Whitehall “braced for private schools collapse” 6

[ICouldBeVioletSky]

Continuation of previous threads to discuss VAT on independent school fees.

We don’t have a lack of doctors and teachers because people want to be lawyers or work in finance…our doctors leave for better pay and conditions abroad and our teachers give up the profession entirely because of poor working conditions. Some lawyers earn big money but many don’t. In fact, I’ve spent much of my legal career earning similar to my teacher brother (he’s a head of year). Overall he had the better package due to the longer holidays and better pension. Nowadays, I do earn quite a bit more than him but that’s because I left regional law and sold my soul to the city again.

@Boohoo76 ,

‘We don’t have a lack of doctors and teachers because people want to be lawyers or work in finance…our doctors leave for better pay and conditions abroad and our teachers give up the profession entirely because of poor working conditions’

I just don’t agree with that. Some doctors leave but we also gain plenty from abroad.

And as for teachers of STEM subjects, they don’t just leave, many never join. Look how few Maths, Physics and Chemistry teachers are actual graduates in those subjects. It is tragic how few Physics lessons are taught by Physics graduates in the state sector.

@Newbutoldfather - lots of people have a career changes these days. Lots of former lawyers and bankers become teachers like yourself? Medicine is obviously harder to retrain into, but nursing and midwifery is an option. And as you know, plenty of people who have made some money and then are not particularly materialistic, do just that, once they are comfortable.

It is not necessarily an “either” or.

Also a lot of people benefitted massively in the long run from the banks risk taking pre financial crash by getting 105% mortgages and now have equity built up. Not everyone was foreclosed. The securitisation scandal was far more of an issue in the US and the regulatory bodies and rating agencies were just as much to blame, in hindsight, as the banks.

So many from abroad in fact that we now have no jobs for the doctors we have paid to train...

When are Labour going to fix that little policy fuck up the Tories brought in?

And why are the government so insistent that all children must do all 3 sciences when so many kids are stuck teaching themselves from the revision guide, or never doing an actual experiment because there are no proper teachers.

But you can’t blame that on people wanting to become lawyers or work in finance. Very few people have a genuine choice between law or medicine. Most lawyers that I know excelled in subjects such as English and history at school, rather than STEM subjects. Whereas my dentist best friend had to have extra help with her English GCSE. My oldest son is one of the very few people that I know who could make that choice but even at his very high performing state grammar, many of the maths genius’ struggle with English.

I have a friend who is a doctor (acute medicine). Every person that he trained with in the UK has now left to work abroad.

Yes, there is a problem with STEM teachers but those people are not choosing medicine over teaching. They are choosing to work in the tech industry. Unless we massively increase the salaries of STEM teachers and improve working conditions, we are not going to resolve that. The problem is, who is going to pay?!

If you want the reduce reliance on the FS sector how will you get the tax receipts up to pay more for those doctors and teachers?

@EasternStandard ,

‘If you want the reduce reliance on the FS sector how will you get the tax receipts up to pay more for those doctors and teachers?’

By diversifying our society away from an unhealthy reliance on finance.

The U.S has about 60% higher GDP per capita than the U.K.

Every engineering, maths and Physics graduate who ends up fiddling around with the latest version of the Black-Scholes-Merton option pricing model is one who is not a teacher, an engineer or involved in high tech.

The idea that finance is a massive boon to our economy is one much promoted by economists, and guess which sector pays economists £250k plus plus to make random predictions.

Is your answer growing the engineering and tech sectors?

I don’t feel strongly about preserving the FS sector but you’ll need equivalent tax receipts if you want to shrink it. You’ll need a replacement in tax income.

@EasternStandard ,

Yes, we need to massively develop the hi tech sector.

We have a nascent high tech hub around Cambridge uni which could massively expand.

I agree but the way to expand things is usually higher salaries, reward for risk, and tax breaks.

We tend to dislike the latter going by the last vote but maybe we can get it together next GE and expand high tech.

You appear to think in black and white. Absolutely nothing that I have said has actually indicated that I want to make choices for other people or that I want a communist society. It is a very blinkered person who believes that crony/neoliberal capitalism ultimately leads to choices for any but the same type of people who would just as happily run a communist state if that’s the way the cookie crumbled. Any extreme ultimately leads to an extreme abuse of power by those who have got too much of it, whether via the Party, the KGB, kleptocracy, the mafia, populism, plain old dictatorship, or our current incarnation of capitalism.

@EasternStandard ,

‘I agree but the way to expand things is usually higher salaries, reward for risk, and tax breaks.’

Risk is rewarded when it works. Look at Branson, Dyson etc. I don’t believe most starting out as entrepreneurs would be put off by 45% tax vs 40%.

Higher salaries is the opposite of rewarding risk, but they are necessary for people with very high skill levels who are not entrepreneurial. And, yes, tax breaks for young tech businesses; I believe we already have the EIS scheme for that.

But also an increased defence spend, which is happening. Defense and Tech go hand-in-hand.

Finally we need to properly reward talented teachers in scarcity subjects, and not allow schools to get bogged down in endless useless new initiatives. If you want future high tech stars, they need to be taught well by talented teachers.

I don’t mind people wanting better teachers but if it’s higher pay then an idea on how to do that is necessary.

I recall listening to a piece on why we lag behind US on tech and commentator said we are good at ingenuity but worse on scaling up. US has more favourable tax regime for that.

I believe we have some smart, well educated people but our system could foster talent better. Labour seem to want to squash things instead sadly.

It is also harder to scale up, regardless, when the likes of, eg, Microsoft, Apple and Google are so massive that they can swallow up innovators before they have a chance to scale up themselves. However friendly the UK tax regime, the big money is in the US, so they can buy up the ideas (or stifle them).

China’s advantage, of course, is it has had to build itself up, because the US has always been hostile to it. The UK has come to heel for the US since WW2, so provides little to no protections from threats coming from that direction. That’s why the Western world are currently running around like headless chickens - because the US has started openly throwing its weight around in a blatantly hostile way, rather than using soft power.

Do you agree with pp that we need to not rely so much on the FS sector?

If so what do you want to replace those tax receipts with

@EasternStandard ,

I think the contribution of the FS industry is massively overrated.

Everyone looks at the taxes they pay but the bailout plus the recession and lack of credit caused by the collapse had a large negative influence the U.K. exchequer.

And all the product that they sell that adds to their bottom line but detracts the same amount from their clients.

And, finally their share prices, which are down over 20 years, meaning pension funds (that is our pensions) have lost money on investments.

It is hard to find any meaningful research on this as, of course, you need economists to do it and the vast majority are employed by the FS, bar those in academia.

I am convinced it is emperor’s new clothes, but I can’t prove it!

I think the hideous bind we are in is that in a globalised economy, there is no getting away from misbehaviour in the financial sector, because when it malfunctions, the entire world suffers. On that basis, it’s better to be part of the problem in the short term than to have the parasitical behaviour move on elsewhere, because then when the City stuffs up, your country recovers a bit more quickly than it deserves, because the rest of the world helps to bail your global financial sector out for you… Although next time, maybe financial armageddon will be preferred and then we’ll get what we deserve for hosting a parasite.

We clearly don’t have the capacity to rein the financial sector in as much as we need to, because the hedge funds, etc, wag the dog, imvho. Feeling a bit stuck, therefore - populism seems to be where we are headed (ie the people whose behaviour is doing the harm in the first place also getting control of the state by convincing the populace that it is legal systems, civil servants, regulations, tax, welfare, and bloated government that are the entire problem, not the behaviour of the increasingly tiny number of businesses and individuals that have control over the world’s finances and are now also in charge of the ruling political parties).

Not that the financial sector has to be behave parasitically, of course, it’s just that it can and too often does. As can and does the tech sector and all “big business.” But we can’t do without big business. And it does sometimes and could also do good. It’s just become too powerful.

I do not understand this distinction between “high tech” and finance - you need money and mergers and acquisition and lending to grow business. What exactly do you mean? If anything, pension funds have invested in US stocks rather than our own companies and banks and hence the fall in share prices. On a per earnings basis a lot of our British companies look quite undervalued and are undersold. Without efficient money moving, nothing happens. It is the money being readily available that helped a lot of US tech.
If anything also tech is in its infancy regulation wise. And the financial and legal and insurance sector is arguably now over regulated.

So what exactly is high tech? Be careful not to advocate for yet another bubble.

Is your real concern with finance derivatives and shorting? Surely it cannot be long term lending and investing and even listing on the stock exchange. That does not make sense.

And much of US tech is running a monopoly and under regulated and we all know that to be a fact.

What I am worried about most is the bind of sovereign debt we and the US find ourselves in and the sometimes hugely illogical decisions that appear to flow from that. And the power concentrated in individuals who have more money to their name than some countries.

With the encouragement of the financial sector and the way the tax system works to favour it.

@Araminta1003 ,

‘I do not understand this distinction between “high tech” and finance - you need money and mergers and acquisition and lending to grow business. What exactly do you mean?’

It’s pretty fundamental really!

High tech is about inventing, for want of a better word, real things. The iPhone in your hand is very different to a knock out call on $/Y. The Satnav in your car, which actually is corrected for the general relativistic time change due to the earth’s gravitational field, is very different to the financing of a merger which, research has shown is value destructive on average (except for the banks and lawyers advising).

The thing about finance is that it is necessary and, without it, we would be a lot poorer. But, since the Big Bang (1986), it has grown by a factor of around 10, with rewards growing similarly. The fact that we need a finance sector doesn’t mean we need the bloated one that we have.

I agree with this.
It’s not that “finance” per se is simply bad or unnecessary (it is clearly necessary and could be hugely beneficial overall to identify, encourage and develop innovation). It’s also not that everyone who works in the financial sector is bad and has the wrong motivations, but the bad actors and behaviours have become too big and powerful and there is too much capacity for manipulation. There is not always a direct link between what I view as the “real” marketplace (the market of goods and services that creates real things that people want or need) and enormously powerful players in the financial sector and business world (those who create and manipulate financial products solely to make money for money’s sake, regardless of the overall effect on the real marketplace).

The real marketplace is too easily rocked by those who make personal gain from its destabilisation. This situation should never have been allowed to develop, but how to put the genie back in the bottle, especially when those who think they can benefit from destabilisation are busy taking a more front of house role on the political scene, rather than manipulating from the shadows?