Concerning Fiscal Conservativism and Keynesian, and European Integration

My friend wrote as follows (shown in Italic letters):
I'd introduce a massive, wholesae Keynesian policy, of state spending to invest in infrastructural development and to uphold demand across manufacturing and industry. Then, utilise the subsequent growth to pay down the subsequent high debt levels.

Coalition is monetarist and fiscall conservative, thus I disagree. Labour aren't real Keynesians, they just want to spend money haphazardly all over the place - thus they are even more dangerously irresponsible than the coalition. Labours non-economics would merely result in protecting vested interests.



(My comment)
Although I quote a lot of Keynesian analysis, I am monetary and fiscal conservative. There is an example: One of the reason why I say is that I often refer to the "liquidity trap" mentioned by Keynesian analysis to reject the "hypowered money" mentioned by the one type of monetarists.

By the way, your theory faces on the contradiction:
(1) You support liberal economism,
(2) you support Keynesian policy,
(3) you support the European Monetary and Fiscal integration,
(4) you support the Federalism in the European Union level
(5) then you support Human right in the European Unionism

Then, (4)+(3)+(2) contradicts (1),
although (2) or (2) + (3) itself does not necessarily contradicts (1) if it is in a smaller scale.

If I were supporting your policy, I would add

(6) Abolition or minimisation of trade unions in the EU (at least to the US level), and setting minimum wage at the level of the most deprived EU member country.

and

(7) strong Fascist social policy intervention to enforce to replace the national governments with the branch local authorities of the European Federal government and to eliminate the enermies and the social defectors who disrupt the smooth European integration under the federal rule.

But if you add all up from (1) to (7), you MUST subtract (5) to accomplish all the rests.

If German 3rd empire had conquelled the whole Europe, the true and stable united Europe would have been established.

The current speed of the both economic and social European integration is too slow and too unstable!

At least, Britain should keep away from the wave of this danger...

Currently, both the EU and the USA are against the free market principle

In terms of microeconomic point of view, the common currency is beneficial to trade between companies across the border.

Nonetheless, the common currency does not imply the free market. The beneficiality of introducing a common currency in the EU is that the trade frequency between countries in the EU is significantly higher than the USA. However, the labour mobility rate between countries in the EU is significantly lower than the US counterpart.

It is not fully proven yet whether a common currency leads the economy to have a high trade frequency and the labour mobility across the border or these factors require introducing a common currency.

If the statement "Free market demands common currency" is valid, it should be that both the trade frequency and the labour mobility have been high before a common currency is introduced, and then a common currency should be introduced afterward. However, if the reason to introduce the common currency is to "expect" the trade frequency and the labour mobility to become high after introducing the currency, the aspect does not fulfill the natural mechanism of the free market. Under the free market, needs induce the supply; expectations are not necessarily relevant to induce the supply.

Under the current European situation, although the aggregate level of trade frequency across the border is high there are a few countries which do not fulfill the condition such as Ireland and Greece. Furthermore, there is a huge barrier of introducing a common currency under the free market principle which is the labour mobility. If the EU situation is that the free market demands the Euro, the labour mobilty should have been much higher than what the EU has got.



All in all, I would like to strongly put emphasis on the statement that both the EU and the USA do not hold their own single currency used among their own states or countries inside them due to the free-marketism.

For example, as a matter of fact, the USA should abandon the single currency system and her federal government interaction into her market if she wants a free market! The US market has a significantly lower trade frequency across the borders between her countries than the EU and Asian economic regions. The current US situation craves for the strong federal planned economic intervention in order to stick these individual states with being the United States of America!!



In order to accomplish to estabilish a free market system, abolition of nation states is necessary in order to allow all individual regions to become free from any planned economic intevention. Overall, nationalism and unionism never go well together with a free market! "Anarch-Capitalism" is only the answer to support free market!!

Land tax is both fair and progressive

Income tax is progressive i.e. an effective tax collecting method if we consider about the marginal propensity to consume and save.

But, it has a high risk to disturb "equity" (synonym of fairness).
It discourages the wealth accumulation by hard working and penalises those who bring an income and/or a talent into that economic region.

The most effective tax is on "land"! Land is a common good and its externality such as pollution and over-population is high contiguous to the others.

Furthermore, land based tax is effective to control the business cycle more than income tax.

Income earners may earn their income in a particular region and spend and invest it in outside this region. Therefore, the effect of income tax is contigent to areas which are not accountable to controlling a business cycle of a particular region.

In addition, the means of production of income is a combination their working effort and a reward from investment. Income tax simply means to penalise working effort and investment. Therefore, income tax has a risk to stagnate the economic productivity.

By contrast, if some one uses a land, it simply means s/he utilises the value of this land. People can utilise to live in a household on it, earn income in the firm on it, and invest into a property on it. These activities also contain working effort and beneficiality of investment. However, unlike income tax, people utilise land to do these activities. These activities can cause pollution, over-population, and business cycle overhear or slump. Furthermore, the means of land tax is hardly contiguous because it directly burdens taxes on the land where the economic activity is derived from. All in all, the land tax accounts on the "equity" of utlising and costing it. Thus, it fulfils the condition of "equity" i.e. fairness.

In addition, land tax can be not only fair but also progressive. High income earners are more able to buy and keep the land with a high value and/or high costs than the rest. Then, land tax is able to tax in proportion to the marginal propensity to saving (In terms of the absolute income hypothesis, consumption of permanent items such as households and lands and investment are considered as a part of saving).












P.S.
I support abolition of taxes on consumption such as sales tax and VAT.

As long as the price elasticity of demand is low, it is a fair indirect taxation because individuals pay as they use.
It is regressive but fairer than the inflation tax (High inflation)

Nonetheless, tax on consumption stagnates economic active level because it harms not only on consumers but also producers. If the price elastiicity of demand is high, then the penalty on producers is much higher than on consumers. Therefore, it is NOT FAIR because it pernalises those who increase the sum of utility among individuals!

Tax on consumption is highly contiguous to those who are not accountable to pay the tax. As we know this tax is not able to control over business cycle and burdens those from outside the economic regions where this taxation exists. Therefore, it disturbs the business cycle and causes moral hazard of taxation (Those who are not responsible for the tax also pay tax!).

Corporations which have a high volume of export gain a high volume of tax rebate. This fact discourages small businesses, creates a barrier for new firms to get into the market, and reduces the internal aggregate demand.

"There is no such a thing like society" because "Human-beings are naturally social"

THERE IS NO SUCH A THING LIKE SOCIETY!!

We'd definitely better say "community" or "institution" if you want to mention the macro environment where a cohort of individuals gathers into.

Human-being is social itself. There is no such a superstitious thing called society! Therefore, human-beings are social each other, so any institute such as a state or a corporation does not need to concern about the empty meaningless superstition called society!

If any instiute enforces individuals to be social by following their vision of sociality, it fails into the oppressive totalitarian serfdom which transforms majority of individual human-beings to beasts!

Only the best alternative policy is to leave individuals and their family alone to allow them naturally social themselves. All in all, the sociability of individuals is not a business of any institute and community!




Oh, I must note that I despise Burkean philosophy so much!
Burke said the tradition is a fundamental guidance of how human-beings should live. I know Burkean theory remains some freedom and liberty, but the idea of common sense guided by tradition is a burden on progress and liberty.

Although human-beings are social, but not capable to define what is a true natural law. Aristotle did not much mention about the tradition although Aristotle is a natural law theorist. Aristotle mentioned the natural law is invisible and difficult to define. Even some academic commentators claimed that although Aristotle said virture is a significant factor of human-beings he has never indicated virture as a moral objective.

By contrast, Burke seemed to insist that virture is an objective and derived from the tradition. But, using tradition as a moral guide line is a dangerous idea. As Bentham said the moral guide line should exist for the future not the past. Tradition, i.e. the past experience, might have been functional in the past, but never 100% significantly functional in the future. This guide line is not able to the existence level and the future optimum level of the pleasure and the pain for individuals. We are able to regress some past data sets and experiences to construct our future plan, but there is always an error in them! The errors derived from psychological senses and indoctrinating moral entreneurs should be omitted by civil action and people's party!

All in all, I declair to say that I am strongly against the statement "Society is the only true state of nature, and reason is to be conducted within tradition". Only the thing whose reason is to be conducted within tradition is a mal-functional guidance of miss-used moral entrepreneurship. It is waste of time to define society as there is no such a thing like society: There are only individuals and their family...!

Tackling on criminal acts with the utilitarian philosophy

In terms of my consequentialist point of view, the legislation system should have provided the incentive which prevents individuals to commit a crime serious act. If there is a criminal act, there is often a derivative branch of the mischief of a criminal act. There is a raison d'etre of a criminal act. In order to decline the number and the quality of criminal acts, the priority is to tackle on the "cause" of crime.

We certainly need a negative sanction (i.e. punishment!!) which is measured owing to the equivalent pain to the pain a victim suffers from. "Mouth to mouth and teath to teach" method sounds uncivil but is certainly necessary and works for preventing some criminal acts. Some severe crimes tend not to decrease by this method according to the statitstics. But the system still need to remain this method in order to equate the pleasure and the pain of both sides. In order to decrease these severe crimes, which are not significantly correlated with the level of punishment, we need to tackle on the "derivative branch" of the mischief of these acts!

Some criminal acts need to be legal or decriminalised such as usage of some recreational drungs (in philosophy of law, it's called some categories of self-intoxication), ganbling, doing and buying prostitution because these acts bring pleasure and are possible to prevent the pain derived from these act by installing a proper legislation. Or, we need to provide individuals the "substitutions" of these goods and services like what Islamic society does.

The severe criminal acts such as murdering, hatred, conspiracy, and organised crime, need a severe punishment by either a public institution or individuals themselves. But, in order to reduce the cost and the derivative branch of the hatred, we need to tackle on the derivative branch of the mischief of the criminal acts...!

Britain, outside the Eurozone, should not lend money to Ireland

Britain doesn't have any accountability to this Irish failure 'cos Britain is not a part of the EMU!

Unless either Ireland leaves the EMU or the Eurozone decided to Federalise itself (i.e. replace the national debts with the ECB bond, and replace the unstable fragmented fiscal policies with a stable common treasury) , investing Ireland contains a high risk premium!

Lending money to individuals with a high risk premium requires charging a high interest rate enough to cover the risk premium because the lender should not make a fatal loss on a budget, which causes the lending country to fall in to another recession.

A relatively well-off country shouldn't be penalised save a country with an insoluble trouble! The current policy will knockdown both the relatively well-off countries, such as Germany and Britain, and the countries under the crisis!



It's highly dangerous to lend money to those which have a high risk premium!

I would have agreed with you if Ireland weren't in the Eurozone.
Under her crisis, the common currency system is a fundamental cause, so the Eurozone countries are much more responsible on her crisis than Great Britain.

The reason why Germany could lend money to Ireland was that the stimulus to Ireland, the same organ of the common currency system, also stimulate the value of Euro, so it is beneficial to Germany in a long term. The value of Euro is influenced by the value of all a whole set of Eurozone countries.

However, the stimulus by Britain, who is in outside the Eurozone, won't encourage Irish economy, the tiny part of the Eurozone. If Ireland had kept her own monetary policy, British stimulus to Ireland causes to the appreciation of Irish economy, therefore it would have induced the healthy inflation which reduces the net present value of the money borrowed at the time Ireland borrowed. Therefore, the motivation to invest into capital in Ireland will be encouraged 'cos of the expected inflation.

On the contrary to this function, the current system doesn't enable Ireland to reduce the net present value of the money borrowed unless the entire Eurozone economy is stimulated. Although the British stimulus to Ireland may boost her economy in a very short run, because the velocity of money invested will be very low or even zero, Irish economy won't be stimulated enough to recover from the recession due to the low inflation expectation.

All in all, the responsibility of Irish economy is based on the accountability of the entire Eurozone. British investment to Irish economy will simply be a waste of money unless Britain charges a high interest rate.


... Politicians tend to lose the perspectives from a financial and economic analyst. If we lend money, all the factors have to be put into a calculus! We must not forget about the dynamic impacts of Financial Engineering on an international public sector economy! The simulation taking the inflation expectation, impact of the monetary union, and risk premium into consideration must be run! It's dangerous to rely on the Pro-Europeanist transcendentalism any more! Realistic financial aspects based on the cost and benefit analysis should be taken into the consideration well!