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How to pay for the crisis (Read 7548 times)

Oldmanmatt

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#25 Re: How to pay for the crisis
May 08, 2020, 06:42:18 pm
Agree about the environmental constraints (and incentives).

With UBI, how would people on here incentivise working over not working, if UBI became a thing? Much like furlough now.

Regarding furlough and incentive.
I’ve now met/spoken to, four regulars from the wall, all furloughed, working as delivery drivers (hence seeing them). Perfectly legal, apparently. All on part time/16hr contracts and all said, whilst the extra money was nice, they just preferred to be active.
Personally, I have been “working“ every weekday, all be it DIY at home or odd jobs at the wall/business stuff. Alarm set (a little late at 8am) shower, breakfast, “work” at 9. Hour for lunch. Training session at 16:30 etc etc.

My point being, a substantial number of people, possibly  most and maybe a large majority, of people would still be productive.

Currently, I’m free to pick and choose my work, my work life balance and it has been the best seven years. Much less stress and a much happier me. Our family seems to avoid most of the problems that affect our friends (not all, most) and our kids (touching as much wood as I can reach) seem well adjusted and happy (even the 15 year old).
Given the circumstances of one murdered father and a dead mother, I genuinely expected huge problems.

This is because we are financially independent, of that I am certain.
We both work, but to make things better, not just to survive.
Also, so far, this little episode hasn’t hurt hugely. If we lose the Wall, it will hurt, but mainly as a matter of pride or loss of something we’ve invested so much heart into.

My usual comments about how crap people are, not withstanding.

spidermonkey09

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#26 Re: How to pay for the crisis
May 08, 2020, 06:51:25 pm
Agree about the environmental constraints (and incentives).

With UBI, how would people on here incentivise working over not working, if UBI became a thing? Much like furlough now.

I don't know the figures that are bandied around for UBI, but presuming something in the region of £12k a year (basing that on the tax free allowance but might be bollocks), I would probably aim to work three/four days a week to top up my income to somewhere in the region of 24 per annum. I could happily live on that for the rest of my life I think.

Fultonius

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#27 Re: How to pay for the crisis
May 08, 2020, 09:25:45 pm
Agree about the environmental constraints (and incentives).

With UBI, how would people on here incentivise working over not working, if UBI became a thing? Much like furlough now.

It's always the big dilemma. As Matt says, most people *actually* prefer to do stuff. I guess for me there are many added benefits:

> you could chose to do 1 less day of work per week and do something else
> you could look after kids instead of working to pay nursery fees
> covers basic needs, so if you want to be an artist, or volunteer to run something, it's easier to do so

It would have to be set up in a way that any work, even 5 hours per week, would be incentivised (i.e. you'd still want a certain amount of tax free, or low taxed earnings so that it doesn't feel like you're working for the tax man.

Also, that money is fed in at the "low" end of the spectrum, where people generally don't save much - therefore, it all gets instantly recycled as tax. All those people who work administering universal basic credit could be off doing something productive...

Johnny Brown

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#28 Re: How to pay for the crisis
May 08, 2020, 09:53:36 pm
Right now it wouldn't change my life but there were a good few years post-uni when it would have made a huge difference.

Nigel

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#29 Re: How to pay for the crisis
May 22, 2020, 08:57:34 am
From the Guardian live blog, Gideon Osborne is still a thing and has been seeding his garbage on radio 4....

Gideon on R4 Today programme again this morning - is it not possible for the BBC to get a respected economist to comment on economic matters? This man knows very little, what little he does know is wrong, and what's more he has publicly demonstrated that over a period of many years. Yet he is still the go to commentator. Go figure?

Thread seems to have run out of steam, but it was interesting to hear the current chancellor say recently at a select committee that the treasury were still yet to decide what an acceptable level of government debt would be, but that it would be higher than previously. Interesting because it is halfway to admitting that largely, it doesn't actually matter.

ali k

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#30 Re: How to pay for the crisis
May 22, 2020, 10:30:05 am
Gideon on R4 Today programme again this morning - is it not possible for the BBC to get a respected economist to comment on economic matters? This man knows very little, what little he does know is wrong, and what's more he has publicly demonstrated that over a period of many years. Yet he is still the go to commentator. Go figure?
His only contribution each time seems to be an attempt to defend his legacy on austerity and the dismantling of public services. Similarly when they get Phillip Hammond on. It’s perfectly obvious they’re going to do this each and every time so in the interests of BBC balance (hmmm) why not get someone independent on, as you say. Unless they’re happy to feed the false narrative successfully spun by the Tories equating national debt to household debt?

IMO if Labour are to make any headway before the next election they need to find a way to completely demolish that narrative. For too long they’ve just let that received wisdom take root and it’s going to be hard to get it out of people’s head now.

tomtom

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#31 Re: How to pay for the crisis
May 22, 2020, 10:42:42 am
it was interesting to hear the current chancellor say recently at a select committee that the treasury were still yet to decide what an acceptable level of government debt would be, but that it would be higher than previously. Interesting because it is halfway to admitting that largely, it doesn't actually matter.

I'm not sure they're halfway to admitting that :) - but you are right in that a year ago - such talk would be unthinkable from a Tory  - or even Labour chancellor... The tabloid press would say we were going Caraccas etc...

seankenny

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#32 Re: How to pay for the crisis
May 22, 2020, 11:11:18 am
Right now it wouldn't change my life but there were a good few years post-uni when it would have made a huge difference.

For me too, but UBI for young men could have disastrous long run consequences for skill acquisition and employability...

https://www.nber.org/digest/sep17/w23552.shtml

Will Hunt

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#33 Re: How to pay for the crisis
May 22, 2020, 11:18:17 am
Right now it wouldn't change my life but there were a good few years post-uni when it would have made a huge difference.

For me too, but UBI for young men could have disastrous long run consequences for skill acquisition and employability...

https://www.nber.org/digest/sep17/w23552.shtml

Are you suggesting that a 360 no scope headshot is not a skill worth acquiring?

petejh

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#34 Re: How to pay for the crisis
May 22, 2020, 11:34:42 am
Right now it wouldn't change my life but there were a good few years post-uni when it would have made a huge difference.

For me too, but UBI for young men could have disastrous long run consequences for skill acquisition and employability...

https://www.nber.org/digest/sep17/w23552.shtml

Correlation<>Causation...


LOL'd reading the final paragraph:

Quote
The researchers also found other interesting trends in the young male population. They report an increase in the percentage of young men living with a close relative, from 23 percent in 2000 to 35 percent in 2015, suggesting that the young mens' lifestyles are being partially subsidized by others. At the same time, the self-reported overall happiness of young men has been increasing.

Davo

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#35 Re: How to pay for the crisis
May 22, 2020, 01:03:00 pm
Paying for the effects of the virus on the economy is slowly cropping up more on the bbc app. The quote below illustrates the general acceptance that the bbc has of the idea that we need to “pay off our debt”

“Ultimately, economists say taxes will have to rise, or spending cut - the emergency raft will have a price tag which we can't escape“


UK borrowing at record high as virus cost soars in April https://www.bbc.co.uk/news/business-52766487

Nigel

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#36 Re: How to pay for the crisis
May 23, 2020, 07:22:58 pm
Paying for the effects of the virus on the economy is slowly cropping up more on the bbc app. The quote below illustrates the general acceptance that the bbc has of the idea that we need to “pay off our debt”

“Ultimately, economists say taxes will have to rise, or spending cut - the emergency raft will have a price tag which we can't escape“


UK borrowing at record high as virus cost soars in April https://www.bbc.co.uk/news/business-52766487

Thanks Davo for the link, depressing though it is. BBC news is an outfit with a large number of people in editorial positions with right wing views, so this one-sided take on the economics side of things is no surprise. Pinch of salt required.

Back in the actual real world, the treasury recently issued a round of gilts (3 year) with negative interest rates. Lenders are paying the UK government to borrow their money. I look forward to seeing the right wing analysis of how this is a problem? They appear not to have mentioned this in that article about "how this will have a cost". They are half right, it will - to the lenders. Who are willingly lending. Like I say, I await the explanation of quite why this is such a disaster for the UK.

Nigel

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#37 Re: How to pay for the crisis
May 24, 2020, 08:51:31 am
Thought I'd link this here for some confirmation bias as coincidentally it mentions government debt levels, gilt issues at -ve rates, and Osborne being yesterday's man. I didn't write it honestly!

https://www.theguardian.com/business/2020/may/23/coronavirus-economic-recovery-borrowing-state-money-sunak

Davo

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#38 Re: How to pay for the crisis
May 24, 2020, 09:31:23 am
I liked that article! Makes a lot of sense

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#39 Re: How to pay for the crisis
May 24, 2020, 03:12:43 pm
Grace Blakely's take on this is that austerity is being touted as a followup to the COVID19 response as a political gambit to snuff out calls for government spending to get decent public services / deal with the climate emergency / etc etc https://tribunemag.co.uk/2020/05/putting-the-cat-back-in-the-bag .

I guess her thinking is a bit reminiscent of what Kalecki was saying in 1943 about why WWII type financing wasn't used in peace time. https://delong.typepad.com/kalecki43.pdf .

I liked this tweet about government debt:-

@RichardJMurphy
May 22
"When someone saves with a bank no one goes round saying ‘That’s worrying because the bank are going to have to repay that one day’, whilst the bank says it’s doing well selling it’s savings products. So why do the media panic when people save with the gov’t by buying its bonds?"

stone

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#40 Re: How to pay for the crisis
May 24, 2020, 08:50:59 pm
There is no analogy between a government borrowing in its own local currency with a floating exchange rate and a government borrowing in foreign currency as causes Argentina's debt crisis.

The interest rates for our long term debt are sometimes set by gilt auctions and sometimes adjusted by QE (as since 2008) and sometimes set by a hard peg (as in WWII when Bank of England guaranteed to buy bonds if their price were above whatever gave their specified yield). Even when the Bank of England chooses to have an entirely "un-manipulated"  gilt market, the yield is simply the market's judgement of what it presumes risk free interest rates will be over the life of the bond. Short-term risk free interest rates are set according to what the Monetary Policy Commission consider is best for the economy. It is never going to be best for the economy to have a debt crisis.

I'm not in favour of massive deficit spending as a matter of course. I think better targeted  taxation ought to enable the government to serve public purpose with only modest deficits. I think  a lot of the COVID19 response spending would have been better replaced by say diktats imposing rent freezes. However it is very bad IMO to claim that post-crisis recovery should be suboptimal due to government debt worries.
« Last Edit: September 21, 2022, 11:17:51 am by shark »

Davo

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#41 Re: How to pay for the crisis
May 25, 2020, 08:37:42 am
To my mind this isn’t about what is a sustainable level of debt for an economy with its own currency: that concept has clearly been failed to be settled by economists despite a lot of work on the topic.

The issue here should be what will be the consequences if we fail to spend and ensure as good an economic recovery as is possible and instead switch to worrying about what is a sustainable level of debt for a country. If we fail to do the former I can only see mass unemployment, a long depression and suppressed standards of living and lower life expectancy for at least 10 years. If we fail to worry about the level of debt then the worst I see is a potential debt or currency crisis at some point in the distant future (and I am aware that even that is up for much debate!!).

I really just don’t understand the argument that we need to utterly cripple the economy for at least ten years in order to avoid a highly debatable effect of a large debt to gdp ratio.

If someone could enlighten me about this (this is a genuine request and I’m not being sarcastic) I would be very interested.

Dave

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#42 Re: How to pay for the crisis
May 25, 2020, 08:43:41 am
Another point is that I am in general fairly impressed by the economic response to the crisis so far. I doubt many governments would have gone further: so credit where credit is due.

Where I worry is what happens when we are out of lockdown and the Conservative party ideology of “balancing the books” again becomes all consuming and we enter austerity 2.0

Nigel

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#43 Re: How to pay for the crisis
May 28, 2020, 10:12:13 am
Of interest to this thread, the governor of the Bank of England has written in the Guardian https://www.theguardian.com/business/2020/may/27/speedy-action-bank-england-covid-19-working

The concluding section (the bold is mine):

Quote
The Bank has taken unprecedented actions in terms of their scale and speed. I believe these actions are working. At a time when a sharp increase in borrowing, by firms and the government, is needed to support the wellbeing of people, we have been able to keep the effective cost of borrowing down, which is essential to support the economy and meet our target for inflation. It can only be achieved because the Bank is an effective independent central bank, and in no sense has that independence been put on hold.

We have signalled that we stand ready to do more within the framework of policies we have used to date. And, in view of the risks we face, it is, of course, right that we consider what further options, such as cutting interest rates into unprecedented territory, might be available in the future. But it is also important that we consider very carefully the issues that such choices would give rise to.

The Bank stands ready to do whatever we can to support UK households and businesses during this period of economic disruption and get through this together. This is our duty.

 

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