What did we think of Martin Durkin's documentary last night?

[hobbgoblin]

I'm pig politically ignorant when it comes to Economics so may well have been brainwashed by this programme, so wanted to see what y'all thought...

Thanks for your reply swc.

I have always been a firm believer in taxing the wealthy since a system that taxes proportionately to income always seemed the only fair way of doing things; the Robin Hood ideology as described by Durkin.

Watching this last night turned that completely on its head.

I also hadn't realised that taxation in general reduces the lowest earners' income by over half so that their benefits simply repay what they have earned and then given in tax.

If I ever felt like I wasn't self sufficient as an employed member of society still claiming a few benefits then this revelation knocked that feeling on the head!

When you realise that the more you earn the more you pay in tax which comes back to you minus the additional cost to the country of having someone (or several scores of people) administer this arrangement, thus reducing the overall level of service you receive in areas such as health, policing and education it all seems like a very poor deal.

I still find it hard to think that recovery could be that speedy if tax was reduced to less than 20% for the highest earners and zero for the rest of us. Do you think members of our society still have any sort of work ethic left for this to really succeed in re-igniting people's sense of ambition and pride?

Sorry, forgot to address your point about why our health service is so poor despite big spending.

My first guesses would be (as touched on in the programme) bureaucracy and overstaffing due to abundance of policy making, lack of streamlining and a history of poor budgeting decisions resulting in a need to firefight..?

I thought the programme was bloody genius. But then I am pig ignorant when it comes to politics and the economy so am easily impressed. I think all the people on there (who seemed to be top of their game - ex chancellors and economists etc) all saying the same thing should be an important thing? Surely?

Have got it to watch this w/e.

Not sure I am looking forward to it

Well the Gaurdian have slagged the programme off already review here but I thought it made many concepts accesible without dumbing down gravely.

It really does make you wonder what the current and several previous Governments have been playing at. Never mind the whole Left/Right/Middle politicial argument, not one single MP seems to be suggesting the sort of radical reform that this documentary appears to make blindingly obvious is necessary!

I though it made some interesting points and the section where MPs didn't know the difference between the national debt and budget deficit was very worrying.
It did make a lot of crude generalisations some of which I don't think are true but it was an interesting watch.

i thought the whole premise was shite. the idea that the ne will magically regenerate if you take away big government. no it won't. the only reason it had a brief flurry or prosperity was due to the british empire and the worlds reliance on the sea for export.

we no longer have an empire and even if the sea was still playing any role in exporting stuff there is nothing to export anymore.

the real issue is the over-reliance on the finance sector to magic money like rumple fucking stiltskin.

I don't agree that the whole premise was wrong, the Government has spent too much and the national debt is way too high. I agree the reminiscing about the 19th century did demonstrate large levels of ignorance of the economic conditions of that period and they also ignorec the fact that some Government spending is essential to give the private sector the right conditions in order to generate growth.

thb i only watched about 5 minutes before i got too angry with the manipulation of facts

why do we need an empire and exportation trade to flourish? why couldn't we be bigger exporters? why do cars and electricals get made in the east? why do we import apples?

can't we be more self sufficient as a country, and from that grow our export market?

I did start with a disclaimer about my breadth of knowledge, just to remind everybody

I didn't watch the documentary, I'm afraid.

But from the comments here, it would appear to pose an interesting question: why are the most successful manufacturing economies now and in the recent past (ie last century) those that have a substantial degree of government intervention, and relatively high levels of taxation?

That is to say: Germany, the Scandinavian countries, China (clearly very different political context, of course, and perhaps more directly comparable with the Industrial revolution era in Britain, particularly with reference to availability of capital & labour, so perhaps we should discount that one), Japan.

The one country that follows the programme that appears to be set out, if I am correct, is the United States, which frankly is something of a basket case.

sorry - basket case with regard to manufacturing, not in toto! (ducks head before half American DH reads comment)

Okay, I am just confused again now.

Is there a solution? It appears to me that pride and, er, politics gets in the way of real solutions.

So, is it true that high taxation and intervention in the past has optimised output?

Or, is it true that high taxation and public sector monopolisation equals dwindling economy and poor services?

If we ignored for a moment the issue of welfare state and focused on which economic model works best for raising GDP (that's what needs to increase, right?) then what is the answer? Private enterprise or swathes of public sector services?

Trade and exporting is good hobbgoblin because it allows greater use of economys of scale and comparitive advantage. The reason that we don't produce all the goods we use in this country and import some from other countries is that other countries can produce some goods for the use of less resources then we can as they have a comparitive advantage in the production of some goods.

Private enterprise is the only way to raise GDP. The Government has a crucial role in creating the right environment (eg educating people/providing quality infrastructure etc) to allow companies and the private sector to grow and increase GDP but the private sector is the main driver of economic growth.

Okay, thank you Huddspur but WHY do we import apples?!

Is it the failure of our economy that we cannot manufacture more electrical goods (for example) for export, or is that to do with infrastructure or natural resources? (Am struggling to think it might be natural resources with the manufacture of a CD player).

hobbgoblin- its a combination of various factors such as wage rates/regulations/expertise/natural resources etc.

hobbgoblin - I think you have to accept that there is not a simple answer. In some situations, substantial government intervention and relatively high taxes has been extremely successful (think Germany).

When the UK tried to copy this in the 70s (remember 'picking winners' and Neddy?) it was, shall we say, not so successful.

One thing that, IMO, is critical is providing a good business environment; which includes amongst other things a well educated population, good technical schools and colleges, absence of excessively restrictive regulation (though what is excessive can be long debated), a favourable macroeconomic environment, including avoiding an overvalued currency, good access to capital at reasonable rates (the Landesbanks in Germany are a good example) and many other things.

It is also of course very important to remember that GDP is not a measure of economic welfare ('bads' as well as 'goods' contribute to GDP).

There was another thread on this documentary ...

I thought it was too simplistic but still provided an awful lot of info that most people in the public either don't know or just won't accept.

It was inexcusable how many MPs clearly didn't know the difference between the national debt and deficit. It also mentioned that the debt was far higher than realized once we take into account all the unfunded state and public sector final salary pensions. Our unborn children are already debt slaves.

It also explained the "broken window fallacy" of why an ever increasing public sector (53% of GDP and 70%+ in some parts of UK!) actually makes everybody poorer and is simply unsustainable.

However, its solutions of cuttng tax and creating more manufacturing industry were very simplistic. Also Hong Kong may not be a very useful comparable to the UK.