voted them in because they were fed up with the Tories and not because of Labour's pledges. Labour would have done better to increase the rate of corporation tax rather than increase employer's national insurance. At least corporation tax is only paid out of profits. And we saw when Osborne slashed corporation tax from 32% down towards 19%, the boost to the economy and inwards investment from it was pitiful. An increase now would have been far less problematic than the national insurance one now. Other changes could include a reinstatement of the 50% top rate of income tax and something to improve our trade with the EU such as joining the Customs Union. That wasn't an excluded option at the last Referendum. Longer term issues of growing wealth inequality still need to be addressed as do our treatment of tax havens and UK assets of people resident there.
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  46. Growing wealth inequality is a real problem that needs to be addressed, probably through taxation. The main problem with the wealthy is that they are unable to spend enough so are always looking to invest in assets such as shares and property. This then firstly creates a drain on the active economy as increasing amounts get diverted in asset purchases. Secondly asset prices increase and the public's disposable income is squeezed and is a further drain on the active economy. I think the starting point to resolve this is for government to place a cap on rental costs. This will invariable trigger a sell off by private landlords and the government should then be prepared to step in and start buying up properties at keen prices. These properties can then be let out again as council properties. We know that we can produce the money when we want to. When covid came along we produced £450bn and investing in property like this is unlikely to be any more inflationary than what happened with covid.
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  47.  @monkeytennis4202  My view is that the deficit needed to come down much sooner and I believe could have done without the extreme austerity that we had. We needed to get much more growth into the real economy. QE was needed initially to stop a financial meltdown but has been overdone since then. Part of the ongoing problem that we have in the UK is a growing wealth inequality. Part of this rests with the affluent. The affluent are able to spend what they need always have a surplus which they invest in assets such as shares and property. However, there is a growing displacement of money from the real economy towards the affluent. This acts as a dampener on the real economy as the affluent will only spend a marginal amount more as they receive more and boosts asset prices as more and more money chases asset purchases. There is little focus on any of these areas, although the LSE's Wealth Tax Commission report made some recommendations. We can't continue to drift and at some point we will need to wake up and address some of these issues. I suspect that we will need some form of wealth recycling, probably with some form of wealth tax coupled with some form of UBI.
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  48. Really? I must have missed the reference to Brexit. I also thought that it as reasonably balanced. Not sure of what you mean by property ownership and wealth accumulation by the common man. In todays' terms the council house sell off was something like a £100 bn giveaway by the state and many who took it up are today's landlords. As a result of this the common man today, particularly the younger ones, have no chance of buying and often struggle to even rent a house. The video didn't skirt over the issue of union dominance and the need to control inflation. It did mention the wastage of North Sea oil revenue, it did mention how Thatcher managed to make much of the North so much poorer whilst the City became richer. The combined Thatcher and Reagan financial deregulation sowed the seeds for the 2008 global financial crash as well as the surge that we have seen in asset prices such as shares and property, and the massive surge in private debt, which in itself fuelled part of UK growth.
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  49. Quoting the UK's national debt at being close to 100% of GDP is a bit misleading. Don't forget that currently £733bn of this is owed to the Bank of England Asset Purchase Finance Facility Ltd, i.e. about 30% of this debt is owed by the Bank of England to itself. It is more correct to state the UK's debt at the net value of about 70% of GDP. Professor Richard Murphy, the political economist has produced a useful video on this: https://www.youtube.com/watch?v=9VP61W2ELeQ.
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  50.  @ab-ym3bf  Did you notice that with the massive amounts of QE? Added to this, the Bank of England has control over inflation.
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