Deficit reduction, please help...
Discussion
Dear PistonHeads elders,
I am but a peasant who that tills the land, so excuse my stupidity.
As far as I know, to make money a country has to make stuff from either its natural resources or by using its clever population. This stuff is then sold to other people, ideally Johnny Foreigner in exchange for hard cash.
So, how does taxing the private sector, who make stuff, and giving the money to the public sector, who don't make anything, make the fiscal deficit smaller?
many thanks
Thick
The Internet
I am but a peasant who that tills the land, so excuse my stupidity.
As far as I know, to make money a country has to make stuff from either its natural resources or by using its clever population. This stuff is then sold to other people, ideally Johnny Foreigner in exchange for hard cash.
So, how does taxing the private sector, who make stuff, and giving the money to the public sector, who don't make anything, make the fiscal deficit smaller?
many thanks
Thick
The Internet
The fiscal deficit is the difference between what the Govt spends, and what it rakes in via the tax system.
To reduce it, you either raise taxes (difficult becuase voters don't like it, and it causes corporations and the mobile wealth-creators to move elsewhere) or reduce spending.
The Govt is proposing to reduce spending to the frankly disgraceful and mediaeval level that it was in, erm, 2007. Hence the uproar.
The issue of the levels of Govt Debt (which impacts Govt. spending, since the interest payments have to be met out of tax receipts) is still to be addressed.
To reduce it, you either raise taxes (difficult becuase voters don't like it, and it causes corporations and the mobile wealth-creators to move elsewhere) or reduce spending.
The Govt is proposing to reduce spending to the frankly disgraceful and mediaeval level that it was in, erm, 2007. Hence the uproar.
The issue of the levels of Govt Debt (which impacts Govt. spending, since the interest payments have to be met out of tax receipts) is still to be addressed.
Edited by Bluebarge on Tuesday 29th March 14:14
As far as I am aware, the public sector does deal with production of goods and services but is state owned, and the private sector is run by private individuals / groups that can produce goods and services too - but is not owned by the state.
Taxing the private sector gets money from large private organisations into the hands of the government, and taxing the public sector is not as effective, as the government would effectively be taxing itself as it controls the public sector.
Basically, we are screwed as we have no money, and neither does anyone else (Johnny Foreigner will not be buying many goods and services) so the government is just trying to get as much money as it can from wherever it can.
Sorry, my economics may be a bit rusty!
Taxing the private sector gets money from large private organisations into the hands of the government, and taxing the public sector is not as effective, as the government would effectively be taxing itself as it controls the public sector.
Basically, we are screwed as we have no money, and neither does anyone else (Johnny Foreigner will not be buying many goods and services) so the government is just trying to get as much money as it can from wherever it can.
Sorry, my economics may be a bit rusty!
Fittster said:
I suggest the OP types keynesian into google.
Or Keynesian rap into youtube 
http://www.youtube.com/watch?v=d0nERTFo-SkRichyBoy said:
But doesn't Keynesian economics imply that you save in the good times and spend in the bad, what we have is made up as you go economics.
In most economic down turns, I think the general view is you don't want to be starting from where you are, unfortunately that luxury isn't available. 
king moron!Fittster said:
In most economic down turns, I think the general view is you don't want to be starting from where you are, unfortunately that luxury isn't available.
Yes, what you need is to have been prudent in the good times and not to have imagined that you had ended boom and bust.BoRED S2upid said:
Our Country hasn't made much for decades therefore make money by taxing what you can cars, fags, alcohol all the evil stuff they make billions taxing these.
What gives you the impression we haven't made much for decades? The UK is the 5th or 6th (depending on whose figures you use) biggest manufacturing country in the world, and in the top 10 exporters. BoRED S2upid said:
Our Country hasn't made much for decades therefore make money by taxing what you can cars, fags, alcohol all the evil stuff they make billions taxing these.
You must be really bored today! Britain produces a lot, we are world leaders in high end technological manufacturing, and have a huge arms industry.
Others that spring to mind
Pharmaceuticals
Chemicals
Engineering
Breweries
Fashion and clothing
Fair bit out there for us to rely on. I read recently that we produce more steel than we ever did, but not a lot of jobs in it, because of advances in technology and the like.
Willy Nilly said:
Dear PistonHeads elders,
I am but a peasant who that tills the land, so excuse my stupidity.
As far as I know, to make money a country has to make stuff from either its natural resources or by using its clever population. This stuff is then sold to other people, ideally Johnny Foreigner in exchange for hard cash.
So, how does taxing the private sector, who make stuff, and giving the money to the public sector, who don't make anything, make the fiscal deficit smaller?
many thanks
Thick
The Internet
Bluebarge has it about right. Imagine it like you, at home, wanting Sky with all of the premium channels. It comes to £10 more a month than you earn, but you can always put it on your credit card because you're due a pay rise next year, which will cover it no problem.I am but a peasant who that tills the land, so excuse my stupidity.
As far as I know, to make money a country has to make stuff from either its natural resources or by using its clever population. This stuff is then sold to other people, ideally Johnny Foreigner in exchange for hard cash.
So, how does taxing the private sector, who make stuff, and giving the money to the public sector, who don't make anything, make the fiscal deficit smaller?
many thanks
Thick
The Internet
Of course next year Sky bring out another set of premium channels. Your pay rise covers the original channels, but you have to pay another £10 a year for the new channels. Not a problem, because you get another pay rise next year that will clear off the credit card no problem.
Then you get made redundant. You have thousands of pounds on your credit cards, and keeping up with the Sky contract and the interest payments mean you are eating Tesco value beans on Tesco value toast three times a day. You have a couple of choices.
Firstly, you could cancel the Sky Channels. That would help quite a lot, but it would mean that you couldn't watch "When Armchairs Go Bad HD" which is your favourite show.
You could go down to just eating Tesco value toast three times a day. You won't fart so much, but the bread gives you indigestion.
You could see if there are any credit card companies stupid enough to give you some more credit.
You could declare yourself bankrupt.
Or you could go out and get another job. It might not pay so well, but it means that you can get rid of half of the sky channels (still retaining the one with "When Armchairs Go Bad HD"), go down to Asda smartprice beans, and not have to get another credit card or go bankrupt. And this time you promise yourself you'll say no next time the Sky salesman calls.
davepoth said:
Bluebarge has it about right. Imagine it like you, at home, wanting Sky with all of the premium channels. It comes to £10 more a month than you earn, but you can always put it on your credit card because you're due a pay rise next year, which will cover it no problem.
Of course next year Sky bring out another set of premium channels. Your pay rise covers the original channels, but you have to pay another £10 a year for the new channels. Not a problem, because you get another pay rise next year that will clear off the credit card no problem.
Then you get made redundant. You have thousands of pounds on your credit cards, and keeping up with the Sky contract and the interest payments mean you are eating Tesco value beans on Tesco value toast three times a day. You have a couple of choices.
Firstly, you could cancel the Sky Channels. That would help quite a lot, but it would mean that you couldn't watch "When Armchairs Go Bad HD" which is your favourite show.
You could go down to just eating Tesco value toast three times a day. You won't fart so much, but the bread gives you indigestion.
You could see if there are any credit card companies stupid enough to give you some more credit.
You could declare yourself bankrupt.
Or you could go out and get another job. It might not pay so well, but it means that you can get rid of half of the sky channels (still retaining the one with "When Armchairs Go Bad HD"), go down to Asda smartprice beans, and not have to get another credit card or go bankrupt. And this time you promise yourself you'll say no next time the Sky salesman calls.
I understand what the deficit is, I understand how UK PLC spent too much on public services, what I don't understand is why we shouldn't cut spending and why people think that spending more on public services will get us out of debt. Of course next year Sky bring out another set of premium channels. Your pay rise covers the original channels, but you have to pay another £10 a year for the new channels. Not a problem, because you get another pay rise next year that will clear off the credit card no problem.
Then you get made redundant. You have thousands of pounds on your credit cards, and keeping up with the Sky contract and the interest payments mean you are eating Tesco value beans on Tesco value toast three times a day. You have a couple of choices.
Firstly, you could cancel the Sky Channels. That would help quite a lot, but it would mean that you couldn't watch "When Armchairs Go Bad HD" which is your favourite show.
You could go down to just eating Tesco value toast three times a day. You won't fart so much, but the bread gives you indigestion.
You could see if there are any credit card companies stupid enough to give you some more credit.
You could declare yourself bankrupt.
Or you could go out and get another job. It might not pay so well, but it means that you can get rid of half of the sky channels (still retaining the one with "When Armchairs Go Bad HD"), go down to Asda smartprice beans, and not have to get another credit card or go bankrupt. And this time you promise yourself you'll say no next time the Sky salesman calls.
We need to export stuff to other countries, not spend money on paper shuffling, or am I missing something.
Willy Nilly said:
I understand what the deficit is, I understand how UK PLC spent too much on public services, what I don't understand is why we shouldn't cut spending and why people think that spending more on public services will get us out of debt.
We need to export stuff to other countries, not spend money on paper shuffling, or am I missing something.
No, you're not but the amount of people who think the public sector somehow is the economy is staggering.We need to export stuff to other countries, not spend money on paper shuffling, or am I missing something.
Gassing Station | News, Politics & Economics | Top of Page | What's New | My Stuff