Tax cuts are in the news as Tory party leadership candidates are talking about them as if tax was going out of fashion. It is very apparent that none of them know much about tax, so a thread to discuss some of the issues.

First, because all government spending is, as a matter of fact, funded by government money creation via the Bank of England, which was proved in the quantitative easing eras, the proper role of tax in the economy needs to be understood by these politicians.

That proper role of tax in the macroeconomy - which is what they’re going to be responsible for - is to reduce inflation. Tax cancels government money creation. It takes government-created money resulting from government spending out of circulation.

There is no direct relationship between money creation and inflation. But it’s clear that a government cannot spend without limit with newly created money and not create inflation as a result. So governments tax to reclaim the money that they spend.

This means that there are questions for ministers who want to cut taxes now.

I keep reading that we are going to suffer stagflation in the UK. That’s possible, I agree. I also think it’s unlikely. It’s just as likely that we might face deflation. But what we definitely need is a change of economic policy. A thread….

Stagflation assumes a continuing situation where wage growth exceeds growth in available goods and services on which income can be spent, pulling prices up.

There are some in the UK for whom this wage growth is happening. Let’s call them the wealthy. They can pay all the prices now being demanded for goods that are in short supply and subject to big price increases, from second-hand cars to heating for the swimming pool.

Others are managing price rises by dipping into their savings, which is going to happen a lot over the coming months, and even years. But for many, these savings will run out. This means of maintaining a lifestyle in the face of inflation is only available to some, and is finite.

For a majority of households, with average incomes (or less) and few savings, the current inflation means reduced standards of living. The amount consumed will fall, as is already becoming apparent in GDP figures, and this crisis has hardly begun as yet.

Welcome to 2022: Reasons to be optimistic, a thread.

Due to the length this comes thread in 2 parts.

It is necessarily a personal view, and I'm sure lots of people will disagree.

1. I found myself on 1 Jan feeling more optimistic than I might have expected. This thread sets out why. Some of you who follow me will recognise elements, but this is the first time I have brought them together.

2. Since the referendum in 2016, many of us have lived with a sense of loss. It has been clear from immediately after the referendum that the policy of the Tory govt, starting with Theresa May, has been to crush opposition rather than open a dialogue to seek unity.

3. Those who voted to remain were to be cast as “out of touch” with public mood, and if they continued to hold to their beliefs, "nutty" and “Anti-democratic”. I have reason to believe this was a deliberate policy decision taken at the highest level in the Tory party.

4. The policy was adopted because the outcome of the referendum was so close it was questionable whether it could be a sound basis for a massive constitutional change. If opposition continued, or grew, it would become a serious threat.

With @DavidGHFrost, for @BorisJohnson, tweeting 1 am threats at Ireland’s government … what’s up?

“Ever bought a fake picture?” Smiley asks Esterhase, in Tinker, Tailor, Soldier, Spy. “The more you pay for it the less inclined you are to doubt it”.

A (very long)🧵/1.

[The following is based on articles written earlier this year, updated - see “notes” tweet at the end]

When future archaeologists pick over the carbonised remains of the Johnson era, they will find many blackened cans kicked down to the ends of multiple Brexit byways. /2.

By a prime minister & cabinet trapped within the irresolvable contradictions of their core policy. Much of what the dig turns up will relate to Ireland/ Northern Ireland. Not incidental to Brexit, but central. /3.

The historians will marvel at how that led to Boris Johnson, David Frost & their Brexit becoming toast. If they’re not too busy picking over the charred debris of England & the UK which, the way things are developing, are likely to be long gone as political concepts. /4.

But, back in 2021, you might be thinking: if only they had listened, we wouldn’t be in this mess. The Irish trilemma was explained time & again, before the EU referendum & after. /5.

What are the rules about flying in another nation’s airspace, intercepting airliners, and general good behaviour in the sky.

A thread 👇

The principles of international air travel were agreed at the 1944 Chicago Convention. WW2 had revolutionised aircraft development and forward-thinking people realised that the rules needed to catch up to accommodate airline travel after the war.

Delegates from 54 countries attended (at considerable personal risk for some) to thrash out a treaty. They had to balance national sovereignty against the co-operation needed for this new means of rapid global transport to work.

Germany, Italy and Japan were not invited (it was 1944) but signed afterwards along with pretty much everyone else. There are now 193 members of ICAO (the body Chicago established) including

Article 1 of the Convention recognises that states have sovereignty over the airspace above them (although the development of another new technology: space means the rules need to catch up again and agree an upper limit).

Rereading Asad Haider's Mistaken Identity recently, I was struck by this bit: "single-issue political frameworks ... end up centering the most privileged members of a group, marginalizing those whose identities exposed them to other forms of subordination."

It articulated something I personally have been trying to for a while now: that Jewish people to whom the single defining issue of 2019 was Labour antisemitism were not people who really *needed* a Labour government, whose life depended on an end to Tory rule.

A number of Jewish people I know – Jews living in poverty, Jews of colour – were concerned by what was happening in Labour. But quite simply, they couldn't guarantee their survival under the Tories. There was no question of who had their vote in a 2-horse race.

These people were appalled that Labour AS, serious as it was, was seen as sufficient reason to elect a party that, to them, was unspeakably worse. But it's hardly surprising: for the Jewish people advocating for "anyone but Labour", life under the Tories isn't much different.

Reading Haider, it becomes clear to me that those for whom antisemitism was the make-or-break issue at an election that took place after Grenfell, years of a hostile environment, a decade of austerity, probably did not personally have much to lose.

Welcome to 'Wealth Inequality Across the Globe' With Professor Li Chunling, Professor Louis Chauvel, Sventlana Mareeva, Professor Celi Scalon, Professor Kwang-Yeong Shin and @MikeSav47032563

The theme today is to understand how we respond to the challenge of intense inequality in many parts of the world. Today we have a group of sociologists who want to respond to the challenge economists have laid down. @MikeSav47032563

Professor Louis Chauvel lays out the debate. Why is wealth crucial now? Compared to income there is no middle class of wealth, you have simply a mass of people with no wealth or negative wealth.

Professor Louis Chauvel: In France you would need 123 years of accumulated average income to reach the wealth of the top 1%. This is a problem for the middle class, but it is even worse for the working class

The need for multi-thematic international comparisons: Today is an opportunity to discuss wealth inequality across the globe.

Delighted to publish @thebfpg’s 2021 public opinion report – the most comprehensive survey undertaken on UK views on foreign policy. It's also a study that reveals so much about the UK’s social fabric & political landscape.

Some highlights... (thread)

1. International identities such as global citizenship, patriotism, being ‘European’ are fiercely contested & closely correlated with domestic political identities. They also cleave onto 'national' identities like self-identifying as English or British.

2. Trust in the UK Government to make foreign policy decisions in line with citizens’ interests has fallen in the past year, as the ups and downs of the pandemic inject much dynamism into public opinion.

3. The raft of new voters secured by the Conservative Party since the Referendum are shifting its centre of gravity towards favouring a more isolationist, security-conscious foreign policy - not always aligned with the approach the Government is pursuing with Global Britain.

4. While more internationalist overall, Labour’s coalition remains extremely divided on foreign policy issues, and its voters are anxious about the impacts of trade – largely seen as a component of the Global Britain project, which they do not feel they have a stake in.

Tons of respect to you @BDHerzinger, love your work, but your arguments in @LowyInstitute's Interpreter on why US needs to support transfer of sovereignty of #DiegoGarcia are both misguided & dangerous. Here's why:

1. Sovereignty: It's not our place to say it. US policy is NOT to take positions on sovereignty and for good reason. A great many allies have competing and counter-competing sovereignty claims. Extremely dangerous to take sides vis a vis our allies over sovereignty issues.

Doing so would cause a political crisis w a FVEY and @NATO ally. Our forces there do not alter this. We cannot make judgements on sovereignty based on the presence of US forces. Doing so would undermine our reliability with a great many relationships where US forces are present.

If the UK were itself to lead on this, then the US could certainly make its views known or take a position, but that is not the current UK position, so we must not / cannot do anything that could be construed as undermining an ally's sovereignty.

2. Legality The UK has stated - and with good reason - that an Advisory Opinion is advice provided to the UN General Assembly at its request; it is not a legally binding judgment. And there are many issues with Mauritius' own claims:

The Grand Duchy of Luxembourg is a founding member of the EU, but it's also a rogue state, enabling massive corruption throughout the trading bloc; while Cyprus and Malta will sell any corrupt robber-baron EU citizenship, it's Luxembourg that leads in laundering their money.

1/

As the @TaxJusticeNet's @nickshaxson memorably put it, Luxembourg is "a criminal enterprise with a country attached" - a country where corporations are guaranteed "an easy ride on taxes, disclosure, financial regulations, and criminal

2014's #Luxleaks exposed some of the worst corruption, whereby @PwC worked with Luxembourg officials to secure illegal tax benefits for major corporations and the world's richest

Luxleaks lead to a 2018 EU directive that required member states to publish registers of the true owners of the companies they registered.

4/

Luxembourg published theirs in 2019, and @lemondefr partnered with ten media orgs for a year-long analysis of the register, which was published this week: #Openlux. The findings reveal that Luxleaks was just the tip of the