Not quite as oversimplified as some of your points but the basic premise, that cutting public spending and taxation is a one way street to recession, is incorrect.
Economies should grow on production of goods and services more than spending, money being taken in tax isn't being spent efficiently but is funding whatever overheads are required to collect and distribute it along with overheads on the services that it may or may not be used to provide. It is precisely that dependence on spending that you are advocating that was the cause of the bust - as a country we weren't producing we were just spending what we had, then what we didn't have.
If the 'majority poor' want to become wealthier we aren't totally averse to social mobility here - I was raised by my grand parents, one a bar maid the other a truck driver, and am typing this from my hideously overpriced flat in Twickenham's Riverside district.
I absolute don't see why the money I have worked to earn, and worked my way up through my career path to earn, should be redistributed to those who either can't be bothered to work or don't wish to better themselves. The state should supply a safety net to ensure a standard of living, it is absolutely not its job to ensure the rich are less rich that will only result in the poor becoming poorer.
So dealing with the 4 scenarios you mentioned objectively:
1 - Would cause pain in the very short term while private sector investment lagged however would in short-medium term and beyond result in higher growth and
everyone being wealthier, just as happened with Thatcher whether we may like it or not all demographics were better off at the end of her tenure. Wealth tends to lead to more wealth, that's the way of things. The biggest thing that can be given to those who are poor is opportunity.
2 - Unviable. A public sector of >50% of the economy will slow growth - note how the previous government's 'growth' was basically all public sector and asset bubble. Crowding out the private sector while using their money to fund the crowding doesn't work.
3 - Would be an incredibly bad idea. Due to much increased levels of competitiveness and mobility among the work force excessively high income tax rates would likely lead to a loss of revenue as those paying the most are able to most easily leave or make alternative lower tax arrangements for their earnings. The income tax base has been shrunk and already our taxation rate, if you include the income tax in disguise that is National Insurance, is quite high enough thank you.
I don't like the idea of simply giving those who are less rich money in the name of equality. It seems quite obvious we come from very different points of view on this - as someone whose wealth, entirely earned through work, you advocate redistributing I'm inevitably not going to agree. The tax man eats 37% of my income from my pay slip and then some more of it that would be in my pocket from employer's NI - over 3% more.
Putting it another way we're in the first week of April - I still haven't earned enough to pay my tax bill for this calendar yet, will take me until May.
I would also suggest that a major problem that needs fixing is the amount of long term unemployed who are intentionally so, and a welfare state that offers little motivation to attempt to find employment to many and promotes being a baby factory as a career with decent earnings and housing prospects.
---------- Post added at 17:23 ---------- Previous post was at 17:17 ----------
Quote:
Originally Posted by Chrysalis
All of this is unlikely to be fixed and especially #3, so government's choose a easy cop out. They make credit easier and as such introduce new money so the rich can see their growth without giving it to the poor, instead the poor just borrow so they can spend. Notice how governments consider it a priority to get things right for the banks to loan out again, thats how they see a recovery.
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Or they want the banks lending to businesses to improve their liquidity and make it easier for them to purchase the goods and services they need to operate. Sorry to ruin the socialist rant with that inconvenient fact and all that.