Skip to main content

Solutions for saving the 'real economy'?

The FT's economists' forum suggests two unusual solutions to the current crisis in the US that a new President could easily implement and quickly boost spending:

  • To keep revenue-starved states, cities, and towns from slashing spending and raising taxes, raise by a flat, across the board percentage - say by a quarter or even a half - every cash grant the Treasury makes to state and local governments. An increase by a quarter would boost their revenues by $95bn, or 5 per cent.

  • Reduce by a flat, across-the-board percentage federal payroll taxes. A 25 per cent reduction would increase take-home pay by about $250bn per year. Cash-constrained households, perhaps half of all households, would quickly spend the money. Even most of the rest would probably increase their spending.

An interesting scenario but one that is unlikely to see the light of day in the UK.

Here, the Labour Government is looking to increase spending, although there is little talk of providing a fiscal boost to local authorities, as suggested above. Indeed, the reverse is true and it is likely that there will be higher council tax bills next year at a time when the economy can least afford to have them.

Secondly, there has been no talk by the Treasury of either personal or corporate tax cuts to boost spending and unless Alistair Darling is keeping this up his sleeve and changing the habits of a lifetime, that is unlikely.

The full article can be read here.

Comments

Anonymous said…
I notice that you are now coming under more attacks from some of the left wing bloggers in Wales. Funny how they go for you but none of the elected Tories? Keep it up as you are saying the right things and the politicians are slowly catching up
November 04, 2008 7:45 am
Anonymous said…
taking the tax off empty buildings would help ,I know it nets the government around £2b but it hits all levels of business from super markets to a small workshop business. It also hits Local Authorities in the pocket , thats our money too.
There is even evidence of buildings being demolished to get out of having to pay high rates even if no business is being carried on in them.
November 04, 2008 1:01 pm
Professor Dylan Jones-Evans said…
VM - to be honest, I am suprised that WAG took the decision to tax empty buildings as it is actually a devolved issue and they could have chosen to act differently to England but chose not to.
November 04, 2008 10:57 pm
Post a Comment

Popular posts from this blog

THE IMPORTANCE OF FRANCHISING

When we talk about start-ups and entrepreneurship, rarely do we discuss the potential of franchising not only as a way of establishing new ventures in the economy but also as a method of growing existing businesses. According to the British Franchising Association, franchising is the granting of a licence by one person (the franchisor) to another (the franchisee), which entitles the franchisee to own and operate their own business under the brand, systems and proven business model of the franchisor. The franchisee also receives initial training and ongoing support, comprising all the elements necessary to establish a previously untrained person in the business. This enables individuals to start their own businesses without having to develop their own ideas and utilising an existing brand and established market. Of course, whilst each franchise business is owned and operated by the franchisee, the franchisor controls the quality and standards of the way in which the business is
Read more

THE MANUFACTURING STRATEGY FOR WALES

Last night, I received the following comment on the previous post relating to a piece I had written back in early 2007 about the state of the manufacturing sector in Wales. "Dylan, you seem to be ignoring the fact that manufacturers in Wales have written the manufacturing strategy. Small and large manufacturers, all represented at the Manufacturing forum, have co-written this strategy. WAG has recently supported this strategy and have funded a co-ordinator with resources. Manufactures are happy with this progress as they are following the strategy they wanted. I know that the Conservatives have attacked the strategy as they seem to think that WAG wrote the strategy. They couldn't be more wrong. The Manufacturing Strategy was written by manufacturers, for manufacturers and is supported by WAG. If you don't agree with this, then I can invite you to the next Manufacturing Forum and you can explain to the manufacturers how their strategy is wrong....I appreciate that there is
11 comments
Read more

Change your business through change

All business organisations, especially entrepreneurial small firms, must cope with an ever changing business environment. However, small firms have a very limited ability in being able to control and relate to changes in the environment, although this can depend on the context of change. For example, if a major customer changes increases its order, the entrepreneur should be able to predict events and actions with regard to the timing and consequences of such a change and forecast any changes in the required resources and cashflow. Given this, the entrepreneur can undertake rational short-interval planning activity in order to underpin organisational control. However, much of the change facing business today is largely unpredictable in terms of its timing and its consequences. In other words, such change is open-ended, with it often being unclear what is changing or why it is changing. For example, the effect of the 9/11 bombing of the World Trade Centre was largely unexpected and its
Post a Comment
Read more