Steve
Hero Protagonist
Posts: 3,633
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Post by Steve on Apr 26, 2024 1:24:03 GMT
If VAT goes up say 8% , the price paid by consumers (and reflected in RPI figures) would also go up by 8% (for VATable goods) unless manufacturers and retailers cut their net prices. That feels unlikely to me. Interesting idea but not for me. Let me just point out here that it wouldn't. My company charges the maximum it can for its products. That is to say if we lower the price from its sweet spot we sell more but make less, if we raise it from its sweet spot we sell less and make less. Where anybody gets the idea that a company could just put its prices up but for some reason hasn't done so baffles me. Exactly, we live in a market economy and if one seller of a product just put up its prices because VAT went up and pocketed the cut in its labour costs from ending employers NI then it would soon have to reverse that as its competitors looked at the net all cost and gross margin positions and destroyed it in the market. |
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Deleted
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Post by Deleted on May 1, 2024 1:11:24 GMT
Ridiculous isn't it that the poorest pay one of the highest marginal rates of tax. But cutting that to a sensible level isn't the way to end the benefits trap, we have to change the much wider tax portfolio so businesses are incentivised to create decently paid jobs. Right now we do 100% the opposite and guess what we have 1.5 million in the economic and social misery of unemployment. Its an interesting point. VAT is charged at the same rate whether your takings are for passing a product on or selling a service (Labour) But when you sell labour you don't get to claim VAT against it. Buy £100,000 of goods and sell it to the public for £120,000 and pay £7,300 to HMRC Buy £100,000 of labour and sell it to the public for £120,000 and pay £14,400 to HMRC Then there's living wage. Excellent idea, the government can give millions away without it costing them a penny, more every year. Hey look at us we're such good guys and so generous.
How about if we stop in work benefits and let the market decide pay? Would employers pay more, or would thousands of jobs disappear. Millions of low paid working people would be driven into bankruptcy and homelessness is what would happen. And a situation of old would be recreated where people will be worse off in work than out of it. In it's way that would be a far worse benefits trap than we have now. |
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Post by Orac on May 1, 2024 8:34:10 GMT
Unfortunately, once you get into a situation where large portions of the population rely on state subsidies, the economy adapts to it and untangling the insanity becomes an upward struggle against those new interests. That's the whole point of these subsidies - to make the population dependent on the ongoing 'charity' of the political class.
Any such change would need to be tapered and would require determination
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Post by dappy on May 1, 2024 10:51:15 GMT
I’m not really as into political philosophy as you Orac. I am more of a pragmatist. As automation builds, I suspect we are going to face a world where government has to work out how to intervene to spread the wealth that automation brings while keeping incentives for people to work when it is needed. Unless of course automation having a major impact is a false alarm.
In terms of in work benefits, we do want to encourage people to work which I suspect needs an element of carrot and stick. If we want to get rid of inwork benefits, I suspect we would have to significantly increase minimum wage which may have other undesirable consequences.
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Post by Orac on May 1, 2024 11:47:41 GMT
I’m not really as into political philosophy as you Orac. I am more of a pragmatist. As automation builds, I suspect we are going to face a world where government has to work out how to intervene to spread the wealth that automation brings while keeping incentives for people to work when it is needed. Unless of course automation having a major impact is a false alarm. In terms of in work benefits, we do want to encourage people to work which I suspect needs an element of carrot and stick. If we want to get rid of inwork benefits, I suspect we would have to significantly increase minimum wage which may have other undesirable consequences. I think the challenge of the new wave of automation is a different issue. At the moment I don't think there is a stable solution to this. The idea that a benign, accepted dictatorship will hover above everyone gently setting the correct artificial incentives, is one of those left fantasies that just wont die no matter how many times it fails. My prediction is war - that there will be continuous turmoil as this position is fought over and exploited. |
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Post by dappy on May 1, 2024 12:22:23 GMT
My crystal ball is slightly defective. In the absence of better information and lack of power to influence, I’ll settle for my “leftist” fantasy rather than inevitable extinction through war…..
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Post by Orac on May 1, 2024 12:39:30 GMT
Why should you accept a relationship between us in which i set your artificial incentives? It's a parent-child relationship.
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Deleted
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Post by Deleted on May 1, 2024 13:28:16 GMT
Unfortunately, once you get into a situation where large portions of the population rely on state subsidies, the economy adapts to it and untangling the insanity becomes an upward struggle against those new interests. That's the whole point of these subsidies - to make the population dependent on the ongoing 'charity' of the political class. Any such change would need to be tapered and would require determination We really need to tackle low pay, an insufficiency of guaranteed full time hours for those who need them, and huge living costs, of which the biggie has long been extortionate house prices and rents. If all that were tackled effectively, the benefits bill would come down. |
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Post by Orac on May 1, 2024 13:56:15 GMT
Unfortunately, once you get into a situation where large portions of the population rely on state subsidies, the economy adapts to it and untangling the insanity becomes an upward struggle against those new interests. That's the whole point of these subsidies - to make the population dependent on the ongoing 'charity' of the political class. Any such change would need to be tapered and would require determination We really need to tackle low pay, an insufficiency of guaranteed full time hours for those who need them, and huge living costs, of which the biggie has long been extortionate house prices and rents. If all that were tackled effectively, the benefits bill would come down. Consider real estate - when you give people more money to buy more of it, the price goes up. Raising pay doesn't help. I would say that real estate costs are the biggest creator of poverty - perhaps barring things like malaria |
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Deleted
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Post by Deleted on May 1, 2024 14:07:51 GMT
We really need to tackle low pay, an insufficiency of guaranteed full time hours for those who need them, and huge living costs, of which the biggie has long been extortionate house prices and rents. If all that were tackled effectively, the benefits bill would come down. Consider real estate - when you give people more money to buy more of it, the price goes up. Raising pay doesn't help. I would say that real estate costs are the biggest creator of poverty - perhaps barring things like malaria In a rare moment of agreement in part between us, I agree that real estate and the housing built on it is a major part of the problem. Though too many part time and not enough full time jobs is part of the problem too. After all, even £30 an hour is never going to be sufficient for someone who only has 8 hours a week. Also, the failure to increase tax thresholds is starting to crucify those of us on low incomes. |
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Deleted
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Post by Deleted on May 1, 2024 14:30:36 GMT
If VAT goes up say 8% , the price paid by consumers (and reflected in RPI figures) would also go up by 8% (for VATable goods) unless manufacturers and retailers cut their net prices. That feels unlikely to me. Interesting idea but not for me. Let me just point out here that it wouldn't. My company charges the maximum it can for its products. That is to say if we lower the price from its sweet spot we sell more but make less, if we raise it from its sweet spot we sell less and make less. Where anybody gets the idea that a company could just put its prices up but for some reason hasn't done so baffles me. Fair points. But the extent to which this is true varies from business to business, sector to sector. If for example you are selling a commodity that is essential and not discretionary - eg food - and are located in an area where there is little effective competition you have much more potential to raise prices to cover increased costs because customers have no choice but to eat and little effective competition. As an example. My Tesco supermarket workplace is situated in a modest town 15 miles west of Plymouth. There is no other food retailer beyond a small corner shop and a B and M, which has a very limited amount of food for sale as it mostly sells non-food items. The nearest rival food supermarket is 12 miles away, which would be a 24 mile round trip for locals at significant cost in fuel and wear and tear on cars for those who have them, and way too much hassle for those who don't. It is only the fact that standardised prices for products set centrally for most of the country - I think prices are higher in London - that prevents a store like mine from charging more than it could get away with in large cities with multiple options. There is of course an upper limit on how much it could raise prices even if it had the leeway to do so. Raise prices too much and it would be more economical for locals to pay the fuel costs of going elsewhere in spite of the distances. In short, two variables will determine the extent to which a company can pass on costs to customers, firstly the extent of effective local competition, and secondly how essential or discretionary is the product or service you are selling. |
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Post by Orac on May 1, 2024 14:53:16 GMT
Let me just point out here that it wouldn't. My company charges the maximum it can for its products. That is to say if we lower the price from its sweet spot we sell more but make less, if we raise it from its sweet spot we sell less and make less. Where anybody gets the idea that a company could just put its prices up but for some reason hasn't done so baffles me. Fair points. But the extent to which this is true varies from business to business, sector to sector. If for example you are selling a commodity that is essential and not discretionary - eg food - and are located in an area where there is little effective competition you have much more potential to raise prices to cover increased costs because customers have no choice but to eat and little effective competition. If Tesco tried to charge £100 for a bag of carrots in this area, they would quickly encounter competition. The problem is with things in fixed supply - like land. |
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Post by Orac on May 1, 2024 15:03:33 GMT
Consider real estate - when you give people more money to buy more of it, the price goes up. Raising pay doesn't help. I would say that real estate costs are the biggest creator of poverty - perhaps barring things like malaria In a rare moment of agreement in part between us, I agree that real estate and the housing built on it is a major part of the problem. Though too many part time and not enough full time jobs is part of the problem too. After all, even £30 an hour is never going to be sufficient for someone who only has 8 hours a week. Also, the failure to increase tax thresholds is starting to crucify those of us on low incomes. Think about this - High real estate costs have two effects that seem almost paradoxical but aren't. From an employer's perspective - real estate prices force up the wages needed to get any piece of work done. No employee can 'afford' to take an offer that doesn't cover these costs and so the employer gets no offers below a high line. From an employee's perspective - they reduce his bargaining power and so force down wages because fewer employers can afford to pay him what he needs to pay those costs. |
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Deleted
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Post by Deleted on May 1, 2024 17:14:19 GMT
Fair points. But the extent to which this is true varies from business to business, sector to sector. If for example you are selling a commodity that is essential and not discretionary - eg food - and are located in an area where there is little effective competition you have much more potential to raise prices to cover increased costs because customers have no choice but to eat and little effective competition. If Tesco tried to charge £100 for a bag of carrots in this area, they would quickly encounter competition. The problem is with things in fixed supply - like land. Well yes, there is an obvious limit to how much Tesco or anyone else can charge for anything before they start damaging their own business. I acknowledged that already. But they have a little more leeway than those businesses wholly dependent upon discretionary spending. There are some things we all need to buy and some things we dont.....the latter would tend to be much less able than the former to pass on any of their rising costs to customers. Any nation of course has only a finite amount of land within it's borders. Nevertheless, the costs associated with it's usage can be affected by a range of factors, including the power of Nimbys and expensive delays in planning processes, restrictions on what the land can be used for, and shortages of the things we need being built on it.. The notion that we have a land shortage does not really bear up under scrutiny. Only 1 percent of UK land has been built upon, and only 2 percent of land in the most densely populated UK nation of England. So the high costs associated with the development of land is not due to a shortage of land, but a shortage of sufficient land being developed for the good of all |
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Post by Orac on May 1, 2024 17:52:26 GMT
If Tesco tried to charge £100 for a bag of carrots in this area, they would quickly encounter competition. The problem is with things in fixed supply - like land. The notion that we have a land shortage does not really bear up under scrutiny. Only 1 percent of UK land has been built upon, and only 2 percent of land in the most densely populated UK nation of England. So the high costs associated with the development of land is not due to a shortage of land, but a shortage of sufficient land being developed for the good of all I didn't say we had a shortage of land. I said land is in fixed supply. Land's usefulness depends almost entirely on where it is and, of course, unlike other goods it can't be transported. This means that land is always in un-addressable shortage where it is needed. This further means rising demand for land translates into a price rise while rising demand for (say) computers need not do so. |
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