Economic Growth

In a Highly Constrained
Environment.

New Techniques and Alternative Governmental

Dynamics to Enable Economic Growth.

By
Peter James Rhys Morgan

i|Page
 Declarations.

Contains Parliamentary information licensed under the

Open Parliament Licence v3.0.

Open Parliament Licence URL:

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parliament/open-parliament-licence/

Contains public sector information licensed under the

Open Government Licence v3.0.

Open Government Licence URL:

https://www.nationalarchives.gov.uk/doc/open-government-
licence/version/3/

ii | P a g e
 All rights reserved. No part of this book may be
reproduced, stored in a retrieval system or transmitted in
any form or by any means, without the prior written
permission of the author, except in the case of brief
quotations embodied in critical articles or reviews.

Published in June 2019 by Morganist Economics.

Revised in October 2023.

ISBN 978-1-5136-5076-0

Blog: morganisteconomics.blogspot.com

Copyright © 2019 Peter James Rhys Morgan.

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 What is Morganist Economics?

Morganist Economics is a progressive school of economic

thought. Most of the current mainstream schools of
economic thought tend to concentrate on the size of
government, with an emphasis on whether to stimulate the
economy during a downturn or not. Morganist Economics
puts the emphasis on developing the tools used to control or
manage the economy in a more effective less costly way.

An example of this would be a Keynesian would argue to

stimulate the economy during an economic slump, a
Monetarist would argue that the economy should not be
stimulated and that the interest rate should be used to hit an
inflation target. Whereas a Morganist would question
whether the tools or mechanisms used to achieve either
objective is beneficial to the long term economy.

Morganist Economics therefore puts innovation and the

concept of the requirement of perpetual change, as the
centrepiece of its thinking. As society alters through time
the needs of the economy will also change so new tools and
mechanisms have to be introduced to allow for the
progression of social needs.

This has led to the creation of new aggregate demand

controls, a new banking system and a new taxation system
among other things, which are aimed at being able to
deliver a pragmatic economic system that can deal with the
new demands of a flexible society.

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By looking at economics through a different view point and
by developing these original ideas it has led to a new
perspective on the failings of the current economic,
banking and financial systems, which highlights the recent
problems in a way other economists have failed to see.

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 Table of Contents.

Preface. 1.

Chapter One. Economic Growth 3.

What is Economic Growth? 5.

Why Aim for Economic Growth? 7.

Chapter Two. Governmental Commerce. 9.

Reinvention and Innovation. 11.

New Product Advancement. 13.

Using Governmental Powers to Enable New Enterprise. 17.

Generating an Income from Government Supported

Commercialized Innovation. 21.

Chapter Three. International Market Commercialization. 25.

If a Cycle of Debt and Low Demand is Prohibiting Economic

Expansion. 27.

Trade is better than tax! 31.

Is The British Government Open For Business? 35.

Letter to UK Government Ministers. 39.

Chapter Four. Occupational and Taxation Efficiencies. 43.

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Is It Time for a New Classification for Employment? 45.

Two Personal Allowances for Two Forms of Employment. 49.

The Taxation Flip Trick. 51.

Taxation Grace. 55.

Chapter Five. Supplementary Income. 59.

More Work, More Reward. 61.

Supplementary Income Co-operative. 65.

Rather Than Another Interest Rate Rise. 69.

"SASI" Cost Efficiencies. 73.

An Answer to Pay Disputes. 77.

Chapter Six. Pension Saving and Economic Growth. 79.

Pension Pumping. 81.

Pension - Annual Contribution Freeze. 85.

Optimal Pension Saving. 89.

Pension Early Release - A Macroeconomic Tool. 93.

Bibliography. 97.

Other Books by the Author. 103.

viii | P a g e
 Preface.

This book has been produced to put forward original

solutions to the currently highly constrained economic
model. Economic growth appears to be the best method of
dealing with repaying the high outstanding governmental
debt.

Governmental spending cuts seem unrealistic due to

political pressure and protective statutory provisions, which
would make it difficult to pass legislation on public
spending reductions through the lower and higher houses of
parliament.

Economic growth offers a second opportunity to avoid

governmental spending cuts through outgrowing the
national debt, as GDP rises above spending the national
debt will fall as a percentage rate of GDP and decline on a
relative level.

The difficulty derives from attaining economic growth,

usually interest rates are lowered or taxation is reduced.
However, these methods have become increasingly
obstructed from the over expansion of the private and
public sector debt markets.

Alternative techniques to enable economic growth are put

forward in this book. Internationally Commercialized
Innovation (ICI) and Supplementary Income (the “SASI”),
the “Echo” Economy, seem to be the most appropriate new
options.

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2|Page
 Chapter One.

Economic Growth.

This chapter explains the concept of economic growth and

why it is required. The definition of economic growth is
explored and then evaluated to describe the conflicting
opinions of how it should be measured and viewed.

The structure of the financial system necessitates perpetual

growth annually. The need to increase the size of failing
economies in many countries around the world to repay the
increasingly high public and private sector debts is stressed.

Increases in output, the production of goods and services,

can be made to attain economic growth and used to control
inflation helping to maintain the currency value of a nation,
which will encourage international trade and investment.

This chapter provides a basic background for the need of

economic growth, which should remedy many problems
experienced in modern economies. It supports the later
articles in this book, which put forward new growth tactics.

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4|Page
 What is Economic Growth?

Economic growth is the increase in the production of goods

and services within an economy from one period of time to
another. The quantified measurement of economic
production is called Gross Domestic Product (GDP) or
Gross National Product (GNP) also referred to as
Aggregate Demand or Aggregate Expenditure. Most
economic output figures are measured in “Real” terms,
when the effects of inflation are removed, meaning they are
inflation adjusted.

GDP is calculated by the following formula (C + I + G +

NX), Consumer Consumption + Investment + Government
Spending + Net Exports (Exports - Imports) (Investopedia,
2018). Although this is only one method of measuring
economic production using a quantitative model. Other
economic growth models include the Harrod-Domar
growth model, the Solow growth model and the Solow-
Swan growth model, which represent other factors that
impact overall productivity (Economicsdiscussion, 2019).

The calculation to measure GDP economic growth from

one year to another is to subtract the GDP (I) for the initial
year from the GDP (F) for the final year, then divide it by
the GDP (I) for the initial year ((GDP F - GDP I) / GDP I)
(multiply by 100 for percentage) (Investopedia, 2018). If
the figure is below zero there is negative growth in the
economy. The calculation can then be inflation adjusted to
show the “Real” terms economic growth figure, once the
increase in the price of goods has been taken into account.

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 Why Aim for Economic Growth?

To pay off high public and private sector debts.

Tremendous public and private sector debts require annual

monetary expansion to enable repayment, due to lending
calculations being based on principal investment. There has
to be sufficient money in circulation within an economy to
enable the expanding debts, which grow with compounding
interest, to be repaid, this requires perpetual annual
economic growth.

To outgrow national debt.

If economic growth exceeds the rate at which public and

private sector debt rises the relative ratio of national debt
declines in relation to GDP. Outgrowing debt reduces the
debt as a percentage of GDP, for example public sector
debt has fallen to 80% of GDP from 90% of GDP, which is
a sign of economic improvement and achievable without
increasing debt repayment.

To control inflation.

Supply side growth, when more goods and services are

produced, should reduce inflation, if the growth in goods
and services exceeds the growth in the rate of spending
during the same period. The relative increase in output to
spending rates should close the inflationary gap. Another
explanation is, if more goods and services enter the market
aggregate prices should fall.

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To maintain currency strength and international trade.

Economic growth should strengthen the currency and make

trade with other countries easier. If the currency is
strengthened by economic growth it will transform the
currency into an investment in its own right, making the
country attractive to foreign investment. This should secure
long term trade deals with other nations and encourage
desirable external investment.

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 Chapter Two.

Governmental Commerce.

This chapter provides suggestions of how governments can

enter into commercial operations, in an effort to expand
their income sources. New product development is strongly
advised to encourage the generation of creative markets.

The process of new product development, in itself, is

explored taking advantage of the methods of enabling new
inventions, which are marketable in their own right.
Optimizing the benefits of original innovation and design.

Expanding the law to legitimize manufacturing techniques

and the production of merchandise that make new markets,
is seen as a key factor. The limited availability of resources
and legally required efficiencies provide a target market.

Income generation and project commercialization are

evaluated to put forward suggestions of how to receive a
return. Licensing, subscriptions, commissions and
commercial contracts are the techniques recommended.

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Reinvention and Innovation Are Key for Economic
Recovery.

I had this published at the Huffington Post on 01/04/2015

20:00 (Morgan, 2015).

As time goes by technology improves with the intention of

providing better product performance and function or the
same product performance and function at a lower price.
Everyday products like the plughole, the light bulb and
even the carrier bag need updates and upgrades. The
existing market for everyday products is vast and perpetual.

Penetration of this market is fairly simple, come up with a

good redesign idea that will make the product perform or
function better, or a way to manufacture the original
product cheaper, and then patent it. The existing market
will buy the new product if it functions better, or is
available at a lower cost assuming function is equal, in
place of the original product.

This form of “Old Product Development” that maintains an

existing consumer market could turn an economy around,
especially if innovation and new technology is added to the
mix. By patenting new materials further improvement
could be given to the product, which would make it
attractive to the existing consumer market.

For example a new material which prevents rain leaving a

stain on windows, or a new metal alloy which illuminates a
filament in a light bulb for longer before burning out, could

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offer an increased utility value to the product that
consumers will be interested in obtaining. As long as the
price is competitive with the previously available products
the market is there.

If there is an existing enterprise that manufactures a

product which meets the needs of the “Old Product”
market, they might be willing to buy out the patent of a
redesign or innovation idea to prevent the threat of
competition. The new idea or innovation will not go into
production but the designer or innovator will gain funds for
future projects.

The obstacle in the way of this approach to economic turn-

around is the cost and enforcement of patents. This may not
be available to individuals who come up with redesigns and
innovations. If the government was to set up a patent
funding and support scheme it could reform the country's
economic turmoil.

The government could also benefit on a financial level, not

just an economic level, by agreeing on terms where they
receive a percentage of any profits made by paying for
patents. Alternatively they could agree with the
entrepreneur to maintain tax nationality with the UK and
not attempt to get around tax policy in exchange for
funding the project.

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 “New Product Advancement”. New product
developments deliver more than just products -
They are innovation and advancement projects too
(Morgan, 2018)!

New product development doesn't just deliver a new

product it provides new advancements, innovations and
designs too. Investment in advancements of technology and
infrastructure will provide upgrades of the existing
products and services. The product in itself is only part of
the gain the advancements in design, function and
technology are marketable too.

New patents in design, function and manufacturing

processes can be developed to bring in an additional
income to the sale of the initial product. Manufacturers may
also benefit from new production processes and
technologies, that could increase output and reduce the cost
of construction operations. The quality, look and function
of products may also improve.

A new product provides upgrades, a new market for state of

the art goods, new designs, new functions and new
manufacturing processes and techniques. The overall
income from the project has many streams expanding into
many markets. The benefits received from the
advancements used to get the product to market are
significant and can lead to efficiencies.

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Using existing products will not generate new designs or
functions you only get what the existing product can give
you. Although new materials or new manufacturing
methods could be used to improve the existing product,
new product development is needed to provide them. New
products make modern advancements all products can
benefit from, old products do not.

An old product's overall gain and income stream is limited

in comparison to a new product's, which is vast. Old
products do not make new markets and advancements. The
improvements and efficiencies they provided have already
been introduced and implemented into the manufacturing
process. Any cost efficiencies received will have already
been utilised.

By developing new products instead of using the existing

products in the market it would be possible to maximise
income sources and in turn increase profits. This does
happen naturally in the free market. However in the UK the
government is half the size of the economy. If the British
government developed new products it could maximise
profits and cut the deficit.

The new products and services developed in the UK could

be sold or licensed for use in other countries. The British
government could make money and efficiencies would be
seen around the world. Expansion of trade with other
nations should also improve international relations and
stabilise global interests. Britain needs to be a leader in
“New Product Advancement”.

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In my previous article, “Reinvention and Innovation Are
Key for Economic Recovery”. I suggested the British
government should set up a patent scheme with the free
market. It may be worth starting a governmental new
product advancement programme, perhaps by updating
their operations, to generate income to turn the British
government into a going concern.

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 Using Governmental Powers to Enable New
Enterprise (Morgan, 2018).

Governments set the standard of legal functions and control

on many different stages. There are various courts on a
regional, national and international level, which hold
authoritative powers to legalise or prohibit business
activities. This control can be used to prevent
environmental or criminal damage and to limit resource
usage. It can also be used to enable new business
developments and enterprises, which will help to expand
economic growth.

Although there are many political movements aiming to

limit resource usage preventing easing laws, it is possible to
restructure the legal and regulatory framework to enable
new innovations that provide efficiencies allowing more
effective use of the resources available. The government
can remove the obstacle or build the framework needed to
enable these new innovations and efficiencies through
Authorisation, Legislation, Regulation and Authenticity.

Authorisation, the enablement of a function or process to

operate generating a revenue stream for business entities.
This may take the form of simply allowing certain
developments and projects or more progressively providing
the framework and legality of new innovations. For a new
business to become successful it must first be legally
compliant to prevent misuse or improper conduct, which

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could be harmful to the economy or society, so approval is
needed.

Legislation, changes in statute law on either a national or

international level effectively introducing or repealing legal
Acts to enable or prohibit specific business activities or
operations. Taking away legal limitations can help an
economy grow, but could cause friction and hold
consequences. Introducing new laws may enable new
innovations to develop into industries, for example
legislation for online commerce allowed internet trade and
ingenuity.

Regulation, the introduction of an organisation or body

which has legal powers to enable or prohibit business
operations. New regulatory bodies can be set up to enable
advances in technology and innovations, pioneering new
businesses or even whole new industries on a national or
international level. Regulation offers ways to generate an
income for governments by commercialising the
enablement of new products for domestic and international
markets.

Authenticity, the power of qualifying or disqualifying an

individual, group, business or product from being in a
genuine position of authority, ability or legal use to perform
an action, service or trade. This enables governments to
license various activities and allows national and
international commerce. If allowed, the selection of
particular agents to perform certain actions will provide an
income stream for the government by charging
commissions.

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By providing the appropriate legal ability to pioneer new
businesses and new innovations governments can both
generate further economic growth and acquire a new direct
revenue source. Economic growth will bring in greater
taxation revenue and commercialisation of shared user
rights will provide governmental business operation
income. The emphasis is to develop new regulatory bodies
for new innovations and industries to sell internationally.

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 Generating an Income from Government
Supported Commercialized Innovation (Morgan,
2018).

Taking advantage of progression and improvements that

develop over time can help to reengineer society and
provide economic prosperity. There is an opportunity to
generate income when new innovations and advancements
are introduced to the market. If the government is part of
this process through developing, distributing, funding or
enabling these new products and services it can receive a
direct source of revenue from the proceeds.

By encouraging efficiencies, updates, upgrades and even

inventing new products or offering new services and
helping them to enter the market place, the government can
share in the royalties or commissions earned. Working with
entrepreneurs and pioneers of industry with the intention of
penetrating the domestic and international markets will
provide persistent macroeconomic stability and vary
government income streams, expanding diversification.

Currently most governmental income is generated from

taxation of the domestic economy or from public sector
debt. By looking outside of the national economy it is
possible to generate another source of financing the
government. International trade will allow a second income
stream, which can compensate for the downturn periods of
the domestic economic cycle. This is made achievable

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through licensing, subscriptions, commissions and
commercial contracts.

Licensing, the granting or allowance to an agent of a right

to use a tool or product to perform a function or service in
agreement to make a royalty payment from income derived
from the proceeds of the enabled business operation, the
government's income is obtained through its involvement in
the allowance or introduction of the product or service into
the market. New advancements and technologies offer a
great opportunity for international product licensing.

Subscriptions, an advanced payment for the right to use or

receive a product or service usually made on a monthly or
annual basis, can be offered to generate an income for the
right to use updates or upgraded versions of governmental
processes or services. This can be taken advantage of by
developing new software, calculations and processes. For
example the taxation system or the legal system can be
modified regularly and subscribed to from abroad.

Commissions, a direct payment for the sale of a product or

right to perform a service which is usually a percentage of
the value of the profit generated from the trade, will
generate a free market income source for the government
making the economy less dependent on taxation income, it
also offers the opportunity to expand into the global free
market. By entering into joint venture projects with
entrepreneurs governments can get a stake in commissions
earned.

Commercial contracts, providing the legal right to use a

product or service in exchange for a fee, offers legislative

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protections to the provider of a product or service securing
an income for the developer or innovator. The
commercialisation of new innovation is a key global
industry governments can take part in, the government's
role would be to endorse and enforce the contracts of the
trade offered by the entrepreneurs who pioneered the new
innovations.

New product development is something governments can

be part of to help support modern businesses and enable
technological progression. Governments can receive
additional income streams initiated from commercialised
projects, providing a more diverse economic model. These
advancements will benefit the world improving living
standards and cost efficiencies. All governments should
seek involvement in product and process commercialisation
projects.

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 Chapter Three.

International Market Commercialization.

This chapter explains the opportunity the global market

offers the domestic economy. If one country's economy is
in downturn there is the prospect of generating returns from
international commerce, remedying low national demand.

Foreign market trade is evaluated explaining that when a

government trades with other nations new wealth is made
outside of taxation. This expands the existing public sector
financing model, which will provide a new revenue stream.

The limitations of the mechanisms used to enable economic

growth on a national level are described, recommending
governmental business operations abroad. Suggestions of
how to penetrate old and new product markets are made.

This chapter includes a letter putting forward the concept of

a secondary governmental revenue department for external
trade. The letter is evidence there is formal communication
with the government regarding expanding income streams.

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If a Cycle of Debt and Low Demand is Prohibiting
Economic Expansion Look to the Foreign Market
for Growth.

I had this published at the Huffington Post on 21/01/2015

10:00 GMT (Morgan, 2015).

As a macroeconomist I often get asked to assess problems

which prevent economic growth and social improvement.
Below I have put forward a short diagnosis with some in
built definitions of economic terms to describe the
limitations the British economy is currently experiencing. I
then suggest remedies to combat these difficulties.

Demand for goods and services that originate from British

buyers, “domestic demand”, is low due to high levels of
public and private sector debt. The debt has to be repaid
reducing the spending levels and material enrichment of
consumers, who the goods and services of the economy are
produced for. This prevents economic growth.

Less public and private sector spending, or “consumer

consumption”, leads to less need for manufacturing and
service providing reducing levels of productivity, which is
a decline in economic output. A lower demand for goods
and services reduces the need for labourers and service
providers resulting in an increase in unemployment.

Higher unemployment leads to a greater need for

benefits/welfare increasing the size of public sector debt.
Also private sector debt may increase as household income

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declines, requiring further debt to compensate for lost
earnings, brought about by higher levels of unemployment
caused by the existing lack of domestic demand.

This cycle of debt and low domestic consumption has led to

a continued reduction in public spending and a fall in
government provided services. These cuts also decrease
domestic demand leading to further economic woe,
including higher unemployment as less labour and services
are needed to meet the demands the society can afford.

The cuts are necessary to pay down the existing debt and
the interest owed, which is also accumulating making an
interest fuelled debt cycle. Domestic demand is very
limited and in cyclical decline. There is another option
which may turn the nation's economy around, the “Foreign
Market”, demand which originates from buyers outside of
the British market.

By attracting demand for goods and services manufactured

in the UK to sell abroad money can be brought in from
outside the domestic market. Domestic demand is not
needed to enable an expansion in the economy and provide
employment, foreign demand enables it. Domestic public
and private sector debt is now not required to allow
economic expansion.

Methods of economic expansion into the Foreign

Market - Through Manufacturing.

The UK needs to sell products to the foreign market. One

method of doing this is to research the product
desired/demanded by foreign customers, then manufacture

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it to sell the product to the targeted market abroad. This
method of economic expansion is called, “New Product
Development”, it is used successfully by the Japanese in
the global electronics market.

Another method is to look at the products already

manufactured in foreign markets, which are highly desired
and in great demand, then design them better. This is the
method used by German car manufacturers to dominate the
luxury car market and is called, “Quality Engineering”.

The Chinese method is to manufacture products which are

in high demand at a lower price, although often lower
quality, for the needs of the less affluent lower end market.
China has dominated the global mass manufacturing
market for many years using this technique, enabling them
to become a leading international economic power.

Methods of economic expansion into the Foreign

Market - Through Innovation.

You don't even have to make the goods yourself. If you

come up with a good idea you can patent it and sell the
rights to construct the product to existing manufacturers. It
is not necessary to have a factory and labour force of your
own, when you can use someone else's. New designs, re-
engineering and innovation are the products being sold.

This reduces the cost of starting up high expense businesses

and takes away the element of risk from the pioneer, if the
idea fails only the cost of the patent is lost. Manufacturers
would be grateful for design improvements, especially if
the product becomes cheaper to produce or better quality,

29 | P a g e
extending their competitive advantage in the increasingly
difficult marketplace.

Embassies can help enormously with international trade,

they even have offices of solicitation to help draw up legal
contracts with their nation’s businesses and industrial
tycoons. It is in their interest to encourage global trade as it
helps to prevent international disagreements promoting
friendly relationships and allegiances.

Through innovation, patenting and approaching

international manufacturers it is possible to enter the
foreign market, to expand the British economy, at very low
cost and minimal risk for the pioneer/entrepreneur. It will
also help with foreign relations through business and co-
operation, which can be helpful for other economies too.

30 | P a g e
 Trade is better than tax (Morgan, 2018)!

High public sector debt which is still growing with an

annual deficit of £40.7 Billion in the UK, requires
government revenue to grow to repay it (Morgan, 2018).
The method of choice used at present to generate
government income is taxation which I define as, "The act
of generating revenue by governments to fund their
expenses by taking money from businesses or citizens."

There are limits to taxation, first in entirety, you can only

take 100% of GDP in tax, this is a zero free market
economy. Choice is taken away from the consumer the
centrally planned government makes decisions on
everything, this is a purely command system economy.
Second in limitation, taking too much taxation inhibits
economic growth in the free market.

There are arguments as to the most efficient forms of

government, most are part command system and part free
market, “mixed structure”, economies. Economist Arthur
Laffer claimed too high a rate of taxation caused the
working population to reduce their productivity due to the
government receiving too much of their output,
demonstrated with the Laffer Curve (Investopedia, 2018).

Either way, whether the economy is purely a command

system economy or a part free market mixed economy,
government taxation revenue is limited to the domestic
economy solely. You can only tax your domestic economy,
but you can trade with the rest of the world. Commerce

31 | P a g e
with other countries around the world will enable
government income to grow.

Trading with other countries can increase the size of the

economy the government can receive income from. Taxing
the free market is limited even if firms operate on an
international level as tax is not always owed to the
domestic government. Simply expanding international trade
through the free market will not necessarily generate
government income, which is required.

By the government producing its own product line and

selling to the foreign market it can guarantee the revenue
generated is received by them. Foreign trade, especially
global trade, expands the size of the potential income of the
government from being 100% of domestic GDP to anything
the international economy can produce, maximising
government revenue.

The potential of increasing government tax receipts alone is

reason to expand public sector new product development
and commercialization on the international stage. It is when
the other advantages this method of generating government
revenue which I call, “Internationally Commercialized
Innovation”, become apparent that the true benefits can be
seen and utilised.

The new revenue generated from Internationally

Commercialized Innovation, “ICI”, has no negative impact
on the domestic economy. High rates of taxation limit free
market growth and take away consumer choice.
Internationally Commercialized Innovation will help to

32 | P a g e
generate money needed to close the public sector deficit
and pay off the overall debt safely.

33 | P a g e
34 | P a g e
Is The British Government Open For Business? An
Alternative To Cuts.

I had this published at the Huffington Post on 11/04/2017

09:21 BST (Morgan, 2017).

The government must find other ways of funding itself,

which do not burden the labour market, make future
generations pay for current expenditure with interest,
decrease the value of investments or sell off assets. All of
which seem to make up the main body of funding options
currently used by the government.

Taxation, which is the confiscation of assets of the

population, usually in monetary form, will limit the ability
of the free market to operate due to business funding
reductions if increased. Demand for goods will decline due
to the lack of business and consumer funds, impacting
profits and the ability to obtain products.

Debt, the borrowing of funds in agreement to be paid back

at a later date, often with interest, leads to a reduction in
future demand when the loan has to be repaid, also with the
cost of future generations carrying the burden. Countries
with high national or even private debt may suffer
macroeconomic consequences, such as currency
devaluation.

Quantitative Easing, the creation of additional money to

enable transactions, which is often used as an economic
stimulus, will lead to a redistribution of wealth. Whoever

35 | P a g e
receives the new money will benefit, but existing asset
owners and investors will lose out on a relative wealth
level. It could also lead to inflation and currency
devaluation.

Selling Off Assets, the sale of government owned property

and other assets, military hardware for example, will take
away the use of the assets and reduce the stock wealth of
the government. Weakened stock and asset ownership of a
government could reduce foreign interest in investment,
making borrowing more expensive through higher interest
rates.

The government needs to find other ways of funding itself,

which are not dependent on outside sources. Taxation and
debt put the burden of funding on the free market and the
population. Quantitative easing will also burden the
population by devaluing their personal wealth. The selling
of assets will impact facilities available to the population.

Either way the population will lose out with the current
funding options. There is however another way for the
government to make money. The government is an
organisation in itself with its own legal identity, which can
generate its own income through its own business
operations. The government is or could be a profit making
organisation.

Rather than the government being dependent on sources of

funding outside of itself, which often limit the population’s
resources. Generating its own funds through its own
business operations is the new role of the government

36 | P a g e
reducing the need for spending cuts, further tax, borrowing,
another quantitative easing program or selling off assets.

The government’s new direction should be to expand its

business and money making operations instead. How? A
change in thinking is needed, the government is now
providing free market products. The British government is
open for business and can make its own money, it is no
longer dependent on the domestic population almost solely
to fund itself.

Governments develop systems and technologies that can be

sold to other governments. Consultancy, patenting,
developing products for the “old product” market or “new
product” development market. These are all methods of
entering the free market, which the government can
become involved in and get a share of the profits.

The foreign market will be key, even if the product is not

used within the domestic economy it could be sold abroad.
The government does not even have to develop the product
itself, entrepreneurs will approach the government with
ideas that can be patented, its role will be to act as the
patent investor and legal enforcer. Shared ownership and
rewards.

Providing products for the foreign market is imperative due

to the reduced level of domestic demand the economy is
currently facing, as a result of high levels of debt. Countries
with more available funds will demand more products, if
they are desired by the population. The article below
explains this concept and methods of entering the foreign
market,

37 | P a g e
“If a Cycle of Debt and Low Demand is Prohibiting
Economic Expansion Look to the Foreign Market for
Growth.” Page 27.

Innovation is essential to increase demand in the domestic

economy or to sell goods abroad. As a macroeconomist I
develop economic tools, calculations, processes and
software that can be patented, then used in the domestic
economy and also sold abroad. I am willing to work with
the government to do this. The article below explains the
process,

“Reinvention and Innovation Are Key for Economic

Recovery.” Page 11.

With high levels of debt, high rates of taxation and a desire

to avoid another quantitative easing program, the British
government must look for other ways of funding itself. An
expansion in its own business operations and generating its
own income could be the best way, it could also avoid the
need for further cuts in government expenditure.

38 | P a g e
 Letter to UK Government Ministers Regarding a
New Public Sector Revenue Source the “ORS”
(Morgan, 2018).

I have submitted a letter to the Prime Minister of the United

Kingdom, on Monday 10th September 2018, putting
forward the suggestion of a new government revenue
source deriving income from Internationally
Commercialised Innovation (ICI) to form the Outland
Revenue Service, the (ORS).

The letter explains limitations of the existing government

revenue model, which is mainly made up of taxation.
Income is solely drawn from the domestic economy and
can only take a cut of its GDP. I recommend extending the
government revenue model to include external income
from foreign trade.

The letter and enclosed article were sent to the Prime

Minister, the Chancellor of the Exchequer, the Shadow
Chancellor of the Exchequer, the Rt Hon Jeremy Corbyn
MP, the Rt Hon Vince Cable MP, Nicola Sturgeon MSP,
Jacob Rees-Mogg MP and Michael Fabricant MP, with a
covering letter.

39 | P a g e
40 | P a g e
P J R M I
J O T
R R ´
G S
A
M O R G A N A
To: 10 Downing Street
B
I T ´ S A B O U T B A L A N C E London
U SW1A 2AA
T

B
A To: The Prime Minister Rt Hon Theresa May MP.
L
A
N
Regarding: A New Source of Government Revenue.
C
E Monday, 10 September 2018

I am a freelance macroeconomist who develops new tools

and policies to provide economic efficiencies and progress.
I have been working on reducing the level of government
debt, which has surpassed £1.8 Trillion. There is currently
an annual deficit, which is adding to the overall debt
extending the problem further. An increase in government
income is required to bring the public sector back into
surplus. The government currently operates a very limited
revenue source model, which mainly consists of taxation
income or further government debt.

Most of the sources of income derive from the domestic

economy solely, which is limited to a share of UK GDP.
There is a global economy worth many times the UK GDP,
which the British government can be part of through
international trade. I have enclosed an article I wrote called,
“Trade is better than tax”, it explains the inadequacy of the
revenue model used by the UK government at the moment.
It then puts forward the suggestion of entering the global
market through, “Internationally Commercialized
Innovation”, (ICI) to create income.

41 | P a g e
Although the process would be a public sector activity,
when governments trade on an international level it
becomes a free market operation. This can easily be entered
through revamping government systems and processes
commercializing any upgrades or efficiencies developed.
New product lines can be licensed and sold internationally
with the government taking its cut. By the government
sharing ownership of new innovations it guarantees it
receives the income generated from international trade
boosting revenue, reducing its deficit.

It might be worth launching a new government department

for external revenue generated from international trade.
The, “Outland Revenue Service”, (ORS) or, “Her Majesty's
Revenue Internationally Commercialized Innovation”,
(HMR ICI). This would provide a second revenue source
and diversification, which could compensate for domestic
economic issues. It will also enable the public sector to
provide a surplus of income and may take away the need
for such high rates of taxation. As it would require a new
department, it needs your approval.
I
T
Kind Regards. ´
S

A
B
O
U
T
Peter James Rhys Morgan. I T ´ S A B O U T B A L A N C E
B
A P J R M
L J O
A R R
N G
C A
E M O R G A N

42 | P a g e
 Chapter Four.

Occupational and Taxation Efficiencies.

This chapter puts forward methods of increasing economic

growth through altering occupational regulations and
taxation policy. A new classification of employment is
suggested to ease the entry of workers to the labour force.

The expansion of the available individual personal taxation

allowances for different forms of occupation are examined
to encourage economic growth. Stating offering a personal
allowance for earned income may diversify the economy.

Taxation efficiencies are recommended to enable economic

growth. By marginally reducing taxation for lower income
earners and slightly increasing taxation for higher income
earners demand should rise without cutting taxation intake.

Other methods of stimulating economic growth without

reducing existing taxation income are suggested. New
businesses are not known taxation sources so they can be
offered temporary taxation grace with no cost to revenue.

43 | P a g e
44 | P a g e
 Is It Time for a New Classification for
Employment That Reduces Regulation and Even
Tax?

I had this published at the Huffington Post on 24/10/2014

11:19 (Morgan, 2014).

In this time of high unemployment and economic downturn

it may be appropriate to look to a new way of dealing with
running a small business that reduces the length of time of
administration. One way of doing this is to offer a new
classification of employment that enables an individual to
operate a business free of regulation and possibly tax until
their income passes into a higher threshold (HMRC, 2018).

Currently an individual is either unemployed, self

employed (sole trader), a partner, an employee of another
business/organisation or a director in a company. A new
classification of employment that is unregulated, which is
referred to as a “Wurker” someone who “works”
unregulated by the Tax Office, meaning they don't have to
fill in the annual self assessment form other than by stating
they are classified as a “Wurker” and are exempt from
doing so, could reduce the administrative time and costs of
running a business.

In the same way it is possible to operate a business account,

“Wurker” accounts could be opened with a limit on the
level of deposits before the next employment classification
is reached and the treatment by the Tax Office changes. In
short if the deposits in the “Wurker” account exceed the

45 | P a g e
amount set by the Tax Office, which is allowed to be
unregulated or perhaps untaxed, the employment
classification will change meaning administrative and
taxation costs will rise.

If the “Wurker” account surpasses the deposit limit the

individual who owns the account will have to fill in the
annual self assessment form, whereas if the account deposit
limit is not surpassed they will not have to fill in the annual
self assessment form as they have maintained the “Wurker”
employment classification by remaining within the
boundaries set by the Tax Office.

For example the limit on the amount that could be

deposited in a “Wurker” account could be set at £20,000,
allowing unregulated and possibly tax free earnings to be
made up to that amount. After the £20,000 deposit had been
exceeded the individual responsible would have to submit
an annual self assessment form to the Tax Office and pay
tax at the relevant threshold.

If the desired outcome of holding “Wurker” accounts is to

reduce taxation liability to increase the number of emerging
businesses they could operate as tax free accounts similar
to an ISA. All funds deposited by the individual who owns
the “Wurker” account could be tax exempt, allowing them
to deposit earnings and make withdrawals (in short earn a
living) without paying tax. The time spent administrating
their earnings would also become simpler as long as they
remain within the “Wurker” employment classification
boundaries.

46 | P a g e
In addition to individuals who work for themselves being
able to operate “Wurker” accounts employees who work
for other organisations could also be allowed to operate a
“Wurker” account on top of their existing employment.
This would allow the existing workforce to expand the
economy by setting up new businesses with the advantages
of the same low regulatory and tax benefits everyone else
receives, without having any consequences on their other
employment or the way the Tax Office classify them (i.e.
running a PAYE account with their employer and a
“Wurker” account in tangent).

If the loss of government income from offering tax free

“Wurker” accounts is too high a lower taxation rate for the
“Wurker” classification could be set instead of a complete
exemption. Even if the same level of tax is taken from the
“Wurker” account as a Sole Trader the administrative costs
and errands involved in running a business would be
reduced. However it is recommended a lower rate of
taxation should be applied to the “Wurker” classification, if
any at all, to encourage growth in this period of economic
downturn.

47 | P a g e
48 | P a g e
 Two Personal Allowances for Two Forms of
Employment to Encourage Economic Growth?

I had this published at the Huffington Post on 10/11/2014

10:46 (Morgan, 2014).

At the moment there is one personal tax allowance for all

forms of employment. It doesn't matter whether the
individual in question works for themselves, a corporation,
an agency or the government they will only be entitled to
one personal tax allowance, which has to be assessed and
regulated to the Tax Office’s specifications (HMRC, 2018).

The division in employment currently acknowledged is

between the private sector and the public sector, whether
the individual works in the free market or alternatively if
they work for the government or local council. I personally
think the division in employment should be separated by
whether the individual is working in Paid employment or
Earned employment.

Paid employment exists;

-When an individual works for someone else who deals

with their taxation and financial administration.

Earned employment exists;

-When an individual works for themselves or with others

and deal with their own taxation and financial
administration.

49 | P a g e
Most people only work in either Paid or Earned
employment rarely both i.e. The individual may work for
either a company or as a sole trader. If the individual starts
to work in both Paid and Earned employment or work more
than one job, they will have to fill in an annual self
assessment form or their employer will have to comply to a
more vigorous accounting treatment.

By offering two separate personal tax allowances for Paid

and Earned employment it enables further tax free earnings
and potentially less administration. It also simplifies the
process of dealing with tax for the individual and an
employer making new business development easier. This
encourages individuals to work in both forms of
employment.

As most individuals don't work in both Paid and Earned

employment, by offering a second personal tax allowance
for each form of employment it enables a thriving tax free
market economy on top of the existing highly taxed
economy. No government revenue is lost but the economy
can expand by identifying different forms of employment
and providing separate taxation treatments.

50 | P a g e
 The Taxation Flip Trick - Making Taxation More
Efficient (Morgan, 2017).

Taxation is a constant hot topic and argued strongly

amongst all sectors of society, it can even cause people and
businesses to relocate to avoid or reduce it. Who should
pay it? How much should they pay? Do I really have to pay
that much? They should pay less! They should pay more! I
do not want to have to pay any at all! etc. And the list goes
on and on.

There may be another determining factor outside of

personal or political opinion that might outweigh all other
arguments. Taxation can be used as a macroeconomic tool
and can be made more efficient in terms of providing
overall economic stability. These advantages could
compensate or even provide an overall gain, offsetting the
downside of a taxation increase.

In short you could lose income from an increase in taxation

but gain income from the overall outcome, such as greater
economic growth, investment security or currency stability.
An example of this would be a one percent decrease in the
lower taxation bracket at the same time as a one percent
increase in the higher taxation bracket, “Taxation
Flipping”.

The individuals with lower incomes have a greater

necessity to consume. The individuals with higher incomes
have a higher rate of saving. By switching or “Flipping” a
marginal amount of taxation from the lower taxation

51 | P a g e
bracket to the higher taxation bracket, it is possible to
increase consumer consumption through the differences in
spending habits.

Taxation intake should remain as it was before, necessarily

to repay national debt, it is who pays that changes. The
“Taxation Flip Trick”, will increase the level of
consumption leading to an increase in output and economic
growth. Individuals with a higher propensity to save will
benefit from the greater return on investments overall
economic stability will produce.

Pay disputes will ease, as most will derive from people on

lower incomes. A one or two percent fall in taxation could
offset the pressure inflation puts upon the lower income
earners resolving many financial difficulties. Employers
will come under less pressure for pay rises too, allowing
them to freeze operating costs and concentrate on running
their businesses.

Easing the taxation burden on low income earners could

help the economy to recover in a time of slow growth and
alleviate the struggle many have encountered. The
alterations in taxation could be marginal and secure the
investments of higher earners. Losses on existing
investments could be prevented through a stronger
economy and maintenance of growth.

In the UK growth has fallen to 0.3% in Q2 (Wearden, et al.,

2017). Economic growth is required to maintain investment
portfolio values. Foreign investors will look for continual
growth, by not hitting economic growth targets overseas
investment could fall. Greater economic growth could be

52 | P a g e
achieved by altering income taxation rates, in a way that
maximises consumer spending.

Currently there are three taxation brackets, the lower rate is

20%, the middle rate is 40% and the higher rate is 45%.
Changing to the following, the lower rate at 18%, the
middle rate at 41% and the higher rate at 46%, taxation
intake should be maintained and economic growth should
be attained. It will also offset inflation, which has been
hitting low income earners (HMRC, 2018).

53 | P a g e
54 | P a g e
 Taxation Grace (Morgan, 2018).

High national debts and continual annual budget deficits

are common place in economies around the world. Even
western countries are falling short of balancing their
governmental spending budgets. Increasing economic
growth could be a resolution to close public sector deficits,
stopping existing government liabilities becoming even
larger. If economic growth expands enough to generate a
surplus of income from taxation revenue it could help to
reduce outstanding liabilities. As governmental debts are
very high long term growth is required.

Economic growth could not only stop public sector debts

from growing but start to pay them off. One method of
increasing growth is to reduce taxation. Lower taxation
enables businesses to retain a greater level of funds and to
increase profit margins. Greater funding will allow further
spending and opportunities to employ more staff. Higher
profits will provide a larger return for investors, who will
likely consume more as a result. If taxation is lower growth
should be achieved and economic prosperity should return
to indebted nations (Economicsdiscussion, 2019).

Lowering taxation is not easy when a country has a public

sector deficit and high outstanding governmental debt. The
government requires taxation income to cover its
expenditure. By reducing the existing taxation intake public
sector revenue may fall short of expectations. However,
new business operations could be exempted from taxation

55 | P a g e
without impacting existing rates of revenue received by the
government. Any cut in taxation for new businesses will
not impact existing government revenue, but it will
encourage growth and investment.

If new businesses were allowed a period of “Taxation

Grace”, a taxation exemption for between two to five years,
it could help the economy to grow. New businesses will
find it easier to attract investment due to the zero rate of
taxation maximising profits and investor returns. Higher
returns are used to compensate for higher risk, providing an
attractive incentive to invest and a greater level of
investment security. It will also help economies diversify
investment structure increasing equity holdings rather than
further expanding credit.

Although direct taxation from new businesses will not be

generated during the “Taxation Grace” period, indirect
taxation deriving from the economic growth the new
businesses enable should be created. Economic growth
should bring about increases in VAT and employment
taxes. In short taxation revenue should rise helping to close
the governmental spending deficit. “Taxation Grace” could
lead to increases in economic growth, employment, indirect
taxation revenue, economic stability and provide economic
diversification on a national level.

There is another mechanism which makes the use of

“Taxation Grace” more effective. The higher the existing
rate of taxation is the greater the interest in looking for
taxation avoidance becomes. If there is a taxation
exemption for new businesses entrepreneurs will likely
invest in them to avoid the otherwise high rates of taxation.
56 | P a g e
This will lead to a “Rush” of new product development and
innovation to penetrate the wants of the market. New
businesses will look for new products, manufacturing
techniques and efficiencies to become a free market
success.

57 | P a g e
58 | P a g e
 Chapter Five.

Supplementary Income.

This chapter puts forward the concept of further personal

taxation allowances for entering into additional paying
occupations. The opportunity to generate secondary income
through supplementary work or trade should enable growth.

More reward for performing extra work is encouraged to

increase overall economic output. New methodologies to fit
around potential recruits’ timetables are explored to enable
a greater number of people to enter further work or trade.

There are suggestions that the greater output should lead to

a decrease in aggregate prices, namely inflation, which will
likely occur when there is a relative increase in production.
Output led economic growth should dampen overall prices.

The recommended newly available taxation exemptions for

further occupations could allow a secondary tax free,
“System D”, style economy. This “Echo” economy should
enable growth without impacting existing taxation revenue.

An increase in the existing personal taxation allowance for

dual occupation is suggested instead of a second personal
taxation allowance for further occupations. This strategy
could help to resolve pay disputes and stimulate growth.

59 | P a g e
60 | P a g e
More Work, More Reward - A Secondary Personal
Taxation Allowance For Supplementary Income.

I had this published at the Huffington Post on 24/04/2017

12:56 (Morgan, 2017).

On a macroeconomic level the UK is very constrained.

High levels of national debt hinders reductions in taxation,
which could be used to stimulate the economy (National-
Debt-Clock, 2017). The risk of higher inflation limits the
effectiveness of interest rates to enable growth. A further
quantitative easing program could lead to a much greater
devaluation of the currency.

In short any kind of economic growth plan using the

existing methods of stimulus would prove difficult, if not
costly, assuming they would work at all. It could, however,
be possible to achieve economic stimulus without other
costs or consequences, like a loss of government revenue or
a weaker currency. Additional beneficial outcomes may
also be attainable.

A cut in taxation would reduce the income the government

receives. Due to high levels of debt, which needs to be paid
back, the government cannot afford to decrease rates of
taxation. This does not mean taxation on further earnings
on top of the existing level of output cannot be cut, if not
taken away altogether. Further earnings do not have to be
taxed.

61 | P a g e
If the labour market was to be expanded through the
workforce performing additional labour and services, the
income whether taxed or not would not impact the existing
taxation intake. By offering a second personal taxation
allowance on supplementary income, where the individual
works for or operates more than one business, economic
growth can be attained.

There is an incentive for further output without impacting

existing taxation revenue. If someone is prepared to work
more, by taking an additional form of occupation, either by
working for an employer or starting a new business, they
will receive a greater financial benefit for doing so. More
work more reward and economic stimulus at little or no
cost.

The only potential cost would be the loss of taxation

revenue deriving from people who already have more than
one occupation. This should be offset, if not, dwarfed by
the increase in the, “dual occupation workforce” emerging
from the supplementary personal taxation allowance
generating a higher level of output and economic
diversification.

An additional personal taxation allowance on income equal

to the existing personal taxation allowance of £11,500,
would be sufficient. For someone at the lower rate of
taxation of 20% they would save £2,300, if they took
advantage of the full allowance. For someone at the higher
rate of taxation of 40% they would save £4,600, if they
used the full allowance (HMRC, 2018).

62 | P a g e
There is an additional rate of taxation of 45%, however it is
questionable if the supplementary taxation allowance
should still be viable because it starts at £150,000 per
annum. If the supplementary personal allowance was
enabled for the lower rate and the higher rate it should be a
sufficient enough incentive for further growth, at little
consequence to taxation revenue.

The other possible consequence is the increase in income

could lead to a cut in benefits, if income surpasses the
threshold entitling the individual to be recipient. As the
new income is supplementary it should be excluded from
the income threshold means test calculation. Benefit
income is only impacted after the secondary personal
allowance is exceeded.

When the secondary personal allowance is exceeded

income over becomes inclusive to the benefit means test
calculation. The question is whether the income which
surpasses the secondary personal allowance should revert
back to the rate of taxation on the first income or start at the
lower level. Personally I think it should start again at the
lower level and tier up.

63 | P a g e
64 | P a g e
 Supplementary Income Co-operative.

I had this published at the Huffington Post on 17/08/2017

11:30 (Morgan, 2017).

In my previous article, “More Work, More Reward - A

Secondary Personal Taxation Allowance For
Supplementary Income”. I put forward a recommendation
for a secondary personal taxation allowance for a second
occupation. In other words one job equals one personal
taxation allowance, two jobs equals two personal taxation
allowances.

The proposal was put forward in an effort to expand the

level of output within the economy without diminishing the
existing taxation intake, which is needed to pay off the
extremely high level of national debt. I suggested this
method as the UK economy is very constrained on a
macroeconomic level and explained the limits of the
existing economic controls.

However since writing the article the topic of pay disputes

has come about and may also be resolvable through the
supplementary income personal taxation allowance,
enabling another income to be brought into a household. In
short it could solve the two problems with one policy.
There are some issues with the concept that could be
overcome or compensated for.

The first issue arises from people who already have two
occupations qualifying for the secondary personal taxation

65 | P a g e
allowance, leading to a loss of taxation intake. Although
taxation intake will decrease from some workers,
compensation will be provided by the economic expansion
the taxation break generates. Indirect taxation will be taken
from the new growth.

The second issue is the impact on benefit income.

Assuming income increases from the new secondary
personal taxation allowance the benefit income which the
individual receives could be reduced. I resolve this by
taking the income from the secondary occupation out of the
benefit means test calculation, until it exceeds the personal
taxation allowance.

The third issue is time and the ability of someone in an

existing form of work to enter a secondary occupation. I
resolve this issue by the suggestion in the title of this
article, a co-operative of efforts and personal taxation
allowances, by sharing the work and joining their
secondary personal taxation allowances a, “Supplementary
Income Co-operative”.

The introduction of a new form of organisation which can

operate as a business and going concern. Where all
members of the Co-operative have to be in existing
occupation or would have to leave the firm, if they cease
being in primary occupation, at the end of the taxation year.
Exclusion due to their loss of the secondary personal
taxation allowance.

Assume 10 people are in the Co-operative and they receive

equal ownership, share rights and profits they will be able
to collectively earn £115,000 per annum tax free. What an

66 | P a g e
investment opportunity for the members and any potential
lenders. It pools resources, shares the work load, offers
flexibility and enables large scale operations to be
established (HMRC, 2018).

By offering this opportunity of tax free part time work to

the existing labour market, the income generated would
help to resolve many of the problems with pay disputes. It
would also help the economy to recover without impacting
the existing taxation intake, which is necessary to maintain
due to the staggering national debt requiring repayment.

67 | P a g e
68 | P a g e
Rather Than Another Interest Rate Rise - Inflation
Absorption Through A “SASI” (Morgan, 2017).

I have previously written about the concept of a

“Secondary Personal Taxation Allowance for
Supplementary Income”. The idea surrounds enabling
expanding output through the incentive of no tax on further
income for a second occupation, as long as earnings do not
exceed the secondary personal taxation allowance and the
individual is still in primary occupation.

Simply starting a second occupation does not entitle the

individual to the secondary personal allowance. The second
occupation has to generate income, which is tax free for the
worker whilst within the taxation allowance. The individual
does not get £23,000 of taxation allowance, the new
occupation has its own allowance which the worker draws
income from.

I was looking for growth in a constrained environment

when developing the idea, which offers a chance to start a
business tax free for the first £11,500 if already in existing
occupation (HMRC, 2018). An opportunity of £11,500 of
tax free trade that should not impact the existing taxation
intake, needed to repay the tremendous national debt
exceeding £1.94 Trillion (National-Debt-Clock, 2017).

This is an opportunity to generate a secondary tax free

economy on top of the existing taxed economy. It also
expands the earning opportunities of the workforce
improving their take home income and may help to resolve

69 | P a g e
pay disputes. There were some limiting factors to some of
the proposals, which were resolved through the
Supplementary Income Co-operative.

Formerly the Secondary Personal Taxation Allowance for

Supplementary Income “SPTASI”, which I changed to the
Secondary Allowance for Supplementary Income “SASI”
for colloquialism. The “SASI” is not only a method of
increasing output within an economy, but a way of
improving taxation efficiency and household incomes to
enrich people's lives.

It could also be used to control inflation through economic

growth “Inflation Absorption”. The current method of
controlling inflation is the interest rate mechanism, if
inflation is too high interest rates will rise. Higher rates of
interest will make loan repayments greater taking away
spending power from whoever owes money like,
homeowners, businesses and consumers.

Inflation is calculated using a Price Index, usually a

Paasche or Laspeyres Index. The index measures the
overall price of a set basket of goods at one period of time
and then compares the overall price of the same basket of
goods at a later period of time. If at the later date the price
has risen inflation has occurred, if the price has fallen
deflation has occurred.

The assumption that is made to increase the interest rate to

control inflation works on the premise inflation is caused
by a surplus of money supply or availability to consume.
This indicates the understanding of economics the Bank of
England, who set the interest rate, follows believes inflation

70 | P a g e
is caused by a disparity in overall output and overall
consumption.

In this case they have chosen to control inflation by

reducing the ability to consume to close the disparity,
which they see as excessive consumption. There is another
way to close this disparity in overall output and overall
consumption, which is called an inflationary gap, by
increasing output. In short the availability to consume
remains the same but output increases.

Closing the inflationary gap through “Supply Side”

stimulus, "There isn't too much money, you're just not
producing enough!" This method of controlling inflation
requires the ability to increase productivity and in turn
output. Any incentive increasing the will or ability of
people to work makes more goods and services available
reducing overall prices, perhaps the “SASI”?

71 | P a g e
72 | P a g e
 “SASI” Cost Efficiencies and Developing a
Secondary Economy (Morgan, 2018).

I have put forward the concept of a Secondary Allowance

for Supplementary Income or the “SASI” as an acronym.
The original intention of the “SASI” was to increase
economic output, but it may also increase take home pay,
resolve pay disputes and control inflation. The “SASI”
offers financial efficiencies for further work or free trade
on top of primary occupation.

For an individual with the national average income of

£27,600 per annum the taxation efficiencies will be at least
20% of earnings (ONS, 2015). If National Insurance
Contributions are not required for income generated in the
secondary occupation the individual will save 29% of
earnings. National Insurance Contributions may be required
to make the full stamp payment.

For an individual with income exceeding the higher

taxation bracket of £45,000 savings will be at least 40% of
earnings. If National Insurance Contributions are not
required for income generated in the secondary occupation
the individual will save 42% of earnings. Further National
Insurance Contributions may not be required if primary
occupation pays the stamp.

For an individual earning £10.00 per hour from their

secondary occupation, which is tax exempt up to £11,500
p.a. They would have had a take home income of £8.00 per
hour for the lower taxation rate of 20%, without the

73 | P a g e
secondary allowance. If the income requires further
National Insurance Contributions they would have had a
take home income of £7.10 per hour (HMRC, 2018).

For an individual earning £10.00 per hour from their

secondary occupation, which is tax exempt up to £11,500
p.a. They would have had a take home income of £6.00 per
hour for the higher taxation rate of 40%, without the
secondary allowance. If the income requires further
National Insurance Contributions they would have had a
take home income of £5.80 per hour.

If the full allowance of £11,500 is utilised the taxation

saving will be £2,300 at the lower taxation rate of 20%. If
the income is exempt from further National Insurance
Contributions the taxation saving will be £3,335. The
taxation saving will be £4,600 at the higher taxation rate of
40%. Taxation saving will be £4,830 if National Insurance
Contributions are exempt.

The “SASI” is not just a way of entering further

employment and gaining an additional taxation allowance
for doing so, it is a way of engaging in tax exempt free
trade up to £11,500 per annum. The real agenda behind the
“SASI” is to have a second legalised tax free, “System D”,
economy on top of the existing regulated economy enabling
economic expansion (Freakonomics, 2011).

It should not impact the existing economy due to it only

being available for people already in primary occupation.
Existing taxation intake should not be impacted. The
intention of the “SASI” is not merely to encourage
individuals to look for further employment, but to

74 | P a g e
encourage individuals in primary occupation to engage in
up to £11,500 of tax free trade.

Forget employment even, £11,500 of tax free trade. Sell

cakes, do social work or get a sales commission for beer,
that is taxation exempt on profits. This will make the cost
of beer fall too, if the purveyor passes on the savings. "Do
you want to buy cheap beer? Yes. OK sign this document
and it will be delivered." You don't need to work for
anyone else, “Just Trade”!

Can you see how this will not take too much time or effort?
How it can reduce the cost of goods and services? How you
can only get it if you are already in work? How the existing
economy and taxation intake remain the same? How it can
reduce inflation? How you might be able to get cheaper
goods? A “System D” economy in tangent with the primary
economy!

75 | P a g e
76 | P a g e
An Answer to Pay Disputes - Make Sure You “R –
PAID” (Morgan, 2018).

As a result of the protests in London, regarding pay

disputes, I have put together a potential solution to remedy
the issue (Merrick, 2018). The problem arises from the
limited income for part time and gig economy workers,
who claim their earnings are not increasing and argue it is
stagflation.

Many of the people in the temporary occupation workforce

will or could have more than one job. A taxation advantage
could provide an incentive for this part time labour force to
enter additional employment and increase their output to
maximise their low or limited incomes.

My suggestion is for an increase in the personal allowance,

if more than one occupation is performed by the individual.
This new Rising Personal Allowance on Income for Dual
occupation workers or “R- PAID”, should increase incomes
for limited contract workers.

This will increase incomes for the “flexible” labour force

who are not in permanent employment, leading to an
increase in living standards. It will also lead to an increase
in labour supply for the part time work available, from
people seeking the taxation efficiencies.

Output should increase and basic services will be provided

by the expansion of the “flexible” labour market. The
current personal allowance for income of £11,850 could

77 | P a g e
rise for people who have more than one occupation to
£12,850. But only if they are in dual occupation (HMRC,
2018).

The loss in taxation revenue is compensated for with the

subsequent income from indirect taxation generated by
economic growth from the R-PAID. An increase in output
should also reduce inflation due to more goods and services
being made available lowering prices.

To avoid exploitation the R-PAID could only be receivable

if income from the secondary occupation's earnings exceed
the overall taxation reduction. For example if the R-PAID
increases the allowance by £1,000, the new job has to earn
£1,000 or in excess to receive it.

By putting in the above requirement it will mean the

reduction in tax revenue the government receives has to be
matched by an increase in economic growth from the new
occupation. This will make sure the loss of taxation is only
seen if there is a compensating economic gain.

The movement in increases of the personal income

allowance for “Supplementary Income” is a topic I have
been developing for a while. I have put together another
possible solution to these problems called the “SASI”,
which provides an extra allowance for a second occupation.

The R-PAID is meant to increase the incomes of workers in

the “flexible” or “temporary” labour markets, who have
less job security. It is also meant to encourage other
workers to join the part time or gig economies to
supplement their income and generate economic growth.

78 | P a g e
 Chapter Six.

Pension Saving and Economic Growth.

This chapter examines the potential use of pension saving

as an economic growth stimulation tool. Alterations in
pension saving allowances provide a method of changing
the saving rates to attain the set economic growth targets.

The impact changing pension saving allowances has on

pension tax relief is investigated, suggesting large cost
efficiencies can be achieved through smaller payments.
Annual pension freezing could be a viable emergency fund.

The optimal pension saving strategy is explored taking cost

efficiencies, pension saving maximisation and economic
growth targets into consideration. An optimal pension
saving calculation is included with some worked examples.

Early pension release is suggested as an alternative last

resort macroeconomic policy to stimulate growth in a
severe economic downturn or deflationary period. It is
considered a very extreme method of generating growth.

79 | P a g e
80 | P a g e
 Pension Pumping (Morgan, 2019).

Pension schemes are a method of investing to provide an

income in retirement, when the individual has reached an
age when they are no longer capable of generating an
income from working. Investment in private and
occupational pension schemes is encouraged in most
countries to support the cost of dependents in their
retirement, it minimises the expense to the state if funds are
provided by the individual themselves rather than the
government solely.

Incentives to invest in private and occupational pension

schemes vary, however most nations will offer pension tax
reliefs. Income tax relief in particular, when the investment
the individual or employer pays into the pension scheme is
exempt from income tax, boosts the size of the asset
portfolio. There are usually limits to the level of tax relief
pension schemes can receive, in the UK there is an annual
contribution allowance and a lifetime tax allowance.

Pension tax relief and the method of contributing into

pension schemes has become a key cornerstone in the
Morganist school of economic thought, as a
macroeconomic tool. The paper “The Pension Problem”
developed in 2006 by Morganist Economics put forward
the use of pension saving as a mechanism to control
inflation instead of an interest rate increase, as a result of
dire consequences of high interest rates used to control
inflation in the early 1990s (Morgan, 2019).

81 | P a g e
As a result of the development of pension tax relief as a
macroeconomic tool, in particular alterations in the annual
contribution allowance to control inflation, significant
pension tax reform has occurred within the UK
(ProfessionalPensions, 2016). In addition to the inflationary
or deflationary control benefits changes in the annual
pension contribution allowance enabled substantial taxation
savings to be achieved, without impacting the overall
lifetime pension taxation allowance.

Although the original intention of “The Pension Problem”

was to control excessive inflation, the economic
environment necessitated deflationary control. Instead of
increasing the annual pension contribution allowance to
expand pension saving and dampen consumption, which
should decrease inflation, the annual pension contribution
allowance was reduced to give consumers greater spending
power, this compensated for lost demand and stimulated
growth.

The decrease in the annual pension contribution allowance

lessened the expense to the Treasury by reducing the
allowable income tax exemption, this meant the
government had to borrow less money to fund itself saving
on the cost of debt interest. Although it would seem to have
cost the pension saver taxation benefits initially, the
opportunity to make up for lost annual pension contribution
relief is enabled by later payments to hit the lifetime
allowance.

After tremendous lobbying from Morganist Economics the

technique of reducing the annual pension contribution
allowance to control deflation and make Treasury cost
82 | P a g e
efficiencies, through deferring taxation exemption
payments, has become a successful macroeconomic tool.
The technique was also used to stimulate economic growth
to support the UK economy during the global deflationary
period seen over the last decade, with minimal
consequences.

Although pension saving and pension tax reliefs differ from

one nation to another, the simple methodology of
decreasing the annual allowable pension contribution,
whether the pension receives tax relief or not, will increase
the availability of funds for consumers and should stimulate
economic growth. If pension tax reliefs exist, as long as the
lifetime allowance remains constant annual contributions
can be deferred to gain the full lifetime tax exemption.

This technique which I call “Pension Pumping”, can

provide economic growth without having to alter interest
rates or the set annual taxation rates. The method is one of
efficiencies and rearrangement of funds to minimise the
cost of borrowing for governments, in addition to
controlling aggregate demand or aggregate prices. It was a
proven success in the UK over the last decade,
demonstrating sustainable economic growth (Statista, 2019)
and stable rates of inflation (RateInflation, 2019).

83 | P a g e
84 | P a g e
 Pension - Annual Contribution Freeze (Morgan,
2019).

The annual pension contribution is the allowable payment

into an accumulated pension fund, which will provide an
income in retirement. The size of the payment can vary
from one year to another, which can provide many
advantages to the pension saver and the economy too. A
freeze or block on pension payments for one year or more
could become an economic tool.

As there is a lifetime pension tax exemption allowance in

addition to the annual pension contribution tax exemption
allowance, if there is a period the pension saving is
prohibited the lost tax relief can be restored by later annual
contributions. Although the annual pension contribution
allowance has reduced in recent years a full annual block
has not yet occurred.

There should be no long term consequence to an annual

pension contribution freeze, as long as the lifetime pension
allowance is maintained and the payments can be deferred
to a later date. This makes an annual pension contribution
freeze a potentially effective economic tool due to its
limited impact on the wider economy, which is not seen
with interest rate changes.

By freezing the annual pension contribution the allowable

investment into a pension scheme will fall giving the saver
more disposable income. This increase in spending power
should support the rate of consumption and help to

85 | P a g e
stimulate economic growth in a recessionary or
deflationary period, this is particularly useful during a short
term money supply retraction.

“Credit Crunches” and tightened credit conditions require

increases of money supply or at least additional available
funds to support consumer consumption, business
operations and enable an increase in trade. The newly
available unsaved annual pension contributions provide this
desperately required stimulus, which may be hard to find
elsewhere without consequences.

There will also be a short term rise in tax intake through not
having to pay tax relief on the annual pension contribution,
due to the frozen payment. Although the tax payment will
have to be made at a later date, if the lifetime pension
allowance remains the same, there will be a saving in
government debt interest payments, generated through
lesser short term borrowing.

The funds made available to the government by freezing

the annual pension contribution, which is like guaranteed
interest free short term borrowing, can give the government
additional income when it is difficult to get it elsewhere.
The freeze could offer a temporary emergency fund for
extreme economic turmoil, unexpected natural disasters or
a war chest.

According to the UK HMRC's website and the published

PEN 6 “Cost of Registered Pension Scheme Tax Relief”
document the cost of pension tax relief per year is made up
of £38,600 Million Total Reliefs less deductions of £13,500
Million plus National Insurance Relief of £16,200 Million,

86 | P a g e
which generates a total of £41,300 Million a year (National
Statistics, 2018).

The cost of pension contributions to the HMRC in lost

income tax is £41.3 billion a year. Although it would have
to be paid back, assuming the lifetime allowance increases
and in line with inflation, contribution freezing offers
guaranteed short term borrowing for the Treasury, which is
great for funding emergencies, economic growth and
“Credit Crunches” (HMRC, 2018).

87 | P a g e
88 | P a g e
 Optimal Pension Saving (Morgan, 2019).

Arguments are made for the best method of pension saving,

however, the logical choice to make is the most stabilising
to the economy, most cost efficient in reducing lost
Treasury tax intake generated by pension tax relief and
most generous in terms of the maximisation of the saved
funds in the pension scheme, which will be made available
to the saver at retirement.

Most economists aim to provide slow stable growth within

an economy over a long period of time. It is usually aimed
to avoid the high peaks in growth, which often bring about
inflation, called “Booms” and the low troughs during a
recessionary period, which often bring about deflation,
called “Busts”, this is referred to as the “Boom – Bust”
business or economic cycle.

Optimal pension saving should achieve slow and steady

rates of economic growth, the monthly or annual pension
saving contributions should not push the economy into the
extreme “Boom – Bust” cycle and may even be able to
stabilise the economy if controlled correctly. This can be
enabled by evenly distributed monthly or annual pension
contributions.

Smaller annual pension contributions will enable greater

available funds for consumption, which will help to
stimulate economic growth. This can be a valuable tool in a
deflationary or recessionary period when greater spending
is required, if managed correctly the monthly or annual

89 | P a g e
pension saving allowance can be used to support or
stabilise economic growth rates.

Optimal pension saving will reduce governmental liability

for pension tax relief, which can save short term borrowing
needs and the cost of interest on debt repayments in short
less borrowing and less interest to pay. The rearrangement
of the pension contribution monthly or annual saving
allowance enables an optimal short term government
borrowing mechanism.

Smaller annual pension contributions will lead to a lesser

need for short term governmental borrowing, as money is
saved through lower pension tax relief payments, reducing
the cost of governmental debt interest payments. The
optimal pension saving methodology for reducing the cost
of government borrowing is smaller regular annual or
monthly pension contributions.

Optimal pension saving to maximise the funds invested by

the saver for their retirement, decreases the cost of the
elderly to the state by reducing financial dependency. The
aim is for the saver to reach the “Full” lifetime pension
taxation exemption allowance or to at least maximise
saving through the pension income tax relief facility to
increase retirement income.

The most efficient methodology of achieving the three

targets of optimal retirement pension saving, which are
stable economic growth, government borrowing
efficiencies and pension fund maximisation, is to set the
pension saving period to be over a twenty five year (25

90 | P a g e
years) timeframe then calculate the optimal annual
contribution or lifetime allowance on this basis.

The twenty five year pension payment period is the time

used in the Morganist Optimal Pension Contribution
Calculation. It can either be led by the lifetime allowance,
lifetime allowance (LTA) divided by twenty five equals the
annual contribution allowance (ACA) (LTA / 25 = ACA),
setting the pension investment rate over the total pension
saving period.

Or led by the annual contribution allowance, annual

contribution allowance multiplied by twenty five equals the
lifetime allowance (ACA * 25 = LTA), setting the pension
saving rate at an annual level, which enables an altering
lifetime pension allowance. This may provide a more
flexible lifetime allowance, which alters as the annual
contribution payments change.

For example, in the UK for the year 2018/2019 the annual

pension tax relievable contribution allowance is £40,000
and the lifetime pension allowance is £1,030,000 (HMRC,
2018). An annual contribution of £40,000 led lifetime
allowance, multiplied by 25 years, equals £1,000,000 LTA.
A lifetime allowance of £1,030,000 led annual contribution,
divided by 25 years, equals £41,200 ACA.

Next year the lifetime allowance rises to £1,055,000, if this

is divided by 25 years the annual contribution allowance
rises to £42,200. If the next year becomes the “Pension Tax
Relief Base Year” the annual and lifetime pension
allowances of all future years will rise at “Real Terms”, in

91 | P a g e
line with inflation, which is a 2 percent increase, if the
inflation target is achieved.

If the last three years of the pension saving period allow a

double annual pension contribution taxation exemption it
could enable deferred payments to reach the maximum
pension lifetime allowance. This would provide flexibility
in the pension investing process and encourage late starting
pension saving, which will reduce levels of dependency on
the state in retirement.

As long as the lifetime allowance remains the same, at real

terms (in line with inflation), the annual contributions can
change without costing the saver tax relief. Slow “Stable”
or “Gradual” economic growth, governmental debt interest
repayment efficiencies and pension saving fund
maximisation have been achieved, with additional
flexibility in annual pension contributions.

By using the Morganist Optimal Pension Contribution

Calculation, the pension investment process has become
optimised and the flexibility of annual pension contribution
payments allow inflationary or deflationary conditions to
be controlled. It will also enable emergency economic
stimulus if needed or an emergency short term borrowing
fund to be available.

92 | P a g e
 Pension Early Release - A Macroeconomic Tool
(Morgan, 2019).

During an economic downturn or deflationary period

economists look for methods of generating artificial
stimulus to compensate for low demand. Usually they will
use monetary policy or fiscal policy to increase the funds
available within the economy in an attempt to boost levels
of consumption and trade, this should create economic
growth or higher prices.

Monetary policy uses the interest rate to drive economic

growth, however it has become constrained due to the
interest rate maintaining a close to zero percentage rate for
the last decade (Morgan, 2019). As the interest rate falls to
encourage lending the mechanism has almost reached its
full potential to stimulate growth (unless the interest rate is
negative), limiting its usefulness (Economicsdiscussion,
2019).

Fiscal policy uses taxation to generate economic growth,

however due to the government having extremely high
levels of debt for the last twenty years it has become
constrained as vast taxation revenue is required to make
government debt interest payments (National-Debt-Clock,
2017). As taxation has to fall to increase income and
consumption, it has been difficult to use it to stimulate
growth.

An alternative viable option to stimulate economic growth

is the early release of personal pension funds. Although this

93 | P a g e
technique may not be advisable in normal stable economic
conditions, if an extreme downturn or a deflationary period
arose it could be the best option. Pensions can be
compensated for losses with extra contributions made in
later working years.

Early pension release may help to stabilise the remaining

funds in pension schemes, if the released money supports
stock market values and provides investment safeguards.
Economic stimulus, which can help to maintain
employment and the operation of businesses prevents
investment failure sustaining the function of producing
output guaranteeing strong returns.

There may be a reduction in the amount of income that can

be received from a pension in retirement or used to
purchase an annuity, if pension funds are released early.
This might be overshadowed by the benefit of securing the
immediate economic situation from deteriorating further,
preventing the value of pension funds diminishing in a
severe economic collapse.

One good example of a justifiable reason for allowing early

pension release is to pay an outstanding debt off, especially
if it avoids personal bankruptcy. The debt is paid off with
no consequence to the lender maintaining the return of their
investment. The borrower will lose some of the value of
their pension fund and tax relief, but they will not be
declared bankrupt.

The long term consequences of reducing funds in pensions

has to be taken into consideration, if early pension release
is allowed. Decreasing saved funds will dampen consumer

94 | P a g e
demand in future years. Pension saving has to be strong
enough to support future rates of consumption and the
elderly in retirement, an economic downturn has to be
serious if early release is used.

Early pension release provides a new dimension to

macroeconomic control, which supports monetary and
fiscal policy when they are constrained. The flexibility of
pension schemes and the longevity of pension saving offer
the opportunity to offset losses occurring from early
pension release through later contributions, making it a
valuable macroeconomic control tool.

95 | P a g e
96 | P a g e
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 Other Books by the Author.

Alternative Economics.
Morganist Economics
Perspectives Volume I.

Description. A compilation
of articles, essays and concepts
of the Morganist School of
Economic Thought.
ISBN 978-1-62407-489-9.

Modern Applied Macroeconomics.

Description. A Conceptual and Technical

Paper, Putting Forward Pension and
Economic Reforms.
ISBN 978-1-5136-4833-0.

Euro Crisis.
Aggregate Demand Control is European
Single Currency Weakness.

Description. A review and critique of

the Euro Crisis, with progressive solutions
suggested.
ISBN 978-1-61364-207-8.

Available at leading online book retailers.

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 Notes.

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