[Ignitionnet]

Originally Posted by Chrysalis

if we were to assume what is paid in taxes would otherwise have been spent (put back in the economy) then yes you could be right. However i reckon in such a situation too many people would stick it in a bank and save it for a rainy day.

We could actually very much do with more saving within our economy, unfortunately conditions haven't been too hot for savers.

Actually saving would have its' own positive effects, some control of money supply would reduce inflation.

There is zero evidence 'too many people' would stick it in a bank - note the VAT reduction that was done to stimulate consumption. I didn't see people saving the money they weren't paying out and the whole point was to encourage people to spend more.

Indeed that's one of the amusing things about the whole stimulus, a part of it was tax cuts in order to stimulate consumption while another part assumed people weren't going to consume if they paid less taxes so was spending like crazy.

Also of note is that during the 30s the UK adopted a monetarist approach to recovering from economic problems and recovered far more quickly than Keynesian methodology allowed the US to.

Originally Posted by Chrysalis

Also whilst the state may be inefficient eg. over paying for contracts, they also dont have the burden of needing to make a profit and satisfying shareholders, for this reason the private sector is not always efficient at sharing wealth.

It's neither the private sector nor the state's job to share wealth.

Originally Posted by Chrysalis

The guys on dragons den are a classic example, they dont care about the uk not getting jobs if manufacturing in china makes them an extra 50p on every unit they sell. Without a state we would have more of a situation where by the richest do indeed get richer but the welath doesnt trickle down because they will do whats necessary to maximise personal gain.

Yes, in their attempts to maximise personal gain a part of it would be employing people to increase their own earnings capacity. Many services cannot be outsourced to another country, there is no danger at all.

It is however extremely likely that once taken over privately some of these organisations would see some rather sharp action taken with the faceless millions who do not provide front line services and who provide very little value, yet manage to cling onto their non-jobs year after year. The state merrily looks after itself and those in non-jobs are an excellent source of votes for the politicians who keep them employed in their non-jobs.

Originally Posted by Chrysalis

The state in affect is a forced spread of wealth via taxation and public services. Some companies go bust when they lose state contracts, thats how important they can be. I know a few business owners and one in particular has boasted how he can charge the council 3x what he charges another company for the same work. The extra profit has carried him through through patches numerous times.

Secondary tax consumers. In my mind this guy is nothing more than a recipient of corporate welfare and I find it quite abhorrent that tax payers are 'carrying him through patches numerous times'. If he requires this welfare his business isn't viable and should go bust.

Originally Posted by Chrysalis

I imagine a scenario similiar to medieval times, where rich land owners have their own set of slaves working for them the type of situation we would revert to eventually without a state. The police eg. would be replaced by a private company who would work for the highest bidder as profit is king. So if they cant make money attending a burglary then they wont do it.

We're rather going into extremes now don't you think? Reducing the state doesn't mean destroying essential municipal and public services, privatised companies operate within regulations which ensure they offer levels of service.

One example is BT, they employ far less people, are far more productive per head and have lower fault rates than at any time when they were a public company.

Many things better when moved to the private sector and there is no endless amount of money propping them up and allowing them to be run poorly. Things in the private sector that are run poorly are usually as a result of extensive public sector subsidy propping them up with ex-public sector influences dragging them down and allowing or forcing them to be run poorly.

Originally Posted by Chrysalis

Which we come back to the problem, people who pay a lot into the state (high earners) always have a feeling of poor value as the state typically provides more for the poor and vulnerable. But does this mean I dont think the books should be balanced? the answer is no, because it wrecks inflation. So in some respect I do agree with you the budget deficit needs to be fixed. But where we will very likely disagree is how much of it should be achieved by cuts and taxation.

In what way will balancing the books wreck inflation? Unbalanced books means debt is being incurred, that debt is going somewhere, it's inflating the money supply artificially, more money means less value for each unit of it and in turn means inflation.

Inflation is, right now, way higher than interest rates which is a disaster. It needs controlling so that we can actually save for our retirements, put money aside with the hope of it being of value when we use it.

As it is right now I am consuming at a pretty rapid rate because there's so little point in me saving.

The Tories have it wrong and aren't much more Conservative than Tony Blair, Labour have completely lost the plot, forgotten how to do opposition and would promise chocolate covered gold bullion for all and bankrupt us to try and deliver it, the Liberal Democrats are a mess.

By the way for my punctuation inspector - there I didn't write it once