{"id":1967,"date":"2011-04-15T15:49:32","date_gmt":"2011-04-15T14:49:32","guid":{"rendered":"http:\/\/www.colinmcnulty.com\/blog\/?p=1967"},"modified":"2017-06-09T05:52:32","modified_gmt":"2017-06-09T04:52:32","slug":"should-rich-nations-pay-defining-rich","status":"publish","type":"post","link":"https:\/\/www.colinmcnulty.com\/blog\/2011\/04\/15\/should-rich-nations-pay-defining-rich\/","title":{"rendered":"Should Rich Nations Pay? Defining “Rich”"},"content":{"rendered":"

\"\"<\/a>In Copenhagen at the end of 2009, “rich nations” were slated for back tracking on helping tackle climate change. Now don’t get me wrong, I think climate change is a very important issue, but what got me annoyed, was who defines which nations are “rich”?<\/strong> I live in the UK and it certainly doesn’t feel like us right now.<\/p>\n

Classically nations are ranked by Gross Domestic Product (GDP), which I think it silly<\/strong>, as the government doesn’t get the GDP in it’s pocket, it only gets what it taxes, which is much MUCH less than GDP. Similarly national debt is often quoted as a percentage of GDP, which\u00a0I also think is silly, it should be quoted as percentage of government income too. Let’s look at some numbers (I like numbers!):<\/p>\n\"\"<\/a>\n

This table shows countries ranked by absolute national debt<\/a>. Which puts the US at #1 and the UK at #2 with $14Tn and $9Tn respectively. Now the UK national debt is listed as 398% of GDP, which is pretty bad, but when you compare it to total UK gov’t receipts of around \u00a3550Bn (roughly $900Bn) then we owe 10x our annual income! <\/strong> That’s pretty damn shocking. In fact, if I went to my bank and asked for a loan, and they discovered my over draft was 10x my net income (salary less tax) they’d laugh so hard they’d bust a gut and probably try to call in the loans.<\/p>\n

Let’s quickly look at gov’t spending then. Here are the charts from last year’s budget<\/a> at the end of 13 years of a Labour government:<\/p>\n\"\"<\/a>\n

3 things catch my eye. Firstly receipts (government income) = \u00a3548 but spending = \u00a3697bn, a massive \u00a3149Bn deficit. Or put another way, we are spending 27% more than we earn.<\/p>\n

Secondly, interest payments on national debt are \u00a344Bn, which is 8% of income. Or put this another way, that’s enough to build 49 Wembly stadiums per year<\/strong>! How would you have liked a wembly sized stadium in your local town?<\/p>\n

Thirdly, Income Tax (\u00a3150Bn) + Corporation Tax (\u00a343Bn) = \u00a3193Bn, but spending on Social Protection = \u00a3194bn. So let me get this straight, every penny of personal income tax added to every penny of company tax, still isn’t enough to pay our benefits bill<\/strong> (and that doesn’t even include the much vaunted NHS). No wonder half of Africa is prepared to risk life and limb to make it into this country.<\/p>\n

I don’t know about you but I find all these big numbers are hard to equate to, so let’s make a comparison which can all understand<\/strong>. The average (median) salary in the UK<\/a> is \u00a324,700 which according to this calculator<\/a>, means a take home pay of \u00a31,596 per month.<\/p>\n

So let’s pretend the UK government was bringing in each month what the average person does and see how the debt numbers change:<\/p>\n

Monthly income = \u00a31,596<\/strong>
\nMonthly spend = \u00a32,027<\/strong> (1,596 x 127%)
\nMonthly deficit = \u00a3431<\/strong> (\u00a32,027 – \u00a31,596)
\nMonthly interest on overdraft = \u00a3128 <\/strong>(\u00a31,596 x 8%)
\nCurrent overdraft = \u00a3191,520<\/strong> (\u00a31,596 x 10 x 12 months) !!<\/p>\n

How would you feel if your personal finances looked like that, a take home pay of \u00a31,596 but an overdraft of nearly \u00a3200k that’s getting worse by about \u00a35k per year?!?<\/p>\n

I don’t know about you, but I wouldn’t say we were rich, I’d say we were completely stuffed!<\/strong> This country will be broke within my lifetime. Enjoy your NHS and your pensions whilst you can, they won’t be around for long.<\/p>\n","protected":false},"excerpt":{"rendered":"

In Copenhagen at the end of 2009, “rich nations” were slated for back tracking on helping tackle climate change. Now don’t get me wrong, I think climate change is a very important issue, but what got me annoyed, was who defines which nations are “rich”? I live in the UK and it certainly doesn’t feel […]<\/p>\n","protected":false},"author":161,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[258],"class_list":{"0":"post-1967","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-uncategorized","7":"tag-economics"},"_links":{"self":[{"href":"https:\/\/www.colinmcnulty.com\/blog\/wp-json\/wp\/v2\/posts\/1967","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.colinmcnulty.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.colinmcnulty.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.colinmcnulty.com\/blog\/wp-json\/wp\/v2\/users\/161"}],"replies":[{"embeddable":true,"href":"https:\/\/www.colinmcnulty.com\/blog\/wp-json\/wp\/v2\/comments?post=1967"}],"version-history":[{"count":4,"href":"https:\/\/www.colinmcnulty.com\/blog\/wp-json\/wp\/v2\/posts\/1967\/revisions"}],"predecessor-version":[{"id":3409,"href":"https:\/\/www.colinmcnulty.com\/blog\/wp-json\/wp\/v2\/posts\/1967\/revisions\/3409"}],"wp:attachment":[{"href":"https:\/\/www.colinmcnulty.com\/blog\/wp-json\/wp\/v2\/media?parent=1967"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.colinmcnulty.com\/blog\/wp-json\/wp\/v2\/categories?post=1967"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.colinmcnulty.com\/blog\/wp-json\/wp\/v2\/tags?post=1967"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}