http://www.telegraph.co.uk/comment/columnists/simonheffer/6448733/None-of
-Britains-politicians-appears-to-realise-what-a-mess-were-in.html

None of Britain's politicians appears to realise what a mess we're in

The Tories' plans to deal with Britain's recession are still 
economically illiterate, argues Simon Heffer

By Simon Heffer
Published: 7:53PM GMT 27 Oct 2009

"Yet we have the Conservative Party saying that it cannot contemplate 
undoing Labour's proposed 50 pence tax rate for the "rich" because the 
unrich won't like it.

Believe me, the rich won't like the retention of the rate, either. Those 
who will pay it will have less disposable income. They will therefore 
spend less money on goods and services, most of which are produced or 
provided by people who only pay basic rate tax. Some of those people 
will lose their jobs, or go on short time. The "rich" will still have 
their jobs, though some of them may (as has already been the case) go 
abroad and take all their spending power with them, where they can pay 
less tax."

Note: I love it when Heffer pretends he understand economics. What he 
hasn't grasped is that the rich as a class cause the rate of the 
circulation of money to slow because they invest most of it - which 
slows the rate of circulation. The less well off spend almost all their 
money quickly and thus increase the rate of circulation.

A concrete example of this: A man has a million pounds. He uses all of 
it to buy a house. The recipient of the money is in a position where he 
will most probably either buy  a new house or put most of the money in 
some other investment. Whoever receives the money then  is likely to 
receive it in its entirety or in large  chunks of it. They will most 
probably invest the money again in property or other assets.  The money 
is circulating slowly and within a small circle.

Compare this with the person with a million pounds who being of a 
philanthropic turn, gives £100 to 10,000 poor people. They will spend 
the money on everyday living very quickly. The recipients of the money 
will be in the main retail outlets of various kinds who rapidly re-cycle 
the money they receive in buying new stock, paying wages and so forth. 
The rate of circulation is increased which increases the money supply. 
The rich in effect cause the hoarding of money.    RH


-- 
Robert Henderson
Personal website: http://www.anywhere.demon.co.uk

On Tue, 03 Nov 2009 12:48:17 +0000, Robert Henderson wrote:

> http://www.telegraph.co.uk/comment/columnists/simonheffer/6448733/None-
of
> -Britains-politicians-appears-to-realise-what-a-mess-were-in.html
> 
> None of Britain's politicians appears to realise what a mess we're in
> 
> The Tories' plans to deal with Britain's recession are still
> economically illiterate, argues Simon Heffer
> 
> By Simon Heffer
> Published: 7:53PM GMT 27 Oct 2009
> 
> "Yet we have the Conservative Party saying that it cannot contemplate
> undoing Labour's proposed 50 pence tax rate for the "rich" because the
> unrich won't like it.
> 
> Believe me, the rich won't like the retention of the rate, either. Those
> who will pay it will have less disposable income. They will therefore
> spend less money on goods and services, most of which are produced or
> provided by people who only pay basic rate tax. Some of those people
> will lose their jobs, or go on short time. The "rich" will still have
> their jobs, though some of them may (as has already been the case) go
> abroad and take all their spending power with them, where they can pay
> less tax."
> 
> Note: I love it when Heffer pretends he understand economics. What he
> hasn't grasped is that the rich as a class cause the rate of the
> circulation of money to slow because they invest most of it - which
> slows the rate of circulation. The less well off spend almost all their
> money quickly and thus increase the rate of circulation.
> 
> A concrete example of this: A man has a million pounds. He uses all of
> it to buy a house. The recipient of the money is in a position where he
> will most probably either buy  a new house or put most of the money in
> some other investment. Whoever receives the money then  is likely to
> receive it in its entirety or in large  chunks of it. They will most
> probably invest the money again in property or other assets.  The money
> is circulating slowly and within a small circle.
> 
> Compare this with the person with a million pounds who being of a
> philanthropic turn, gives £100 to 10,000 poor people. They will spend
> the money on everyday living very quickly. The recipients of the money
> will be in the main retail outlets of various kinds who rapidly re-cycle
> the money they receive in buying new stock, paying wages and so forth.
> The rate of circulation is increased which increases the money supply.
> The rich in effect cause the hoarding of money.    RH

It is important to distinguish between saving and investment.  The 
"saving" of excess money by the truly rich is the problem, and not the 
investing.  Saving = hoarding.  Asset swaps such as already existing 
equities and real estate are not actually investments.  They are 
"savings".  An investment would by like financing a company that is 
attempting to develop modular thorium rectors.  Or a company developing 
biofuels or advanced solar.  Even a company developing batteries or 
electric automobiles or advanced robotics and artificial intelligence. 
THOSE are investments. 

-- 
"Those are my opinions and you can't have em" -- Bart Simpson