[Closed] Is Unemployment a "Price Worth Paying"?

I think it is unrealistic to expect a fully costed proposal on an internet forum.

😆

Pure capitalism - job fixed. If it needs doing then it will get done and paid for by those who want it.

...and end up like the US with crumbling roads, massive poverty, no healthcare for a huge chunk of the population and a totally polarised society. Sounds great!

Z11

Can you please go away and find out what GDP is, because you clearly haven't a clue.

GDP has sod all to do with national debt or balance of payments. In fact, it doesn't measure anything useful at all.

What country has the biggest GDP?

What country has the biggest national debt?

Notice anything?

There seems to be a strong vibe on here that capitalism is wonderful and the 'cure' for all ills. As such it is black or white.

I'm not saying it would be my personal choice (it wouldn't) but everyone calling for cuts so long as its not the bits they use that are cut is a ridiculous.

Either have public services or don't.

BTW, the country with the biggest national debt isn't a socialist country.

No i don't think so. What were trying to get through is the concept of living sustainably. Hence the position that pensions need to be paid for at a constant proportion of GDP. This has nothing to do with debt or austerity ...it is making the pension system sustainable otherwies there will be a much bigger problem in the future.

RPRT - the relevance of GDP here, is the fact that the only "proof" being posted that the public sector pension program is affordable, is the fact that a graph in the Hutton report showed that the cost as a proportion of GDP might fall a little bit... which I've already said is irrelevant because total government spending is [b]still[/b] completely and utterly unsustainable.

Once we've cut the public sector to the point whereby we can at least begin to [u]live within our means[/u], we can [b]start[/b] to worry about pensions liabilities forty years down the line

doesnt this all come back to recklessness and instability in the banking sector, certainly private pensions lost 10s of billions overnight in the last crash

which I've already said is irrelevant because total government spending is still completely and utterly unsustainable

By what measure? Less than Germany, France, Netherlands, etc etc.

Easily affordable and IMO desirable. I like good healthcare education and welfare

kimbers Nope,

Definately all the fault of socialist ideas and public sector workers.

Pure capitalism

...and end up like the US with crumbling roads, massive poverty, no healthcare for a huge chunk of the population and a totally polarised society.

Your heavens-to-Betsy characterisation of the country is so contextless as to be useless.

I predict a RIOT 😈

By what measure? Less than Germany, France, Netherlands, etc etc.

By the measure that its one hundred and fifty ****ing [b]billion[/b] quid more than total government income

expenditure more than income means debt, borrowing is, be definition, never a "sustainable" financial position, as, sooner or later, you have to pay it back.

As mentioned above - [i]The trouble with Socialism is that eventually you run out of other people's money[/i]

DB - the calling for cuts is an interesting one, especially if we can step away from the dogma of the "its all the bankers" versus "its all the public sector' fault.

I think there is starting to be an important shift in economics/politics away from the initial focus on the deficit towards a more growth agenda at least in some countries.

I can understand why the debate started as it did (see this week's Economist) but equally Greece shows us what happens if you don't have growth. The primary fiscal surplus that is required to stabilise the public debt ratio is given by the following formula:

1/100 x public sector debt as % GDP x (Interest rate - nominal GDP)

The fallacy that Greece cn possibly survive is very simple maths:

They have PDR of 160%, and IR of 4% (did) but GDP of -5%. Put it into a spreadsheet and it quickly becomes apparent that the math doesn't work despite what the EU politicians were saying.

As economies elsewhere slow, the same maths starts to become troubling. Just play around with -ve GDP assumptions.

We can argue on here as to the cause of the problems depending on our persuasions but that matters not a jot. The simple fact is that EU governments of all parties are losing basic credibility.

This is why The Economist is arguing this week, that focus needs to start with growth. Without that they argue that credibility will not be restored. The next problem though is have we exhausted the traditional Keynesian and/or monetarist levels for growth?

The US is not a pure capitalist society.

And look at the state of it. Christ knows what it would be like if it was.

The problem I think is that people take public services for granted. Things like free education, healthcare, security etc have become so 'normal' that people forget what life would be like without them, or how much they would cost if purely private.

people forget what life would be like without them

At the moment we have Socialism for the bankers, capitalism for everyone else.

Oh the ironing

Dazh: "The problem I think is that people take public services for granted."

....'cos, it's free, innit? 😉

[Lovely afternoon BTW - anyone fancy a ride?]

Given that poverty is defined as a calculation of 60% of median income - do you think that it would be mathematically possible to eradicate poverty in the UK?

Think about that one for a minute...

AT PMQ's last week Ed Milliband asked not one single question about the economy. Not like its anything important. Why not? Because Ed Balls is sat next to him. Its inexcusable

No, it was because Darling's book came out that week.

while people are thinking about that ZU, how do you feel when you learn that...

"Around a quarter of adults live in households where nobody has a high enough income to pay tax" (IFS this week)

...I find that more thought provoking than the definitions/mathematical possibilities

[straight ? BTW - no BIFF intended]

Z11

By the measure that its one hundred and fifty **** billion quid more than total government income
expenditure more than income means debt, borrowing is, be definition, never a "sustainable" financial position, as, sooner or later, you have to pay it back.

I explained this to you yesterday (or was it the day before?)

NO, YOU DO NOT PAY IT BACK - it's impossible. Our global economy only works by the creation of debt.

I'm confused now 🙁

Greece shows us what happens if you don't have growth.

No. Greece shows what happens when a small agriculturally based country where everyone is getting on quite nicely gets conned into thinking that growth is the answer to everything and that it should borrow loads of money in order to enjoy the same access to consumerist gewgaws as its "rich" neighbours.

No. Greece shows what happens when a small agriculturally based country where everyone is getting on quite nicely gets conned into thinking that growth is the answer to everything and that it should borrow loads of money in order to enjoy the same access to consumerist gewgaws as its "rich" neighbours

.............. Lies about it's finances and allows mass tax evasion

If you've got 38 minutes you might want to have a look at this:

[url=

Course[/url]

I think he talks a lot of sense.

(if you can get over the production values of the video)

Binners banks lend money out [ they dont really have*] and it works as long as everyone believes everyone will pay everyone back and savers dont ask for their money back. Once this stops being believable and people panic and ask for their money back or stop paying it crashes like this.
When it crashes like this we blame the public sector for crippling us and talk about how only capitalism can save us.
The logic of all of this is lost on me mind but thats the story.

RPRT - is the stuff you are smoking legal? 😉

Isn't Greece actually just an example of people wanting good public services etc, while not wanting to pay any tax?

They all retire when they're 50 and tax evasion is endemic at every level of society. And now they're getting uppity because the Germans don't want to pay for it

THM,

What's your point?

Quite happy to debate ad infinitum, but I'll go elsewhere for comedy if you don't mind.

Binners banks lend money out [ they dont really have*] and it works as long as everyone believes everyone will pay everyone back and savers dont ask for their money back. Once this stops being believable and people panic and ask for their money back or stop paying it crashes like this.

A Ponzi scheme?

Isn't Greece actually just an example of people wanting good public services etc, while not wanting to pay any tax?

Or more akin to the US subprime situation?

Maybe they shouldn't have been allowed to borrow loads of money?

Didn't I read somewhere during the crash that Goldman Sachs had been helping the Greek government keep their debt off the balance sheet?

Hang on a mo......

[url= http://www.spiegel.de/international/europe/0,1518,676634,00.html ]I thought they did[/url]

It'd be cheaper in the long run to cut Greece loose

It does make you wonder how much longer they can keep pouring cash down the money pit? All the stuff I've read seems to suggest its a case of 'when' rather than 'if' Greece defaults

JY - Of course, banks lend money that they do not have. That is their function - to intermediate between those that have excess savings (eg depositors) and those that have a deficit (borrowers). So their liabilities are capital (owned by shareholders), deposits (owned by those with excess savings) and other investors who provide debt. The reason why these are "liabilities" is of course that they need to be paid back. On the other side of the balance sheet are the assets - cash, loans, investments and a tiny % of fixed assets.

This role combined with the inherent leverage in their business model means that they are also a highly geared reflection of what is going on in society. Of course, the current reforms are trying to make them less geared. Banking then becomes a business of analysing, pricing, taking and managing risk. It was always thus and will remain so.

I do not believe the chain of thought you describe though. I have not read anywhere an analysis that says that the banking crisis was the fault of the public sector crippling us. It has multiple, inter-related factors but this is probably one too far.

Instead we are in the middle of an ongoing crises with different epi-centres and different causes. It started with a crisis at the household level, specifically those people who have historically found it difficult to afford housing, became a banking problem and has now moved to be a sovereign problem. It is because of this that attention moved from the ability of individuals to repay, then banks, then countries. As part of that trend, focus shifts to the question on whether the deficits being run at the country level are sustainable or not. Hence, the issue of the costs of public sector (including pensions) become part of the analysis.

banks lend money out [ they dont really have*] and it works as long as everyone believes everyone will pay everyone back and savers dont ask for their money back. Once this stops being believable and people panic and ask for their money back or stop paying it crashes like this.

A very nice and concise description of the capitalist financial system. And yes, also a nice and concise description of a classic Ponzi scheme. God help us all when it all comes crashing down.

JY - Of course, banks lend money that they do not have. That is their function - to intermediate between those that have excess savings (eg depositors) and those that have a deficit (borrowers).

You seem to have missed out any mention of "fractional-reserve banking". You know, the bit that means banks really can lend money that[i] [b]doesn't even exist.[/b][/i]. It is quite important.

God help us all when it all comes crashing down.

It did - and the next phase is still to come.

..If you've got 38 minutes you might want to have a look at this:

I like this one...

[url=

RPRT - you are correct, there are lots of things I left out including things that banks do wrong..

Binners, you are correct on both counts. Its rather like certain institutions that derived large amount of their returns from helping companies to avoid UK taxation, later benefitting from UK taxpayers support.

It did - and the next phase is still to come.

Well not quite. They managed to stuff a load more money into it to just about keep it afloat. I often wonder whether it wouldn't just be better to reset all the databases, create a load of new money and share it out again. It'd be like the matrix!

I do not believe the chain of thought you describe though. I have not read anywhere an analysis that says that the banking crisis was the fault of the public sector crippling us

THM

But JY made a fairly clear point that banks lend money they don't have.

You then went on to say that you agreed with him, but giving the misleading (your favourite word) impression, but alas the one that most people seem to have, that banks merely take money from depositors and then lend it out, when of course that is nothing like what they do.

OK RPRT - for sure, that is a simplification. The point being was merely to show that banks do not own the money they lend. Blimey getting on to fractional reserve banking was not something that i expected on STW.

But it is a very valid question and point. Made all the more interesting in that some of the most heated critics of the concept are actually the libertarian free marketers in Austria. There has to be some irony there.

I wonder how you would sell the concept of 100% reserve banking to Vince Cable. Ok, time for a quick ride to try and think of the answer. Thanks for the idea RPRT - apart from the aggro, there is always something that I get form your posts!! Just not sure about the Greece analysis.

all i will say is dont mention Elton John..he did once and nearly got away with it

THM

But JY made a fairly clear point that banks lend money they don't have.

You then went on to say that you agreed with him, but giving the misleading (your favourite word) impression, but alas the one that most people seem to have, that banks merely take money from depositors and then lend it out, when of course that is nothing like what they do.

Of course banks lend money they don't have, that's the point? Is that bad, or is it just something you don't understand and therefore feel is dangerous?

Fractional reserve banking conspiracies have replaced 9/11 conspiracies as far as I can tell.

So RPRT - the Martenson analysis is interesting and clearly put. I can't see anything particularly controversial here though. What are your key take aways from it?

Fractional reserve banking conspiracies have replaced 9/11 conspiracies as far as I can tell.

bainbridge,

Like many things, it's bad in excess. And that is what we have had - runaway creation of money as debt. And now we're in the sh1t.

Konabunny,

Please don't try to lump fractional reserve banking in with all that other stuff. It is part of mainstream economics and its use/abuse has led to many of our current economic problems. You will find plenty of mainstream economists saying so.

THM,

The key "take away" (or point, as I prefer to term it) is that the economics that have "worked" since the war won't work anymore as we reach the limits of population growth and resources such as agricultural land, fresh water, fish, timber etc.

Forgot also to mention the economic effects of of peak oil, which are/will be massive, but are still being ignored by the "business as usual" policies of governments around the world.

A good source of info on this phenomenon is:

[url= http://www.theoildrum.com/ ]The Oil Drum[/url]

(plenty of reading matter for you there THM)

Actually, just went to the oil drum to see what was new and came across this article, which talks about "peak debt" and ties it to peak oil. Also makes a few suggestions as to how the economy might be changed in order to create a more sustainable future (-ve interest anyone?):

[url= http://www.theoildrum.com/node/8350#more ]Oil Drum Article[/url]

RPRT - perhaps we nearly agree for a change! I agree that the economics that have defined the post war period will need revising. I agree about the importance of understanding and delivering sustainable economics although I am less persuaded by some of the more Malthusian-type predictions.

But coming back to some of the discussion on this and other threads, I think that the most important point that Martenson makes comes right at the end. He asks people to "take responsibility" and to re-think the type of jobs that they are doing. Above all, do a job that gives quality of life not one that is merely for the money.

Whatever one's political persuasion and wherever one stands with regard public sector pension rights there is one glaring fact facing all of us. We are going to have to accept lower returns, pay more for them and ultimately work for a lot longer than previous generations. In the face of that truism, we should stop hiding our heads in the sand about pensions and focus more on ensuring that we and more importantly our children do jobs that they actually enjoy. Because we are ALL going to have to them for a lot longer than we previously thought.

I made the point to JY earlier (I think) about the best things that Unions can do for them members. It is not to pretend that they will be able to maintain the current employment and retirement structures - because this will ultimately fail. Much better is to prepare union members for the realities of life ahead, where as you say RPRT the economics that drive our life will be very different.

teamhurtmore

'Whatever one's political persuasion and wherever one stands with regard public sector pension rights there is one glaring fact facing all of us. We are going to have to accept lower returns, pay more for them and ultimately work for a lot longer than previous generations.'

I dont believe this should be the case at all....the scenario you outline above is applicable only if we as a society want to continue with a bloated state, subsidies for the banking industry etc etc....personally i felt the failing banks should've been allowed to fail....no point keeping a bankrupt business afloat with public money....we would have a much clearer view of how the land lies now if that had happened.
It all comes back to living within your means....and that goes for government too....if they dont have the tax receipts to implement their ideas then they shouldnt do it.
An irresponsible attitude to money has pervaded all areas of society recently....a friend went travelling for a year, had no intention of working....it was effectively a year long holiday.
He applied to put 30k on his mortgage to finance this, the flat he bought was purchased when prices were high anyway so the lender should've told him to poke it....but they didnt, they tagged 30k onto his mortgage and off he went for a pleasant 12 months....flat now cant be sold as he's got huge negative equity and he regrets the 12 month holiday that is now going to cause him years of financial grief.

This story and others involving personal loans, credit cards etc can be repeated for millions up and down the country....what needs to change is peoples attitude to money and this pathetic 'i must have it NOW' approach to consumer goods.

I believe we should have a state funded education system, armed forces, police, NHS and a very basic benefits system which keeps food on the table for people between jobs....beyond those things government spending should be cut back in the most dramatic way....i reckon we could then afford a decent pension system for all and not have this pathetic hand wringing approach to politics where we feel the state has to be involved with every facet of people's lives.

Deviant - I agree that this should not be the case, but fear that it will be! So better to be prepared.

Credit cards are an interesting one. A few years ago, John Varley (the then CEO of Barclays) was pilloried in the press for saying that borrowing off a credit card was a bad choice and a mistake that many were making. In essence he was saying its the last thing you should do. And the press, murdered him over it. For a change, a banker being honest!?!

don't try to lump fractional reserve banking in with all that other stuff. It is part of mainstream economics

However, the mouth-breathing conspiracy theory nonsense from inter cut & paste merchants is absolutely of the same stable as Jews/Lizards/Bilderberger rubbish. I see you've mentioned Peak Oil too. I reckon if you can just squeeze in some "freeman on the land" reference, you'll have the whole set.

the economics that drive our life will be very different

I've been practising economic retraction ever since I graduated from university...

kb

However, the mouth-breathing conspiracy theory nonsense from inter cut & paste merchants is absolutely of the same stable as Jews/Lizards/Bilderberger rubbish. I see you've mentioned Peak Oil too. I reckon if you can just squeeze in some "freeman on the land" reference, you'll have the whole set.

What do you suggest then? That people don't talk about peak oil, because some people will use it as evidence of "conspiracy".

We are going to have to accept lower returns, pay more for them and ultimately work for a lot longer than previous generations.

Don't agree with this bit. In particular, the idea that we all need to work harder/longer.

Once you come to terms with the fact that you don't need to replace your kitchen every 5 years, replace the car every 2 years, replace your phone every year etc etc. then you can get by on a lot less money than many people seem to think you need. Every time I don't buy something I mentally celebrate the fact that I won't have to earn the money to pay for it. We're pretty lucky in that (IMO) we're reasonably well off, but all around me I see people making lots more money than us who still seem to think that they aren't well off and need to make more of it. What's needed isn't more work to afford the same lifestyle, but a more realistic view about what things are and aren't important.

THM

I am less persuaded by some of the more Malthusian-type predictions.

Can you expand.

Sorry RPRT no scraps today. Too much work to do. Whatever lifestyle choices anyone makes they will have to work harder to achieve them. Better strategy than simple heads in sand or downsize type strategies.

On Malthusian stuff - hard to summarise - suffice to say that I find a lot of background science inconsistent and unconvincing. Climate change and it's causes being an obvious example.

Climate change and it's causes being an obvious example.

Oh dear... 😯

seems the labour party are now saying they wouldn't reverse any of the cuts that the tories have put in. To me that'd suggest the cuts are necessary, not 'ideologically motivated' (if it was the latter, labour could reverse them, right?)

not at all 5lab - thats becuase the tory press have continually pushed the idea the cuts are necessary and Labour are too scared to go against them.
Its purely ideological.

Same as labour got into a "tougher cutter than you" position before the election.