M
morganist
My alternative solution to higher tax and spending cuts.
The article below was published at morganist economics.
https://morganisteconomics.blogspot.com/2021/09/beyond-budget-outgrow-government-debt.html
Copyright © 2021 Peter James Rhys Morgan.
Beyond the Budget - 'Outgrow' the government debt rather than 'Repay' it.
By Peter Morgan.
15:10 07/09/2021.
Rising discontent with the Chancellor of the Exchequer's plans to increase taxation have led to disaccord within the Conservative Party. The increase in National Insurance Contribution rates has led to the most vociferous disagreement between the backbenchers and the cabinet, which is turning into a campaign to prevent its implementation. However the whole debatecould be avoided by finding an alternative method of funding the Prime Minister's ambitions!
Proposed solutions to balance the budget have included taxation increases and spending cuts, which has ignored a massive aspect of macroeconomics. Economic growth can be expanded to provide a more buoyant free market economy, a greater rate of taxation revenue, decreased unemployment and a higher level of GDP. If economic growth is sustained for long periods it could 'Shrink' the government debt as a percentage of GDP, effectively 'Outgrowing' the debt.
Outgrowing the government debt prevents the need to increase taxation or introduce spending cuts. As long as economic growth is achieved continuously it can gradually reduce the public debt as a percentage of GDP, avoiding the need to implement the extremely hard policies the Chancellor of the Exchequer the Rt Hon Rishi Sunak MP is proposing. The current balancing strategy assumes a stagnant economy with fixed budgets, alternatively growth can be created.
Alternative economic options are available to the Chancellor of the Exchequer through a new strategy embracing economic growth. Presenting two directions the Treasury can pursue in an effort to deal with the increasing government debt. The first option is to 'Balance' the Budget and the second option is to 'Outgrow' the government debt proportionately. The consequences of the 'Balance' strategy are immense and could be inimical to the long term macro economy.
Slashing government spending could be illegal if core services are not provided and taxation increases could damage the functioning of the free market economy. The advantages of using the 'Outgrow' strategy include a stronger free market economy, greater taxation revenue and a larger overall economy. The problem with the 'Outgrow' strategy is the limitation to generate further economic growth, although this can be solved through the use of new economic tools.
Repayment of the government debt becomes unnecessary if growth is achieved as the amount of debt dwindles as a percentage of GDP over time. Government debt return payments can be minimised by achieving the inflation target and maintaining a low base rate of interest. Using superior economic control tools and new macroeconomic techniques can provide the desired boost in economic growth the economy has been denied, as a consequence of the lockdown.
Improving economic policy is possible through a movement in strategy from sluggish budget balancing to a greater rate of sustained economic growth. Advancements in macroeconomics can provide the means to enable the attainment of a higher economic growth target. Changing from the Chancellor's painful 'Balance' economic strategy to the kinder 'Outgrow' economic strategy, could remedy many of the economic problems the nation has encountered amicably.
The article below was published at morganist economics.
https://morganisteconomics.blogspot.com/2021/09/beyond-budget-outgrow-government-debt.html
Copyright © 2021 Peter James Rhys Morgan.
Beyond the Budget - 'Outgrow' the government debt rather than 'Repay' it.
By Peter Morgan.
15:10 07/09/2021.
Rising discontent with the Chancellor of the Exchequer's plans to increase taxation have led to disaccord within the Conservative Party. The increase in National Insurance Contribution rates has led to the most vociferous disagreement between the backbenchers and the cabinet, which is turning into a campaign to prevent its implementation. However the whole debatecould be avoided by finding an alternative method of funding the Prime Minister's ambitions!
Proposed solutions to balance the budget have included taxation increases and spending cuts, which has ignored a massive aspect of macroeconomics. Economic growth can be expanded to provide a more buoyant free market economy, a greater rate of taxation revenue, decreased unemployment and a higher level of GDP. If economic growth is sustained for long periods it could 'Shrink' the government debt as a percentage of GDP, effectively 'Outgrowing' the debt.
Outgrowing the government debt prevents the need to increase taxation or introduce spending cuts. As long as economic growth is achieved continuously it can gradually reduce the public debt as a percentage of GDP, avoiding the need to implement the extremely hard policies the Chancellor of the Exchequer the Rt Hon Rishi Sunak MP is proposing. The current balancing strategy assumes a stagnant economy with fixed budgets, alternatively growth can be created.
Alternative economic options are available to the Chancellor of the Exchequer through a new strategy embracing economic growth. Presenting two directions the Treasury can pursue in an effort to deal with the increasing government debt. The first option is to 'Balance' the Budget and the second option is to 'Outgrow' the government debt proportionately. The consequences of the 'Balance' strategy are immense and could be inimical to the long term macro economy.
Slashing government spending could be illegal if core services are not provided and taxation increases could damage the functioning of the free market economy. The advantages of using the 'Outgrow' strategy include a stronger free market economy, greater taxation revenue and a larger overall economy. The problem with the 'Outgrow' strategy is the limitation to generate further economic growth, although this can be solved through the use of new economic tools.
Repayment of the government debt becomes unnecessary if growth is achieved as the amount of debt dwindles as a percentage of GDP over time. Government debt return payments can be minimised by achieving the inflation target and maintaining a low base rate of interest. Using superior economic control tools and new macroeconomic techniques can provide the desired boost in economic growth the economy has been denied, as a consequence of the lockdown.
Improving economic policy is possible through a movement in strategy from sluggish budget balancing to a greater rate of sustained economic growth. Advancements in macroeconomics can provide the means to enable the attainment of a higher economic growth target. Changing from the Chancellor's painful 'Balance' economic strategy to the kinder 'Outgrow' economic strategy, could remedy many of the economic problems the nation has encountered amicably.
