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Ask HN: What Is Happening in the UK?

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Re: Ask HN: What Is Happening in the UK?

#91

Post by SilverBirch »

icare_1er wrote: post #8

Genuine question: why are markets disapproving of the economics policy decided by a ... right-wing governement ? I though markets reacted negatively to socialist governments getting into power, not the opposite.

The markets want to know that the UK can pay off it's debt. The government announced a massive spending package along with massive cuts to tax revenue. As well as this, they did it without the normal independent analysis on the impact, and have signalled they don't think they need to worry about the UK balancing it's budget in the short term. So the markets don't think the UK will be able to pay off its debt because the government announced plans that will cause it not to be able to pay its debt. Simple as that.

Normally left wing governments are punished because they increase spending without increasing tax revenue - causing unsustainable debt. The UK has done the right wing equivalent - they decreased tax revenue without decreasing spending - causing unsustainable debt.

Re: Ask HN: What Is Happening in the UK?

#92

Post by imdsm »

fnimick wrote: post #18
cbeach wrote: post #10

Earlier quoted context omitted.

Oh yes, you're not wrong. Many people on the left see tax as an appropriate punishment for wealth. In their worldview, wealthy people are demonised and dehumanised. The left are convinced that wealthy people are parasitic on society. This leftwing ideology seems peculiar to me, having seen the data on who's funding public services, and who's benefiting from public services.

How can you possibly justify keeping even more of your money that you earn from profiting from the work of others, when people in need are freezing and starving? I know HN runs libertarian but this is just abhorrent.

Many people make this point, but very few are willing to defend their views with some good old pragmatism. In the nature of HN, let's have a go at that, shall we?

1. Who works harder, an office worker working for 7.5 hours or a nurse who works for 12+ hours?

2. Who works harder, a person who works 37.5 hours in an office, or someone who works 80 hours a week, founding a company?

3. Who has worked harder to get where they are, an office worker who spent 6 months getting an NVQ in Microsoft Office or a nurse who spent 4-5 years getting a degree in nursing?

4. Who takes more risks, a person who works 37.5 hours in an office or a founder who puts their own capital in to try and create a company?

5. Which brings more value to a community, a person who is employed, or a person who employs people?

Re: Ask HN: What Is Happening in the UK?

#94

Post by Brakenshire »

tut-urut-utut wrote: post #38
pyb wrote: post #2

In a few words, PM Truss's first economic measures indicate that she's ideologically-driven and has no idea what she's doing. Namely, cutting taxes for the rich in hope that maybe some economic boost will "trickle-down" to the middle class and the poor. This idea is utterly discredited in economic circles. The UK central bank, the BoE, is forced to take measures to counteract what Truss and her government are doing !…

Well, Truss was not elected because of her economic (or any other) competence, but because of her hardliner course against Russia. Rishi Sunak was a better choice in every category, but had two problems: 1. he is not "white" 2. he is not anti-Russian enough EDIT: By "elected" I meant "elected by her own party".

Rishi Sunak was claiming to be resident in the US while Chancellor of the Exchequer, while his wife was claiming non dom status to avoid paying tax. He was also hated by the supporters of the previous PM because he wielded the knife.

Also, the most popular candidate with the Conservative membership was Kemi Badenoch, who is black, but far more radical than Rishi Sunak, who was forced to defend Treasury orthodoxy.

I’m not convinced it has much to do with race.

Re: Ask HN: What Is Happening in the UK?

#95

Post by BerislavLopac »

What is really happening is that a group of disaster capitalists, including various "think tanks" and hedge funds, have direct control over the PM and the government, which is putting in place policies that directly benefit them. They have made great profits by extracting the public money in various ways, as well as shorting the sterling; there is no "ideology" involved, it's simply pure short-term greed.

This has been going on for a while, but even Johnson wasn't as directly controlled by this group. They took the opportunity to get rid of him and put Truss to the PM's position, making sure that she will do exactly as they tell her.

Re: Ask HN: What Is Happening in the UK?

#96

Post by roenxi »

ceejayoz wrote: post #43
a3w wrote: post #34

Earlier quoted context omitted.

A little to coarse, since OP asked about the UK. But Obama already acknowledged that the US will never pay back all their debt, "even if they get 10% GDP increase per year for every single year" if I am not mistaken about that non-verbatim quote.

Not paying off all the debt and defaulting on debt are vastly different things.

Are you potentially not a creditor? I think the term here is 'distinction without a difference'. If you lend the US enough money for a sandwich, you should expect not to get a sandwichworth of money back. What you call that legally is not that interesting, I suspect, to the people were lending the money.

Re: Ask HN: What Is Happening in the UK?

#97

Post by hcayless »

ksaxena wrote: post #32
pyb wrote: post #2

In a few words, PM Truss's first economic measures indicate that she's ideologically-driven and has no idea what she's doing. Namely, cutting taxes for the rich in hope that maybe some economic boost will "trickle-down" to the middle class and the poor. This idea is utterly discredited in economic circles. The UK central bank, the BoE, is forced to take measures to counteract what Truss and her government are doing !…

The bigger problem is the energy-price guarantee that Truss has announced that will put a ceiling on fuel price for consumers, with the difference born by the UK treasury - estimated outflow is more than 100 Billion pounds. This outflow is planned to be funded by borrowing, which has resulted in a weaker pound.

They really had no choice about that part. The spike (beyond their control) in energy prices was set to bankrupt hundreds or even thousands of small businesses and put many people in a situation of deciding between heat and food.

The tax breaks though, were totally an own goal.

Re: Ask HN: What Is Happening in the UK?

#98

Post by Nursie »

orlp wrote: post #77
steve_gh wrote: post #20

Earlier quoted context omitted.

Quite frankly, you are hugely privileged to be earning at that level. The median average salary in the UK is just under £26k. Also, when you are that income level, there are a number of tax benefits you can enjoy - for example the first £40k you put into your pension is before tax - so it effectively reduces your salary (for tax purposes) by £40k. SO if you are doing the sensible thing and putting money into a pensio…

> Also, when you are that income level, there are a number of tax benefits you can enjoy - for example the first £40k you put into your pension is before tax - so it effectively reduces your salary (for tax purposes) by £40k. It also reduces your actual salary by £40k, not just for tax purposes, if you'll never end up using your full pension. Either because you've died before doing so, or because the pension fund can…

Pension funds that are contribution based can't be underfunded, pretty much by definition.

> a pension now that may or may not be fully available after retirement, versus £40k minus tax invested into an index fund and accessible/reroutable whenever?

If we're talking about people putting that 40k into a pension because the tax on going over 100k salary is too much, you've saved 21k straight off by not taking it as salary. So we're talking about 19k in your hand vs 40k in a pension.

The pension fund you contribute to now could just be an index fund (it may be a managed fund though, depends what you pick), and as we have moved away from final salary pensions, there's no danger of underfunding because it's basically just a tax-shielded investment.

So the answer is, assuming you live to retirement (or even to 55, the age where you can take a tax free lump sum from your pension in the UK), that 40k invested in a pension is likely to be a lot better for you than 19k in a similar fund that's not tax-shielded.

And it's more likely to be there when you need it later in life because you won't be able to dip into it during your working years.

Re: Ask HN: What Is Happening in the UK?

#99

Post by weberer »

bigfudge wrote: post #44
icare_1er wrote: post #8

Genuine question: why are markets disapproving of the economics policy decided by a ... right-wing governement ? I though markets reacted negatively to socialist governments getting into power, not the opposite.

The counter factual where a left wing government does something this stupid is hard to imagine because the press and markets normally go so apeshit at even minor transgressions of neo liberal orthodoxy that we never get that far.

Its not hard to imagine. We've seen it just recently in Venezuela.

https://en.wikipedia.org/wiki/Crisis_in_Venezuela

Re: Ask HN: What Is Happening in the UK?

#100

Post by notahacker »

Someone wrote: post #71
ksaxena wrote: post #32

Earlier quoted context omitted.

The bigger problem is the energy-price guarantee that Truss has announced that will put a ceiling on fuel price for consumers, with the difference born by the UK treasury - estimated outflow is more than 100 Billion pounds. This outflow is planned to be funded by borrowing, which has resulted in a weaker pound.

Adding nuance: it’s not that they put a price cap on energy prices (many countries in Europe do that), but the amount of money allocated to it. Reading https://www.bruegel.org/dataset/national-policies-shield-con... , the UK allocates about double of what France, Italy and Germany allocate to it.

Further nuance: the UK government also ruled out trying to regain some of that expenditure on energy subsidies by increasing taxes on relevant energy company profits.

And whilst the fiscal impact of the top rate tax cut (or indeed not introducing energy company windfall taxes) may not have been that huge relative to the energy subsidy, the signal sent by the the triumphal announcements that borrowing to cut taxes would solve problems was that the government wasn't just making emergency funds available to resolve a crisis, but has ceased to care about balancing their budget or inflation and doesn't really know what it's doing.

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