Do some people not realise that the money that governments have to pay for things comes from taxes?

[Thedogshow]

I keep hearing people say things along the lines of ‘letting people die so that people can go shopping’ and ‘so that rich people can get more money’ etc. As if the other option would be to just chill out forever at home, get paid by the government and wait until this mythical time when we are ‘safe’ from coronavirus.
But the NHS, universal credit, all social care etc is paid for by money that is obtained by the government from income tax, corporation taxes, duties on alcohol etc. The alternative is to borrow more money from countries like China.
Surely they understand this?
If all businesses are shut and no one is earning the government will quickly run out of money. If lots of big businesses go bust it is catastrophic for the country. If banks go bust everyone loses everything. It makes the UK extremely vulnerable. And domestically, so, so many jobs will be lost, both in the private and public sector.
It is pretty important. Wanting the economy not to tank is not greed, it’s essential to protect the whole of society.
Nothing comes from nothing.

[collatwrlamadamage]

Ironic that the op said people don't understand when its clear a few people on this thread have bought the rhetoric hook line and sinker.

[Kazzyhoward]

I think some public opinion is confused. Brexit job losses, fine, COVID job losses disaster.

Half the voters thought the benefits of Brexit outweighed the negatives.

There are no benefits of Covid.

Now do you see the difference?

[BubblesBuddy]

Also this level of borrowing cannot be repaid in 10 years. The banking crisis was a blip in comparison to this! This is a mega expense that will take decades to pay down. This is why under 35s will be most affected.

[socialcommentator]

Left wingers aren't renowned as being the brightest bulbs on the tree OP... look at Jeremy "I failed my A levels" Corbyn and Angela "I didn't go to school" Raynor

[Moondust001]

The Tories didn't force Blair/Brown to sign huge numbers of new PFI contracts did they?
I didn't say I supported EITHER party using PFI. I opposed it at the time. I was correcting the erroneous statement that this was a (New) Labour initiative. It wasn't. It was a Tory initiative. That should have told the Labour Party all they needed to know about it. But it didn't.

[DogInATent]

Are you assuming that government expenditure on UC, furlough, business grants is somehow "lost" to the economy? Every pound the Government issues through these means will be spent several times over in the economy.

Cash-flow is always more important than profit, and the governments priority at the moment is keeping cash pumping through the system. If it stops it will be harder to re-start.

There are some very big grant schemes being set-up at the moment that are already looking ahead, and aimed at investments to help businesses trade out of the end of a recession. Important as historically more businesses have gone bust in a recovery than in a downturn.

Nothing comes from nothing
That's true of carrots and parsnips, but the international money markets are creating money out of thin air every second of every day. It comes down to the basic question of, "What is money?"

[GhostofFrankGrimes]

Kazzy

Do you not see that both Brexit and COVID have economic consequences that are quite similar? Do you not see the rank hypocricy of people cheering on No Deal Brexit (job losses, potential food shortages) and complaining about lock down (because job losses, food shortages)?

[MrsPnut]

The Bank of England is not privately owned -
The Bank of England is the central bank of the United Kingdom and was established as a corporate body by Royal Charter under the Bank of England Act 1694. The Bank was nationalised on 1 March 1946, and gained operational independence to set interest rates in 1997 (the Bank of England Act 1998 Part II sets out the responsibilities and objectives of the Bank in relation to monetary policy).

The Bank is a public sector institution, wholly-owned by the government, but accountable to Parliament. The entire capital of the Bank is, in fact, held by the Treasury solicitor on behalf of HM Treasury. Each year, the Bank is required to submit its Report and Accounts to Parliament, via the Chancellor of the Exchequer. For more information you may be interested to see the Bank’s latest Report and Accounts, which can be found on our website at:

//www.bankofengland.co.uk/publications/annualreport/index.htm

Also the economy is nothing like a household budget, it does not need to balance. The government need to invest money to stimulate the economy and if they can borrow that money when interest rates are very low then they should do that.

The difference between the Labour ideology and the Tory ideology is that the Tories want to stimulate the economy by giving tax breaks to the rich and large businesses which doesn't always then trickle down to the rest of the country.
Labour want to give the money directly to the lowest paid, and by investing in house building and large infrastructure projects. If you give more money to low paid workers then they tend to spend that money in their local area and the government benefits from getting parts of that investment back in the form of VAT, NI and taxes. As the local economy grows then the amount the government recovers grows as well.

The selling off of the gold and the banking crisis were both failures of the financial sector, being too greedy and both times Gordon Brown had to act to bail them out to prevent a complete financial crash.

[GhostofFrankGrimes]

Left wingers aren't renowned as being the brightest bulbs on the tree OP... look at Jeremy "I failed my A levels" Corbyn and Angela "I didn't go to school" Raynor

John 'O Levels' Major was an political powerhouse compared to Old Etonian Johnson.

[BubblesBuddy]

I think though, Ghost, the unemployed is far higher than anyone would think about post Brexit. This is much much bigger. Pump priming companies hadn’t kept people from being redundant! There are 2 million more unemployed. We need a strong economy to pay for what we want but trashing it won’t happen if we all demand pay increases for public sector workers because the other tax payers simply cannot afford it if they are unemployed or only just surviving on salary reductions.

Quite simply we cannot find everything we want so there has to be give and take. Pension funds will be decimated. The tax take will plummet. No one much will have spare cash. Businesses were precarious anyway. Many will close. If we don’t spend, businesses close. The government can spend but that won’t save everyone. It’s really bleak.

[BubblesBuddy]

Sorry - should have read “trashing it will happen faster if we all demand pay increase etc....

[GhostofFrankGrimes]

Bubbles

Rather than public sector workers being thrown under a bus again the government could always clamp down on tax avoidance, end vanity projects like HS2. I'm sure they'll rue the billions already spent on Brexit.

An economic system that is largely reliant on people spending on credit cards at shopping malls is doomed to fail anyway (remember public sector workers are also consumers) - as we have seeen over the decades, with no lessons learnt.

[LastTrainEast]

"So why dont Governments own their own banks and print or I guess create numbers on a screen? Although that would be the common sense approach, common sense is not a bed fellow of politics."

And then we have collatwrlamadamage who I think may be a freeman on the land with the mystical Bank Of England stuff and the 'money isn't real.'

The Bank of England is owned by the UK government and while bank notes have no intrinsic value 'money' does and we can't just make more or we'd all be rich.

I'm not half as scared of the virus as I am of being stuck on the same planet as some of you.

[alloutoffucks]

Thank you OP. I thought it came from some magic money tree.
Like the £53 million wasted on Boris' Garden Bridge that never happened.
By the way I have read quite a few economists now saying that a sharper stricter lock down would in the long run be better for the economy than half measures, partial lock down, opening up, then lock down again. That it is far harder for the economy to recover from a strung out scenario like the one some are proposing.

[MigginsMs]

Yes, some people are clueless. It was the same around Brexit as well. People don’t realise that “the economy” is not just some abstract idea lining the pockets of Philip Green, it’s actually everything.

[Iwalkinmyclothing]

Left wingers aren't renowned as being the brightest bulbs on the tree OP



If you realised just what a twit this sort of made you sound, you would cringe.

[alloutoffucks]

@ bubblesbuddy Pension funds have dropped dramatically. This has happened before. Shit for anyone very close to retirement. For most of us they will have built up again by the time we retire.
And the level of unemployment being talked about is the same as during the 80s. That was tough. Extras people are used to like lots of take away coffees and eating out will become less common. But plenty of people were still happy then, and will be happy now.
One thing I think a lot have learned from our lock down judging from posts on MN is what is really important. It isn't buying random shit. It is seeing friends and family and there is a lot of joy in everyday things.

[alloutoffucks]

@MigginsMs The economy should operate to help people. It is not a beast separate from us. The idea that economies can grow every year is a false one. Every decade has its recession and proves that. Capitalist economies actually seem to need recessions to continue to operate okay. And the attempts to stop any recession happening in the 90s were proven foolish. I remember the magazine articles about how the west had stopped recessions from happening.
Recessions are tough on individuals. But I also know many economists were saying we were overdue one and that it was going to happen anyway. Trying to stop recessions happening at all is like trying to stop the tide coming it.

[BubblesBuddy]

I agree Ghost. However tax avoidance won’t be enough. One of the interesting issues arriving from the help for the self employed is the number of people taking dividends only. My DH was self employed in a professional partnership and his accountant always said to pay themselves a living salary and pay income tax on that. It’s often more than other taxation but avoidance of it is rife. The numbers of people not paying income tax is huge!

I fully understand public sector workers spend and pay taxes but they are more bomb proof in other ways. Lots of their in work benefits and pensions are generous and funded by the state. I’m not saying we don’t want them or value them but pay increases have to be paid for by others.

We need a root and branch evaluation of the NHS. It’s not a sustainable model now. We have abused it in too many instances. Smarter working and paying for it is a must.

[GhostofFrankGrimes]

Lots of their in work benefits and pensions are generous and funded by the state.

Public sector pensions are not as "generous" as they used to be, it was another stick to beat workers with (public vs private).

It’s not a sustainable model now.

Of course it is, it just needs political will. Something it hasn't had for 10 years.

[Kazzyhoward]

One of the interesting issues arriving from the help for the self employed is the number of people taking dividends only. My DH was self employed in a professional partnership and his accountant always said to pay themselves a living salary and pay income tax on that. It’s often more than other taxation but avoidance of it is rife. The numbers of people not paying income tax is huge!

Tax is still paid on dividends. Corporation tax of 19% is paid on the profits and then personal tax at 7.5%/32.5% or 38.1% is paid on the dividends paid out of the after tax profits. It's certainly not tax free - in fact very similar to tax on sole trader profits.

There's a lot of nonsense posted about how dividends are tax free - they're not.

[BubblesBuddy]

Public sector pensions are very generous when compared to others. Look at the crash of pension funds right now and see where that leaves anyone else. If you are retiring right now and not employed by the state, heaven help you. Annuities will be very poor value and nowhere near what public sector workers get whose pensions are funded to the tune of £13 billion each year by the state. Private workers don’t get that. Perhaps the playing field should be levelled?

The nhs should not be about money. It costs £125 billion each year. It needs to be funded in another way for some services. We also need to value it and use it wisely. Insurance schemes could work as in Germany. We must be open to all points of view and alternative options.

[BubblesBuddy]

Income tax is more than corporation tax. That’s why people do not opt for it! Anyone self employed and has paid income tax on their earnings has paid more tax. Others have avoided it by paying dividends. Otherwise why would anyone pay dividends if the tax was greater? It’s not. Definitely for smaller traders.

[GhostofFrankGrimes]

Ah, the old public vs private argument. Divide and rule. Private sector needs to unionise and camapign for better pension provision. This would be far better than embarking on a race to the bottom. If people have worse pensions in retirement they won't make very good consumers will they?

Some of us value the NHS already thats why I didn't vote for austerity, pay freezes, axing bursaries etc.

[BubblesBuddy]

The race to the bottom is inevitable with a recession. 20 per cent have great pensions, security of employment and a job for life. Others are far more precarious but no one seems remotely concerned.