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The Coronavirus Economy NEEDS a Guaranteed Basic Income NOW!

by John Brian Shannon

Well, it appears that Coronavirus returned with a vengeance this week, just as I predicted.

The reasons for it’s return are both simple and complicated, and those reasons are; ONE: In the early days of the COVID-19 pandemic Western governments sat around waiting for someone to tell them what to do, and when someone didn’t, they sat some more, allowing the Novel Coronavirus to spread to thousands of people, who then infected many more thousands of people.

Mind you, once medical professionals told Western governments that Coronavirus represented an existential threat to their countries, they moved quickly to direct citizens towards healthier choices such as ‘social distancing’ and the wearing of PPE’s whenever they left their homes and only essential service workers were permitted to travel to and from work. Both modalities were surprisingly effective in reducing further airborne transmission of the disease.

TWO: A good example of the complete lack of personal responsibility shown by some is represented in the photo below, taken only days ago when the COVID-19 alert threshold was lowered (slightly) and thousands of people (who obviously AREN’T healthcare professionals) mobbed the beaches, disregarding the recently relaxed Coronavirus social distancing rules.

Bournemouth beaches, Coronavirus, UK

Bournemouth beaches under slightly relaxed lockdown rules. Image courtesy of SkyNews.

Consequently, the huge sacrifice made by millions of Britons staying home under lockdown for two months may be in vain!

And many may now catch the disease and perhaps die because a number of Britons lacked the personal discipline to adhere to the (recently relaxed) Coronavirus social distancing requirements!

Let’s hope it turns out that by sheer dumb luck only small numbers of Britons will subsequently catch the disease and suffer or even die on account of the irresponsible actions of those beach going Britons.


Why the UK Needs a Guaranteed Basic Income for the Coronavirus Economy

Due to initially slow response by Western governments (but see the effective response to COVID-19 mounted by South Korea here) and due to the lack of discipline shown by some Britons, it looks like Coronavirus is here to stay for the next two years. At least.

Not only that, but there WILL BE another COVID variant arising this year or next that may prove deadlier than the present Coronavirus pathogen. It’s typical of respiratory viruses that they mutate and those mutations often become more effective at terminating the lives they infect. ‘Nature of the beast’ as they say in virology labs around the world.

So, the economy can’t continue to be locked down and survive Coronavirus indefinitely. It needs real money to be earned, spent, taxed, and reinvested in the whole economy every day of the year.

Consequently, when large numbers of people aren’t working during the COVID-19 lockdown, money stops flowing and businesses begin to die. And that’s terrible for the economy. And it’s even more terrible for individuals who live from paycheque to paycheque as their cash and ‘fridge contents dwindle for as long as the crisis continues.

That’s why it’s no surprise that many headed to the beach over the past few days to gain respite from the living hell they experienced over the past weeks.

See how things are so connected? Demographers see it everyday.



To stabilize the economy and to prevent irreparable harm to persons during this and future Coronavirus lockdowns, the UK needs to institute a Guaranteed Basic Income

Handing huge amounts of taxpayer money to corporations isn’t the answer, as 50% will always and automatically be skimmed-off to add to annual profits and be thence distributed to shareholders — many of whom AREN’T UK citizens, don’t pay taxes in the UK, and may never live in the UK. Which isn’t any kind of pathway forward for the UK economy. So forget that plan.

Putting real money in the hands of Britons is the way forward, especially during times of lockdown, high unemployment, war, or natural disaster. By simply paying adults a minimum income, they can afford to eat, keep the lights on, and keep hope alive for their families for the duration of any crisis or emergency.

Many such facilities already exist in the UK, including all social welfare and Universal Credit spending, food banks, homeless shelters, substance abuse organizations, local charities, domestic NGO’s and foreign NGO’s operating in the UK during the pandemic.

What a GBI means to the UK economy is that all social welfare and charity gets rolled into one payments system — thereby eliminating the many parallel and overlapping programmes that were designed with the best of intentions to, (1) mitigate the effects of poverty on Britons, and (2) alleviate the sudden and unexpected poverty caused by local crises or national emergency.

It means keeping people alive until the crisis has passed (yes, it’s that dire in many cases) so that Britons can then pick up and carry on with their lives after the crisis and once again contribute to the wider economy.


Who Should Get It?

Every adult UK citizen (including senior citizens) who live in the bottom economic quintile and (a) thereby earn less than the annual official national poverty line (about £20,000/yr in the UK) or (b) any adult UK citizen temporarily affected by local crises such as flooding, or national crises such as pandemic, war, or other emergency situations that cause them real hardship; e.g. no money to buy food or find shelter, should automatically be eligible to receive GBI payments.

Non-citizens shouldn’t be eligible for a UK GBI, but should be able to (easily) access enough funds from the UK government to safely transport them back to their country of origin, allowing them to return to their home country until the crisis is over. E.g. A one-time payment of £1250.


How to Pay GBI to Citizens

The best way to pay a Guaranteed Basic Income to UK citizens is, of course, the easiest way. And that is via a reverse income tax, which simply means the UK government issues a monthly credit to individuals via their personal HM Revenue and Customs account to top-up their income to £1250/mo. for as long as they earn less than the official annual poverty line amount in the UK.

As HMRC knows exactly how much you earn due to your most recent income tax form, it’s a simple matter for them to credit your HMRC account to top you up to £1250 for that month and transfer it to your bank account via online banking. Some people may choose to allow HMRC to do this automatically, while others may wish to manually log in to their HMRC account to choose the date they want their GBI deposited into their bank account.

Some may wish to have their GBI payment deposited to their PayPal account. That should be OK too.


UK GBI: Reducing Government Overhead Costs, Supporting Low Income Britons, and Supporting Britons Hit by Natural Disasters/Pandemic, Etc.

Instead of today’s many overlapping and expensive government programmes, some with HUGE overhead costs, a single-payer system would put more actual money in the hands of Britons living below the official poverty line at a lower cost to taxpayers, and to more easily assist Britons during emergencies, again, at a lower cost to taxpayers.

How could it cost less when even more people are likely to receive a GBI, than presently receive Universal Credit?

By eliminating the many costly and overlapping anti-poverty programmes using the single-payer system (HMRC’s payments system) and by dramatically reducing homelessness, drug abuse, property crimes, policing costs, court costs, incarceration costs, mental health costs, and reducing NHS cost of (repeatedly) caring for homeless people or (repeatedly) caring for those injured while engaging in property crimes offences, or who (repeatedly) engage in confrontations with law enforcement, due to the nature of the poverty-stricken life they lead.

Read: Canada’s forgotten universal basic income experiment — BBC Worklife


A UK GBI Improves the UK’s ‘Velocity of Money’ and Therefore, the Whole Economy!

Economists call the speed of the transfer of money from one person to another, the ‘velocity of money’ and it’s a fascinating thing to examine. But to explain it properly, a short video is required to demonstrate how relatively small amounts of money can revolutionize a village, town, city, or rural area…

Now, for a more detailed look at the velocity of money, see Doug Andrew’s excellent example on the topic of how money really works, which refers directly to the ‘velocity of money’ — also known as MV = Py to economists.

FYI – All these examples are sans tax as they’re simple examples designed to demonstrate how velocity of money works.

But in the case of government stimulus — whether government stimulus paid to corporations (a corporate subsidy, or corporate welfare) or paid to individuals as part of a GBI (a personal subsidy, or personal welfare) every dollar or pound sterling of that stimulus (subsidy) returns to the government via taxation within 11-years — and the government is only ‘out’ by the amount of interest paid on the money they injected into the economy 11-years prior. And that’s why you pay taxes…

By the way, your taxes don’t pay for the full amount that the government lends to the economy, you’re paying tax to cover the interest on the money the government lends to the economy. If it wasn’t done this way (so-called ‘Cost of Use’ of money) your taxes would be much higher.

Therefore, British taxpayers don’t pay the full cost of social welfare programmes via taxation, they only pay the interest on the amount loaned to the economy by the government over that 11-year period.

Now, here’s a secret: Since I took my economics education (U.S.A. circa 1991) that 11-year repayment statistic has decreased to 4.3-years (U.S.A. stat roughly similar to the UK statistic) because the velocity of money has increased so dramatically since then. Ask any economist.

Therefore, the huge cost of homelessness, property crimes, policing costs, court costs, incarceration costs, property and vehicle insurance costs, medical costs, etc., to the economy will always be many times more… than the cost of 4.3-years worth of interest payments on money loaned to the economy by the government to solve those problems! Which means, that after 4.3-years (or thereabouts) the British taxpayer should be in for a tax break — courtesy of the GBI and a much better velocity of money factor. All of which equals a booming economy.

Conclusion: It’s cheaper to pay citizens a GBI than it is to pay for the huge costs of poverty on individuals and on the whole economy!

I love economics. Have a great day everyone!

Virus Economics: When Markets Feel Poorly

by John Brian Shannon

Fearing that the Coronavirus pandemic might affect their investments, perception became reality for investors in the world’s stock exchanges as markets see their biggest drop in recent years.


‘Money flees uncertainty’ – You’ve heard it before or read it in print

It vaporizes during civil unrest, it dissipates into thin air when politics goes awry such as when a national leader faces a coup d’é·tat, and it leaves without saying goodbye during natural disasters. In short, the thing we call “money” isn’t our friend at all, in fact, “money” (by which, I mean ‘investment’) is the most fair-weather friend we could have.

And that’s a good thing!

(I hear what you’re thinking, “Is Gordon Gekko writing this post? You know, the whole, “Greed is good,” thing and all that?) Hehehe.

No, Gordon Gekko from the movie Wall Street isn’t writing this post, I’m merely remarking upon what’s patently obvious in the global marketplace — that the de facto rule is that individual and institutional investors prefer stable and profitable companies and countries to unstable and less profitable companies and countries. Of course.

What it means on the ground is that organizations that prepare in advance for the ‘bad times’ are seen as more stable, and therefore a better long-term investment, and that’s where the money flees to during challenging economic times.

Which is why some countries have a AAA+ credit rating and others don’t. It’s why some companies have triple A credit and others don’t. It’s why some countries need IMF loans and others don’t.


Stayin’ Alive, Yeah!

Being prepared, means staying alive, even while your competitors are dying all around you. (Not literally dying; But that’s the kind of talk you hear on trading floors during the so-called ‘bad times’)

I say ‘bad times’ because, for prepared countries (and companies) there really are no ‘bad times’.

Prepared organizations sail right through recessions, depressions, war, civil unrest, natural disasters and more — precisely because they’re well managed and well-equipped to weather any sort of storm, whether it be political, economic, or even natural disasters that can strike without warning.

Any CFO knows that recessions occur every 25-years. They know their factory (or whatever) is located in a floodplain, or in an active earthquake zone, etc., therefore, long in advance of any of those events occurring, they create a ‘rainy day fund’ to carry the company through a catastrophic period with surprisingly little upset.

The reward for this kind of long-term thinking is that when disaster finally strikes (and it surely will, it’s just a question of when) your organization will carry-on with ‘business as usual’ even as your competitors are dying in the market. It’s called ‘building resiliency’ into your company (or country) and it’s a fine thing.

And that’s the time that your company can go ’round and snap those companies up for ten cents on the dollar. ‘Picking their bones’ as we used to say in the halcyon days of Carl Icahn, investor, corporate raider… and strangely enough… philanthropist. Cool, huh?

Anyway, ‘Fortune favours the prepared’ said Louis Pasteur, and he was right.

So it follows then, that countries that aren’t prepared for Coronavirus version 2019 (called COVID-19 now that it’s been officially named) aren’t going to sail through it unaffected.

Rather, it’s easy to see even at this early stage which countries have engaged in long-term thinking, and have long ago upgraded their medical capacities to handle pandemics such as COVID-19, and although some cases showed up on their healthcare systems they had the ability and the capacity to deal with those cases with immediacy.

And if there’s one thing that pandemic-type viruses hate, it’s timely diagnosis, speedy quarantine and effective treatment.

Consequently, those prepared economies will see little economic impact from COVID-19 or any subsequent mutation of the COVID-19 virus which is likely to be called COVID-20 if it occurs in 2020. And there’s always, always, a mutation eventually, however it’s almost impossible to predict when that mutation will occur. At that time, the treatment for COVID-19 won’t work on COVID-20 (or whatever that mutation gets named) or if it does work, it’s likely to be less than 50% effective. Just sayin’.

Again, those governments that believe in long-term thinking and have prepared in advance of the latest Coronavirus pandemic have already inoculated their economies against the worst of the problem, although they could still (secondarily) be affected by other countries whose economies may now suffer on account of not being prepared.

Therefore, it was the perception of investors who have themselves created the entire ‘Black Monday’ market devaluation by pulling their investments from the stock market. But if there are more countries that are prepared for and respond well to the Coronavirus threat, then today’s market recalibration will turn out to be nothing more than a blip on the year-end 2020 annual report.

But if it turns out that a majority of countries aren’t properly prepared to handle this Coronavirus pandemic then this market slide could last a long time and worsen as thousands more become infected.

And then what happens around November or December 2020 if a new, mutated COVID virus appears?

Just as the markets get back to normal, suddenly a newer and more virulent version of this virus begins to run through the world’s healthcare systems… will they be ready then? Let’s hope so.


More Pandemics are On the Way. So, Let’s be Ready Next Time!

One thing’s for certain. In this increasingly interconnected world, there will be more pandemics and perhaps much more deadly and with a more rapid onset than the COVID-19 virus.

In such an instance, only the countries blessed with leaders who aren’t afraid to make the big decisions (like closing their airports and even their land borders and seaports for 2-weeks to prevent millions more infections from occurring) will survive the next viral onslaught.

In the case of the COVID-19 virus (so far) it looks like the major economies have dodged a bullet, because it turns out that it isn’t the strongest virus, as it’s only able to kill the elderly and the infirm. However, future pandemics may not be as mild as this particular Coronavirus.

We need to get ready. We have so far failed this drill, but Western healthcare systems are quickly ramping-up to meet the present threat. Until governments begin to provide permanent ongoing funding to healthcare providers to help them get more efficient at capturing such viral threats, isolating those who are contagious, and effectively treating those who’ve been exposed to such contagions, we’re living on borrowed time.

Let us thank the medical professionals on the front lines diagnosing, isolating, and treating those people who’ve had exposure to the virus, and thank them for doing much in a short time, with only tepid support (at first) from Western governments. Bravo!


Bonus Graphic

Markets see their biggest drop in recent years as fears of the COVID-19 virus spreads.

Markets see their biggest drop in recent years as fear of the COVID-19 virus spreads.


 

A Day in London: 2020

by John Brian Shannon

Welcome to London, 2020. You’re in the former Battersea Power Station where the British International Motor Show is being held this week!

Artist rendering of the renovated Battersea Power Station in London, UK that will be home to Apple Inc.

Artist rendering of the renovated Battersea Power Station in London, UK — Apple’s UK & Commonwealth HQ. Business Insider

Apple Inc’s new UK & Commonwealth HQ is full of Alan Turing-esqe brilliant people glad to be hosting the show in their auric new building — and for the first time anywhere, iDrive (Apple’s shiny new hydrogen powered car) is on public display.

Aside from its obviously stunning design, the best thing about this car is that it can’t be stolen because unless the owner of the car is within a few feet of the car with his/her iPhone on and logged-in to the iDrive app, it is just a piece of aluminum, glass and plastic that can’t go anywhere. There’s no computer or operating system to allow the car do anything at all, save for the iDrive app in your iPhone or iPad.

apple icar concept car in london, uk

Early Apple iCar concept.

No iPhone or iPad? Then you’re not the owner of the car. Because a matching serial number iPhone & iPad is provided with each Apple Car, with thumbprint security and as many passwords or login captchas as you want. It’s up to you.

Even if someone steals your iPhone and manages to locate your car, you can always “Log out of all devices and apps” remotely from any computer or smart phone on the planet — including the app that drives your beautiful new Apple Car. (Stolen car coasts to side of road, wholly inactive)

Now, that’s what I call a user-friendly car ownership experience.


And Brexit, You Ask? Pshaw!

Brexit came and went a long time ago. Neither Project Fear or the extreme Brexiteers were right; The UK coasted through 2019, Brexiting on March 29 as scheduled and other than a temporary blip in the markets things continued as normal. Yes, even the Sun rose in the sky the next day. Astonishing!

But not really. For all the hype, compared to other events taking place in the world Brexit turned out to be a sideshow. Only hyperventilating European politicians on both sides of the English Channel noticed Brexit.

After dipping to 1.2% GDP growth in 2019, the UK recovered and is now looking at 2% growth for 2021 — not due to Brexit — but due to the fact that Remainers are no longer sabotaging the UK economy hoping for it to fail so they could get their way.

Since the summer of 2019, the UK joined the USMCA (the new NAFTA agreement) and the CPTPP, and the new Commonwealth of Nations Free Trade Accord (CNFTA). In 2020, the UK has signed trade agreements with countries that have a combined population of 5 billion+ people.

A free trade deal with the EU (based on the excellent CETA agreement the EU has with Canada) is expected to be signed by the end of 2020 and go into effect on January 1, 2021.

Food shortages, rioting, family strife, civil war? Not a bit of it.

Every politician who tried to make a career out of Brexit is gone. Whether extreme Brexiteer, extreme Remainer, whether continental European or Briton; Every politician who held an extreme Brexit position was invited by their respective parties (and voters, hehehe) to leave politics.

Enjoy the day Britons, legal migrants to the UK, and visitors! You’ve earned it.

Oh, and the UK and the EU signed a modified Withdrawal Agreement on the 11th-hour of March 28th, 2019. But you knew that.