Tuesday, Jan 13, 2009
Brown should cut taxes and stop spending
MoneyWeek: How Gordon Brown can help the economy – cut taxes and stop spending
"If it really has to, the Government could still do something - it could cut taxes. That would put more money in people's pockets, which they could use as they wished. It could cut spending on unproductive non-jobs to pay for it – there are arguably plenty of people in quangos and in public sector middle-management posts who would cost the taxpayer far less and do far less damage on the dole than in their posts."
Posted by damien @ 11:33 AM (533 views) Add Comment
24 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. Gnsf said...
yet again another brillant report from moneyweek, why are these the only people who seem to know what they are talking about.
2. cornishman said...
Stepek - spot on:
"the sum total of Mr Brown's actions over the past decade have been to lead us into this financial crisis – quite possibly the worst in living memory. If only he had simply spent the past decade "doing nothing", we might all be a lot better off now."
3. letthemfall said...
In a sense Gordon Brown did do nothing - about the deregulation introduced by the last govt. That has been the leading contributor to the financial crisis, I would say. There is an element of bluster about Stepek's articles at the moment. More stuff about the inefficient public sector management. What can one say about the efficiency of private sector management? How well were the banks managed?
4. mrmickey said...
It is becoming obvious to me that the bailouts are designed to help the governments friends & buy labour votes not help the economy. Bailouts should be going to the man in the street not to fat cat bankers & businessmen. What is the point of bailing out the car industry if nobody has any money to buy the cars, the government is only addressing on side of the equation. The end result will be the collapse of the economy while the fat cats enjoy their retirement on their tropical islands funded by bailouts.
5. shipbuilder said...
3. mrmickey said...
"It is becoming obvious to me that the bailouts are designed to help the governments friends & buy labour votes not help the economy. Bailouts should be going to the man in the street not to fat cat bankers & businessmen. What is the point of bailing out the car industry if nobody has any money to buy the cars, the government is only addressing on side of the equation. The end result will be the collapse of the economy while the fat cats enjoy their retirement on their tropical islands funded by bailouts."
Exactly - this was always the point. We always pay.
What if - the bailout money had been given to the public to spend as they wish, the banks allowed to collapse, homeowners in trouble allowed to sell up and write off their debts. Back to square one? What about employers taking on the unemployed to train and job-share with those who want to go part time - full employment?
Who knows - these are just ideas (i'm sure someone will leap on them with a reason why they can't work). The point is that these type of ideas will never be considered because they benefit you and me, not big business.
6. stillthinking said...
The UK is facing a grim future. Articles like this point out why.
7. andrew said...
Stuggling with this one "letthemfall", Stepek is okay but is criticising the public sector ?
Got you pegged, Left leaning but politely sitting on the fence, something happen to you in the 80's ? Were you adversely affected by the last Conservative government ? If yes then just spit it out man. Your version of history started circa 1979 and it is all the Tories fault, which is just as bad as saying that the Tories have all the answers.
Look, the banks are a special case when it comes to the private sector, we all know they are bent, that is how it is. Have you ever worked in the Private sector and had to go out looking for customers, then doing the work to actually generate some money ?
The public sector is hugely inefficient, if in doubt then visit any tax office or call your local council or better still visit your local council, there is no sense of urgency, no efficient work ethic, no rushing to answer the phone. Nobody is anti all public workers, you are missing the point. Nobody is against the front line staff, the people that actually work.
Back to the article, cutting taxes and spending would work it is simple. Hands up who wants to pay more tax, and why ?
8. another alan said...
cutting taxes would only work if we assume that people would then increase their spending...
right now, paying off debts and saving is a much more likely response to tax cuts
9. letthemfall said...
Well, andrew, you have pegged yourself clearly as a keen Tory supporter, if I recall some of your earlier posts. I long ago abandoned the notion that one party is significantly better than the other as naive. I think post-War political history bears that out.
There is a lot of ill-considered blame thrown about in the newspapers, and here of course. To say it's all Brown's fault, or the public sector's fault is so much name-calling, and a little puerile. There are examples of inefficiency in all sectors. The public sector has its examples, but equally does the private. If one of your measures, rushing to answer the phone, is used, consider how long one has to hang on when ringing privately run call centres. I could cite many more examples of lousy private sector service. One is on balance no worse than the other.
I don't subscribe to any version of history and I don't blame everything on the Tories, as you seem to be prepared to blame most problems on Labour. Don't accuse me of bias when you are showing it yourself.
10. andrew said...
what is there to work ??
Yes people would save because they feel insecure, if I loose my job I want some money saved to cover my rent and food costs for a few months.
Explain what happens when people spend, where does that money go ? Spend where ? In a shop, okay I will go out shopping and spend all my spare money, so now a group of shops have my money, why should they have it and not me ? Are they then allowed to save it or spend it ?
Do you fully understand the logic of what you are saying ? I can't believe it, really I don't mean to offend but it is like reading the half baked theories of a bunch of media brainwashed pseudo intellectuals.
11. letthemfall said...
"really I don't mean to offend but it is like reading the half baked theories of a bunch of media brainwashed pseudo intellectuals."
Come on now, you're not really trying!
12. mark wadsworth said...
@ Shipbuilder, what you propose would work just fine.
Articles like this reaffirm my faith in human nature, very few will listen but at least I know I'm not teh only one.
For the zillionth time, there were about 1.5 teachers/doctors/nurses/soldiers/prison officers/ tax officers in 1997 out of 6 million taxpayer funded jobs. The number of supposedly 'productive' or 'useful' public sector workers has gone up by about a third to 2 million and the total number has gone up to 8 million, that's one in four workers.
Don't tell me that there isn't massive waste and duplication (or 'fraud and theft', in my book). Why do we need three 'back office staff' for each teacher or each policeman?
13. kruador said...
Andrew, the assumption goes that the shop that you spent your money in will therefore be able to continue to pay its staff, buy new stock, etc, and their staff, and their suppliers' staff, and the suppliers' suppliers' staff, will also spend their money, so on ad infinitum, until all of it eventually ends up back with the Treasury or goes overseas.
The difference is that if you cut taxes, people might spend half of it, whereas if you increase public spending by the same amount, all of it goes into industry, at least at the first level (that industry's staff will still likely save a proportion of it). Problems arise when public spending exceeds taxation and you're *not* in a slump - that leads to inflation. It doesn't matter whether the source of excess public spending is borrowed money or 'printed' - all I'll say is that borrowing far outweighs the amount of notes and coins in circulation. In theory borrowing might keep a government in check more than 'printing', but it hasn't worked so far.
14. Kenhay said...
Oh dear! So much sense coupled with so much pre-conception! Politicians have to run the country and whilst they make mistakes, they are held resposible for their decisions in one way or another. People can say what they want on this site-they have no decisions to make which may effect the country for years to come. To let people flounder through no fault of their own is true (and outdated) capitalism. Irrespective of where the blame lies, someone has to do something to protect jobs, the banking system, housing availability and peoples' expectations of life. Such action would have to be taken by any government of any party. Even a coalition would have to take responsibility.
I have no idea if cutting taxes and spending would work anymore than increasing them. Luckily I don't need to decide such things and can say what I like as can anyone else here.
15. letthemfall said...
mark w:
Assuming you are correct for the moment (although there has been a reduction in public sector jobs in recent years according to the ONS figures), how do you know that all these workers are a "massive waste...". With respect, this is the kind of thing one hears on the hustings, usually from Conservatives. I've no doubt there is a lot of wasted effort in public services - and we can all find examples - but I suggest there is just as much in the private sector. Over the years I have had many reasons to complain about the goods and services offered by the private sector.
Who are the unproductive workers who are not teachers, doctors, etc? The administrators, procurers, whatever... Are there not similar roles in the private sector? It is pointless to chastise one section of the workforce. We have heard talk about cutting public sector waste by many govts, Cons and Lab. The biggest so-called cutter of waste, the 80s govt, hardly delivered a new prosperity, did they? Unless you count the Lawson boom (cf Brown boom). The answer is to make the whole country really efficient. I welcome your suggestions on how to do this, aside from the sack the public sector spongers.
16. mark wadsworth said...
@ Letthemfall, the ONS figures show that the numbers are still increasing Table 5(2).
Who cares about 'waste' in the private sector - you don't have to pay for it, do you? Prices are ultimately set by the most efficient or best-value producer. ANd if you get bad service, go somewhere else, the same as everybody else does.
Do you have any idea what the 6 million "other" taxpayer-funded workers do? You can't just say "they must be doing something useful", the onus of proof is on the government to explain what the heck they all do, we are the ones paying for them. AFAIAC, there are two or three million too many until somebody can prove otherwise.
17. letthemfall said...
mark w: "Who cares about 'waste' in the private sector - you don't have to pay for it, do you?"
Of course I do. If my car is made badly it costs me. If insurance companies are inefficient premiums go up. If the supermarket tills are slow I hang around "being unproductive".
The table you link is the one I was looking at. Fewer public sector employees in Sep 08 than 06. I saw another table a while ago showing even more in 2001 (or thereabouts). Anyway, that's not really the point. In short, you are assuming there are lots of public sector wasters, whereas private sector workers, including presumably yourself, are far more efficient and productive. You are also assuming that the managers in the public sector are so incompetent that they employ people to do nothing much. I have an idea what some do because I have seen them do it, and broadly they look to me to be doing a reasonably job. What is your evidence to the contrary?
18. letthemfall said...
I suppose I should also mention the banks. We are all paying now for their inefficiency. Someone said they are a special case. Pretty damn big special case, and most definitely a private sector case.
19. Mark Wadsworth said...
LTF, look at table 5(2), not Table 4.
If your car is badly made, buy a different make next time!
Of course "some" public sector people do good stuff, or do pointless stuff well and to the best of their ability. I'm happy to accept that half the "others" are doing something useful or support services for teachers, coppers, soldiers etc. Beyond that I am not convinced.
What about the 30,000 who administer the Pensions Credit? Even if they got it right first time, wouldn't it be better to have a £130 per week Citizen's Pension and have done with it? What about all the 'charities' aka quangoes? The climate change advisors and street football co-ordinators?
20. cornishman said...
Re waste in the private sector - most people can go elswhere if they are kept waiting in a checkout queue longer than they feel comfortable with - or buy another make of car.
Re waste in the public sector - there are hundreds of thousands of people very busy filling in forms and collecting and collating data. All done reasonably efficiently I imagine. The question to ask, though, is whether all this data is worth the cost and whether anything useful or productive comes from the expenditure. Maybe it's a pointless task in the first place - regardless of how efficiently it's done - and should be stopped. This won't affect front line doctors, nurses or teachers negatively. In fact it would enable them to go about their professional lives much more efficiently.
Whilst we live in the UK - we have no choice but to pay for all this 'inefficient' use of money.
Mark W is right.
21. c'mon correction said...
In my experience - I worked in private sector for 8 years - and now in the public sector for 5 five years, I would say that the public sector is inherently inefficient.
I've even worked in two companies - ex public sector utility companies - that were privitised and taken under private management - I've never, ever seen people moan and whinge about 'work conditions' like public sector workers of 20 odd years now working under private management. It was a BIG eye-opener.
Don't get me wrong, there is a lot of talent working in public sector, but also huge bureaucracy and endless meetings about nothing.
Mark W. is indeed right.
22. letthemfall said...
You can buy another car, but there is a cost associated with this. And there are a lot of poor cars manufactured, even today. Given that the greatest economic damage in most of our lifetimes has been inflicted by a large and important part of the private sector, all this slagging off the public sector amazes me.
Cmon: there are indeed some awful meetings in the public sector, but also some very good ones. I think it varies from dept to dept and company to company.
Mark W appears to be a strong Tory supporter, and I suggest that informs his views rather than any direct experience of public sector inefficiency.
23. shipbuilder said...
I am utterly sick of the public vs private sector rubbish. One is public, one is private, because they have very different functions, or should have. Common sense says that efficiency is better than not, but in this case neither is inherently efficient or otherwise - the idea that only profit drives efficiency is wrong - in the most efficient manufacturer in the world, Toyota, customer focus and good ideas drive efficiency. Read 'The machine that changed the world'.
The public sector in this country has many legacy issues, not least political interference, public image and the fact that this debate is taking place. In other countries this is not the case. There are also some startlingly inefficient private sector companies.
Really the whole debate is ignorant left vs right points scoring.
24. shipbuilder said...
It's obvious that we have a public sector in this country that could work a lot better and with less people.
It's also obvious that the private sector, in general, provides far more than we actually need, wastes our common resources and distributes the profit from this to a disproportionately small number of the population.
Efficiency depends on how you look at it.