Economics

Why every economics paper should come with a warning label

Published by Anonymous (not verified) on Wed, 03/10/2018 - 2:48am in

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Economics

It should be part of the academic competences of trained economists to be able to be clear about what their models are for; what the models are about; what the models are capable of doing, and what not; how reliable the models are; what sorts of criticisms have been levelled against the models and how […]

Way to cheaper electricity littered with false conceptions

Published by Anonymous (not verified) on Tue, 02/10/2018 - 9:09am in

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Economics

Power prices are not an issue that should ever have become hostage to politics, and they are not one that will be ignored in an election campaign.

Spelteori och politik

Published by Anonymous (not verified) on Mon, 01/10/2018 - 11:49pm in

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Economics

På Ekonomistas har Jesper Roine några ‘spelteoretiska resonemang’ kring den pågående och utdragna regeringsbildningen i vårt land: Det överlägset mest kända resultatet när det gäller att applicera spelteori på politik är det så kallade medianväljar-teoremet. Enkelt uttryckt säger det att om politik kan beskrivas som att inta en position på en vänster-högerskala och två partier […]

Chicago economics — utterly and completely wrong

Published by Anonymous (not verified) on Mon, 01/10/2018 - 7:01pm in

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Economics

Every dollar of increased government spending must correspond to one less dollar of private spending. Jobs created by stimulus spending are offset by jobs lost from the decline in private spending. We can build roads instead of factories, but fiscal stimulus can’t help us to build more of both. This form of “crowding out” is […]

If anyone can get everything wrong at once then May can

Published by Anonymous (not verified) on Mon, 01/10/2018 - 5:44pm in

It's very hard to know what more Theresa May can get wrong. Until she starts digging, that is. And then she does it again. Take this from this morning's Guardian:

Foreign buyers of properties in the UK will have to pay a new levy, in a renewed attempt by Theresa May to tackle the housing crisis.

With concern growing among senior Tories that the party has allowed Brexit to drown out a compelling domestic agenda, plans unveiled on Saturday night will see foreign buyers pay extra stamp duty to fund a drive to tackle rough sleeping.

What's wrong. Let me start with the superficial, and move in stages to the conceptual.

Superficially, this is just puff. Take two vaguely related issues; link them in a policy statement; say solving one will solve the other, and claim to have a big policy announcement for your conference speech. Except she hasn't, of course. These issues are not linked.

Foreign housebuyers do have a detrimental effect on the UK housing market, but that is not the cause of rough sleeping. The problem's caused by foreign housebuyers would be best solved in three ways.  The first would be a substantial tax on empty, or near empty, properties used as second homes. Labour has not got near this with its tax on second properties used as holiday lets. Instead, the issue is about properties bought primarily for speculation. The issue here is that council tax is a mere incidental cost and the tax rate - although higher than for other capital gains remains low, and also very hard to collect from the offshore entities that are the legal owners of so many foreign-owned properties.

The issue is then forcing the open registration of the  beneficial ownership of these properties;  a tenfold increase in council tax on them;  a significant increase in the capital gains charge  on them and a refusal to permit  changes in registration of title until that tax is paid;  and, perhaps most important of all, an end to the domicile rule that still makes the UK a tax haven for so many people  who can claim that the UK is not their natural home.

When it comes to the problem of rough sleeping,  a small fund paid for with stamp duty will not solve the problem.  The problem has been created by austerity, more than anything else, and May remains committed to that.

So let's become more conceptual. Suggesting links between revenues and spends is simply disguised tax hypothecation, and hypothecation is always a bad basis for taxation, especially when it is suggested that it will solve a problem which will continue even if the tax base that is supposed to pay for its solution disappears. It is time that politicians stopped this stupid game of linking revenue and expenditure.

To come to the core argument then; let's be clear that if rough sleeping is a problem in the UK then we are not dependent upon some additional tax paid by those foreign owners of properties in this country to solve it. It is an insult to the rough sleepers to suggest that is the case. It is an insult to our intelligence to suggest that is the case. And it is a sign of ignorance on Theresa May's part that she thinks the government cannot create the funds to solve this problem without having to raise additional taxation, when that is simply not true. If rough sleeping is a problem worth solving then the  government already has the means to do so:  it can simply vote to commit funds to the task, knowing that it can always create the necessary funds to do so, and that if the task is worth doing then, in this case, it will pay for itself by eliminating the cost that rough sleepers create. The solution is as simple as that and it is just wrong for May to suggest otherwise.

I am not sure what I dislike most about this announcement. The failure to think; the lack of compassion; the implicit belief that we are all dependent upon taxes paid by the rich or the sheer ignorance: they all rank as reasons to be disgusted. It's not just because of Brexit that we need some new political leadership in this country.

The UK as a corporate tax haven

Published by Anonymous (not verified) on Mon, 01/10/2018 - 3:43pm in

The Mail has launched a campaign for the reform of UK corporation tax. That's about a decade late, but everyone is welcome to the party. They quote me in the launch article:

Richard Murphy, at Tax Research UK, believes the UK has such a 'lax' approach to tax that it is 'basically an honesty-box regime'. Murphy said: 'There is obviously a problem with these large corporations.'

He claimed many 'pure tech' firms are 'under-declaring' profit, while others appear not to be paying VAT. Some use intercompany payments to reduce tax liabilities or else pay debt interest to reduce or wipe out UK profits. The transfers are almost always done through tax havens. Murphy added: 'We operate as a corporate tax haven and we don't regulate companies in any effective way. Whether companies pay tax is basically a matter of choice.'

I should stress, when talking to the Mail my suggestion was made in the context of the complete failure of Companies House to properly regulate companies, as evidenced by the fact that some 400,000 a year are struck off from the Register without any proper enquiries being made by anybody, including HM Revenue and Customs. It is this neglect, which I think is deliberate, that makes the UK  corporate tax haven. After all,  we now know that secrecy is key to any tax haven regime, and by simply failing to ask questions about companies who choose not to disclose their affairs the UK is creating a system that exactly replicates that available in the most abusive tax havens.

Greening the economy

Published by Anonymous (not verified) on Sun, 30/09/2018 - 10:12pm in

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Economics

This letter from my Green New Deal colleague Coilin Hines was in the Observer today:

Will Hutton is correct that public resistance to austerity and increasing support for tax and spend should provide a huge opportunity for Labour, but that its present stance on Brexit could keep it from power (“In Britain’s chaotic rail system – as elsewhere – we need a creative state to play its part”, Comment).

The reshaping of our economy that he advocates will also crucially need, particularly for those who voted Leave, to give people hope for the future by providing increased economic security in every community throughout Britain.

To achieve this, Labour will need to prioritise a massive nationwide green infrastructure programme that will help tackle climate change, is labour-intensive, consists of work that is difficult to automate and so could provide a secure career structure for decades. This would include making the UK’s 30m buildings and future new builds energy efficient and fitted with renewables, plus a concentration on rebuilding local public transport links.

Most importantly, as the Green New Deal group’s report of the same name shows, it will need to generate “jobs in every constituency”, including “left-behind” areas that played such a pivotal role in the Brexit result. It could also help ensure there is no repeat of 2008.
Colin Hines, convenor
UK Green New Deal Group
East Twickenham, Middlesex

How economics became a cult

Published by Anonymous (not verified) on Sun, 30/09/2018 - 10:00pm in

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Economics

This is well worth watching, from my friend Steve Keen, We keep saying we'll do some stuff together but it's not happened as yet:

Steve has been genuinely innovative. That cannot be said of many people.

How do models relate to reality?

Published by Anonymous (not verified) on Sun, 30/09/2018 - 6:42pm in

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Economics

 

New Keynesian nonsense ‘proofs’

Published by Anonymous (not verified) on Fri, 28/09/2018 - 11:32pm in

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Economics

New Keynesians use mathematics to ‘prove’ some very odd stuff … Take, for example, a paper by Campbell Leith and Simon Wren-Lewis entitled Electoral Uncertainty and the Deficit Bias in a New Keynesian Economy. The thrust of the paper is that our particular form of party-based democracy naturally leads to ‘deficit bias’ … The authors […]

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