June 24, 2013
Progress dictates that we determine our future based not on history but on future needs. We did not need an industrial sector before we had one.
The service sector is the largest employer and supplier of needs. Without technology and medicine, today’s world would be pretty awful. Those primary elements of productivity are not the source of all productivity. People are. Innovation and ideas are worth more than widgets or burnt coal.
I think we have yet to find an economic path that works for everyone, but so far what we have evolved with a thriving service sector is better than centralised wealth only consequential on primary production being the mainstay of all economic activity. More directly: the fewer people who can make money from the productive activity, the smaller the economy.
Banks do create money. Investment does create money. But for 100% employment to be possible, there has to be value for services and ethical organisations. Primary sectors are always smaller than what they grow. It is wrong to think we rely upon them for growth.
World class education is our most valuable export.
April 10, 2013
George Soros argues that Angela Merkel’s German Led Austerity is the wrong medicine for Europe.
March 23, 2013
In the Telegraph, Jeremy Warner states “Lack of growth has completely poleaxed the centre piece of the Government’s economic strategy — getting the deficit under control.” and concludes “Osborne is often accused of cowardice and a lack of radicalism. He needs to be much bolder if he is ever to get to grips with the public finances, critics say. This may or may not be true, but the perhaps surprising reality is that if he is given the five years now needed to complete his plans, he will have brought about a remarkable transformation — some £24bn in selected tax cuts at the same time as a fiscal squeeze which reduces the size of the state as a proportion of GDP back to where it was before the last government began its madness. Brown’s public sector expansion will have been entirely reversed.”
Clearly, the starving off of all the grand schemes Brown initiated as a policy filter is not that well thought out. Progress is progress, so some of what is now dust was causing growth that has now been lost.
Long term growth is caused by small businesses that can adapt to new conditions becoming large concerns making stuff that the world needs. Of course stuff now can include intellectual capital realised from the results of ecommerce and other profound changes in the economic sphere that the UK is utterly failing to become adept with because investment is impossible, so companies continue to ride the same wave to shore. But the tide is still going out because the Government has to create more dependency on introduced capital as it has utterly failed to stimulate sales. The worst kind of manager shuts the door to preserve demand.
February 17, 2013
Adam Smith wrote the seminal work about capitalism – The Wealth of Nations. Growth was then based on nations competing in the most extreme act of international piracy in history, colonialism.
These days we talk of “bubbles” as though these modern gold rushes were a certain financial rhythm. We developed a science to predict and thus invest as a business. The most successful have been investing madly and hiding it from tax authorities. Capital is continually extracted from the wealth of nations and poured into tax havens in a sort of reverse colonialism – only to find its way back into the economy funding more Government debt via bonds.
The only way that the Government can reduce these debts is to have a money supply from tax revenue exceeding expenditure, or to devalue the currency. Western economies continue to need to spend more than they take. What has happened to the Wealth of Nations?
February 7, 2013
The economies of the West have all run into trouble due to the derivatives scam and resultant financial meltdown causing massive capital flows out of national economies. Tax avoidance and corporate logic has led to offshore tax havens becoming significant on the radar of the US and UK governments. Austerity has lain the problem upon the society rather than the entities that caused it, and has prevented growth being a solution to endlessly rising government deficits and ultimately inflation.
The UK and USA could learn a lot from a more progressive and successful Western economy – that of Norway. True, they have oil reserves, not as large as the USA reserves – but they charge a 50% corporation tax levy on oil drilling. And so they should. Oil companies invest in exploration and drilling, yes it is expensive. But once they tap into the Earth’s resources they are effectively using something that belongs to the people and the future.
Western Governments are stuck in a thread of believing that any tax rise is regressive when ultimately what they are achieving with short-termism is to evaporate wealth from their own coffers. The 1% benefit because they avoid tax and yet enjoy the benefits of health and protection (both police and armed forces), education and pensions provided by the Government.
New progressive thinking is required and Norway is a good place to examine for a balanced model.
August 22, 2012
The use of austerity has worn thin at least for the probable longevity of George Osborne. In its current form at least. Infrastructure spending by this two faced Government amount to allowing private roads to be built which is certainly going to provide some relief to chronic unemployment and incrementally it may result in economic improvement. But it is not what they set out to do, which is to build a bigger economy. That, they surmised, would result if we do what we would want a government to do, to protect wealth – to sustain privilege.
Which seems based on the misapprehension that wealth itself is a thing. It is not, really. It is the flowing of money that is the thing. The flow of money between viable entities finding areas of demand and creating supplies to meet them. I am hungry. I go eat a sandwich. And Joe’s is just around the corner. These connected imperatives, these compelling reasons to do things. Art. Achievement. Enterprise. Hobby. Obsession. A society with flows inward to fewer central points creates poverty as well as pockets of wealth. Taking risk on credit creates debt with a chance of wealth. Governments tend to run in debt as a natural state, hoping to improve things sooner.
If the measuring stick of a society is the degree of economic growth it can achieve, it establishes an instant demand for more population to share the load. If we can find an honest way to limit the growth of humanity we can then modulate our economics to fit more comfortably than the monied classes feeling they need to accumulate so much more than anyone else before anyone else gets their filthy mits on it. It is not so much that economies are inflating by increasing the money supply and devalusing currency slowly – it is the only way to evaporate the effect of trillions of dollars locked into tax havens. Unproductive wealth is the economic glutony of the modern world. And it works like cortisol in the body, it adds sink holes to the economy – which means that there is less actual cash in the system.
This is an ever accelerating economic phenomena of allowing tax havens. To attract people with a lot of asset income to reside Governments are obliged to allow tax havens into the economic equation.
The net effect with devaluation is to make the funds that tend to be locked into tax havens more at a risk of devaluation if left in your currency. The problem is that the Governments are compelled to compete for such retinues as those of the religiously rich.
Job creation by government in times of economic emergency yes. This Government’s record at economic improvement? Negative, trending: negative.
January 21, 2012
Disabled people should not be discriminated against. However, behind increasing numbers of disabled, is the rise in false claims: you can have rigorous detection or universality depending on your politics.
Both are expensive and do not target funds to the disabled, because if you assume the year on year growth is down to false claims then penalising the disabled is not the solution.
Education does provide a return on investment so it is worth doing, always. State-run family planning however seems to have a terribly high cost. I am all for reducing the world population but there is no reason to dictate to evolution.
November 12, 2011
There are many ways to “solve” the crisis.
You do not win a game of chess by barking at the pieces on the board, but sacrifice can have huge dividends. Part of the crisis is one of leadership.
Our leaders keep talking but not facing the fact that the economic system is riddled with corrupt practices, magical mathematical models that distort value and they appear to be relying on these mechanisms “to induce real growth” while starving the participants in favour of those for whom tax avoidance is a religion and make fortunes by gambling on leveraged valuations for things that do not exist.
October 8, 2011
The value of pension funds is bleeding away in the UK and across America protesters decry Wall Street’s corrupt practices and greed. We were told (by politicians, most likely) that freedom in the markets would free things up and maybe it did. What we were not told and did not realise until it was far too late, is that continued freedom for the market to create new instruments that multiply values without any effect on the other side of the ledger, well that is not the creation of growth. It is mediation by greed. It is irresponsible government and it is pointless.
The world system is a board where each member represents badly controlled feudal entities, each of which is an experiment. Some return value funds can be directed there, others do not get a look in. For years the bleeding empires and the super consumer states appeared to be the best bets, followed by those who had a point to prove or to recover from. We have a system of systems, each of which potentially returns differential values to investors.
It works when the members have control of their entities – for stability and continuity it is reasonable that more strict regulations should apply to state controlled enterprise. When you put the power generation into the hands of a private monopoly there is nothing to stop societal extortion. By inventing methods to fit more water into the same pool, the investment banking sector has very slowly and carefully increased the money supply. The effect is to create mathematical fountains which they in turn invested in new pools, ad infinitum. It is great to create these self perpetuating multipliers of wealth but there comes a point, if the water evaporates before it hits the ground that the whole system becomes a liability, deflated by the absence of pressure and unable to restart the infernal machine as it requires more dynamics exist to feed into its frenzy.
So the pool masters, realising the one way nature of this effect dipped their cup into and extracted what they needed as they then fell from the self induced elevation of their wealth and into, hopefully, obscurity in a country mansion.
And the executive board that runs the world hope for excessive rain to refill those myriad of pools. At first they pump all the water from the foundation pools into the top pools hoping to restart the fountains. Out come more cups draining the network before any can trickle down. And the new pools are starting to rust.
It is inevitable as Governments wind down their public sector and invest heavily in rescuing “capital” from itself, that pensions are going to universally drop. The solution is to demolish the structures that feed on tax payers to rescue pensions. The other solution is to nationalise core banks and protect national sovereignty.
The theory is that the Bilderberg Group of the hyper wealthy that seem to sit above democracy want to eradicate governments at a national level, and replace it with their own, the guiding hand of the benevolent dictatorship, the grandest lords of them all. The ones that own everything.
In 2001, Denis Healey, a Bilderberg group founder and, for 30 years, a steering committee member, said: “To say we were striving for a one-world government is exaggerated, but not wholly unfair. Those of us in Bilderberg felt we couldn’t go on forever fighting one another for nothing and killing people and rendering millions homeless. So we felt that a single community throughout the world would be a good thing.”
See also Telegraph article on decline of pension funds.
January 23, 2009
The last great empire builders – the UK and the USA appear to be on the brink disaster due to the collapse of debt financing.
Due to the mountain of debt compared to productivity mainly in the private sector, the banking crisis looks like it inevitably will move to the next stage despite the extraordinary generousity by Governments of tax payer reserves into the banking sector.
It seems that our addiction to capital is an addiction to “productivity free” capital – in other words the acceleration of capital growth over the past thirty years has been a belief system based on attributed value rather than real value. Notice how your house got more and more valueable?
Continued in End of Empire on DisturbingTrends: predicting future politics
December 22, 2008
The path that GW Bush has set the United States upon is inverse socialism. It is regression. It has produced an incipient depression in the world economy by creating a inverse bubble. A huge cash vacuum has removed 2 trillion from the American federal reserve.
To reduce the treasury into a funding agency for the seriously wealthy, bankers and those who take a cut from everyone, is grand scale theft.