Ask Not Whether Governments Will Default...

nickmason

CLAPTON wrote: »

there is of course no possibility of increased productivity or new inventions or any of that stuff that may, just may allow a continuation of the post war (2) prosperity?

Yes there is, but in a "global world" - if you'll excuse the teutology - the benefits of this are likely to be felt across all nations, at least to a degree. Which means the comparative positioning is still interesting.

carolt

So - what happens if we default?

What happens if loads of us rich countries default?

How bad is it for us/the global economy?

Lots of places seem to do it every so often, and then everyone forgets and things go back to normal...

(She says hopefully.)

bigbigmamamoo

why is it that countries only raise revenue through tax, why can't the UK nationalise some key industries to make a profit. I think if we combined this with a one-off tythe on the uber-rich to get rid of our debt, then we would be way ahead of other Western nations

nickmason

bigbigmamamoo wrote: »

why is it that countries only raise revenue through tax, why can't the UK nationalise some key industries to make a profit. I think if we combined this with a one-off tythe on the uber-rich to get rid of our debt, then we would be way ahead of other Western nations

Banks? Isn't that pretty much what we've done...?

Mind you, only because the market allowed it - basically offering the government an opportunity to do a bit of insider trading by buying stock that it would rescue.

In normal times, it would be lovely if you could nationalise industries, make a revenue profit, sell them (privatise) for further capital profit, nationalise and repeat ad infinitum. The trouble is that the private sector tends to be better at adding value than the public sector - so the price you'd pay to nationalise would be greater than the price obtained through privatisation.

And one-off "tythe"s do tend have lasting effects on people's behaviour. I'm not sure I'd do business in a country that occasionally plunders my wealth, or [STRIKE]grabs [/STRIKE]nationalises my business.

michaels

Part of the reason that N Sea oil production is falling so quickly is that every time the price spiked up Mr Brown would make an undignified grab by slapping on more taxes - more money for the treasury short term but long term it made investing in oil production look too risky.

blueboy43

GDB2222 wrote: »

So, if the tax take is around the maximum, what do you do? Raising tax rates doesn't raise any more money if you are at the optimal rates. Raising pension age doesn't help much either, as it shuffles the unemployment between generations and/or pushes expenditure from pensions onto social security. Inflation is the obvious way out, and it's been tried lots of times, but of course it only really helps with fixed liabilities, eg gilts, not things like pension commitments.

1) The first bit is the "lump of Labour fallacy".
It is things like poor education & skills, over regulation, minimum wage etc that limits young peoples unemployment - its is next to nothing to do with whatever retirement age we choose.

2) Trying telling that to people on pensions (public and private) during the 1970's

Radiantsoul

michaels wrote: »

Part of the reason that N Sea oil production is falling so quickly is that every time the price spiked up Mr Brown would make an undignified grab by slapping on more taxes - more money for the treasury short term but long term it made investing in oil production look too risky.

Oil companies paid a 10% surcharge on corporation tax which rose to 20% in 2006. But certainly Gordon Brown wasn't tweaking tax rates in accordance with movements in Brent Crude.

Milarky

Generali wrote: »

They take into account continued economic growth at a the 'natural' rate for an economy (eg about 2-2.5% for the UK).

Clearly they can't take into account a revolutionary technology that changes everything as by definition that is unpredictable.

Seems sensible to me. That 'trend rate' has been around that for long enough. If technology could have lifted our growth rates (and it raised some other countries of course) it would have done so.

Radiantsoul

Milarky wrote: »

Seems sensible to me. That 'trend rate' has been around that for long enough. If technology could have lifted our growth rates (and it raised some other countries of course) it would have done so.

It has probably only been around from the 1950s to date, which is only two generations.

Jazzshed

carolt wrote: »

So - what happens if we default?

What happens if loads of us rich countries default?

How bad is it for us/the global economy?

Lots of places seem to do it every so often, and then everyone forgets and things go back to normal...

(She says hopefully.)

It is a good question. We will see soon enough because it is inevitable.