Daily Archives: 14 November 2008

Economist help required

Money, its a crime.  Share it fairly but don't take a slice of my pie.The newspaper headlines this week are packed with political tales of which party is promising the biggest tax cuts.  I’m not an economist so you’ll forgive my ignorance I’m sure.  Didn’t the world’s governments just throw trillions of tax payer’s money at the financial markets to prevent them from collapsing?  Did I just dream that or something?

Please correct me if I’m wrong about this but these trillions of dollars have to come from somewhere don’t they?  The £500 billion that my government took to pay the banks so that tey could lend it back to us with interest, that came from the taxes that we pay doesn’t it.  It could be direct taxation from income, taxation on the things we buy or taxation on business that produce things or sell services.  Every time there is a transaction of some kind the state takes a cut. 

They use this money to pay themselves, keep the NHS functioning, pay for the two wars that we’re involved with, give cash to Europe, pay for unemployment and pensions, pay for roads, libraries, policemen and women, pay for social care of all kinds (we can see how well that is funded), education for our children, independent scientific research and a whole host of other things. 

Taking £500 bn of that money away means one of two things to me, as I’m not an expert at all.

  1. They will need to cut spending on all the publically funded things that they could have spent the money on.
  2. They’ve borrowed it and will have to pay it back with interest.  This will mean that there will be less money to spend on publically funded things.

I’m sure I’m going to just go out there nwo and put my ignorance on my sleeve for all to see.  If there is less money in the pot to spend on things because it’s been spent already then doesn’t this mean that the state needs to recoup that loss in order to keep spending by raising taxes?  Or reduce public services.  One of the two.  Surely?

Reducing taxes will reduce the amount of money the government can skim and less money will be coming in to the public’s coffers.  Have I got this wrong somewhere?  OK, people will have more money in their pockets and so might spend more which will lead to more transactions where the state skims a bit off the top but if that is the case then why not cut the tax burden right down to nearly nothing and the country will be rich.  We’ll have wonderful public services because we’ll all have cash falling out of our ears and the state will be there to pick up our scrappings.

Tell me lies, Tell me sweet little liesI suspect that it is a Big Lie to get votes.  Come on politicians, you can be honest with us, we’re not stupid.  We understand that things might be tough and we might be a bit skint for a bit, tell us that and let us bite the bullet now so we get it over with all the quicker.  Honestly, we’ll thank you for it in the end.  A Big Lie just makes us distrust you all the more.  So, stop that.  Stop it at once.

It can’t be that easy?  What have i missed?

5 Comments

Filed under Bad things happen, Shitbiscuits, You decide