Pete Wargent blogspot
Co-founder & CEO of AllenWargent property advisory, offices in Brisbane (Riverside) & Sydney (Martin Place) - clients include hedge funds, resi funds, & private investors.
4 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.
"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he is one of the better property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.
"Pete Wargent is one of Australia's brightest financial minds - a must-follow for articulate, accurate & in-depth analysis." - David Scutt, Business Insider, leading Australian market analyst.
"I've been investing for over 40 years & read nearly every investment book ever written yet I still learned new concepts in his books. Pete Wargent is one of Australia's finest young financial commentators." - Michael Yardney, Australia's leading property expert, Amazon #1 best-selling author.
"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data and charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, and author of the New York Times bestsellers 'End Game' and 'Code Red'.
"Pete's daily analysis is unputdownable" - Dr. Chris Caton, Chief Economist, BT Financial.
Invest in Sydney/Brisbane property markets, or for media/public speaking requests, email firstname.lastname@example.org
Tuesday, 3 April 2012
"Anyone? Anyone? The Laffer Curve...."
OK, little quiz for you - name the movie:
“…described by George Bush as something ‘-doo’ economics…Anyone? Anyone? Voodoo economics…”
If you love the movie Ferris Bueller’s Day Off as much as I do, then you’ll recognise the quote (the economics teacher is drawling inanely to himself as the class tune out and dream of doing something more interesting).
I think so many of us loved that movie because it represented mine and every schoolchild’s dream: the chance to sack school and all its banalities (such as, indeed, learning about the Laffer curve and voodoo economics) to go and do something they actually care about - like hanging out with your mates in town or by the pool.
Heck, what am I saying, I still felt exactly like that when I was 29 years old and working at Deloitte.
The Laffer curve
Anyways, it gave me a chuckle to see the good ol’ Laffer curve back in the news of late.
The theory drawn up by Laffer (on the back of a napkin, as legend has it) goes something like this:
· - Tax rates at 100% are useless – no-one would bother doing any work as it wouldn’t be worthwhile
· - Tax rates at 0% are useless too – the poor old government would have no revenue, and we can’t be ‘aving that!
· - Thus, the best tax rate is somewhere in-between
Well, I can’t fault the logic! The key, of course, is to work out where the curve’s efficient frontier lies.
This was all obliquely relevant to the UK scrapping its temporary 50% tax rate in the recent budget.
Nowadays, most of us tend to agree that a top bracket of income tax of much under 40% would not be ideal, as the government would soon fail to meet its Medicare (or NHS depending on your jurisdiction) and Social Security liabilities.
Some studies have implied that income tax rates can lurch up to 70% or higher – in the short term at least – before people start voting with their feet and migrating. Though in my view this may well change as world migration becomes more fluid (I wouldn’t work in any country that charged me 70% tax – so I expect plenty of others wouldn’t).
Theoretcially post-war years were supposed to offer us all a “peace dividend” of prosperity and lower taxes (LOL!) whereas in fact, the UK persisted with unbelievably high rates of tax right through until the mid-1970’s (in 1974 - 83% income tax, 98% for unearned income – Sir Paul McCartney for one must have been absolutely livid) before Maggie Thatcher finally wielded the tax-axe.
Of late, though, very few countries have persisted with income tax rates of above 60% (Cameroon, the Democratic Republic of Congo – and one other country that I can’t remember off-hand – a total of just three countries) as it is now generally agreed in progressive capitalist countries that lower tax rates benefit the economy overall.
(Regular readers will know that paying lots of income tax is not something I’m particularly a huge fan of – and I loved the look and feel of Singapore a week or two back…or perhaps a stint in Honkers would be fun…maybe one day).