UK Economy
"I think of the jobs that are being lost and the recovery delayed by a government too scared to lower the tax rate lest it be thought insufficiently caring and nice towards the deserving poor."
From an article which outlines what's wrong with modern British politics: http://blogs.telegraph.co.uk/news/james ... sq-content
Jeff
From an article which outlines what's wrong with modern British politics: http://blogs.telegraph.co.uk/news/james ... sq-content
Jeff
Whether it's anachronistic drivel or enlightened thinking depends on your political perspective... 
Surely the problem in Greece was that the government overspent. IMHO, the government is there only to do things that need to be done collectively, like providing defence and building roads. But in modern Britain, it's morphed into a juggernaut, trying to provide all things to all people (including paying for council union officers!).
A burgeoning state sector takes money out of the productive economy. It also encourages irresponsibility - why should people work hard and make their own provisions for the future when the state is going to look after them?
Jeff
Surely the problem in Greece was that the government overspent. IMHO, the government is there only to do things that need to be done collectively, like providing defence and building roads. But in modern Britain, it's morphed into a juggernaut, trying to provide all things to all people (including paying for council union officers!).
A burgeoning state sector takes money out of the productive economy. It also encourages irresponsibility - why should people work hard and make their own provisions for the future when the state is going to look after them?
Jeff
Galilee66 wrote:Jeff,
I would suggest you check who pays what taxes in Greece to see the result of this anachronistic drivel.
cheers
Galilee66
-
mulberryhawk
- Posts: 165
- Joined: Thu Oct 29, 2009 12:37 am
Forgive my economic ignorance but this statement sounds as if it is more applicable to one specific part of the private sector.A burgeoning state sector takes money out of the productive economy. It also encourages irresponsibility - why should people work hard and make their own provisions for the future when the state is going to look after them?
Is it not the finanncial sector which has been burgeoning , who takes money out of peoples pockets by irrisponsible lending practices to both businesses and households, causing massive debt burdens for both public and private individuals. Erodes the value of pension funds, and the value of savings and currency as interest rates are kept on the floor to help ease pain of both public and private deleveraging? Which leads to a socialisation of private debt in the form of bank nationalisations.
I agree in smaller less bloated governments , but lets not kid ourselves the private sector is not always the benovelent force that you seem to suggest.
Jeff,
There is no argument that Greece overspent - but the Greek governments - over many years - failed to establish a sound revenue base. Income from certain activitites ( I seem to recall shipping and stock market trading) was (and possibly still is) not subject to taxation. If you then consider the extraordinarily generous pension arrangements - particularly the early age at which a Greek citizen becomes eligible for an aged pension - it is axiomatic that there will be financial collapse.
Watching what is happening in the UK from the other side of the globe I tend to think that there is an extensive amount of pain to come yet. Any action designed to contain public debt will result in a reduction of Government expenditure (the electorate will demand that) - and that will ineluctably lead to a contraction of the economy. However, a nation can not continue to "live beyond its means" forever and the teachers and public servants involved in protests will have to eventually face up to the harsh reality of economics. I do not believe that there is anything inherently wrong with public debt - or private debt for that matter. However, it is essential that public debt is raised to service infrastructure (for example) which will facilitate economic activity - especially exports. For a decade we in Australia had a Governement which prided itself on the accumulation of massive budget surpluses - while completely ignoring infrastructure - particularly roads, railways and ports upon which our relatively high bulk/low value export economy depends.
Essentially, there has been a fundamental shift in the gloabl economic balance of power - away from the USA and Britain/Europe towards China and India.
To avoid appearing too smug I should add that I fear that Australia is failing to prepare for the inevitable next shift in economic power. Currently, Australia has benefited from the demand for raw materials from the burgeoning economies of both China and India - particularly China's voracious demand for iron ore, coal and gas. However, the lessons from the "old paradigm" of USA and Britain/Europe have not been fully appreciated by Australians, many of whom believe that the "yellow brick road" has no end. In this country we have not enthusiastically embraced the need to diversify and unless we do that we will be in the same position as Greece, the USA and the UK in time.
Galilee66
There is no argument that Greece overspent - but the Greek governments - over many years - failed to establish a sound revenue base. Income from certain activitites ( I seem to recall shipping and stock market trading) was (and possibly still is) not subject to taxation. If you then consider the extraordinarily generous pension arrangements - particularly the early age at which a Greek citizen becomes eligible for an aged pension - it is axiomatic that there will be financial collapse.
Watching what is happening in the UK from the other side of the globe I tend to think that there is an extensive amount of pain to come yet. Any action designed to contain public debt will result in a reduction of Government expenditure (the electorate will demand that) - and that will ineluctably lead to a contraction of the economy. However, a nation can not continue to "live beyond its means" forever and the teachers and public servants involved in protests will have to eventually face up to the harsh reality of economics. I do not believe that there is anything inherently wrong with public debt - or private debt for that matter. However, it is essential that public debt is raised to service infrastructure (for example) which will facilitate economic activity - especially exports. For a decade we in Australia had a Governement which prided itself on the accumulation of massive budget surpluses - while completely ignoring infrastructure - particularly roads, railways and ports upon which our relatively high bulk/low value export economy depends.
Essentially, there has been a fundamental shift in the gloabl economic balance of power - away from the USA and Britain/Europe towards China and India.
To avoid appearing too smug I should add that I fear that Australia is failing to prepare for the inevitable next shift in economic power. Currently, Australia has benefited from the demand for raw materials from the burgeoning economies of both China and India - particularly China's voracious demand for iron ore, coal and gas. However, the lessons from the "old paradigm" of USA and Britain/Europe have not been fully appreciated by Australians, many of whom believe that the "yellow brick road" has no end. In this country we have not enthusiastically embraced the need to diversify and unless we do that we will be in the same position as Greece, the USA and the UK in time.
Galilee66
-
superfrank
- Posts: 2762
- Joined: Fri Aug 14, 2009 8:28 pm
Good posts above and I tend to agree with both.
Globalisation has changed the game and the scary bit is that western governments have assumed that growth is going to return big style that will enable both public and private sector debts to be reduced or at least become manageable.
IMHO that is a dangerous assumption.
Growth in the last 10-15 years in many western nations was largely achieved through increased public spending and a property boom which masked the effects of real wealth creating business and jobs steadily disappearing overseas.
Mervyn King says that interest rates shouldn't rise "until the economy is growing strongly".
What if that never happens?!
The UK, for example, is not only burdened by massive public and private debt, but also by a demographic timebomb of an ageing population and the associated pension liabilities.
China is increasingly looking to buy western technology because the don't just want to produce low-tech tat. The east is getting stronger and stronger, I fear the west is in denial.
Globalisation has changed the game and the scary bit is that western governments have assumed that growth is going to return big style that will enable both public and private sector debts to be reduced or at least become manageable.
IMHO that is a dangerous assumption.
Growth in the last 10-15 years in many western nations was largely achieved through increased public spending and a property boom which masked the effects of real wealth creating business and jobs steadily disappearing overseas.
Mervyn King says that interest rates shouldn't rise "until the economy is growing strongly".
What if that never happens?!
The UK, for example, is not only burdened by massive public and private debt, but also by a demographic timebomb of an ageing population and the associated pension liabilities.
China is increasingly looking to buy western technology because the don't just want to produce low-tech tat. The east is getting stronger and stronger, I fear the west is in denial.
...thereby keeping money in the hands of businesses, allowing them to reinvest it.Galilee66 wrote:Income from certain activitites ( I seem to recall shipping and stock market trading) was (and possibly still is) not subject to taxation.
And low taxes are great if you want to attract investment from abroad.Having excessively generous non-private pension arrangements amounts to over-spending, doesn't it?Galilee66 wrote:If you then consider the extraordinarily generous pension arrangements -
I agree. We ain't seen nothing yet...Galilee66 wrote:Watching what is happening in the UK from the other side of the globe I tend to think that there is an extensive amount of pain to come yet.
I don't buy that argument. Growth doesn't come from government spending. Basic economic theory states that economies grow due to investment, innovation and exports.Galilee66 wrote:Any action designed to contain public debt will result in a reduction of Government expenditure (the electorate will demand that) - and that will ineluctably lead to a contraction of the economy.
And if we don't cut government spending, then the pain will be far worse when we eventually do have to cut it.
Look at what's happened in the States - President Obama's Keynesian experiment has cost many billions, but delivered negligible benefit...
Such as what? I don't wish to sound facetious, but we already have the things exporters need, like roads and ports.Galilee66 wrote:It is essential that public debt is raised to service infrastructure (for example) which will facilitate economic activity - especially exports.
Jeff
Last edited by Iron on Sun Jul 10, 2011 10:46 am, edited 1 time in total.
I agree that some sectors of the banking industry have lots to answer for. But they aren't the reason that Britian spends more each year on debt interest repayments than on defence. That's the fault of Prudence Brown and his friends...
And the irony of the public anger at the banking sector is that many of the people who criticise the banks helped to cause the crisis by buying houses and luxury items they couldn't afford, thinking the good times would never end...
Jeff
And the irony of the public anger at the banking sector is that many of the people who criticise the banks helped to cause the crisis by buying houses and luxury items they couldn't afford, thinking the good times would never end...
Jeff
mulberryhawk wrote: Is it not the finanncial sector which has been burgeoning , who takes money out of peoples pockets by irrisponsible lending practices to both businesses and households, causing massive debt burdens for both public and private individuals. Erodes the value of pension funds, and the value of savings and currency as interest rates are kept on the floor to help ease pain of both public and private deleveraging? Which leads to a socialisation of private debt in the form of bank nationalisations.
Growth might well take place in some parts of the world, but Britain and America are stuffed!superfrank wrote:Western governments have assumed that growth is going to return big style that will enable both public and private sector debts to be reduced or at least become manageable.
If you were a widget maker, why would you open a plant here or in the States when India and China have skilled and hard working staff who are willing to work for half our wages?
At the risk of sounding all Daily Mail, let's not forget about the alleged asylum seekers we look after! Or the European immigrants who work over here, making it harder for British people to find work, thereby increasing our social security bill. I read recently that 90% of jobs created in the last 12 months went to immigrants...superfrank wrote:The UK, for example, is not only burdened by massive public and private debt, but also by a demographic timebomb of an ageing population and the associated pension liabilities.
Jeff
-
superfrank
- Posts: 2762
- Joined: Fri Aug 14, 2009 8:28 pm
i.e. we are only producing crap full-time jobs, or even crapper part-time ones.Ferru123 wrote:I read recently that 90% of jobs created in the last 12 months went to immigrants
I used to work for the London arm of a major diamond miner (when I joined it employed 1200 people in decent full-time jobs with good pensions etc.). The company is now only half that size and the remainder is being transferred to Botswana in 2 years time!!
Those jobs are being lost for good, they're not coming back.
That may be true in general terms, although many immigrants are going into nice jobs too - see http://www.telegraph.co.uk/finance/jobs ... tures.htmlsuperfrank wrote: i.e. we are only producing crap full-time jobs, or even crapper part-time ones.
Jeff
-
mulberryhawk
- Posts: 165
- Joined: Thu Oct 29, 2009 12:37 am
Whilst I agree people borrowed beyond their means, the only reason that they did this was because banks were falling over themselves to offer 100% +morgages with no downpayments necessary.
Basically your saying its ok for private banks to lend incomprehensibly large sums to companies to finance m&a activity on a grand scale, skim off the comissions when the bull marktes in full cry and then when everything crashes, its the tax payer who bails out these reckless bank sized bets.
The public anger would appear to be warranted as whilst the taxpayer continues to pay down their household debt in an environment of higher living costs and lower wage growth, banking pay scales and bonuses remain in place to attract the "best and brightest".
So the economic model you seem to be supporting is the one of free market economics in the good times, but when the banks "masters of the universe" cant manage risk the debts and liabilities are transferred onto the public balance sheet. Ever heard of moral hazard?
Basically your saying its ok for private banks to lend incomprehensibly large sums to companies to finance m&a activity on a grand scale, skim off the comissions when the bull marktes in full cry and then when everything crashes, its the tax payer who bails out these reckless bank sized bets.
The public anger would appear to be warranted as whilst the taxpayer continues to pay down their household debt in an environment of higher living costs and lower wage growth, banking pay scales and bonuses remain in place to attract the "best and brightest".
So the economic model you seem to be supporting is the one of free market economics in the good times, but when the banks "masters of the universe" cant manage risk the debts and liabilities are transferred onto the public balance sheet. Ever heard of moral hazard?