{"id":50224,"date":"2020-05-28T07:58:19","date_gmt":"2020-05-28T06:58:19","guid":{"rendered":"https:\/\/www.taxresearch.org.uk\/Blog\/?p=50224"},"modified":"2020-05-28T09:17:30","modified_gmt":"2020-05-28T08:17:30","slug":"understanding-the-myths-that-need-to-be-tackled","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2020\/05\/28\/understanding-the-myths-that-need-to-be-tackled\/","title":{"rendered":"Understanding the myths that need to be tackled"},"content":{"rendered":"<p>I have now done some analysis on all the answers to the<a href=\"https:\/\/www.taxresearch.org.uk\/Blog\/2020\/05\/23\/question-of-the-day-myth-busters\/\"> question I raised last weekend<\/a> on the economic, and other, myths that need to be tackled on a persistent basis.<\/p>\n<p>What I have tried to do is group them. My suggested groups are as follows:<\/p>\n<h3>Banking myths<\/h3>\n<ul>\n<li>Full reserve banking<\/li>\n<li>Banks create 97% of money<\/li>\n<li>There is a fixed quantity of money that we might have<\/li>\n<li>Banks are intermediaries<\/li>\n<li>Money is inherently valuable<\/li>\n<li>Money has asset backing<\/li>\n<\/ul>\n<h3>The household analogy (the myth needing to be tackled most of all)<\/h3>\n<ul>\n<li>The government is like a household<\/li>\n<\/ul>\n<h3>Modern monetary theory myths<\/h3>\n<ul>\n<li>There is no magic money tree<\/li>\n<li>MMT is indifferent to inflation<\/li>\n<li>Tax can't contain inflation<\/li>\n<li>We need unemployed people to control inflation<\/li>\n<\/ul>\n<h3><strong>The party political myth\u00a0<\/strong><\/h3>\n<ul>\n<li>The Conservatives borrow less than Labour<\/li>\n<\/ul>\n<h3>Borrowing and tax and spend myths<\/h3>\n<ul>\n<li>Governments borrow<\/li>\n<li>Taxes and bonds raise money for the government<\/li>\n<li>Taxes pay for spending<\/li>\n<li>The government cannot run an overdraft with the Bank of England<\/li>\n<li>The debt has got to be repaid<\/li>\n<li>Our grandchildren will have to pay for this<\/li>\n<li>We have to repay the national debt<\/li>\n<li>Deficit = debt<\/li>\n<li>We have to balance the budget<\/li>\n<li>Government debt is bad<\/li>\n<li>Governments can't print money<\/li>\n<li>We need more taxes<\/li>\n<li>We must live within our means<\/li>\n<li>We have maxed out the credit card<\/li>\n<li>We can run out of money<\/li>\n<li>We're in hock to the bond markets<\/li>\n<li>The government has to pay interest on debt that it owes itself<\/li>\n<li>QE debt will be resold to the market<\/li>\n<li>We'll go bust if the government borrows<\/li>\n<li>We can't borrow all the money that we need<\/li>\n<li>Debt is growing proportion of national GDP<\/li>\n<li>We can't afford the interest on the national debt<\/li>\n<\/ul>\n<h3>Tax and spend myths<\/h3>\n<ul>\n<li>Governments spend taxpayers money<\/li>\n<li>We tax and spend<\/li>\n<li>There is taxpayers money<\/li>\n<\/ul>\n<h3>The inflation myth<\/h3>\n<ul>\n<li>We're going to be like the Weimar Republic<\/li>\n<\/ul>\n<h3>The austerity myths<\/h3>\n<ul>\n<li>Austerity was necessary<\/li>\n<li>Tax increases are bad for the economy<\/li>\n<li>Austerity stimulates growth<\/li>\n<li>The state crowds out the private sector<\/li>\n<li>The hard choice is we cannot afford to save jobs<\/li>\n<li>We can't afford to be green<\/li>\n<li>The benefits system is funded by taxpayers<\/li>\n<li>Privatisation was necessary<\/li>\n<li>The state cannot be trusted with our pensions<\/li>\n<li>We can\u2019t afford \u2026. The NHS \/ pensions \/ social care \/ education \/ benefits etc<\/li>\n<\/ul>\n<h3>Governance myths<\/h3>\n<ul>\n<li>The central bank is independent<\/li>\n<li>The OBR is independent<\/li>\n<li>The Institute for Fiscal Studies is an objective commentator<\/li>\n<\/ul>\n<h3>Economic myths<\/h3>\n<ul>\n<li>Increasing interest rates controls inflation<\/li>\n<li>Markets allocate money efficiently<\/li>\n<li>There is no multiplier<\/li>\n<li>The quantity theory of money is true<\/li>\n<li>Economics is rational<\/li>\n<li>Externalities do not matter<\/li>\n<li>There is an invisible hand<\/li>\n<li>Wages reflect a person's worth<\/li>\n<li>GDP measures wealth<\/li>\n<li>Migrants take our jobs<\/li>\n<li>The private sector is more efficient than the state sector<\/li>\n<li>Red tape is killing business<\/li>\n<li>The market always knows best<\/li>\n<li>The state is inefficient<\/li>\n<li>There is perfect information<\/li>\n<li>There is no asymmetry of information<\/li>\n<li>There are no monopolies<\/li>\n<li>There are no monopsonies<\/li>\n<li>No one is a price maker<\/li>\n<li>Equality does not matter, growth does<\/li>\n<\/ul>\n<h3>Green myths<\/h3>\n<ul>\n<li>There is no climate crisis<\/li>\n<li>We have to grow<\/li>\n<li>Growth isn't green<\/li>\n<\/ul>\n<h3>Rich myths<\/h3>\n<ul>\n<li>The rich pay for public services<\/li>\n<li>The top 1% pay 25% of all taxes<\/li>\n<li>The rich will leave the country<\/li>\n<li>Tax cuts for the wealthy stimulate growth<\/li>\n<li>CEOs need high pay<\/li>\n<\/ul>\n<h3>Abuse myths<\/h3>\n<ul>\n<li>Benefit fraud is rampant<\/li>\n<li>Tax avoidance is the big issue in tax abuse<\/li>\n<li>Tax havens are crippling our tax system<\/li>\n<\/ul>\n<h3>Pay myths<\/h3>\n<ul>\n<li>Low paid workers are not deserving<\/li>\n<li>UBI is unaffordable<\/li>\n<li>Income inequality is a good thing<\/li>\n<li>The wage rate and unemployment are related<\/li>\n<\/ul>\n<h3>The Scottish myths<\/h3>\n<ul>\n<li>GERS is a fair reflection of Scotland's income<\/li>\n<li>Scotland can't survive as an independent country<\/li>\n<\/ul>\n<h3>The development myths<\/h3>\n<ul>\n<li>Capitalism has lifted millions out of poverty<\/li>\n<li>Outsourcing benefits those now on $3 a day<\/li>\n<\/ul>\n<p>So, thoughts, yet again?<\/p>\n<p>Suggestions for more, better groupings and where to start are welcome.<\/p>\n<p>In the meantime, I am moving on to addressing some of these.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>I have now done some analysis on all the answers to the question I raised last weekend on the economic, and other, myths that need<br \/><a class=\"moretag\" href=\"https:\/\/www.taxresearch.org.uk\/Blog\/2020\/05\/28\/understanding-the-myths-that-need-to-be-tackled\/\"><em> Read the full article&#8230;<\/em><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35,191],"tags":[],"class_list":["post-50224","post","type-post","status-publish","format-standard","hentry","category-economics","category-myths"],"_links":{"self":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/50224","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/comments?post=50224"}],"version-history":[{"count":0,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/50224\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/media?parent=50224"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/categories?post=50224"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/tags?post=50224"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}