Yeah, but 45% would be federal income tax only in Europe. Social Security, pensions, sales tax etc pp would be on top, and are generally also considerably higher than in the US.
There is a first layer on companies having to pay 25% of salaries to taxes, then a second layer of 25%, then a third layer of income tax 0 to 30% depending on total sum and how many dependents.
So all employees are already above 44% taxes before income tax :D
In other countries then it may be 65% if you count gas taxes etc etc. VAT (sales tax) is 20+% in a lot of countries
Yep, and you don't get healthcare for that, or post high school education.
I used to take things for granted, now news like "I have to pay $30k for Corona virus hospital treatment" make me appreciate being born in "socialist" Europe. To each their own.
max 2500 pounds. Say for 6 months? A Year? That's 15k to 30k. This is not enough to justify "45%" taxes for life...
You (or I) would need to save for worst-case scenarios and get very few economies of scale: you can't have 0.001 of an epidemiologist on retainer.
The government can at least pool risk (and everything) over the entire country.
It does work pretty good though for city workers - managers, devs, etc
Targeted help now and then a jolt when it's over.
Additionally, something as pivotal as a UBI is exactly the kind of thing that you _wouldn't_ want to implement as a reaction to a temporary crisis. You're likely to create the wrong abstraction based on contingencies of the situation.
And, even though it's an employer subsidy, this is more beneficial in the long run if the economy recovers, because employers don't have to go through the fire/hire destruction and deadweight loss.
This is an astonishing U-turn, and a very welcome one. I just hope the social distancing isn't too late.
UK is going to print lots of GBP to fund this, and in doing so, it will devalue its currency, since EU will possibly be doing much of the same, the Euro and GBP will devalue against US ( and everyone else ), assuming US on a relative terms did not print as much ?
Or is this assumption wrong?
Will we be able to boot-strap the supply chain to keep the economies of the world rolling?
There's a lot of seasonal stuff in cold storage - the apples you buy are from last year.
Today they announced that the government will pay 80% of furloughed workers' salaries, up to £2500 per month. That does not need to be repaid. They also announced today that the interest free period on the loans will be extended to 12 months, up from 6, which is separate to the salary intervention.
As long as there is no crisis of confidence in the ability to repay that debt, it will not be an issue.
Right. The government's policy should act counter-cyclically to counteract major issues like this. It's better to reserve our spending for when we need it than to spend indiscriminately when we don't.
You want government monetary and fiscal policy to act as a counterbalance to natural instability, not as an amplification.
> This should be remembered when progressive reforms are rejected.
I agree, but for different reasons. It's important that we avoid overextending ourselves during the good times, because we need to keep our options open when we find ourselves in times like these.
To save money in a large pile is not a proactive thing to do. It's reactive. The proactive thing is to have a far reaching social safety net and a stable social institutions.
The Imperial College report had 510,000 dying in the UK under a no-action scenario. Average age lets say 79 as the virus progresses.
510,000 * (82.5-79) * GBP 30,000 (QALY for the NHS) = 53.5 billion pounds based on the funding methodology used for the NHS.
Instead the Uk seems to be willing to throw its entire GDP at this problem, 3 trillion pounds. This seems... completely unjustified.
How can we justify this sort of effort for Coronavirus, but not Climate Change, Obesity, Air Pollution, which will kill many more than COVID-19? Is it just because Coronavirus does it spectacularly in 3 months and all of those other things take decades?
Just sending out money to everyone is simple. It can be done fast.
You might be right, but it's not obvious that the difference is material.
as in - no one's giving anyone anything. It's all just shell games.
At least in Norway that is very clear - if you're self-employed - you're usually much better off actually employing yourself.
I don't think that is true.
They've increased UC by £20 a week. To our USA friends that is USD $23.30 a week.
I don't think that counts as substantial. It is barely going to touch the gap.
Almost nobody who was working last month self-employed is likely to be able to afford their rent and bills, or even just their family food bill, on UC going forward.
While on UC, in theory you can also get your rent paid. But only if you are renting somewhere substantially below the median market rate for the area.
Since the area is assessed over quite a large region, that means virtually everyone in a decent city has a rent level higher than is covered anywhere in the city, and people are normally required to move to the edges or beyond (or often into dodgy accomodation that would fail inspections).
But people cannot move now.
They can change their eating patterns, and refuse to pay bills (but watch out because debt collactors still have their jobs, and credit files are still recording).
And full tenants can stop paying rent, and avoid eviction. But watch out because when protective measures stop, evictions will resume because people will not be able to pay the backlog of debt. Especially if the landlord sees it as an opportunity to refurbish and raise the rent (I've seen this happen, find an excuse to get rid of the current tenant then add a 25% rent hike in the ad for the next one).
Worse than that: If evicted (eventually) due to substantial non-payment of rent, in normal times people struggle to find another landlord that will accept them aftwards, because landlords may contact a previous landlord for a reference.
But tenants can't move to a cheaper home suddenly, especially not all at once, and with no money or drivers to move everything.
(And lodgers, who are tenants living in someone's home with the landlord, are still not protected from eviction under current measures as far as I can tell. They are covered by different rules than tenancies, have few rights, are highly vulnerable if the landlord wants them gone. Notice can be as little as 1 week. There are a lot of lodgers in the UK.)
If there was rent deferral of some kind that would help. (Ideally where the government pays the rent so the landlord does not know the state of the tenants finances.) But the government has, currently, said no to direct help for renters. They have tweaked the housing allowance, but only by a small amount so it still doesn't cover the rent for the majority of people in suddenly changed circumstances.
And even with all benefits added up, it's still much less than the 80% that most salaried people are getting.
Self-employed are looking awfully screwed at the moment.
And people who got made redundant just recently are also getting a rough deal, unless they are lucky to have an employer who undoes the redundancy somehow.
Those people are unlikely to be able to get a personal loan to cover their shortfalls either. Many with already bad credit rating will get "computer says no", but those with good credit have a problem too: After passing the rating, they will be asked for proof of income, because it's the law in the UK since a few years ago that lenders must get that proof. Which people suddenly without jobs cannot provide.
This has nothing to do with UBI. It's a temporary measure designed to be counter-cyclical against the current catastrophe.
The defining feature of UBI is that it never ends. That's the opposite of temporary measures like this.
The two can't be compared as equivalent.
If it can minimize the odds of a depression, it might even be a cash flow neutral option.
A u-turn from what previous position and by whom? Universal basic income hasn't really been debated seriously in the UK, so nobody had a previous position to u-turn against.
It's not impossible, but Americans voted against it overwhelmingly less than two months ago, well after this epidemic had already started.
It's impossible because the corporate mega machine is already auto programmed to extract as much cash out of people, in ways most people can't even comprehend.
How else do you end up with huge inequality or with a subprime meltdown?
It's not enough to just give people cash, you have to protect them from a machine that has already proved multiple times its vastly superior to any regulatory mechanism on the planet.
If China, South Korea or Japan haven't done any such thing having been hit harder, totally feels like corporate lobbies are pulling the strings in US and UK taking full advantage of fear as they did to get the banks bailed out in 2008.
> Average age lets say 79 as the virus progresses
No idea what you're on about. Most people in the UK don't even make it to 79 as is, nevermind with a highly contagious and dangerous virus floating about.
> Instead the Uk seems to be willing to throw its entire GDP at this problem, 3 trillion pounds
Again, what are you on about? The British government has definitely invested (invested, think about that word) a huge sum of our GDP at this problem, but everyone I've spoken to here has been more than happy with this decision even though we're all the fortunate ones that have managed to keep our jobs.
Thousands of people are already dying from this in one small concentrated area in Italy, in a matter of weeks. Shall we just say fuck it and let thousands more die here too? Should the whole world say the same thing? Shall we let the entire economy hit the sort of fucked levels we haven't seen since like WW2?
There are many problems in the world, sure. Not so many of them are as simple as a deadly virus plaguing the planet. You think we can just spend 15% of our GDP in a single year and solve obesity, climate change, and air pollution?
Also shouldn't you be celebrating since this has massively cut down on CO2 emissions and is already changing many people's commuting/working habits, possibly permanently?
> Is it just because Coronavirus does it spectacularly in 3 months and all of those other things take decades?
Yeah something that can fuck humanity in 3 months is definitely worth putting some more thought in to than something that won't be felt for decades away. How can you write a sentence like that and not understand it at the same time?
That’s the point he’s making though, we’re overcommitting resources to this problem because we can see it. Once climate change is apparent enough for people to panic, it’ll be too late.
> Thousands of people are already dying from this in one small concentrated area in Italy, in a matter of weeks. Shall we just say fuck it and let thousands more die here too? Should the whole world say the same thing? Shall we let the entire economy hit the sort of fucked levels we haven't seen since like WW2?
Looking at the data from Italy, 98% of the people who died were retired, had pre-existing conditions, and were making no noticeable economic contribution. I’m not saying that economic utility should be what determines someone’s value of life, but the argument that spending trillions of dollars to save the lives of some 85-year-olds “avoids economic disaster” makes no sense. If a world leader were acting in a purely Machiavellian manner, they would let the virus run its course as quickly as possible so productivity could return to normal.
Any attempt to make an argument of this sort in the current panic is being seen as insensitive and met with outrage (“you don’t care about me/someone’s parents/grandparents”).
If the consensus ends up being that we need to put an 18 month hold on all activity and spend trillions of dollars to extend the lives of a few hundred thousand octogenarians, this will be a mistake that resonates for generations.
Also, the current policy being pursued isn’t a simple “spend x, save y lives” trade-off. An extended period of isolation will not only have economic effects (greater poverty, on average, will reduce life expectancy for many), it’ll also result in a higher incidence of mental health issues and suicide. Children will have their educational development severely disrupted. When the calculus on this policy becomes clear, it could be possible that we end up trading many millions of years of aggregate future life to save a million people who’ve already lived very full lives.
Secondly, the fact that governments are not rational. This UK government is beginning to wake up to the fact that it will lose all public support in coming months and is making belated attempts to shore up some public support.
IDK, maybe it's just some of us are willing to sacrifice a bit if it means that people don't get turned away from hospitals because they are no longer "economically productive"?
I, for one, would much rather spend a few weeks/months wondering how long I can go without paying my rent as I have no current income than do something like, say, go invade Iraq for a third time.
It's all about perspective methinks...
To be clear the UK has 29 million workers who make an average of 28k pounds. If 60% of them are off work and can't work from home paying 80% of that wage to 60% of them would appear to cost about 32 billion pounds per month.
The GDP in 2019 was 2.21T pounds. If we had to pay 80% of 60% of the workforce for 6 months this would cost 195B pounds or 9% of the GDP aprox.
This would be about 400k per life saved which is still a lot of money but honestly would you rather the rich have bigger mansions or your fellow vulnerable citizens be alive?
It is deceptive to claim that the only people dying are 80 year olds. Here is a local that just died in my state aged 42.
https://komonews.com/news/coronavirus/breast-cancer-survivor...
I think we are going to see hyperinflation at some point, particularly if this is dragged on for the 18 months necessary for a vaccine.
Why would I go in to work and stack shelves when the Government will just give me money to sit at home? Why would I even go into the hospital to operate a Ventilator?
The point is that the UK (and many other countries) are essentially 100% oriented around COVID-19, to the extent that the entire resources of the country and its people are dedicated or impacted by it.
Lets reiterate the death rates, from Imperial College's own report:
0-9: 1 in 50,000
10-19: 1 in 16,667
20-29: 1 in 3,333
30-39: 1 in 1,250
40-49: 1 in 667
50-59: 1 in 167
60-69: 1 in 45
70-79: 1 in 20
80+: 1 in 11
The above is slightly less than the risk of death from any cause.
How does Climate Change directly kills people now? In its most catastrophic failure in the future, it will. But we still have time to fix it.
Obesity is a Choice. I have never heard of people getting Obesity in third world countries where they dont even have enough food.
Air Pollution may shorten our life spans, but its origin also improves our quality of living and lengthen our life expectancy. So it really is a trade off.
I would even go as far as to say if anyone thinks we should put those money for Climate Change and not to save those elderly will be morally wrong. But that is just my personal opinion.
Preventing climate change is a fantasy. Sont take it from me, watch Bill Gates discuss the topic.
Secondly, yes, 500000 deaths in the short term is much more alarming and destructive than the same in the long term or some time in the future.
Um, no. Firstly, not everything is about rational economics. No sane and functioning democracy is going to allow 500k people to die if it can stop it.
Coronavirus is just the last nail in the coffin - it brings forward the deaths that would have occurred over the next 1-2 years into the present. The panic is irrational.
I do think we would react the same way to any of the other issues if you only the side effects were more 'immediate'. Things like climate change do not impact day to day life currently and especially not in western world. It's just too easy to ignore them right now.
http://m.nautil.us/issue/83/intelligence/the-man-who-saw-the...
I'd beg to differ on that. If the economy was left to crash, the cost of housing and rent could go down, which is the main expense for most households.
What the cash injections are doing is holding these high at all costs, transferring money to those who already have assets. The non owner classes will be poorer than ever, facing ever unaffordable housing with extra taxes to cover the bailout debt.
Instead of this. The government could decide that leases for the tax year 2020-2021 are getting their prices slashed 10% and there would be different consequences on the economy.
It's all largely driven by human decisions. The virus has no say in that.
I'm not sure why you bring up those companies in response to my proposal of managing your own money. But since you mention how purely evil those companies are, last time I checked they were employing real people, working on real products and services, supporting their families and contributing to the economy. I'm not a fan of big corp, bit it's not so black and white.
https://www.imperial.ac.uk/media/imperial-college/medicine/s...
Vaccines in human trials in the US now need to go through a 14 month observation period to understand effectiveness and side effects.
Influenza vaccines, if they are any guide, are only 50-70% effective and need to be renewed annually.
Ask people if they are willing to sacrifice 18 months of their life so that someone with an average age of 79 and existing health complications can live another couple of years and you will start to deal with the problem honestly.
By my calculations for every 1 year of saved life (average age 79) we are paying for it with 10 years of lockdown life (average age 35-40).
Secondly, let's do this mental experiment, let the disease spread - how do you expect society to function, nevermind economy, if ~5 % of the population is dying of pneumonia and 30% are severely ill. I doubt you'll be able to get served as Starbucks.
> The above is slightly less than the risk of death from any cause.
So let's slightly less than double the death rate for anyone that catches this _highly_ contagious disease? Get real mate, come on.
You would do those things because collective survival of organised civilisation depends on it
That measure has been meaningless for a long time now since the central banks manipulate it for whatever goal they are currently trying to achieve.
With the amount of uncertainty in the current economic climate if interest rates were set by the market they would be skyhigh as nobody would risk loaning money.
We pay between 0 and 100 euro per month for health insurance, which covers basically everything with a very low co-pay amount (like 150 euros per year max)
Student loans are also much much lower. We pay 1600 euros per year tuition, the rest is government paid.
So the 40% may sound very high, but if you look at what is included compared to what the middle class in the US spends on student loans and healthcare I think we're not much worse off over here.
Likely depends on the country. It's not in Germany, and 45% is the highest tax bracket which few people will reach, but 43% is very achievable and you'll find plenty of knowledge workers in that bracket as it starts at ~55k €. Add ~20% sales tax, very high taxes on power and fuel etc.
The social net has a very high price, we need to stop prancing around the facts. I still think it's largely worth it (although it does contain very strong moral hazards), but I don't believe in hiding the truth so people don't come to different conclusions.
The US has a low income tax, but then the middle class needs to pay for their own health insurance (at $ 600 a month), disability insurance and pension etc. which means they end up not far different from Europe.
The big difference is at the extremes of the scale, the very poor and the very rich. In the US the poor don't have any health insurance, disability insurance, or pension etc because they cannot afford it. And the very rich in the US are way better off than they would be in Europe, because for them a low income tax greatly outweighs the costs of insurance etc.
In the UK it is known, by government studies, that a huge amount of money that people are entitled to in benefits is never claimed because people either don't know about it or are put off by bureaucratic hurdles. Government officials generally don't draw people's attention to what they are entitled too, and often make mistakes, occasionally fatal (people have starved to death). And some people get what they are entitled to only by appealing bad decisions, with the appeal success rate being rather high.
Right now, especially for people such as those who are self-employed or with complex finances (savings and debt at the same time, etc), proving elegibility to benefits is very difficult, especially if done from scratch when they don't have well organised documentation to hand. (Normally it's a once-a-year thing, to file taxes.)
But the need for urgent finance in the current crisis is the same for everyone without enough cash.
Some self-employed or gig economy people are panicking about affording food right now, and retaining shelter; let alone bills, and that's a terrible situation to suddenly happen, especially to large numbers of people.
What I would advocate for, in a crisis such as this, is helicopter money to everyone at first, and then gradually introduce more nuanced systems that take a bit longer, and give people time to plan for. So that at least nearly everyone can be safe with regards to food and shelter in the short term.
Simplicity first.
That means that when we are able to restart the economy, we start with massive unemployment and with companies which have simply ceased to exist. Much better to just put everything in the deep-freeze and then pull it out, ready to go when we can.
lose support over what exactly? are you foreseeing a scandal of some sorts?
As it is we might be headed towards a yo-yo epidemic. Interesting argument here: https://marginalrevolution.com/marginalrevolution/2020/03/he...
Ps wasn’t sure if you were being sarcastic...
i was generally curios since some polls indicate growing satisfaction with the ruling Conservative party as well as the PM.
to me it seems that most of the world is in "flattening the curve" mode in order to alleviate stress on their health systems. as such this disease will run it's course and i don't think there will be a scandal in the UK as most countries will be either the same or worse-off. but an inquiry? definitely.
You're surely just being deliberately naïve here, playing the naif? I just don't really see the point I guess
I could just as well ask if you're just trying to be clever devil's advocate here.
And some people will make that calculation and figure out a way to officially be unable to work and pick up government money. That's always happened, it's called malingering.
Given a lack of choice how can paying wages make any difference to their employment behavior. I'll repeat: this is not basic income.
> The government will pay the wages of employees unable to work due to the coronavirus pandemic
>And some people will make that calculation and figure out a way to officially be unable to work and pick up government money. That's always happened, it's called malingering.
Wait, you agree this happens, despite just having waxed eloquent about "living in society", but then condescend to everyone who suggests it does? Right, I'm the one wasting everyone's time here...
Edit: it's as if you're talking about a completely different thing to what this actually is: as per the sibling comment, this is a benefit going to people losing their jobs, for reasons they cannot control in any way.