Oh dear – until the words Tax Research UK are mentioned this seems reasonable – now, however, all figures are dubious and Lucas should withdraw the Bill.

@1 – even if the figures are overstated by as much as 200%, don’t you think £16 billion is a little ridiculous?

According to DWP figures, about £1.6 billion is lost to benefit fraud – and the likes of the Daily Fail are happy to trumpet that particular cause! So why not this?

I hope the bill gets serious attention, if only so an accurate amount can be determined (and then recovered).

Can’t help but think this is completely pointless. The overwhelming majority of these companies will have never done anything, having being set up for dull reasons like name protection (e.g. Most large groups will try to register stuff like International Business Machinery PLC or Associated Dairies Corporate Services Limited to stop cheeky attempts at passing off), long dormant companies in a group acquired/set up for some reason lost in the mists of time, off-the-shelf companies waiting for a buyer, companies to hold the freehold of blocks of flats where the leaseholders have emancipated themselves, etc.

The rest, a small minority, will have missing accounts generally because the auditors (if large enough) are refusing to sign off owing to going concern issues (I.e loss making) or because they’re so chaotically run that the likelihood of there being actual taxable profits is also minimal.

What you’re probably left with, typically, is a small rump of companies, typically members of much larger groups, and HMRC has, from experience, quite significant powers and sticks to compel them into compliance anyway. [1]

It’s really needle in a haystack territory, and I can’t help but feel it’s not the best use of HMRC’s resources…

[1] to be fair, there’s also companies being used in MTIC fraud cases, but, again, these are already being chased by means of HMRC’s already extant powers – if you were to deploy resources, I’d put them here, TBH.

Agree with Max, it was sounding surprisingly reasonable up to that point…

Also what on earth does this have to do with the PCS Union? The terms ‘bandwagon’ and ‘mission creep’ come to mind…

I really hate to make an argument that looks like an ad hom but anything that Murphy has a hand in should be scrutinised very carefully due to his long standing estrangement from the truth.

If you want to fight tax evasion then the obvious places to start would be tax simplification and perhaps giving more resources to track down evaders, (obviously diminishing returns on the latter though).

Lastly, this myth that companies rather than people, whether as workers, investors or consumers, pay tax, needs to be heavily stamped on for the foolishness that it is.

Not just are large companies evading tax , but many self employed smaller companies, one man businesses etc, are being heavily investigated for tax evasion. Its a disgrace that big companies get away with it while the litttle guy is geting bashed.

Is one of those companies Bearwood Corporate Services?

You know, the vessel Lord Ashcroft used to funnel £5 million to the Tories.

Allegedly.

I swear someone must pay right-wingers to go to left-wing sites and write rubbish on there. Can’t be any other explanation.

The actual policies outlined seem quite reasonable, despite the ad homs and nothing-to-see-here efforts in the comments. Surely the transparency would be welcome?

“Also what on earth does this have to do with the PCS Union? The terms ‘bandwagon’ and ‘mission creep’ come to mind…”

Tax Research is Richard Murphy. Richard Murphy works for Caroline Lucas….he wrote the report that Lucas is relying on here. Richard Murphy works for PCS.

PCS is the union that represents tax workers at HMRC and Murphy (and to some extent Lucas) are arguing that there should be more tax workers employed (and fewer fired) which is why ……

Well, you get the picture. It’s just the usual rent seeking. Employ someone to create a report saying that more of your union members should be employed and then publish the same thing under a number of different names and titles to make it seem like there’s widespread support for the idea of employing more of your union members.

Very little surprising about any of this, it’s how politics works.

I’m firmly in the Murphy-is-a-tool camp. but I don’t understand the objections to country-by-country reporting. I don’t imagine it would change me, I don’t see that it would cost much. Pretty harmless, but on basis more information is always better, worth doing?

[it does seem quite possible that many of these 500,000 companies never file any tax returns because they never do anything]

um, I don’t imagine it would change ‘me’? much I mean. I don’t think it would change much.

” It’s just the usual rent seeking. Employ someone to create a report saying that more of your union members should be employed”

Pretty much every strategic defence review does the same. But this doesn’t mean we should abolish the army.

Question is Timmy – is tax evasion and tax avoidance an issue costing the treausary more than it would cost to clamp down on it?

The nagging suspicion is that because most of you right wingers want lower taxes, you’ll do anything to prevent efforts to stop law breaking and use of loopholdes. Hence you’re about as useful and trustworthy to this debate as a drug dealer is to the pros and cons of drug legalisation.

Wait, what do you mean right-wingers who constantly argue for more transparency in govt do not want that from corporations?

Hypocrisy? Shurely Shome mishtake…

“Question is Timmy – is tax evasion and tax avoidance an issue costing the treausary more than it would cost to clamp down on it?

The nagging suspicion is that because most of you right wingers want lower taxes, you’ll do anything to prevent efforts to stop law breaking and use of loopholdes. Hence you’re about as useful and trustworthy to this debate as a drug dealer is to the pros and cons of drug legalisation.”

Well, a drug dealer would be against legalisation because his profits come from the illegality. But moving on:

I’m just entirely fine with cost effective methods of reducing tax evasion.

I’m not entirely sure that tax avoidance even happens: there is obeying the tax law and there is not obeying the tax law. There is thus tax compliance and tax evasion. Nothing else. But let’s even leave that point aside.

But let’s look at my real problems with various of Murphy’s suggestions.

For example, this country by country reporting thing. He’s ignored (or is ignorant of) the very reason for the existence of a multi-national firm. As Ronald Coase won his Nobel for, there are times when having an activity within one organisation makes sense. There are other times when it doesn’t, a series of arms length contracts being a better solution.

Which is which time depends upon which system adds more value (ie, makes more profit). The very reason that multi-n’s exist therefore is that they produce more value (more profit!) than arms length contractual relationships.

Yet Murphy now insists that multi-n’s must be taxed as a series of arms length contractual relationships: which is ignoring the very reason that multi-n’s exist.

Similarly with his campaign about low value tax relief on mail order from outside the EU. The whole point of this is because trying to examine every damn parcel or letter that enters the country would cost more than whatever amount of VAT or duty is lost by not doing so.

And finally, what really gets my goat about his wibbles on corporation tax is that he refuses to even consider the incidence of the tax. It ain’t, ever, the corporations that pay the tax and it’s usually not, in open economies, the shareholders or capital that does. So his entire rhetorical whine, that “companies must pay tax” is dead in hte water before he’s even started.

Tim,

I don’t understand. How does asking multinational corporations to publish the information they must already be sumbitting to local tax authorities in the territories they operate in, to ensure they are complying with local tax requirements, conflict with an appreciation of why multinationals exist?

You appear to be objecting to one thing – a pragmatic measure – on the grounds of some perceived theoretical inconsistency. Who cares about perceived theoretical inconsistencies if there are pragmatic advantages?

Why object to the publication of information that helps people understand how companies operate, how they account for their revenues and costs, and what taxes they pay?

“to ensure they are complying with local tax requirements, conflict with an appreciation of why multinationals exist? ”

Because the very existence of the multi-n shows that they are making profits purely by being a multi-n: they are making profits over and above what they owe locally in each jursidiction precisely and exactly because of their method of organisation.

“There is thus tax compliance and tax evasion. Nothing else. But let’s even leave that point aside.”

Oh come on Tim, Surely you must be aware of the large sums spent on accountants to arrange accounts to take advanatage of the loopholes in a complex system of laws? Hence why Lucas etc are arguing for such loopholes to be closed. Even Osbourne is arguing for tax codes to be simplified as part of this.

Tim

What, in the Coasian theory of the firm, says that in those cases where it is more productive to have an activity within one organization spread across many countries, taxes should not be levied on a by-country basis?

“Hence why Lucas etc are arguing for such loopholes to be closed.”

As Osborne is actually doing. Lowering the headline rate while reducing some of the allowances.

Yes, Murphy does argue against this.

“What, in the Coasian theory of the firm, says that in those cases where it is more productive to have an activity within one organization spread across many countries, taxes should not be levied on a by-country basis?”

It’s an implication of the theory.

System A, arms length contractual relationships, profits of Y, taxes due of X in each jurisdiction.

System B, multi-n, profits of Y plus, why should taxes of X plus be due in any jurisdiction?

We;ve exactly the same economic activity taking place in each jurisdiction in each system, haven’t we? But the method of organisation itself, that multi-n, is what produces the Y plus profits: why should any of that “plus” be due to any specific jurisdiction?

This bill has been roundly ridiculed by people who actually know what they are talking about – unlike Caroline Lucas, Chuka Umuna and Richard Murphy.

The first ridiculous leap of logic is that 500k companies not filing accounts = 500k companies “evading” tax. I suppose my 3 dormant companies, which make no money in the UK are included in that….along with all the companies which make no profit in the UK.

As for Murphy’s country by country reporting – apart from the massive fallacy that you will get more information or more tax revenues, all you’ll see is perfectly legal transfer pricing. It’s simply not in large companies interest to do anything illegal, though they will legally try to minimise their tax bill.

What you will see though is large extra costs on companies. large ones might simply move headquarters, meaning we’ll see less tax paid in the UK, and small businesses will find it harder to cope with the extra requirements.

Let’s face it though, Murphy has delusions of grandeur and Lucas knows not what she’s talking about. All this bill will do is make it harder and more costly to do business in the UK – and reduce tax revenues.

“This bill has been roundly ridiculed by people who actually know what they are talking about ”

Much like Lansley’s NHS bill then.

nah, still not getting it.

yes agreed, a multinational (presumably) makes profits over and above what it would do if it were organized as a series of discete firms in each country, trading with each other.

that acknowledged, how should those profits be taxed?

Should, for example, a multinational be allowed to establish an office in a tax haven, recognize 100% of its global profits in that territory and claim that none of its operations in any other country are making any profit, hence pay zero coropration tax? Just because, er, Coase pointed out it makes sense to have activities take place within a single organization?

I know almost nothing about tax law, but my impression is that countries wish to tax the profits of companies operating within their jurisdictions, and that this is regarded as sensible by all, including

OECD and IMF

and that each county requires companies to pay taxes on economic activity in that country and asks companies to comply with local tax law including the recognition of profits on a country basis. Further, we all know that companies do piss about trying to avoid paying taxes by various cunning ruses, so why not ask them to publish information that might make it harder for them to do that. for example, perhaps companies tell different things to different countries, and publishing information would make their lying easier to spot?

Tim that is fucking lame. Right, fine, OK some portion of profit is due to the very multinational nature of multinatonal firms and cannot be attributed to any particular territory. Now, I’d have thought the pragmatic approach would just be to say, bully for you, and then carve up the profits between territories somehow, but seeing the importance of theoretical purity to you, here’s the obvious solution

1. require multinationals to state what proportion of their profits is due to the very multinational nature of multinatonal firms and cannot be attributed to any particular territory.

2. establish a global taxation authority to tax these global profits that cannot be attributed to any particular territory.

job done.

“establish a global taxation authority to tax these global profits that cannot be attributed to any particular territory”

And thats a substantial amount of development work and peacekeeping funded right there. vaccines to eradicate at least 3 diseases globaly in the first year I’d imagine.

@ 16 Luis

It’s not as simple as that….as Tim says, multinationals effectively have economies of scale and business because they cross borders. How do you tax say a car company selling it’s product all over the world, manufactured from parts made all over the world?

Where the car is produced the costs incurred would count as a loss, but the profits from selling in another country as a profit. It’s ridiculous to suggest that the whole sale value of the car should be taxed, just the profit on making it, right?

Hence transfer pricing, and why country by country reporting is dead before it even begins.

@ 18 Planehsift

Companies spend large amounts on accountants (and auditors), but minimizing the tax bill is LEGAL.

Of course, the obvious way to get more tax is to simplify the laws so that companies are better off paying the taxes than hiring the accountants to minimise them. QED.

@ Sunny

Companies publish audited accounts. They are pretty transparent.

As for right wingers writing rubbish….seriously take a look at your own work. Just in the statement you made which I correct above you’ve basically shown your ignorance of how the real world works.

“but minimizing the tax bill is LEGAL. ”

I know, I was specific to say that it was about loopholes and closing these would be a great start.

Global taxation authority….why not just have a world government as well. And no countries and nationalities while we’re at it.

*bangs head on table*

“Global taxation authority”

We already have a world trade organisation.

This bill has been roundly ridiculed by people who actually know what they are talking about

You mean the people who will be forced to be more open about their affairs? Yes, that’s completely shocking that is…

In other shock news, Tories remain completely signed up to corporatism and monopoly power.

Tyler

try banging harder

(planeshift – WTO is just a forum for negotiating trade agreements and adjudicating on disputes)

I’m aware of that, the point is institutions of global governance are already with us. There have been numeorus dissertations written on the changing nature of sovereignty for international relations postgrad courses.

planeshift,

oh right, yes.

n.b. I’m not actually advocating a global tax authority, I’m just trying to deal with this pathetic objection: “but some of these profits cannot be attributed to any particular territory!”. Well gee, I guess we ought to just stop taxing multinationals then.

This figure of £16bn for corporation tax lost because companies don’t file accounts is the biggest load of crock ever and in keeping with Murphy’s ludicrous reports.

Why on earth would a trader incorporate if they wanted to avoid tax?! Setting up a company puts the trading activities under the radar as the addresses and personal details go on the record at Companies House. HMRC are far more likely to become aware of underdeclaration of income if a company is undertaking the trade than if a sole trader is.

Murphy is widely seen as a joke figure in economics and tax circles. His reports have all the incisiveness of a sixth former’s essay and his conclusions are mostly based on wild assumptions and leaps of logic. You should see the comments he makes in reponse to his blog for examples of the man’s ability to construct logical arguments.

The fact that someone with as few intellectual gifts as Murphy has become so prominent in the tax debate shows the poverty in discourse amongst the Left at the moment.

[although my global taxation authority wouldn't have do much - because under what I am proposing, if companies do not wish to attribute profits to any particular territory but wish to claim inherently multinational profits, all they have to do is say what proportion of profits they wish to have treated in this manner. If we set the tax rate on global profits at 50%, I think multinationals will discover it's not so hard attributing profits to particular territories after all].

Sam,

I’m with you on that last para. Mortifying.

@34 and 36:

“Murphy is widely seen as a joke figure in economics and tax circles. His reports have all the incisiveness of a sixth former’s essay and his conclusions are mostly based on wild assumptions and leaps of logic. You should see the comments he makes in reponse to his blog for examples of the man’s ability to construct logical arguments.

“The fact that someone with as few intellectual gifts as Murphy has become so prominent in the tax debate shows the poverty in discourse amongst the Left at the moment.”

Quite so. But Sunny regards Murphy as a “tax genius”. On the left particularly, you have only to spout the correct “narrative” and you are praised.

It applies to the right as well paul.

37

right, because none of the right’s favored sons are imbeciles who just preach to the choir

[but I do think there's an economics vacuum on the British left. The Americans have countless high profile economically literate lefties. We have the NEF and Murphy]

I’d agree with that Luis, but why would that be the case do you think?

@4 PCS are one of the Unions dominated by left-of-Labour caucuses; they tend to be on board with these types of campaigns. As an aside, check out which unions back UKUncut, and read the recent political history of those Unions.

That’s also where the Greens sit on the spectrum.

Murphy has done the work for TUC etc as Tim States; he’s also the source of the “Missing xyz billions due to tax dodgers” claims from the Green Party Election Manifestos.

Reading the methodology in the report, it’s very much abrabadabra-nomics. Work out the number of companies we know nothing about, slice out a couple of categories, assume without much justification that the rest should pay x-pounds per year (x=£30k iirc), multiply it up and – abracadabra – we are missing £16bn.

It’s a very thin evidential base.

@ 39. Luis Enrique

It is because lefties in the UK from the 1980s onwards stopped studying economics and switched to things like psychology. Now the ignorance about even the most basic concepts is endemic. Conclusions that do not fit with the way they want the world to be are somehow right-wing economics. They are oblivious that if there is such a thing as left wing and right wing economics, the so-called left and right agree on 90% of the economics and just dispute how much principles apply to any given situation. If statism was being criticised by economics as inefficient, they wanted nothing to do with economics. I had an ex-TUC lecturer in the early eighties who taught as a matter of fact that minimum wages in some situations cause unemployment. Now lefties have a mental breakdown at the thought. See how many of them are becoming attracted to things like chartalism and modern monetary theory. Anything will do other than confront reality.

Planeshift,

I don’t know – partly it’s because lots of left-wing intellectuals and newspaper editors have never bothered to actually learn any mainstream economics, and have been content to jump straight to explaining why mainstream economics has got it all wrong in complete ignorance of what it actually says, whist regarding economics as merely a matter of telling whatever stories please you, and a fondness for being “radical” and commissioning cultural studies academics to write economics columns.

Partly I think it’s the fault of mainstream economics in the UK – and I don’t just mean failing to understand what the banks were up to – where are the UK left-wing economists putting themselves about and getting into the media, getting involved with policy debates? Some, like Simon Johnson have left the UK, others like Collier, are prominent in other fields. Our big names – like Tim Besly just have no public profile. Where are the UK economists making a noise about social deprivation, inequality, unemployment, industrial policy, corporate welfare, financial reform etc. etc.? Why aren’t people like Paul Woolley or Paul Gregg writing more regularly in The Guardian? Where is our Paul Krugman or Dani Rodrik? Why can’t The Guardian assemble something like the NYTs’ economix blog?

There is plenty in economics that ought to appeal to left-wingers (market failures, agency problems, contract theory, network effects, labour economics etc.) and there are people like the IFS and CMPO who produce left-wing relevant research … maybe mainstream economics in the UK either neglects or places low status on left-wing-ish research and has left the field to the likes of NEF? (I’m not really qualified to make sweeping statements about the profession – many economists I know describe themselves as left-wing but just have zero interest in participating in public policy debates)

“It is because lefties in the UK from the 1980s onwards stopped studying economics and switched to things like psychology.”

But why would this have happened in the UK and not the US?

(maybe this is why the likes of Paul Gregg don’t venture into public very often – look at the response they get).

Luis, I think the context of that needs to be understood. We now have a situation where people with terminal cancer are being declared ‘fit to work’ by a company being directly paid to find such things, and in the context of the most ugliest debates on welfare and disability. So regardless of how reasonable that article is, I don’t think we can expect people who are suffering as a result of policy decisions taken by successive governments to take further calls for ‘sanctions’ with full politeness.

I also don’t think its particularly controversial to say that the track record of economics on this issue is without belmish; the conceptualisation of the manner in which people obtain employment as a ‘labour market’ has very little to say on issues around disability, in particular people with mental health issues, or conditions like aspergers syndrome. i.e. people for whom standard recruitment practices will act against them (job interviews are just as much about ‘fit’ and creating a rapport with the interviewer as they are about skills and the ‘price’ of labour – its not a market in the same way as say me going to buy salmon for tea).

I think you have to bit more sympathetic here; there may well be economists who have a more realistic understanding of disability and employment. But these aren’t the ones being paid shit loads as consultants for governments to design welfare schemes that are causing real distress and suffering, or the ones being paid by the media to depict welfare claimants as scroungers who need ‘more incentives’.

Sorry Luis, but thats my bugbear here. Economists are specialists in economics, and when they try and branch out into fields in which they are not experts (like disability), sometimes you get real bad results.

planeshift

oh I fully agree – economics has nothing useful (far as I know) to say about disability, mental health. If you want to say that Gregg should have left designing the fit to work stuff to somebody else, fine. Perhaps he did, for all I know. – have you read this by him?

I shouldn’t have written that … there is of course tons of stuff on health economics

here’s a paper on the economics of disability
http://econpapers.repec.org/bookchap/eeeheachp/1-18.htm

“Also what on earth does this have to do with the PCS Union? The terms ‘bandwagon’ and ‘mission creep’ come to mind…”

OrangebookLieDem,

If you didn’t have your head so far up your own lying, duplicitous backside, you would know that the PCS has long been running a campaign to tackle the billions lost through tax avoidance.

Luis, yeah thats a good paper. But i think the point I’m making is it isn’t standard economics textbook theory on the labour market – where you all you have to do to get a job is lower your wage demands (price) and an employer will snap you up like a bargin hunter in the aisles of tesco looking at the ‘reduced’ pile. Yet this is the main theoretical basis on which welfare reform proceeds – with excessive attention paid to create the right ‘incentives’ and the introduction of sanctions for those deemed ‘fit for work’ as a result of what a private company says (not actual doctors).

So you can’t be suprised that the victims of this fail to differentiate between the economists who are involved with this system, constructing a discourse around scroungers and incentives, and economists outside this system who recognise the description of the labour market they learned in A-level economics was a simplification designed to help them pass an exam.

And this negative impression gets further reinforced by the Worstalls who consistently express opinions that they try and pass off as ‘what the entire economics profession says’ , when in reality their opinion is ‘what some economists argue in debates that occur within the profession’. In that sense we all have you to thank for your corrections of Tim.

Plus we haven’t even got into the fact that there are other social sciences and academic subjects that adopt different approaches to the same social issues, as well as numeorus inter-disciplinary research groups that realise you have to have a knowledge of all kinds of subjects to truly grasp an issue.

“PCS has long been running a campaign to tackle the billions lost through tax avoidance.”

PCS has long been running a campaign to protect its members’ jobs by using fantasies about tackling the billions lost through tax avoidance as an excuse.

Fixed it for you.

“Tax Research is Richard Murphy. Richard Murphy works for Caroline Lucas….he wrote the report that Lucas is relying on here. Richard Murphy works for PCS.”

And where did you find this rot? In the depths of your bowels?

planeshift,

I’m sure economics does neglect some of the more ‘human’ aspects of the labour market, possibly for the justifiable reason of trying to understand the basic economics, possibly not … but I think you’re being a bit unfair on Gregg’s welfare reform which places a lot of emphasis on personal development, training etc. Or at least, intends to.

@ 30 Sunny

Please learn to read or something similar – companies get audited, and publish those accounts. I know it doesn’t suit your version of reality, but unfortunately it’s the truth. Seems like a lot of lefties – UKUncut and Richard Murphy amongst others – are too damn lazy to bother reading what every corporate financial analyst goes through with a fine toothcomb and instead just make sweeping judgements with little or no basis in fact.

You are making a judgement based on your own ideological prejudice. Nothing more.

What’s even more terrifying is the undercurrent to your view – that big business is somehow inherently evil, and that the government (I suppose led by a left wing “liberal” intelligensia) knows best how to spend our money. It’s business and trade that gives us jobs and makes us as a nation wealthy – and you want to stifle it.

@ 51 Richard

Richard Murphy is Tax Research.

Fact – check his website or companies house.

Richard Murphy wrote the report for Caroline Lucas.

Fact – read it if you can do so without laughing too hard.

Richard Murphy works for the PCS Union

Fact – unless the money they pay him is for other more salubrious services.

Seriously, are you and Sunny on the same reality bending drug or something? I thought LSD just made you hallucinate?

sorry planeshift, duff link earlier

http://cmpo.wordpress.com/2011/04/11/the-work-capability-assessment-and-helping-the-disabled-back-to-work/

there Gregg appears to say he isn’t responsible for the fit to work stuff, and complains the government have really screwed up. that blog post reads to me like he wrote it angry – I don’t think he’s any happier than you are over what’s gone on.

@richard

Just because you seem to too busy to do any checking

“I was delighted to walk with unions I work with – PCS and Unite.”

http://www.taxresearch.org.uk/Blog/2011/03/28/a-new-confidence-in-opposition-to-injustice/

Thanks luis, its a good article. Would you agree that some of the hostility he faced though is the result of a few economists providing the theoretical groundwork for politicians to design systems that have caused real suffering?

If so would you say an appropiate solution is to ensure that, as well as economists, we have people from other profesions such as doctors, psycologists etc, as well as disability activists, involved in constructing appropiate reforms? In other words take an inter-disciplinary approach?

I guess so … it looks to me like the real omission was on the part of whomever failed to predict the behavior of Atos and didn’t pay attention to what was happening and quickly take action. My guess is that’s because, as you’d guess, somebody in charge was really interested in saving money not doing the right thing by disabled people. I think interdisciplinary expertise is sensible, but in this case I don’t know who from which discipline would have prevented whomever hired Atos from doing it as they did.

If the fit to work assessments were being conducted decently and fairly (accurately), would you have any objections to the other elements of the welfare reform

this is way off topic now!

“I guess so … it looks to me like the real omission was on the part of whomever failed to predict the behavior of Atos”

But any economist could have told you that. If the incentive is to find people fit for work then people will be found fit for work whether they are or not.

Incentives matter, see?

Useful thing this economics stuff.

an economist might have looked at the incentives politicians and private firms like Atos face, and predicted they’d do things on the cheap and not spend extra money to treat people decently and er on the side of generosity. maybe they needed more economists, not fewer.

(or maybe it was an economist who thought they could write a contract with Atos that would keep them honest – in which case, bad bad bad)

ah – Tim said it quicker and better

“Useful thing this economics stuff”

yes, but my point is it isn’t the be all or end all. In terms of the issue of unemployment and disability its also quite useful to know about sociology, psycology, the practices of human resources departments, the physical and mental effects of different conditions etc.

You frequently write things that suggest you don’t even know of the existance of other disciplines.

“If the fit to work assessments were being conducted decently and fairly (accurately), would you have any objections to the other elements of the welfare reform ”

Yes. because most of it is based on the notion that the reason people are unemployed is because the welfare system produces an incentive to stay unemployed. I’m not going to dispute this is the case for some people, in some circumstances, and for low wages. But the extent to which this applies is greatly exagerrated, to the detriment of other issues that explain unemployment such as poor skill levels, transport links, prejuduce against those who have been unemployed from human resources professionals and employers, ageism and other forms of prejudice, or just general economic decline in the regions where unemployment exists.

I’ll declare an interest. I’m currently writing up the results of a study we did on unemployment and economic activity in a south wales valleys town. There is not a scrap of evidence that lack of incentives are the issue here, and plenty of evidence of the above. Is anyone going to seriously suggest that the person on ESA we interviewed who used to earn 38k before a car crash injured him needs an incentive to find a job? He already knows the economic benefits of having a job, making his family homeless by cutting his benefits is not going to get him back in work – preventing employers from discriminating against him and requiring them to make reasonable adjustments will do far more.

“but my point is it isn’t the be all or end all. ”

Of course, economics isn’t the be all and end all of anything, not even of economics. It’s a pretty important part of economics to be sure, but the prejudices you bring to it in the beginning have a large effect as well.

“You frequently write things that suggest you don’t even know of the existance of other disciplines.”

??

I tend not to write about other disciplines because I don’t know much about other disciplines: not because I don’t know that they exist.

You know, this division and specialisation of labour stuff….but that’s economics again.

Yes. because most of it is based on the notion that the reason people are unemployed is because the welfare system produces an incentive to stay unemployed

“most of it”? yes, I’m sure it was concerned with the incentives people have to get work – and that can be a good thing, like ensuring benefits etc. aren’t withdrawn at such a rate as to make getting a job pointless – but I thought lots of it was about training, interview skills, job placements etc. too? But I don’t know enough about it to really say, but I’d be very surprised if anything Gregg designed was “mostly” as you say.

I agree with you far too much is made of the “welfare trap” idea … I think that explanation for unemployment gets some qualified support from economists (the generosity of benefits is part of standard “labour supply” models, but skills, wages, labour demand and lots else is in there too)

“I don’t know much about other disciplines:”

Maybe you should. ‘Unemployment’ isn’t an issue that solely belongs to economics, and there is a wealth of information from other disciplines that provides some very important insights.

“specialisation of labour stuff”

Well you are only supposed to specialise after a basic grounding in a variety of subjects. You can’t realistically do economics without some maths. But in UK universities; it is entirely possible to do a degree in sociology without ever coming accross basic concepts in economics, and vice versa. I’ve met people doing masters degrees in International Relations who couldn’t even give a series of arguments from economics in favour of free trade…..how absurd do you think that is? About as absurd as an economist without some understanding of the basics of sociology I’d have thought.

Think about it this way:

Economics 101 – States always benefit from adopting free trade policies
International Relations 101 – states always act in their self-interest

The existance of protectionist policies means one of the above has to be wrong.

[er .... economists think that the economy as a whole benefits from free trade, but certain groups with in the economy are worse off and have political clout, and governments interested in reelection and handing out favours like protectionism - a standard explanation for protectionism, in undergrad econ text books, is that the state is acting in its self interest]

Luis, yeah – that bit is international relations 102, not to mention sociology 107. The point is both are simplifications designed to introduce concepts to students, and things always become more complex once you delve into things. There is often far more plurality of opinion over issues than the basic texbook.

(Although its worth pointing out there are some IR theorists who would reject that notion of the state, and instead view it as acting in the national interest at all times, rather than captured by specific groups. I tend to think they are idiots who don’t know anything about other subjects, but there we go)

@38: “It applies to the right as well paul.”
@39: “right, because none of the right’s favored sons are imbeciles who just preach to the choir”

Indeed. I did not deny that it happens on the right (eg the tiresome James Delingpole): my claim was it particularly happens on the left, where the sense of moral rectitude more often seems to cloud critical judgement. Murphy is quite a phenomenon, and I cannot think of anyone on the right who is hailed as a “genius” while amply demonstrating his own inability to formulate valid arguments.

Simplify the law and punish white collar criminality with serious jail time. As soon as the first “Tyler” enjoys a Belmarsh shower, the level of corporate and individual tax evasion will decrease dramatically.

Saying it is legal is meaningless. Everything is legal until it isn’t. All legality requires is an act of parliament or a judgment. Spousal rape was legal until the 90′s

“Adam Smith Institute kisses up to corporate paymasters”.

Fixed it for YOU, Tim. Impartiality’s a bitch, isn’t it?

@42 Richard W

“It is because lefties in the UK from the 1980s onwards stopped studying economics”

Ed Balls? Yvette Cooper?

I suspect that one reason we do not hear much from left wing economists is that our media are run by people who know nothing about the subject.

A recent BBC investigation found that HSBC used a tax loophole to divert millions of pounds of NHS money into a Guernsey ‘tax haven’. In 2010, a company set up by HSBC made more than £38 million from its 33 PFI hospital-building schemes and paid £100,000 in UK tax – less than half of 1% of the profits [3]. Describing such practices as ‘scandalous’, former Oxford MP Dr Evan Harris called for new rules to stop NHS money being sent to tax havens [4].

Stuart Gulliver, the new chief executive of HSBC, recently received a bonus of £9million- which could pay for the annual salary of over 400 nurses [5].

In 2010, a company set up by HSBC made more than £38 million from its 33 PFI hospital-building schemes and paid £100,000 in UK tax – less than half of 1% of the profits

Err, yes, because the company was set up to be like a partnership.

Taxes on the profits were paid by the shareholders, not the company.