Trump's tariff wars...long post.

[tauzero]

16 minutes ago, Steve Browning said:

 

I'm afraid this may be slightly provocative, but the mention of the politics of envy in this forum just demonstrates how effectively the 'haves' are controlling the argument. 

 

Generally a phrase that should be accompanied by "I'm all right, Jack".

[Kiwi]

2 minutes ago, tauzero said:

Starbucks, incidentally, also use IP licensing as another big revenue stream.

And this is specifically mentioned in the video I posted, too.

[tegs07]

9 minutes ago, tauzero said:

One of the many tax dodges employed by big companies: https://cictar.org/all-research/starbucks-swiss-scheme

 

Another is to borrow money for investment from a second company belonging to the same parent, then repay it at a high interest rate, claiming tax relief on the interest. I think there could be ways of regulating that, either by placing a maximum interest rate or by abolishing tax relief on loans between sister companies altogether.

 

Starbucks, incidentally, also use IP licensing as another big revenue stream.

Just humour Trump and slap a 25% tariff at the point of sale for all US franchises. Then negotiate a reciprocal deal to remove the tariff?

 

Edit: I guess he calls the existing VAT an unfair tax and denounces it even though the US also has state taxes on sales.

Edited Friday at 12:40 by tegs07

[tauzero]

6 minutes ago, Kiwi said:

And this is specifically mentioned in the video I posted, too.

 

To me, the key words accompanying that video were "It's a long one at over two hours". 😁

[Burns-bass]

25 minutes ago, tauzero said:

 

To me, the key words accompanying that video were "It's a long one at over two hours". 😁

 

I watched as much of it as I could handle. The entrepreneur makes a truly awful (but inevitable) call for deregulation and believes the debunked BS about trickle down economics. Gary came across as aggressive and stand-offish, which obscured what (to me) seemed reasonable demands.

 

What the entrepreneur guy fails to understand is that the Government can – and should – create the conditions for an entrepreneurial culture, and that comes when the workforce is healthy, educated and mobile. All these things are enabled by increased government spending (either through taxation or borrowing) to create the conditions for an entrepreneurial culture. This point Gary makes by illustrating the massive increase in US domestic spending under Biden. The result? Their economy is going gangbusters.

 

We're once again following a path of austerity which will cause our economy to stagnate, meaning we'll fall even more behind. The solution isn't to reduce regulation or taxes on the rich.

 

Gary is an economist and can only apply this lens to every decision. He's brought out as some sort of firebrand, but he lacks the clarity of thought of someone like Ash Sarkar who is a much stronger and more persuasive communicator for the same message. 

 

Edited Friday at 13:06 by Burns-bass

[prowla]

4 hours ago, TimR said:

 

I think there's a point at which envy gives way to recognising that people who have huge amounts of leverage are out competing people who are just trying to eat. 

 

That's not envy, that's people who are being greedy. 

 

I'm not envious of people richer than me, but I certainly worry for people who are massively poorer than me.

 

Property is driving a lot of this inequality, which is what I'm talking about by leverage. A lot of this wealth is notional amd its just the ability to borrow on equity. Especially when it comes to Trump. (and many people living in houses that are 'worth' 10x what they paid for them).

 

2 hours ago, tegs07 said:

Indeed particularly when the politics on envy makes way for the politics of hate and finally the politics of war. a path well trodden.

 

43 minutes ago, Steve Browning said:

 

I'm afraid this may be slightly provocative, but the mention of the politics of envy in this forum just demonstrates how effectively the 'haves' are controlling the argument. 

Oops!

I was slightly being devils advocate there (and for the record, I'm not a billionaire, or even a millionaire).

But there is sometimes a "let's make the rich pay!!!" mentality towards the mega-rich and a more general "make them pay their fair share" towards anybody who is earning a bit more than whoever is speaking, which I think is destructive and self-defeating.

People do have the ability to go elsewhere and take their money with them; sure their physical assets, such as houses, are fixed in-situ.

But we also have laws, established over centuries, which define property and rights (unless you're wanting a Trump here to tear up the rule book).

There's also a notion that the rich are all selfish narcissists, but that is just a stereotype.

Take the example of BIll Gates, once the richest man in the world, and his constructive charitable works.

Just one of many.

Further, the UK is simply not going to dictate to the rest of the world; the billionaires in Russia, China, Africa, the US, and pretty much everywhere are just going to shake their heads and laugh.

All that happens if a government gets too draconian is the wealth shifts to a different elite (the controllers as opposed to the entrepreneures) - the plebs still stay in the same place.

[tegs07]

31 minutes ago, Burns-bass said:

We're once again following a path of austerity which will cause our economy to stagnate, meaning we'll fall even more behind. The solution isn't to reduce regulation or taxes on the rich.

Gary is an ex trader who made his cash betting on the fact that the economy will never fully recover from the 2007 crash. His core idea is that the government will be stuck in an austerity doom loop permanently whether they are labour or conservative without taxing unproductive capital.

IMO on this point he is correct.  The UK Government can no longer just borrow to invest with the current debt mountain.

Markets just don’t view the UK as a credible investment destination. Raising investment is getting more difficult and more expensive.

 

The  yield on long term gilts will just keep rising killing off any financial headroom as Reeves has discovered. Go the Truss route and try and increase spending and lower taxes without a sound plan and short and long term yields will spike enormously causing instant pain. Two different options have been tried and have failed. They are back to slashing expenditure and will soon be raising taxes. This won’t solve anything other than kick the can further down the road. Hopefully until someone else takes the blame.

Edited Friday at 13:38 by tegs07
clarity

[Russ]

2 hours ago, peteb said:

 

Exactly! I can be done if they go about it the right way, but it will be a bold move for a timid government that knows it will get massive pushback from incredibly powerful people, who will have the media in their side.

 

But what is the alternative? We can't keep going on the way we have been doing and we are creating the conditions for a populist political party to come to power who will make things even worse. 

 

We really should be moving towards implementing the Nordic Model. Not only are the Nordic countries regularly voted the happiest countries on Earth, stuff just works there. Ironically, there's a lot more public services being provided by the private sector there than in the UK, but it's all very heavily regulated and efficient.

 

I've always been of the opinion that nobody likes paying tax, but, if we've got to pay it, I want to see good value for what I pay. Taxes in the Nordics are quite high, but you do get a hell of a lot for what you pay (healthcare, free university and adult eduction, heavily subsidised childcare, etc, etc). They are also transparent - everyone's tax records are a matter of public record, so corruption is almost unheard of. 

[Steve Browning]

1 hour ago, tegs07 said:

Just humour Trump and slap a 25% tariff at the point of sale for all US franchises. Then negotiate a reciprocal deal to remove the tariff?

 

Edit: I guess he calls the existing VAT an unfair tax and denounces it even though the US also has state taxes on sales.

 

Not just State taxes. Sales tax can be imposed at city, State and Federal levels, and by zip code.

[tegs07]

10 minutes ago, Russ said:

I've always been of the opinion that nobody likes paying tax, but, if we've got to pay it, I want to see good value for what I pay. Taxes in the Nordics are quite high, but you do get a hell of a lot for what you pay (healthcare, free university and adult eduction, heavily subsidised childcare, etc, etc). They are also transparent - everyone's tax records are a matter of public record, so corruption is almost unheard of. 

I think most people could be persuaded to pay more tax if they thought it was being spent wisely and for the benefit of society. I remember a Swiss friend telling me years ago how his local Canton had rejected plans for a building (can’t recall what it was) as it was ugly and made of inferior materials. They wanted to pay more for an aesthetically pleasing design that would be more durable as it was seen as a better investment. I can’t imagine this happening in the UK!

[tauzero]

52 minutes ago, Burns-bass said:

What the entrepreneur guy fails to understand is that the Government can – and should – create the conditions for an entrepreneurial culture, and that comes when the workforce is healthy, educated and mobile. All these things are enabled by increased government spending (either through taxation or borrowing) to create the conditions for an entrepreneurial culture. This point Gary makes by illustrating the massive increase in US domestic spending under Biden. The result? Their economy is going gangbusters.

 

I don't think it even needs to be an entrepreneurial culture, at least not solely so - more a productive culture, but there could be a mix of publicly and privately owned industry.

[Pseudonym]

1 hour ago, tegs07 said:

Gary is an ex trader who made his cash betting on the fact that the economy will never recover from the 2007 crash. His core idea is that the government will be stuck in an austerity doom loop permanently whether they are labour or conservative without taxing unproductive capital. On this point he is correct. Government can no longer borrow to invest with the current debt mountain. Markets just don’t view the UK as a credible investment destination. Raising investment is getting more difficult and expensive.

The  yield on long term gilts will just keep rising killing off any financial headroom as Reeves has discovered. Go the Truss route and try and increase spending and lower taxes without a sound plan and short and long term yields will spike enormously causing instant pain. Two different options have been tried and have failed. They are back to slashing expenditure and will soon be raising taxes.

 

This sounds less like a justification for taxing capital than a justification for (a) not indulging ideologues unfit for office, and (b) calculating spending and taxes according to something other than the complaints of the electorate and prospects for retaining office. Those are political issues rather than economic ones.

 

The UK lost its reputation as a credible investment destination for reasons that are scarcely connected to a surfeit of unproductive capital. That unproductive capital is more symptom than cause. I question the notion that the best way to deal with unproductive capital is to put more of it in the hands of the governments that have, in recent years, committed numerous acts of economic self-harm.

 

If the UK wants more of its capital to be productive, the UK needs to earn back its reputation as a good place to risk capital. The Trump administration offers a window for this, I would say. It will not happen, however, unless there are better things to do with capital than spend the excess on helping the UK economy limp along for another few years without therapy or surgery.

 

I'll happily buy shares in a European bank, or a Japanese conglomerate, but I currently have no more faith in the UK than I have in the US when it comes to economic reliability. I simply do not find that the UK has adapted to the self-inflicted loss of its reputation for reliability. Until the UK can find a political equipoise that does not foster either delusional nitwits or excessively timid political trimmers, I fear that Britons will continue to blame the money for the misuse of money.

 

Money is not the enemy. I think there is too much unproductive capital in the UK economy as well, but the UK really needs to come up with incentives to use it productively. One need not be a tax-phobic loon to have reservations about taxing wealth in order to fuel a bunch of fantasies. Until the UK gets real about its economic relations with the rest of the world, the fantasies are all we have to guide us. Not good enough.

 

You have a fine educational and research infrastructure. Use it. You have an opportunity to attract foreign expertise instead of deterring it with hostile-environment nonsense that flatters no-hopers and alienates people with actual talent. Take it. You have the raw material for agile, information-heavy networks of supply and demand. Build them. Let us stop pretending that the fault lies in the stars. And, please, let us stop hoping that there is great potential in people simply because they were born in Good Old Blighty, or are the salt of the earth, or went to Eton, or whatever version of British exceptionalism blinds people on any given day. There is unrealised potential, and there is hot air and promises. If the UK wants to avoid the errors of the US, there are plenty of useful lessons available.

 

I hope the UK learns them. I would like to do something with a spare few quid other than buying Bittermints, which in any case are not made in the UK.

[Pseudonym]

50 minutes ago, Steve Browning said:

 

Not just State taxes. Sales tax can be imposed at city, State and Federal levels, and by zip code.

 

Indeed. And yet, those allegedly thick Americans manage to calculate all of this perfectly well, just as our grandparents could do sums in old money that would make Bill Gates's eyes glaze over with the Blue Screen of Death.

[tegs07]

4 minutes ago, Pseudonym said:

 

This sounds less like a justification for taxing capital than a justification for (a) not indulging ideologues unfit for office, and (b) calculating spending and taxes according to something other than the complaints of the electorate and prospects for retaining office. Those are political issues rather than economic ones.

 

The UK lost its reputation as a credible investment destination for reasons that are scarcely connected to a surfeit of unproductive capital. That unproductive capital is more symptom than cause. I question the notion that the best way to deal with unproductive capital is to put more of it in the hands of the governments that have, in recent years, committed numerous acts of economic self-harm.

 

If the UK wants more of its capital to be productive, the UK needs to earn back its reputation as a good place to risk capital. The Trump administration offers a window for this, I would say. It will not happen, however, unless there are better things to do with capital than spend the excess on helping the UK economy limp along for another few years without therapy or surgery.

 

I'll happily buy shares in a European bank, or a Japanese conglomerate, but I currently have no more faith in the UK than I have in the US when it comes to economic reliability. I simply do not find that the UK has adapted to the self-inflicted loss of its reputation for reliability. Until the UK can find a political equipoise that does not foster either delusional nitwits or excessively timid political trimmers, I fear that Britons will continue to blame the money for the misuse of money.

 

Money is not the enemy. I think there is too much unproductive capital in the UK economy as well, but the UK really needs to come up with incentives to use it productively. One need not be a tax-phobic loon to have reservations about taxing wealth in order to fuel a bunch of fantasies. Until the UK gets real about its economic relations with the rest of the world, the fantasies are all we have to guide us. Not good enough.

 

You have a fine educational and research infrastructure. Use it. You have an opportunity to attract foreign expertise instead of deterring it with hostile-environment nonsense that flatters no-hopers and alienates people with actual talent. Take it. You have the raw material for agile, information-heavy networks of supply and demand. Build them. Let us stop pretending that the fault lies in the stars. And, please, let us stop hoping that there is great potential in people simply because they were born in Good Old Blighty, or are the salt of the earth, or went to Eton, or whatever version of British exceptionalism blinds people on any given day. There is unrealised potential, and there is hot air and promises. If the UK wants to avoid the errors of the US, there are plenty of useful lessons available.

 

I hope the UK learns them. I would like to do something with a spare few quid other than buying Bittermints, which in any case are not made in the UK.

People don’t like it but we have an excellent aeronautical industry, weapons industry and the potential to be world leaders in drone production and development.

 

There is also a head start in medical cannabis which could also be decriminalised for public consumption. Stress is a big business.

 

Vice stocks ahoy.

[Russ]

3 minutes ago, Pseudonym said:

 

Indeed. And yet, those allegedly thick Americans manage to calculate all of this perfectly well, just as our grandparents could do sums in old money that would make Bill Gates's eyes glaze over with the Blue Screen of Death.

No they can't, they just guess! Here in New Jersey, the sales tax is 6.625% - nobody's calculating that off the top of their heads. 

 

You never know what something is going to cost until you go to the checkout - the sales tax isn't included in the shelf price and is added on at the till. 

 

 

[Pseudonym]

Just now, tegs07 said:

There is also a head start in medical cannabis

 

Nice pun.

[Steve Browning]

1 minute ago, Russ said:

No they can't, they just guess! Here in New Jersey, the sales tax is 6.625% - nobody's calculating that off the top of their heads. 

 

You never know what something is going to cost until you go to the checkout - the sales tax isn't included in the shelf price and is added on at the till. 

 

 

 

That last bit does genuinely baffle me.

[Chienmortbb]

Just now, Russ said:

No they can't, they just guess! Here in New Jersey, the sales tax is 6.625% - nobody's calculating that off the top of their heads. 

 

You never know what something is going to cost until you go to the checkout - the sales tax isn't included in the shelf price and is added on at the till. 

 

 

Drives me crazy whenever I go to the US. At least VAT is already on the price over here, you pay the price you see.

[Pseudonym]

Just now, Russ said:

No they can't, they just guess! Here in New Jersey, the sales tax is 6.625% - nobody's calculating that off the top of their heads. 

 

You never know what something is going to cost until you go to the checkout - the sales tax isn't included in the shelf price and is added on at the till. 

 

I was thinking of my accountant, really. I do remember a tiresome small-business owner in Maine grumbling at a town meeting that a change to a tax would mean that she wouldn't be able to calculate the tax, and someone said, "I've been in your store. You don't calculate the tax now, your till does."

 

[Pseudonym]

5 minutes ago, Steve Browning said:

That last bit does genuinely baffle me.

 

It took me a while to get used to it. After a while, I realised that the real American Dream is to become wealthy so that one need not worry about what things actually cost above the posted price. Give Me Convenience or Give Me Death.

[Pseudonym]

10 minutes ago, tegs07 said:

People don’t like it but we have an excellent aeronautical industry, weapons industry and the potential to be world leaders in drone production and development.

 

There is also a head start in medical cannabis which could also be decriminalised for public consumption. Stress is a big business.

 

Vice stocks ahoy.

 

And quite right too. Just look at the DoI. It is essentially an extended parody of timeless (i.e. hopelessly outmoded) British virtues such as silliness, good humour, endless scatological chortling, and benign hobbies that contain the promise of Obsessive Compulsive Disorder. Nonetheless, quite a lot of the content over the years has suggested the existence of a shadowy, corrupt, narco-military think-tank somewhere in Wiltshire. As a nation, we seem to be good at blowing things up, getting high, and talking about past glories. Just ask Pink Floyd.

 

My great-uncle worked in the aeronautical industry. My grandfather was a navigator in Lancasters. A relative in France designs Exocets, and his uncle supplies rifles to the British Army. Even my aunts drone on and on.

 

Vice is good business. Investments in stocks should be undertaken with care, however, unless one has that particular fetish.

[Pseudonym]

19 minutes ago, Chienmortbb said:

At least VAT is already on the price over here, you pay the price you see.

 

Not in my local newsagents. That old git always tried it on.

[tegs07]

1 hour ago, tauzero said:

 

I don't think it even needs to be an entrepreneurial culture, at least not solely so - more a productive culture, but there could be a mix of publicly and privately owned industry.

Productivity levels in the UK in comparison to most of our competitors is absolutely shocking. Over the last decade and a half it continues to slump due to a lack of investment and disjointed policy decisions. I tried and failed to address this in the wages thread ages ago. We can’t just keep paying more and producing less but expect stuff to stop accelerating in price.

 

I guess the example is if I am a baker with the capacity to bake 20 pies. I charge £10 a pie as they are premium pies and generally sell out most days. Sometimes days are slower and I have a couple leftover.

Government decides to bow to public pressure and raises wages in many areas. Suddenly Gary from the local convenience store has enough cash to buy my pies and so does his mate. I am now selling out of pies by mid afternoon.

In a productive economy I would invest, increase production and make 40 pies to cater for the demand. Another pie shop would open and provide competition and might even lead to me lowering the cost of pies.

However in a non productive economy I can’t increase production, I am paying my pie makers and salespeople more and am running out of pies by 2pm. So I just increase the price of my pies.

 

mmmm 🥧 

Edited Friday at 15:12 by tegs07

[JoeEvans]

Is there an example of a country that taxed the rich so much that many if them moved elsewhere, with the country suffering economically as a result? It's often mentioned as a risk but I'm interested to know if it's actually something that happens.

For example, are there large numbers of wealthy Scandinavians living in lower-tax countries, visible and countable by economists?

Edited Friday at 15:31 by JoeEvans

[tegs07]

6 minutes ago, JoeEvans said:

Is there an example of a country that taxed the rich so much that many if them moved elsewhere, with the country suffering economically as a result? It's often mentioned as a risk but I'm interested to know if it's actually something that happens.

We’re living in one. 10800 millionaires left the UK last year, double the number that left the year before. Too early for the effects to be felt yet but that gap in tax revenue has to be plugged and I expect you and me will be plugging it.

 

 

Edited Friday at 15:32 by tegs07