Honest question to Red Kestrel...

How is it cost neutral?

 

Well, on the subject of bets, it's Cheltenham next week!

 

No I did not and yes I have albeit acquired many years ago and mainly around Keynsian theory .

 

I was hoping you'd ask me that.

Again, I'm going to attempt a classically liberal approach. To oversimplify, the way you improve the economy is essentially through competition. Very broadly speaking, the more different businesses you have supplying any single market, the better the overall efficiency will be.

The thing is, despite this 'American Dream'-esque nonsense which suggests that anybody can go from selling shoelaces in the street to running an international business, people generally don't set up companies when they're struggling to get by, no matter how sure they are that there will be a market for it. If you're not sure whether you'll be able to feed your kids next week, or if you're scared of being made homeless, then any old minimum wage job looks a much better bet to keep yourself going than does the sheer terror of waking up every day with no idea about how much money is going to come in. The people who set up small businesses are, in the main, those with relative security that they're not going to lose absolutely everything if it fails.

Even if you are a liberal, every single person taken out of poverty, and every single person taken off the streets, and every single person who is paid enough to allow them to put a bit of money aside every month, is a potential entrepreneur. Those who have no work, or no home, or are essentially itinerant, are an economic drag. Those who work 60+ hours a week for barely enough money to live on do nothing but enrich their employer, and this reduces the efficiency of the market,

I'm not in any way a liberal - I'm a small-state leftist at heart. But I'm convinced that there is a solid argument for a working welfare state from the right as well, and that's my attempt to articulate it.

 

I will link you some stuff from Portes who is not in favour of nationalisation but explains it most clearly when I get home.

 

Read the section by Johnathan Portes better than wading through the paper he wrote on it which is a tad dull.

http://www.independent.co.uk/news/u...r-public-control-john-mcdonnell-a7738141.html

 

But we have done the same QE and got **** all for it.

 

I prefer the Pottsian theory .
Work harder for greater returns .

 

Hi JC. The only bit I can see in the link referencing Portes.. is..

"Jonathan Portes, Professor of Economics at King's College London, said the policy would have “no impact on deficit, capital or current”. He however suggested the policy might be “dumb” for other reasons."

Hardly a glowing endorsement nor does it explain why. Water is one thing, What about public utilities like electricity - largely owned by foreign ( French?) companies?. As a general observation, the problem as you know, with economics and economic forecasting is there are far to many
variables. No one can say with any certainty what is right and what is wrong. However eminent an economist is, I have found over many years, to take pronouncements with a hefty pinch of salt. Often experts in the field turn out to have got thing spectacularly wrong. I am nopt discounting theory from one so eminent as Portes but there are equally eminent economists who take an opposite view. Both Friedman and Keynes were giants in the field of Economic theory but Friedman spent a lot of the time trying to discredit much of Keynes work.

OK changing the subject.... not any attempt to score points but can you reconcile the two headlines (from the same paper) for me as I am genuinely increasingly confused. Is it or isn't it??.........

Budget latest: Britain's deficit won't be cleared until 2031 under Tory ...
www.independent.co.uk › News › UK › UK Politics

22 Nov 2017 - The Budget deficit will not be wiped out until 2031, the Treasury watchdog has suggested – a staggering 16 years later than George Osborne originally pledged.
George Osborne's original deficit reduction target finally achieved but ...
www.independent.co.uk › News › Business › Business News

1 Mar 2018 - The original austerity deficit reduction target set by former Chancellor George Osborne has finally been achieved, according to official figures – but more than two ... According to the latest data, the UK did not lapse back into recession during the consolidation of the Osborne years, but GDP growth was still ...


Wibble!!!

 

SEEN THE PRICE OF CUMBERLAND SAUSAGES THESE DAYS lolol

 

Trains are easy

On others, setup alternative suppliers that are cheaper and better and force others out

 

There is a long report where Portes and many others on the subject where uses the same argument (as most economists do) for all nationalisation. Basically you obtain an asset. In some instances rail for example you pay nothing for that asset you just wait until the franchise elapses. In other instances there will be an initial outlay to obtain the asset but because the asset you have obtained is equal to or greater than the outlay it has no impact on public finances. The one codicil is that in some areas pensions may mean the value of your asset does not exceed your outlay.

As I said Portes is not in favour of nationalisation in broad terms but he like most peers recognises that it is cost neutral.

The original austerity target was to reduce not wipe out the deficit.

 

But reports state the deficit is now surplus not merely a reduction in the level of deficit.

Re nationalisation What do you mean " Inital outlay to obtain the asset"? Very woolly description . Do by that you mean paying over the odds to acquire a company owned by Foreign organisation? How do you force a sale. Franchise expiry is one thing but Re-nationalisation of a privatised utility is surely not that simple.

 

I mean you buy a profitable asset for market value. You don’t have the money but you have the asset. In terms of the balance sheet it has zero impact.

In terms of deficit the govt expanded it’s target in 2015 to include public sector borrowing see below.

http://researchbriefings.files.parliament.uk/documents/SN05657/SN05657.pdf

This has not been met and isn’t likely to be in the foreseeable.

 

Trains are easy

On others, setup alternative suppliers that are cheaper and better and force others out

 

Agreed. They all love the free market, after all. It would be hypocritical to complain if another company - state owned or private - finds an edge. If they want to compete with it then they'd be more than welcome to give up their dividends.

 

An extra benefit is that everybody who claims that nationalised industries don't work will have no grounds to complain about the introduction of state-owned competitors, because they'll obviously be out-competed almost immediately, thanks to the miracle of productivity that is private capital.

 

Top 20 deficits around the world. USA, **** me.

Rank Country CAB (million US dollars) Year
1 United States 462,000 2017 EST.
2 United Kingdom 91,420 2017 EST.
3 Canada 55,570 2017 EST.
4 Turkey 38,950 2017 EST.
5 India 33,680 2017 EST.
6 Brazil 28,990 2017 EST.
7 France 28,920 2017 EST.
8 Algeria 22,870 2017 EST.
9 Argentina 22,130 2017 EST.
10 Australia 21,680 2017 EST.
11 Egypt 19,830 2017 EST.
12 Mexico 19,810 2017 EST.
13 Indonesia 17,030 2017 EST.
14 Iraq 12,220 2017 EST.
15 Colombia 11,700 2017 EST.
16 Pakistan 11,670 2017 EST.
17 Oman 10,300 2017 EST.
18 South Africa 9,810 2017 EST.
19 Lebanon 9,488 2017 EST.
20 Kazakhstan 8,291 2017 EST.

 

The austerity programme the tories have followed , was just another way to keep wages low , pay rises low , spending low . It hasn’t solved or payed off any debts , it’s just another reason for the tories not to invest in schools housing

 

http://www.taxresearch.org.uk/Blog/...ts-it-there-never-was-a-reason-for-austerity/