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Jeremy Corbyn speaks to Andrew Neil about borrowing

Yesterday the BBC’s Andrew Neil interviewed Jeremy Corbyn. A link to the interview is here.

Starting at 21:52 the discussion goes as follows:

-*-

Neil: And as part of the investing in the future you plan to borrow a lot to do that. How much will you borrow?

Corbyn: What we will do, is for the public ownership elements there’ll be an exchange for, erm, bonds for shares in it.

Neil: But what is a bond?

Corbyn: A government – a government bond.

Neil: Yes, it’s a debt instrument. It’s borrowing.

Corbyn: Well, it’s a bond – it’s a government bond which would be serviced by the income from that service, but in addition we would have control of it. Take –

Neil: But you would still have to borrow. Bonds are borrowing. You would borrow.

Corbyn: Take the water industry, for example, which has been a method of siphoning off profits out of this country to offshore companies that made a lot of money at the same time leaving us with expensive water and in some cases very bad levels of pollution.

Neil: You would need to borrow – I understand the case but you would need to borrow to buy the utilities.

Corbyn: No, it’s not a – it’s a swap of the shares for a government bond.

Neil: But if you’re issuing bonds, Mr Corbyn, you’re issuing government debt. You are borrowing.

Corbyn: Issuing bonds that we own which would be paid for by the profits from the industries, so instead of the profits –

Neil: But you’ve said you would cut the water utilities’ profits. That means you wouldn’t have the money to pay for the bonds.

Corbyn: Andrew, instead of the profits being siphoned off they would remain here. That’s an advantage, surely?

Neil: National debt is already an incredible 1.7 trillion. If you borrow to invest on top of the 50 we do, another 25 you say, you need to borrow to nationalise, you may have to borrow – if the IFS is right – for day to day spending.

Corbyn: No, we’re absolutely clear we will not borrow for day to day spending.

Neil: But you might have to, if the IFS is right. Our national debt, which has already soared under the current government would soar even more under Labour, wouldn’t it?

Corbyn: No, because the – we have the rule that we would only borrow to invest for the future. We would not borrow for revenue expenditure. I mean that’s sort of a sensible rule which has not always been followed.

Neil: A technical rise.

Corbyn: And what we’d get in return is investment in better services. That in turn would encourage economic growth. Listen, we have a huge imbalance of investment. Far too much goes to London and the south east in transport infrastructure. Far too little goes to the north east, north west and Yorkshire. Those issues have to be addressed. Hence the National Investment Bank, which will be regionally based all across the UK.

-*-

According to the polls it is looking more likely, though still unlikely, that Mr Corbyn will be our next prime minister. So I would like to know what he means by the above. My base assumption is that he has very little idea what he is talking about. But I must confess that if Andrew Neil were to ask me what a bond is, my answer would be scarcely less waffly than Mr Corbyn’s. Can Samizdata readers explain it all for me and readers like me? What exactly is wrong with his proposals, if anything?

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43 comments to Jeremy Corbyn speaks to Andrew Neil about borrowing

  • Matthew Moore

    A bond is a debt contract, nothing more. ‘lend me this and I will repay you X on Y date’.

  • bobby b

    A bond is a post-dated check with a little bit extra thrown in to the amount to pay for the wait.

    (ETA: This is rough metaphor. I can already see the mavens circling.)

  • Tom

    It is a written IOU issued by the government with a fixed term for repayment and a fixed interest rate. It can be traded so the person repaid may not be the original lender. If the interest rate is too low or too high for the market at the time it will be sold at a higher or lower price to adjust for that. Because it’s backed by the credit of a state able to raise money by force it’s regarded as a safe bet and UK government bonds are called gilts (gilt edged securities) to signify that in a cute way.

    There. Now you know more than a possible future Labour PM and his Chancellor.

  • Eric Tavenner

    A bond, in this case a government bond, works like this.
    You give the government 100 local currency units. After the bond matures, often in several years, the government will pay you 120 LCU, which by then will allow you to buy the same amount of commodities that 80 LCU would have bought when you bought the bond.

    As for Corbyn, he appears to be claiming that borrowing isn’t borrowing if the government is doing it.

  • Fred Z

    @Eric: “As for Corbyn, he appears to be claiming that borrowing isn’t borrowing if the government is doing it.”

    For once Corbyn is absolutely correct, though only in stopped clock mode and no doubt using “reasoning” combining stupidity and insanity.

    A government bond is a tax, either on the bondholder who gets stiffed or the future taxpayers who are forced to repay the bondholder, or his great^nth grandchildren.

  • RRS

    Presumably most “utilities” (rates regulated) already issue “Bonds” and “Preferred” Shares.

    But, what Corbyn seemed to be straining for was an idea of creating a type of “Revenue” bond or fixed return instrument payable (only??) out of the net operating gains of the utility.

    That would simply convert the present equity (shares)into a form of debt instrument that need not, but probably would, be guaranteed by the taxpayers; especially as operations take off to their appointed hand-basket destination under “government” management. Could make their revenues tax-privileged some way to make them more marketable.

    Glad to help !!

  • Joe Blow

    History has gone beyond rhyme here and is repeating itself.

    The 30 year govt scrip used as ‘payment’ to expropriate private property between 1945 and 1951.
    ‘Thanks’ to those patriots whose assets in rail, mining, shipbuilding etc etc were run to destruction during WW2.

    The 3% earnings on which was subject to ‘unearned income’ surcharges in addition to the usual income taxes.

    And come repayment time in the mid to late 70s; a very convenient decade of double digit inflation completed the theft.

  • Mr Ed

    ‘The name is Bond, Jeremy’s Bond’

    ‘Ah, Jeremy’s Bond, we’ve been expecting you… to default’.

  • Jacob

    Corbyn, like all socialists, seems to think that a business that is profitable under private ownership (the utilities) will remain profitable also under government ownership and management.

    This, of course, is not the case.
    These people are unable to understand that fine people, well intentioned, and good bookworms like they are are incapable of doing the management work that the wicked capitalist does.

  • Bogdan the Ausssie

    Jeremy Corbyn – an ultimate PARASITE. A complete MORON. Totally EVIL.
    Imbeciles like him are poised to take over EUNUCHAIA soon.
    Then Australia will become VENEZUELIA…

  • So the 10% of the population who know what a bond is think Corbyn’s an idiot, and the 90% who don’t know what a bond is, think the whole discussion is some weird technical thing they’re not interested in.

    1 – 0 to Mr Corbyn, methinks.

    Meanwhile, when Mrs May drives her car into a tree, 90% of the population can work out that she’s not that great a driver.

    2 – 0 to Mr Corbyn.

    PS missing from the whole conversation between Andrew N and Mr C is :

    “Why have water charges gone up so much since privatisation – is it the rip off private owners ?”
    “No it effing isn’t. It’s the HUNDREDS OF BILLIONS that the EU forced us to spend meeting their effing ridiculous water quality directives. Because while we were already drinking water, the Spanish were drinking sewage. But we can’t have different rules across the EU can we ? So we had to pour two thousand years of water company profits down the drain for no reason than to amuse the EU apparat.”

    Brexit NOW !

  • Paul Marks

    The Conservative Party Manifesto has come in for a lot of attacks – some of the attacks being contradictory, with the Conservatives being accused (at the same time) of being anti freedom Big Government types AND denounced for NOT pledging to spend an unlimited amount money on social care for wealthy people, without asking for some payment at least after the death of these wealthy people. However, it is certainly true that both Mrs May and Mr Hammond are from the opposite end of the Conservative Party to (for example) me – our opinion of what government can achieve and what it should try to do (not just on economic policy – but on such things as the internet) is very different.

    But this obsession with the Conservative Manifesto and the economic and other policy positions of Mrs May and Mr Hammond has obscured the fact that the Labour Party is led by people, such as Mr Jeremy Corbyn and Mr John McDonnell, whose ideas on economic policy (and just about everything else) are utterly demented. The Labour Party leadership believe in doctrines that would destroy this country. The threat is as real as that – and millions of young people (brainwashed by the far left dominated schools and universities) have registered to vote – that is what Mr Corbyn and co (with their passionate desire to turn into the United Kingdom into Venezuela) are counting on, millions of voters (young and not so young) who will just vote for unlimited free stuff, with the vague (and absurd) promise that “the rich” and “big business” will pay, and magic words such as “bonds for investment” (translation – borrowing for wild government spending providing free stuff for the voters) to deceive people.

    With the Constituency boundaries rigged in favour of the left (we are still using the 2001 census, not the 2011 one, and Scotland is still over represented) I fear that this country is sleep walking to disaster.

  • Rob

    Andrew, instead of the profits being siphoned off they would remain here. That’s an advantage, surely?

    Once the State gets hold of it there won’t be any profits to invest, unless they raise prices to eye-watering levels (in effect, taxing water consumption).

  • Kevin B

    The water companies are owned by nasty furriners and they are stealing all the profits.

    So we will steal the water companies off of those nasty furriners and keep the profits for ourselves.

    But we will give the nasty furriners a bond which is a kind of cheque type thingy.

    Which we will pay for out of the profits of the water companies so those nasty furriners can’t complain.

  • Gary

    The core idea here is that the water companies can be purchased using debt. That 100% of each water company can be purchased using only debt. That no equity funding would be required at all. Let’s unpick the proposal this way:

    – If the UK Govt can buy the whole business simply using bonds, why can’t anyone else? The typical answer is “well its too big”. But Pimco for example have $2,000 Billion of assets under management. That’s a figure comparable to the UK government. So why couldn’t they do something like this if it was such easy money?

    – Answer: An infrastructure business (water, telecom, toll roads, etc) is largely financed through debt, but is never exclusively so because there is always an element of risk, and there needs to be a class of owner who is first in line to take that hit on the chin. When there are accounting irregularities at BT, we want the shareholders to suffer, not my granny’s bond coupon. When the gas field blows up, we want the shareholders to suffer, not my granny’s bond coupon. That’s what the equity portion is for: we want those capitalist pigs to take the first hit because we want the others to be insulated. The true debt or bondholders need a reduced risk profile because that’s what granny requires for her pension.

    It is immoral (and contrary to FSA guidelines) to expose my maiden aunt’s pension to that level of equity risk. And that’s Corbyn’s proposal – not that I think he is clever enough to realise that even if it was explained to him, but the unintended consequence would be to damage the pension of little old ladies up and down the country. This is standard M&M theory for the last 50 years.

    TL/DR: If something looks to good to be true, it probably is. And so it is in this instance.

  • Deep Lurker

    Corbyn, like all socialists, seems to think that a business that is profitable under private ownership (the utilities) will remain profitable also under government ownership and management.

    Not just that the business will remain profitable, but that it will be oh-so-much-more profitable. Because running a business is child’s play and the wise and good people a government would appoint are ever so much smarter than the private owners. Who are such dunderheads that they can barely keep the business going even thought doing so is child’s play. And if the government takes over all the businesses in an industry, that industry will be even more profitable because of economies of scale[1] and the elimination of wasteful duplication.

    [1]They’ve never heard of diseconomies of scale, and if told about that concept they’ll either dismiss it as anti-socialist propaganda or else will twist it into a claim that people will somehow be better off if they have less stuff.

  • John B

    Bonds (as described above) and shares are both ways to get capital for investment into an enterprise.

    The difference is with a Government bond the principal sum is guaranteed and the profit aka interest/yield is fixed and guaranteed at the outset; with shares the principal sum is not guaranteed, and the profit aka dividends is variable and not guaranteed.

    So here is the real indicator that Corbyn is clueless…”….a method of siphoning off profits out of this country to offshore companies”.

    That means shares are owned by offshore companies which would be the same offshore companies, individuals and Governments who would buy the UK Government bonds of which Comrade Jeremy speaks.

    So the money from bond yields being ‘siphoned off’ to offshore entities is not the same as money in dividends being distributed to offshore entities. Somehow magically the yield on those bonds is all going to stay within the UK unlike profits from share ownership.

    There is a further point about Government bonds aka debt – the Government just prints money to buy them back and that debauches the currency, is therefore a stealth tax making people poorer.

    And now, according to the polls, over one third of the electorate believes this man should be in charge with Diane Abbot at his side keeping everyone safe.

  • Jacob

    “They’ve never heard of diseconomies of scale”

    And they have never heard of the labor unions (that they themselves promote) that actually control government enterprises and loot them at will.

  • Thailover

    It’s the stupidity of modern markets to treat ONES OWN DEBT as an asset. We’ve seen this insanity in other areas of public markets, such as a company creating spin-offs out of thin air, dumping their core company’s debt into it, borrowing against it as if a liability were an asset, then creating more “valuable” company spin-offs under the core company banner. Such maneuverers is why I’ve never had any sympathy for “investors” (stock market gamblers) who “invest” in such ponzi schemes whilst never even glancing at a company’s filed financial statements. (Anyone remember Enron?)

    What Corbyn is doing is a slimy tactic, if somewhat different than the above. He’s using a debt instrument, a promissory note, as an asset, with a promise to pay back with “higher numbers” i.e. interest, but with a future-devalued currency. Not only that, he’s buying something with YOUR black check and your children’s blank check. How generous of him. And he’s using the envy of largely ignored “northerners” to bolster support for his slimy antics. At least that’s the way I see it.

    Politicians aren’t daft…they’re evil, IMO.

  • Laird

    It’s impossible to know for certain, as Corbyn’s explanation is unclear (which is probably because he doesn’t actually understand the words he’s saying), but if he’s talking about issuing revenue bonds for the “purchase” of the water system he’s not entirely wrong to consider that something other than “government debt”. Payment of revenue bonds is limited to the cash flow from the specific asset; they are not “full faith and credit” bonds which the government is obligated to pay regardless. The government need not “print” more money in the future to pay them. Nor are they directly analogous to a “deferred tax” (unless you consider increasing your water bill a form of tax). Revenue bonds can, and do, default, and there is no recourse to the government for their payment.

    Of course, assuming that the purchase price of the water system is paid 100% with these bonds, the current owners would be “asked” to swap one stream of cash flows for another. And since Corbyn’s whole purpose is to somehow keep at least some of the water system’s profits in the country, the payments on the bonds will necessarily be lower than the dividend plus retained earnings now accruing to the current owners. Why would they agree to that? Leaving aside the obvious fact that there is really no choice when your business is being nationalized, and assuming that the company is actually valued at a fair market price, the answer could be that there is less risk to the bonds than to the shares. The payment stream on a bond is regular and predictable; that on shares is not. And given the government’s interest in maintaining a functioning water system the bondholders would have a fairly high degree of confidence that the government will keep water rates high enough to cover the debt service, so their fear of default would be minimized. Given the right set of terms, I can understand why the current owners might willingly agree to such a transaction.

    What I can’t see is why the taxpayers would, however. Assuming that public utilities, such as water companies, are regulated in the UK as they are in the US, rates are set by the regulatory body. Those bodies, being political creatures, have no interest in maximizing the profits of the utility owner; quite the opposite, in fact. They generally set rates to permit the recapture of capital costs plus a minimally acceptable rate of return. Thus when the company is in private hands rates tend to be relatively low. However, once the utility is government owned there is little political incentive to keep rates low; government always seek to maximize their revenues by any means possible. So even if the yield paid to the (new) bondholders is lower than what they had been earning as holders of a private company, after nationalization the customers of the water company should expect to see their rates increase far faster than they would have otherwise. (This is true regardless of the managerial competence of the bureaucrats who will be running it.) More of the “profits” (not that the government ever accurately measures “profits” anyway) might actually remain in the UK, but it would be at the cost of the utility customers. In the long run they would see no benefit, only detriment.

    But if Corbyn actually understands any of this (which I seriously doubt), it is certain that his supporters won’t. Economic ignorance is widespread in society, but it is endemic (indeed, well-nigh universal) on the left.

  • Econ 101: Corbyn: No, because the – we have the rule that we would only borrow to invest for the future. We would not borrow for revenue expenditure.

    So if the government calls it an investment, it’s not actually a loan and as a result it’s not really spent as an expenditure, it’s spent as something else.

    Mr. Corbyn is the answer to the question “How dumb do they think we are?”

  • RRS

    Laird,

    Exactly – PLUS

    The Brits have C. Northcote Parkinson’s works as references.

    From the U S, we could send them a bound copy of:

    The History of the Establishment and Operation of Amtrack

    which is an ongoing work with regular supplements, reporting on the effects on systems deteriorations, maintenance failures, etc.

    As that great moralist Barney Frank emitted: Government is what we do together (sort of like a public bathroom).

  • Mr Ed

    Historically, it seems to me that Mr Corbyn has been more comfortable in the company of people who make private bombs than those who sell private bonds.

  • […] Mr. Ed of this parish, who may or may nor be a talking horse but make sense […]

  • Phil B

    @Paul marks at 7-14AM, 28th May –

    “Spend an unlimited amount money on social care for wealthy people, without asking for some payment at least after the death of these wealthy people”

    I would have no objection to funding my own retirement and health costs if the Government did not rob me so comprehensively during my working life to fund everyone else in the country (the unemployed, immigrants, the EU etc.) so heavily.

    For a while I kept a record of how much I earned and the tax I paid (lost in a hard drive crash). From memory, just under 75% of the money I earned was lost to tax. I paid:

    Income Tax
    NI Tax
    Local Government tax (which as they implement the national government policies, can be considered to be their local representatives)
    VAT
    Duty on petrol (plus VAT on this tax too)
    Tax on interest earned on investments (savings, shares)
    etc. etc. ad bloody infinitum.

    I carefully noted that I bought (for example) that I filled the car with 50 of petrol and of that 42 was tax, I bought shoes and the VAT was 20%. Of the amount I earned and spent, I recall that over 73% went in tax.

    If I managed to save enough to pay a mortgage on my home out of the residue, then if the government force me to sell my home to pay for care, then the tax rate will approach 100%. Am I unreasonable in asking to be allowed to keep this?

    Meanwhile, if I had become a drug addict and unemployable, or an illegal immigrant whose only skills are goat herding and shooting an AK47, then I would not need to worry about old age.

    Try keeping a spreadsheet and list all of your income and expenditure with the Tax element listed against the amount and see what you see … then come back and tell me that it is unreasonable to expect that I should benefit from the amount of money they took with menaces from me.

  • Phil B

    Oh, and in connection with the above, when I slough off this mortal coil etc. there are DEATH duty taxes on the estate too … Might as well introduce bonded servitude too and have done with the whole sham.

  • bobby b

    Sort of on-topic, here’s an interesting article posted in Caracas Chronicles (a Venezuelan blog dealing with the country’s collapse) concerning the morality and efficacy of holding PDVSA (Petroleum of Venezuela) and Venezuelan governmental bond debt as the country devolves into possible/likely default on its debt obligations.

    It’s too brief, and doesn’t get into the musical-chairs quality of holding governmental debt as it matures into non-payment – it deals mostly with the secondary market – but it’s interesting in its own right.

  • John K

    The first thing to remember about Jeremy Corbyn is that he is intellectually rather limited.

    After a grammar school education, he scraped two A Levels at grade E, and then did a year at Polytechnic doing “Trade Union Studies” before dropping out and geting a job at NUPE, a left wing public sector union.

    He has never been employed by a private business, he has no real understanding of how they work or the pressures they face. As far as he is concerned, the only “good” employment is public sector employment, and private sector workers are serfs who are exploited by managers so that the rich can steal the fruits of their labour.

    In this case, I think the concept he is struggling with, is that he proposes to issue bonds to buy an asset, the water companies. Thus, on the government’s balance sheet (if he knows what that is, which I doubt), the liability of a debt, the bond, is matched by the asset of the water industry. Netted against each other, they balance.

    Of course, the book value of the water industry will be whatever the government says it is. The industry will no doubt be run by doctrinaire socialists in the Corbyn mould, so it is unlikely the industry will be worth as much as the government says it is. And there is the awkwardness of the state expropriating the private property of people who bought it in good faith, but I don’t suppose Corbyn will lose any sleep over them, as they are capitalist oppressors.

    In short, we have an ill-educated man putting forward a policy which he does not really understand, and which will not work. I don’t like Mrs May very much, but how can a sane person think of voting for the Corbyn Labour Party for more than an nanosecond?

  • Derek Buxton

    PhilB, Do not forget the tax on any insurance policy you may have. This can be heavy, tax on house insurance, car insurance…mandatory, and all the other protections against disaster that we have.

  • Laird

    bobby b, interesting article. Thanks.

    John K, it sounds like Corbyn is the UK’s version of Bernie Sanders: ill-educated (and probably not overly bright), lacking in relevant experience, and arrogant enough to espouse meddling in forces which he clearly doesn’t understand.

  • Schrodingers's Dog

    During the last Labour government, between 1999 and 2009, per capita public spending rose by about 50% in real terms. After all that “investment”, why aren’t we now living in a golden age of unprecedented prosperity and truly superb public services? Why is the NHS in seemingly permanent crisis? Why does public spending never seem to deliver the promised benefits, only demands for even more public spending?

  • Runcie Balspune

    Take the water industry, for example, which has been a method of siphoning off profits out of this country to offshore companies that made a lot of money at the same time leaving us with expensive water and in some cases very bad levels of pollution.

    Says the man who, at taxpayer largesse, has probably siphoned off about £3 million (adjusted) into his own pocket for doing effectively sod all, and will continue to when he retires and his gold plated pension kicks in, all financed by the humble taxpayer.

    “Bond” is just another socialist synonym for “magic money tree”.

  • John K

    it sounds like Corbyn is the UK’s version of Bernie Sanders: ill-educated (and probably not overly bright), lacking in relevant experience, and arrogant enough to espouse meddling in forces which he clearly doesn’t understand.

    Laird:

    That sums him up pretty well.

  • Phil B

    @Derek Buxton – yep, I had included that too and all the other mandatory stuff I could not avoid (e.g. MOT/testing the car for roadworthiness with VAT, road tax with again, VAT), insurances and the tax on the premiums, VAT on food (only certain items but nonetheless, taxed). It was hopefully covered by the “etc. etc. ad bloody infinitum” bit. >};o)

    Seriously, try keeping a spreadsheet for (say) three months and see just how much tax you pay, directly and indirectly. You may have to pro rata some costs (like the annual insurance premiums, council tax etc.) but you will undoubtedly be shocked.

    As a “for example” the average price of petrol in the UK is 116.6p/litre. Extracting the VAT of 20% leaves a residue of 97.16p/litre. Duty is 57.95p/litre which leaves the oil company 39.21p per litre to find, drill for, extract, transport, refine, build petrol stations, distribute the petrol and pay accountants to collect for the government 77.39p/litre tax. Note that an unknown portion of the 39.21p will be profit and the Government will tax that too (companies DO NOT pay tax, their customers do – they simply pass on the tax collected).

    Methinks that “Politician, Lamp Post, Rope – some assembly required” is well past time to be implemented.

  • bobby b

    “As a “for example” the average price of petrol in the UK is 116.6p/litre.”

    Ouch. Can my math be correct? Are you really paying almost $6 per gallon for gasoline?

    FWIW: Here in midwest USA, I just filled my truck at $2.20/gallon (45p/liter), of which $0.48/gallon (10p/liter) was tax.

  • Phil B

    @bobby b – nothing wrong with your maths. Links here:

    https://www.petrolprices.com (I took the 116.6p/litre one from this)

    https://www.petrolprices.com/the-price-of-fuel.html (Historical data).

    I wanted to stress that the oil companies actually have to do a lot of work and effort to deliver the product to the end customer whereas the Government collects (in round terms) 2/3 of the price for doing nothing but pass laws. Of course, when the oil companies put up prices, the self same government then screams about them being greedy and unethical (while of course, collecting extra revenue from the price increase which is likely beyond the oil companies control).

  • Paul Marks

    Phil B. – I agree with you that government spending and taxation is vastly too high.

    However, I fail to see how unlimited government spending for “Social Care” for wealthy people is going to make things better – surely it would make things even worse.

    “Government is spending vastly too much money (and so taxing me into the ground) therefore government should spend MORE money” makes no sense. And I repeat I am from the opposite wing of the Conservative Party from Mrs May – it just strikes me as utterly bizarre that is when the lady actually makes sense (the need for some limit on the increase of government “Social Care” spending, at least a limit on government spending on people who have very large assets of their own) that Mrs May is savagely attacked.

    Mrs May was riding high in the polls – and then the Manifesto came out with some moderate (very moderate) proposals on government funded “Social Care” – and all Hell broke loose, with Mrs May essentially being accused of eating babies.

    Forget “spread sheets” and other such stuff – no government is going to make serious policy changes (the policy changes that are desperately needed if the costs of the Welfare State are not to utterly bankrupt this country) if even very moderate proposals (such as those on Social Care) are treated as baby eating.

    Whenever I turn on a British news or current affairs show there is someone talking about poverty – and they are always someone who knows nothing at all. They think that even more government spending (totally unlimited government spending) is the answer to everything.

    “Give me more free stuff, give me more free stuff, give me more free stuff…….”

    Do you not think there has to be some limit on government spending?

    “How dare you say that! Do you not know how highly I have been taxed!”

    I repeat that I already know that taxation is very high – I just dispute the theory that increasing government spending even more is going to reduce taxation.

  • Mr Ed

    Ouch. Can my math be correct? Are you really paying almost $6 per gallon for gasoline?

    bobby b:

    At £1.166p per litre, at current rates that’s c. USD $1.499 per litre, in US gallons c. $5.77 or Imperial $6.81.

    I recall a few years ago a ‘plane crash in the USA where it exited the airport (on take off iirc) and it stopped near a gas station. Someone in a British paper website commented in astonishment at the price of gas as shown on the sign near the tailplane of the aircraft.

  • Schrodingers’s Dog (May 29, 2017 at 5:54 pm): “During the last Labour government, between 1999 and 2009, per capita public spending rose by about 50% in real terms. … Why is the NHS in seemingly permanent crisis?”

    Under the last Labour government, NHS-spending doubled; Gordon Brown is still touting that fact as one of Labour’s achievements: “We doubled expenditure on the NHS.

    Sadly, this doubling of its cost was not accompanied by any overall improvement in its output – rather the reverse. It remains a classic example of how rapid increase in regulation can effortlessly defeat rapid increase in expenditure. Natalie posted some background here.

  • Phil B

    @Paul Marks,

    My point is this – I have paid many times over for the care I am likely to receive via taxation. I have paid into the NI contributions as well as general taxation (leave aside that the NI fund is a Ponzi scheme and that current contributions are used to pay todays pensioners etc., not as a pension “pot”). Having paid (under duress) the Government are now saying I must pay again.

    You can have it two was – the Government say I will tax you (unto death) and you are entitled to healthcare, a pension etc. OR we won’t tax you and you make your own provision. You can’t cherry pick the “Tax” bit from one and “make your own provision” from the other.

    OK let’s extend this concept. You are involved in a motoring accident. The hospital looks up your earnings and savings and charges you – you are rich enough to afford it. You retire and have sufficient funds not to need the Government pension so you don’t get that, either. You are ill and need to take time off work to recover. No sickness payment for you. You do your weekly grocery shopping. At the checkout, the supermarket accesses your salary details and charges you double or treble the value of the goods – you can pay for it so where is your objection? The person behind you has exactly the same basket of groceries but is charged nothing. Happy with that?

    If I have paid for something, no matter how reluctantly and no matter that my NI contributions are based on the total of my salary (so the more you earn, the more you pay) I unreasonably feel entitled to receive what I have paid for, particularly when those that pay nothing receive the benefits I have paid for and am denied.

    My recommendation to keep a spreadsheet was not to influence Government (Britain has an oligarchy) but to get people to actually think about the level of taxation as much of it is hidden and therefore it does not rankle as much as it should.

  • Laird

    Phil B, I understand your anger, and certainly don’t disagree with the idea of people keeping track of the taxes they pay so they’ll actually be cognizant of the magnitude of governmental exaction. But you’re thinking of taxes (including NI contributions) incorrectly. You haven’t “prepaid” for some service or other. You’ve paid taxes. Period. It’s a sunk cost, not an investment. If you should ever manage to receive some of those benefits, count your blessings. But don’t for one moment think that the government can’t, or won’t, reduce or even eliminate those benefits when it becomes necessary, or expedient, to do so.

    Here in the United States we have something called Social Security. We pay a massive amount into it, generally structured as the “employer contribution” and the “employee contribution” (although any thinking person knows that it really all comes out of employee compensation), and if you’re self-employed you pay both halves yourself. The sum of those “contributions” is presently over 15%, and for many people it’s more than what they pay in income taxes (which is additional, of course). They’re called “contributions”, but the reality is that it’s just another tax. People depend upon Social Security for old-age income, and many actually believe that their “contributions” are in a “trust fund” held in some fictitious “lockbox” which is sacrosanct. But the truth is that the government has already spent all that money, and the “lockbox” contains nothing but government IOUs. Our Supreme Court held long ago that there is no legal entitlement to Social Security payments; the government can reduce or even eliminate them entirely if it so chooses. Your NI contributions are no different. It’s just another tax.

  • John K

    Laird:

    I am sure Phil B knows that. His point is that having been taxed to buggery all his working life, the government which runs a so-called “welfare state” can then turn round and call him a rich bastard who will have to sell every asset down to his last £100,000 to fund his own care. Without putting words in his mouth, I imagine he feels that is not very fair.

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