Thursday, February 23, 2012

Liam Fox On Britain

By MP Liam Fox via Tyler Cowen:

Despite a 25 per cent devaluation of sterling, UK exports to Asia in the last three years have grown at a slower rate than those from Greece and Spain. In 2011, per capita gross domestic product in Ireland was greater than that in the UK. Meanwhile, the role of the state in the UK economy has grown and taxes have risen.

…More generally, individual risk and effort is not rewarded when the UK government share of GDP has risen from 38 per cent in 1999 to 51 per cent in 2011, the effective top rate of tax is over 50 per cent, and CPI inflation for the last five years has averaged 3.5 per cent.

That part about Ireland is however misleading since a large part of Ireland's GDP is basically accounting fiction as multinational firms through misleading internal pricing attribute profits to Ireland to benefit from Ireland's low corporate income tax.

As for his claim about British exports doing worse than that of Greece and Portugal he is right-and wrong. Between January-November of 2007 and 2011, British exports rose by 5% while Portuguese exports rose 12% but Greek exports fell by 9%.

The rest of the facts are however correct.


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