UBB.classicTM 6.5.0
quote:highlights the biggest issue and one that drives your friend's observation.
their duty to create as much value as possible for their stockholders
quote:How about "Co-operativeism"?
Originally posted by Caissa:
What we need to do is abolish capitalism and get on with a more equitable economic system.
quote:You'd think businesses would have at least some idea of the productive capacity of workers, and might regard the ability to [build their product/provide their services/whatever the business model is] as something of an asset. If they don't regard productive capacity as an asset now, I'm not sure revising accounting rules will change that.
Originally posted by Josephine:
An acquaintance with a background in finance suggested that what we really need in order to help businesses create more jobs, and to overcome some of the problems that result from their duty to create as much value as possible for their stockholders, and at the same time to help companies that are struggling, is an accounting change.
Right now, everything related to employees is on the liability side of the ledger. Nothing about an employee is an asset on the books. Nothing.
quote:Exactly. The lack of respect some American business owners & CEOs have shown for their own workers in the last 11 months has been shocking.
Originally posted by Crœsos:
]You'd think businesses would have at least some idea of the productive capacity of workers, and might regard the ability to [build their product/provide their services/whatever the business model is] as something of an asset. If they don't regard productive capacity as an asset now, I'm not sure revising accounting rules will change that.
quote:What system would that be?
Originally posted by Caissa:
What we need to do is abolish capitalism and get on with a more equitable economic system.
quote:That's the point, though. CEOs and CFOs and people with MBAs are all trained to notice what hits the bottom line. If their labor never hits the bottom line in any way that they can see, they won't notice it, and they therefore won't value it appropriately.
Originally posted by cliffdweller:
in the end, you notice what you value. If you don't value labor, you won't notice how they contribute to your bottom line.
quote:We seem to have some scope for misunderstanding accounting terminology here. The opening post refers to showing the value of employees' skills/knowledge on the balance sheet as intangible assets. But the term the bottom line generally refers to the profit and loss account. The proft and loss account automatically includes the contribution of labour as well as its costs, in the current accouting period, because it represents the difference between the company's revenue, partly generated by its labour force, and its operating costs, partly comprised of its labour costs.
originally posted by Josephine
If it's only the cost of labor that is on the bottom line, then it's only the cost that they notice.
quote:The question has to be asked then - why are the older employees costing more?
Originally posted by Josephine:
Right now, everything related to employees is on the liability side of the ledger. Nothing about an employee is an asset on the books. Nothing. That's why, when a business is struggling, they want to get rid of their oldest and most experienced employees first -- those employees are bigger liabilities. They don't value the experience and knowledge those employees have, because there is nothing in the books that says those employees are worth the extra money that they cost.
quote:Good managers can be expected to understand the productivity because they read the timesheets (or production figures) and not just the aggregated balance sheets. It is not reasonable to expect a bean counter reading a balance sheet to understand the productivity of individual employees when all they have is the big picture of the overall performance of the business or division.
Originally posted by Crœsos:
quote:You'd think businesses would have at least some idea of the productive capacity of workers, and might regard the ability to [build their product/provide their services/whatever the business model is] as something of an asset. If they don't regard productive capacity as an asset now, I'm not sure revising accounting rules will change that.
Originally posted by Josephine:
An acquaintance with a background in finance suggested that what we really need in order to help businesses create more jobs, and to overcome some of the problems that result from their duty to create as much value as possible for their stockholders, and at the same time to help companies that are struggling, is an accounting change.
Right now, everything related to employees is on the liability side of the ledger. Nothing about an employee is an asset on the books. Nothing.
quote:Even in a cooperative, a member who does not pull their weight will not reap the rewards as greatly as a member who does.
Originally posted by Boogie:
quote:How about "Co-operativeism"?
Originally posted by Caissa:
What we need to do is abolish capitalism and get on with a more equitable economic system.
quote:The value of the labour is in what goods and services they produce, the income from which does go on the big picture balance sheet.
Originally posted by Josephine:
If you put the value of labor on the bottom line, because the bottom line is what they value, they will notice it, and will begin to value it. If it's only the cost of labor that is on the bottom line, then it's only the cost that they notice.
I think that changing the accounting rule could change the behavior of corporations very, very quickly.
quote:Even taking a "big picture" view, the idea that productivity is a result of the efforts of workers doesn't seem terribly complicated to grasp. You don't need to know the specifics of which individual workers are the most productive to get the very basic concept "if we have no workers, work won't get done".
Originally posted by the giant cheeseburger:
Good managers can be expected to understand the productivity because they read the timesheets (or production figures) and not just the aggregated balance sheets. It is not reasonable to expect a bean counter reading a balance sheet to understand the productivity of individual employees when all they have is the big picture of the overall performance of the business or division.
quote:One that is not based upon usury.
Originally posted by Beeswax Altar:
quote:What system would that be?
Originally posted by Caissa:
What we need to do is abolish capitalism and get on with a more equitable economic system.
quote:If there is an opportunity to get accounting terminology wrong, I will probably get it wrong. I am reasonably certain that my acquaintance was talking about the balance sheet, not P&L.
Originally posted by moonlitdoor:
quote:We seem to have some scope for misunderstanding accounting terminology here. The opening post refers to showing the value of employees' skills/knowledge on the balance sheet as intangible assets. But the term the bottom line generally refers to the profit and loss account.
originally posted by Josephine
If it's only the cost of labor that is on the bottom line, then it's only the cost that they notice.
quote:Such as?
Originally posted by leo:
quote:One that is not based upon usury.
Originally posted by Beeswax Altar:
quote:What system would that be?
Originally posted by Caissa:
What we need to do is abolish capitalism and get on with a more equitable economic system.
quote:Except that that is the way the vast majority of small and medium sized companies do it anyway. The slowly-rising-up-the-pay-scale thing is almost dead except in some very large organisations (private as well as public)
Originally posted by the giant cheeseburger:
If workers were to be promoted to higher pay rates only when they applied for it and had demonstrated that they could maintain the higher level of productivity, then it would be demonstrable that they contribute a higher amount of value to the company.
![[Projectile]](graemlins/puke2.gif)
) or an accountant or a social worker or a call centre worker or a supermarket checkout worker (whose work rate is determined by the rate at which the system presents them with customers and the way their bosses set up the systems they use) or a programmer (code metrics? ![[Killing me]](graemlins/killingme.gif)
) or a plumber (if involved in domestic repairs, then every job is different - and their boss gets paid more the longer they take to do the job) a "consultant" or even a "manager" (which I think may be the individually most common job title in Britain these days)quote:ok, well in terms of the balance sheet, I don't think it's right to say that employees feature heavily as liabilities but not as assets. They don't feature much on either side. That's because as I said before, liabilities are only for events that have already happened. Generally a company has already paid its workforce for the work they have already done, a liability only arises for work done but not yet paid for. The fact that they will have to be paid in the future might make them a liability in the mind of the Chief Executive but not on the balance sheet.
originally posted by Joesphine
I am reasonably certain that my acquaintance was talking about the balance sheet, not P&L.
quote:Anyone going to answer BA?
Originally posted by Beeswax Altar:
quote:Such as?
Originally posted by leo:
quote:One that is not based upon usury.
Originally posted by Beeswax Altar:
quote:What system would that be?
Originally posted by Caissa:
What we need to do is abolish capitalism and get on with a more equitable economic system.
quote:It was Marx who said that things that visit us first as tragedy return as comedy. I hope you're being funny. Marx was a complete disaster.
Originally posted by Caissa:
All BS has to do is look at my avatar for my answer.
quote:No idea who that is. Why don't you tell us? Is there a particular flavour of whoever-that-is's politics you prefer over others? Come on, stop being so coy. Name names!
Originally posted by Caissa:
All BS has to do is look at my avatar for my answer.
quote:Yeah! Are you now, or have you ever been, . . .
Originally posted by deano:
quote:No idea who that is. Why don't you tell us? Is there a particular flavour of whoever-that-is's politics you prefer over others? Come on, stop being so coy. Name names!
Originally posted by Caissa:
All BS has to do is look at my avatar for my answer.
quote:Now that's funny! To be honest I think everyone in the entertainment industry would be a... er... I dunno! I don't know what we are discussing here, because the person hinting at it seems to by shy about saying what it is he believes in. So I don't know what anyone in the Entertainment business would be.
Originally posted by Crœsos:
quote:Yeah! Are you now, or have you ever been, . . .
Originally posted by deano:
quote:No idea who that is. Why don't you tell us? Is there a particular flavour of whoever-that-is's politics you prefer over others? Come on, stop being so coy. Name names!
Originally posted by Caissa:
All BS has to do is look at my avatar for my answer.
quote:Her avatar says nothing about what system she favors. Good luck trying to identify what a self-identified Socialist favors other than not Capitalism. Mao's China? Stalin's Russia? Castro's Cuba? Chavez's Venezuela?
Originally posted by no prophet:
quote:It was Marx who said that things that visit us first as tragedy return as comedy. I hope you're being funny. Marx was a complete disaster.
Originally posted by Caissa:
All BS has to do is look at my avatar for my answer.
The middle ground is social democracy with a regulated economy so no-one exploits anyone. We've moved away from that. We need to restore it. But Marx? No.
quote:That's why asked about any particular flavours. I always think Marxism - there, I've said it for you... pet - is a bit like Baskin-Robbins ice-cream, fifty different flavours.
Originally posted by Beeswax Altar:
quote:Her avatar says nothing about what system she favors. Good luck trying to identify what a self-identified Socialist favors other than not Capitalism. Mao's China? Stalin's Russia? Castro's Cuba? Chavez's Venezuela?
Originally posted by no prophet:
quote:It was Marx who said that things that visit us first as tragedy return as comedy. I hope you're being funny. Marx was a complete disaster.
Originally posted by Caissa:
All BS has to do is look at my avatar for my answer.
The middle ground is social democracy with a regulated economy so no-one exploits anyone. We've moved away from that. We need to restore it. But Marx? No.
Social Democracy doesn't guarantee no-one exploits anyone. Who decides what counts as exploitation? No matter the economic system somebody will claim to be exploited by somebody else who will also claim exploitation.
quote:Jesus - the answer's always Jesus, so he must be the beardy bloke.
Originally posted by Caissa:
All BS has to do is look at my avatar for my answer.
quote:You're right, that's true. We've done a little better with regulated and restrained capitalism here. I am for the middle ground, between restraint of business entirely by socialist ideology, and reasoned restraint of that gov't control. We need a balance. Better than either end, and I have seen both in relative mild versions. The European irresponsible manner of social welfare of France and Greece is not acceptable and isn't what we've had. Nor is the total wide open capitalist exploitive model of say some Asian and South American countries; America seems to be between us and them from my read. I worry about the the growing rich and poor groups, and the shrinking middle group, from whom we get patriots and revolutionaries.
Originally posted by Beeswax Altar:
Social Democracy doesn't guarantee no-one exploits anyone. Who decides what counts as exploitation? No matter the economic system somebody will claim to be exploited by somebody else who will also claim exploitation.
quote:One important addition to that list is capacity, the amount of product that can be created in a certain time period. Employees contribute to this, along with equipment and infrastructure. Lack of capacity holds back a lot of businesses with good ideas and excellent products, because it requires investment to build, and it costs to maintain it even if you aren't using it during a slack period. Capacity puts a limit on how much product a company can sell.
Originally posted by Chapelhead:
What a company has that is of value is reputation, systems, market position, public profile, fixed and current assets etc and possibly the experience of it workforce.
quote:No, you are just suspicious of big companies like Unilever. If a small company dispatched a press release would you worry about veracity then?
Originally posted by Spiffy:
2) if you are an existing company, your shareholders have to vote to permit you to reincorporate as a B Corporation, which was super tricky in the B&J reincorporation as they are a subsidiary of Unilever-- who says they supported it *now* but I'm always suspicious of press releases.
quote:Surely the shareholders' valuation of the company is always distinct from the accounting valuation? No company ever trades on the stock market at the price its balance sheet would suggest.
Originally posted by Josephine:
An acquaintance with a background in finance suggested that what we really need in order to help businesses create more jobs, and to overcome some of the problems that result from their duty to create as much value as possible for their stockholders, and at the same time to help companies that are struggling, is an accounting change.
Right now, everything related to employees is on the liability side of the ledger. Nothing about an employee is an asset on the books. Nothing. That's why, when a business is struggling, they want to get rid of their oldest and most experienced employees first -- those employees are bigger liabilities. They don't value the experience and knowledge those employees have, because there is nothing in the books that says those employees are worth the extra money that they cost.
quote:Co-operative socialism - another name for living the Magnificat; of prophets before profits.
Originally posted by Beeswax Altar:
quote:Such as?
Originally posted by leo:
quote:One that is not based upon usury.
Originally posted by Beeswax Altar:
quote:What system would that be?
Originally posted by Caissa:
What we need to do is abolish capitalism and get on with a more equitable economic system.
quote:I think only someone who doesn’t understand capitalism could truly believe that capitalism “almost collapsed” a few years ago.
Originally posted by Caissa:
I don't mean to be coy and I am not shy. Capitalism is a system based on worker exploitation and the increasing accumulation of wealth by the richest. The disparity between the rich and poor keeps growing. At some point capitalism will become unsustainable and will collapse.It almost did a few years ago. Hopefully, when capitalism collapses, it will be replaced by some more equitable form of socialism.
quote:Whatever the present Chinese economic system may be, "capitalism" seems an insufficient descriptor. Nineteen of China's top twenty corporations are either government entities or have the Chinese government as the majority shareholder. While China may not be strictly communist anymore, it's not really a either a capitalist economy or a "mixed" economy (market capitalism with social safety net) like we see in the West. I'd say the best descriptor would be "industrialized feudalism", or maybe "feudal industrialism".
Originally posted by deano:
But look at China. It started as pure Communist (thesis) and is now capitalist, but is that the antithesis or the synthesis?
quote:True about accountants. But less true about the other stuff. Work creates jobs. The more that is produced and sold and used the more there is to go round and the more work there is. Workers make more work to do, not managers, never mind accountants.
Originally posted by Russ:
Nothing that bean-counters do creates jobs. Jobs are created by innovation and creativity, by individuals who understand the production process and the market well enough to see how things could be done differently.
quote:"State Capitalism" is a traditional term.
Originally posted by Crœsos:
I'd say the best descriptor would be "industrialized feudalism", or maybe "feudal industrialism".
quote:Which proves that you and Ken are mistaken about work creating jobs. It does nothing of the sort. Work is what you get when you expend energy. Jobs are created by people being willing to pay someone to expend their energy to do work.
Originally posted by Sioni Sais:
ken states, correctly, that work creates jobs. That leads me to wonder why so many are without jobs because there is clearly a lot of work that needs doing.
quote:That hasn't worked here in the US. The last time we had an employment boom, it was after tax hikes, not cuts.
Originally posted by deano:
quote:Which proves that you and Ken are mistaken about work creating jobs. It does nothing of the sort. Work is what you get when you expend energy. Jobs are created by people being willing to pay someone to expend their energy to do work.
Originally posted by Sioni Sais:
ken states, correctly, that work creates jobs. That leads me to wonder why so many are without jobs because there is clearly a lot of work that needs doing.
You have the cart before the horse.
In order to pay someone to do work, you must first get the money. Unfortunately in Britain, the Government, held back as it is by LibDems, and preceeded by 13 years of Labour Governments, has decided that it wants the money business earn. Therefore there are no jobs, as no businesses have the money to create jobs.
Cutting taxes would increase the ability of companies to employ people to do work.
quote:Wouldn't it make a difference if they had contracts? Goodwill is often claimed as an asset. This is entirely in the mind of the public. What control does the company have over it?
Originally posted by moonlitdoor:
The reason why they are not assets, in UK accounting principles at least, is as Enoch alluded to, that you can only claim things as assets if you have control over them for the future, and you don't have control over your employees because they might leave.
quote:Actually you are right. I failed to start from the beginning of the chain, and picked it up in the middle.
Originally posted by cliffdweller:
I think you are both wrong. Consumers create jobs. Jobs are created when consumption of goods and services create a demand for those goods and services.
quote:*Chokes on tea*
Originally posted by deano:
quote:Actually you are right. I failed to start from the beginning of the chain, and picked it up in the middle.
Originally posted by cliffdweller:
I think you are both wrong. Consumers create jobs. Jobs are created when consumption of goods and services create a demand for those goods and services.
But those consumers are being picked clean by taxes as well. Cut their taxes and they will start spending again. That money goes into businesses and they will start hiring.
quote:Bullshit. Pure and utter bullshit. High taxes are most certainly NOT the source of our problems.
Originally posted by deano:
But those consumers are being picked clean by taxes as well. Cut their taxes and they will start spending again.
quote:Employee pay is a business expense and thus deductible from taxes (personal or corporate, if you are a sole proprietor/partnership/corporation). So taxes don't enter into the calculation.
Originally posted by deano:
quote:Which proves that you and Ken are mistaken about work creating jobs. It does nothing of the sort. Work is what you get when you expend energy. Jobs are created by people being willing to pay someone to expend their energy to do work.
Originally posted by Sioni Sais:
ken states, correctly, that work creates jobs. That leads me to wonder why so many are without jobs because there is clearly a lot of work that needs doing.
You have the cart before the horse.
In order to pay someone to do work, you must first get the money. Unfortunately in Britain, the Government, held back as it is by LibDems, and preceeded by 13 years of Labour Governments, has decided that it wants the money business earn. Therefore there are no jobs, as no businesses have the money to create jobs.
Cutting taxes would increase the ability of companies to employ people to do work.
quote:Yes, but that was my point. We have done precisely what you are suggesting, it has made a lot of American CEOs very very wealthy-- but there is no sign that it has changed our unemployment rate one iota. Because, again, businesses don't hire people because they have money burning a hole in their pocket. They hire them when they need them to provide goods and services that there is a market for. We don't need to help our corporations amass more wealth. We need to create a demand for the goods and services that workers produce.
Originally posted by deano:
I don't know much about the US tax system.I'm refering to the UK tax system.
Our taxes are way higher than US ones (I think), so let's start there.
quote:Hold on! They UK hasn't been immune from supply-side bozos and they haven't done us any good either. deano mentioned Sir Keith Joseph*, another monetarist in the Friedman school, and we've had high indirect taxes and decreasing direct taxes for the last 30 or so years. The former have doubled while the latter has reduced from 33% to 20% in that period.
Originally posted by RuthW:
If lowering taxes really worked the way all the idiot supply-side trickle-down economists say it does, the US would be light-years ahead of the UK in job creation. But we're not.
quote:Exactly. "Trickle up" is what creates jobs. When the care-minders and the Walmart cashiers and all the other lowly paid workers start having enough cash in their pocket to buy a few things, that will create demand-- whether it's ticket takers at the movie theater or salesclerks at the bookstore or barristas at the coffeeshop. Studies have shown that consumers like Porridge are far more likely to spend an extra $20, or, please God, $100 on something like that then the 1%ers-- who again, are sitting comfortably on record piles of cash already.
Originally posted by Porridge:
quote:*Chokes on tea*
Originally posted by deano:
quote:Actually you are right. I failed to start from the beginning of the chain, and picked it up in the middle.
Originally posted by cliffdweller:
I think you are both wrong. Consumers create jobs. Jobs are created when consumption of goods and services create a demand for those goods and services.
But those consumers are being picked clean by taxes as well. Cut their taxes and they will start spending again. That money goes into businesses and they will start hiring.
I make barely over subsistence in my lowly work as an overeducated person-minder of individuals with assorted cognitive and psychiatric disabilities. I'm one of those dreadfully dependent 47%-ers who get most of my tax money back at refund time.
My problem isn't taxes. It's crap pay combined with high costs of food, shelter, clothing, and gas.
If I were paid better wages, I would have more to spend. In fact, I could spend it on items I need but can't afford, and/or even the odd luxury or two -- movie tickets or a book from the bookstore instead of waiting until the 12th of Never in the public library queue for Hilary Mantel's latest.
quote:Actually, many small businesses seem to exist to be a tax dodge...
Originally posted by Doublethink:
I think we should not accept the idea that business exist to make a profit go unchallenged. Businesses exist to create goods or services, and to provide livelihoods. Profit is a proxy for that. But we shouldn't mistake it for the point of the business.
quote:So are you assuming that taxes are NOT spent?
Originally posted by deano:
But those consumers are being picked clean by taxes as well. Cut their taxes and they will start spending again. That money goes into businesses and they will start hiring.
quote:Not at all sure about this. If a company never made profit on any product, it would not last very long no matter how much it enjoyed making things.
Originally posted by Doublethink:
I think we should not accept the idea that business exist to make a profit go unchallenged. Businesses exist to create goods or services, and to provide livelihoods. Profit is a proxy for that. But we shouldn't mistake it for the point of the business.
quote:Starbucks hasn't made a profit in years, but does OK. Plenty of vast, highly successful business make minimal profits. If you believe their tax returns that is.
Originally posted by Jengie Jon:
quote:Not at all sure about this. If a company never made profit on any product, it would not last very long no matter how much it enjoyed making things.
Originally posted by Doublethink:
I think we should not accept the idea that business exist to make a profit go unchallenged. Businesses exist to create goods or services, and to provide livelihoods. Profit is a proxy for that. But we shouldn't mistake it for the point of the business.
Jengie
quote:Well, that may depend how socially critical the business is - agricultural subsidies spring to mind.
Originally posted by Jengie Jon:
quote:Not at all sure about this. If a company never made profit on any product, it would not last very long no matter how much it enjoyed making things.
Originally posted by Doublethink:
I think we should not accept the idea that business exist to make a profit go unchallenged. Businesses exist to create goods or services, and to provide livelihoods. Profit is a proxy for that. But we shouldn't mistake it for the point of the business.
Jengie
quote:There are tens of thousands of non-profit businesses, some of which have lasted a very long time, indeed.
Originally posted by Jengie Jon:
quote:Not at all sure about this. If a company never made profit on any product, it would not last very long no matter how much it enjoyed making things.
Originally posted by Doublethink:
I think we should not accept the idea that business exist to make a profit go unchallenged. Businesses exist to create goods or services, and to provide livelihoods. Profit is a proxy for that. But we shouldn't mistake it for the point of the business.
Jengie
quote:It's why I have one, well actually one business, 2 companies. I used to have 3.
Originally posted by tclune:
quote:Actually, many small businesses seem to exist to be a tax dodge...
Originally posted by Doublethink:
I think we should not accept the idea that business exist to make a profit go unchallenged. Businesses exist to create goods or services, and to provide livelihoods. Profit is a proxy for that. But we shouldn't mistake it for the point of the business.
--Tom Clune
quote:I know from 6 years of reading Ship of Fools that dodging taxes is immoral.
Originally posted by no prophet:
quote:It's why I have one, well actually one business, 2 companies. I used to have 3.
Originally posted by tclune:
quote:Actually, many small businesses seem to exist to be a tax dodge...
Originally posted by Doublethink:
I think we should not accept the idea that business exist to make a profit go unchallenged. Businesses exist to create goods or services, and to provide livelihoods. Profit is a proxy for that. But we shouldn't mistake it for the point of the business.
--Tom Clune
![[Disappointed]](graemlins/disappointed.gif)
quote:Fail on history too.
Originally posted by Sober Preacher's Kid:
quote:Employee pay is a business expense and thus deductible from taxes (personal or corporate, if you are a sole proprietor/partnership/corporation). So taxes don't enter into the calculation.
Originally posted by deano:
In order to pay someone to do work, you must first get the money. Unfortunately in Britain, the Government, held back as it is by LibDems, and preceeded by 13 years of Labour Governments, has decided that it wants the money business earn. Therefore there are no jobs, as no businesses have the money to create jobs.
Cutting taxes would increase the ability of companies to employ people to do work.
Fail on relevance.
quote:Well of course he does. That is how capitalism works - people competing for crumbs while the rich stay rich.
Originally posted by Sioni Sais:
the awful possibility that George Osborne and his pals want the ordinary man and woman in the UK, employed or not, to remain poor for decades to come.
quote:6 years wasted, then.
Originally posted by Beeswax Altar:
I know from 6 years of reading Ship of Fools that dodging taxes is immoral.
quote:If governments are so bad, why don't you do your Christian duty and form a better one.
Originally posted by Russ:
In order to create a job, there has to be a person A who finds it worthwhile to employ a person B at a wage that B finds it worthwhile to accept.
There are many things that can prevent this from happening, and government is usually active in doing quite a lot of them.
I'm sure y'all can think of a few.
Best wishes,
Russ
quote:Sorry Tom and Russ. That was wrong twice. on posting grounds and as a host.
Originally posted by tclune:
SS, you're not in Hell any more. Engage the issue, not the man.
--Tom Clune, Purgatory Host
quote:There's no government like no government.
Originally posted by Sioni Sais:
If governments are so bad, why don't you do your Christian duty and form a better one.
quote:Just ask Somalia.
Originally posted by Mere Nick:
quote:There's no government like no government.
Originally posted by Sioni Sais:
If governments are so bad, why don't you do your Christian duty and form a better one.
quote:Is Somalia always the way it is, though? Were the Cherokees like that before Europeans showed up?
Originally posted by mousethief:
quote:Just ask Somalia.
Originally posted by Mere Nick:
quote:There's no government like no government.
Originally posted by Sioni Sais:
If governments are so bad, why don't you do your Christian duty and form a better one.
quote:I'm pretty sure the Cherokee haven't been on a major trade route for 5,000+ years.
Originally posted by Mere Nick:
Is Somalia always the way it is, though? Were the Cherokees like that before Europeans showed up?
quote:
Originally posted by Mere Nick:
Can there be anarchy, tastefully done?
quote:That is only true for income and corporation taxes, for many businesses VAT is the largest tax. A reduction in VAT would be a stimulation to business.
Originally posted by Sober Preacher's Kid:
quote:Employee pay is a business expense and thus deductible from taxes (personal or corporate, if you are a sole proprietor/partnership/corporation). So taxes don't enter into the calculation.
Originally posted by deano:
quote:Which proves that you and Ken are mistaken about work creating jobs. It does nothing of the sort. Work is what you get when you expend energy. Jobs are created by people being willing to pay someone to expend their energy to do work.
Originally posted by Sioni Sais:
ken states, correctly, that work creates jobs. That leads me to wonder why so many are without jobs because there is clearly a lot of work that needs doing.
You have the cart before the horse.
In order to pay someone to do work, you must first get the money. Unfortunately in Britain, the Government, held back as it is by LibDems, and preceeded by 13 years of Labour Governments, has decided that it wants the money business earn. Therefore there are no jobs, as no businesses have the money to create jobs.
Cutting taxes would increase the ability of companies to employ people to do work.
Fail on relevance.
quote:When we look at rates in the US it means the rate on taxable income, so it is indicative.
Originally posted by aumbry:
Also (referring to another poster) the idea that the headline rate of corporation tax is really indicative of anything is mistaken because you also need to look at the rates of available allowances.
quote:Actually capitalism has a vested interest in promoting individual consumption. A capitalist is hardly going to make a killing if all the consumers of his products are paupers.
Originally posted by leo:
quote:Well of course he does. That is how capitalism works - people competing for crumbs while the rich stay rich.
Originally posted by Sioni Sais:
the awful possibility that George Osborne and his pals want the ordinary man and woman in the UK, employed or not, to remain poor for decades to come.
quote:Quite possibly. I was referring to the poster who made a list of historic rates of corporation tax in the UK and was trying to make some sort of political point out of it.
Originally posted by Mere Nick:
quote:When we look at rates in the US it means the rate on taxable income, so it is indicative.
Originally posted by aumbry:
Also (referring to another poster) the idea that the headline rate of corporation tax is really indicative of anything is mistaken because you also need to look at the rates of available allowances.
quote:I would agree-- it's dumb. Yet some of our corporate CEO's-- quite a few, in fact-- seem to be just that dumb.
Originally posted by aumbry:
Actually capitalism has a vested interest in promoting individual consumption. A capitalist is hardly going to make a killing if all the consumers of his products are paupers.
You could argue that capitalism is bad for the environment or for the moral fibre of the population but that it is a conspiracy to keep people poor is just plain dumb.
quote:VAT/GST is an indirect tax; the tax incidence, that is who actually pays the burden, falls on consumers, not businesses. The whole idea of VAT is that businesses can deduct the VAT from their input, so that the tax doesn't cascade.
Originally posted by aumbry:
quote:That is only true for income and corporation taxes, for many businesses VAT is the largest tax. A reduction in VAT would be a stimulation to business.
Originally posted by Sober Preacher's Kid:
quote:Employee pay is a business expense and thus deductible from taxes (personal or corporate, if you are a sole proprietor/partnership/corporation). So taxes don't enter into the calculation.
Originally posted by deano:
quote:Which proves that you and Ken are mistaken about work creating jobs. It does nothing of the sort. Work is what you get when you expend energy. Jobs are created by people being willing to pay someone to expend their energy to do work.
Originally posted by Sioni Sais:
ken states, correctly, that work creates jobs. That leads me to wonder why so many are without jobs because there is clearly a lot of work that needs doing.
You have the cart before the horse.
In order to pay someone to do work, you must first get the money. Unfortunately in Britain, the Government, held back as it is by LibDems, and preceeded by 13 years of Labour Governments, has decided that it wants the money business earn. Therefore there are no jobs, as no businesses have the money to create jobs.
Cutting taxes would increase the ability of companies to employ people to do work.
Fail on relevance.
Fail on precision.
Also (referring to another poster) the idea that the headline rate of corporation tax is really indicative of anything is mistaken because you also need to look at the rates of available allowances.
quote:As someone who employees people, I cannot imagine your figures would be that correct for it costing double the employee's salary to employ them and thus pass to the customer twice the price. Income tax is a straight deduction from pay and is deducted from the employee's wages and submitted to the gov't as is the Canada Pension Plan and Employment Insurance here. None of these are employer expenses. If GST/VAT is charged, the company charges the 7%, but gets to keep a percentage, around 2% for the trouble of charging it. Workers' Compensation is a payroll tax and the only one directly assessed to the employer. Is it so different in UK?
Originally posted by Ender's Shadow:
However if the person willing to do it is working for a firm that has to charge VAT, and pay income tax on his pay, and National Insurance, that £10 to the employee easily rises to £20 to be charged out to the final customer, just from taxes. Therefore I do it myself - all because of taxes.
quote:That's not quite the way we pay them here. The employee is paid, say $15/hour. The tax and other things (except Workers' Comp) is deducted by the employer and the worker receives the balance. Roughly $30,000 per year. Federal income tax is 15% after various deductions, so probly about 12% overall or 3600. The person then will pay somewhere between about 4 and 11% on taxable income after that, which in real terms is 2-maybe 9%, 1200 to 2700. So the person takes home roughly 5 or 6000 less than stated paid amount. That's no where near your UK tax rates as you've reported them.
Originally posted by The Machine Elf:
For the UK, for the employee to receive £10 after 20% tax and 12% employee national insurance, they need to be paid £14.70 ( £10 / ( 1-(0.12+0.20) )
If you add the 13.8% employer's NI and then 20% VAT, you end up with £20.07 ( £14.70 * 1.138 * 1.2 ).
So if someone wants to end up with £10 in their pocket from moving the lawn, then the company has to charge the customer more than twice that.
quote:Though the actual going rate in a relatively expensive area down south is about £13 an hour, and even individual contractors usually charge less than that to pensioners.
Originally posted by The Machine Elf:
For the UK, for the employee to receive £10 after 20% tax and 12% employee national insurance, they need to be paid £14.70 ( £10 / ( 1-(0.12+0.20) )
If you add the 13.8% employer's NI and then 20% VAT, you end up with £20.07 ( £14.70 * 1.138 * 1.2 ).
So if someone wants to end up with £10 in their pocket from moving the lawn, then the company has to charge the customer more than twice that.
quote:The fact that VAT is paid by the consumer can hardly be dismissed - as that is ultimately who pays for all business taxes. My work is billed with 20% VAT attached, okay the VAT on some of the business expenses can be offset but unless the business is making a thumping loss these will always be a small fraction of the VAT charged on the turnover.The amounts paid to the VATman are significant!
Originally posted by Sober Preacher's Kid:
VAT/GST is an indirect tax; the tax incidence, that is who actually pays the burden, falls on consumers, not businesses. The whole idea of VAT is that businesses can deduct the VAT from their input, so that the tax doesn't cascade.
Canada cut the GST/HST five years ago by 2% points, it made zero difference to businesses or to consumers. It sure hurt the budget though.
Exporters don't pay VAT at all, it's zero-rated just for that purpose.
Fail on economics and actual knowledge of how VAT works. [/QB]
quote:Along the way, not by you directly. And the customer isn't whining over losing that 5%, that's why VAT's are beloved of economists for being the "least-distortionary" form of taxes. But even though this guts your argument you clearly want to beat up on the taxman so up the pole the strawman goes.
The amounts paid to the VATman are significant!
quote:The direct supplier to the customer is only paying 20% of Value Added, not 20% of the total price. Therefore the supplier is only paying 5% of the price or so, so the substitution effect of VAT is small. Which is why economists love VAT. Also for the fact that the tax is contained to 20% of the total price at most, unlike with old-time sales taxes which could cascade through the system and multiply the effective tax rate faster than rabbits.
But surely the imposition of VAT increases the price paid by the consumer, which decreases the demand as any fule kno and therefore the marketability of the product or service.
quote:You need to tell that to the previous British government who considered a reduction of VAT from 17.5% to 15% would substantially increase demand by lowering prices. When a consumer purchases a good subject to 20% VAT it doesn't matter diddly squat to him whether that is shouldered by one firm in the supply chain or a hundred. In any case the added value on a good is always subject to a charge of 20% If adding 20% onto the price of something had so little effect on demand I would suggest that every business would increase prices by 20%. The fact is that for products where there is elasticity of demand it makes a substantial difference.
Originally posted by Sober Preacher's Kid:
quote:The direct supplier to the customer is only paying 20% of Value Added, not 20% of the total price. Therefore the supplier is only paying 5% of the price or so, so the substitution effect of VAT is small. Which is why economists love VAT. Also for the fact that the tax is contained to 20% of the total price at most, unlike with old-time sales taxes which could cascade through the system and multiply the effective tax rate faster than rabbits.
But surely the imposition of VAT increases the price paid by the consumer, which decreases the demand as any fule kno and therefore the marketability of the product or service.
In aggregate instead of at a micro level it is far from clear that taxes reduce consumer demand, some of the eras of greatest prosperity and consumer demand have featured the highest tax rates, historically. In aggregate what goes around comes around, so the money ends back in the system. It's double-entry accounting.
quote:Ah, that would be politics, I am speaking of policy, Sir Humphrey Appleby instead of Jim Hacker.
Originally posted by aumbry:
quote:You need to tell that to the previous British government who considered a reduction of VAT from 17.5% to 15% would substantially increase demand by lowering prices. When a consumer purchases a good subject to 20% VAT it doesn't matter diddly squat to him whether that is shouldered by one firm in the supply chain or a hundred. In any case the added value on a good is always subject to a charge of 20% If adding 20% onto the price of something had so little effect on demand I would suggest that every business would increase prices by 20%. The fact is that for products where there is elasticity of demand it makes a substantial difference.
Originally posted by Sober Preacher's Kid:
quote:The direct supplier to the customer is only paying 20% of Value Added, not 20% of the total price. Therefore the supplier is only paying 5% of the price or so, so the substitution effect of VAT is small. Which is why economists love VAT. Also for the fact that the tax is contained to 20% of the total price at most, unlike with old-time sales taxes which could cascade through the system and multiply the effective tax rate faster than rabbits.
But surely the imposition of VAT increases the price paid by the consumer, which decreases the demand as any fule kno and therefore the marketability of the product or service.
In aggregate instead of at a micro level it is far from clear that taxes reduce consumer demand, some of the eras of greatest prosperity and consumer demand have featured the highest tax rates, historically. In aggregate what goes around comes around, so the money ends back in the system. It's double-entry accounting.
And make up you mind, first you say exports are not liable to VAT and now admit that EU exports are but that it doesn't matter!
quote:That was Henry Ford's insight when he decided to pay all his workers $5 a day (instead of the $1.50 that was the going rate at the time). Who was going to buy all those Model Ts?
Originally posted by aumbry:
quote:Actually capitalism has a vested interest in promoting individual consumption. A capitalist is hardly going to make a killing if all the consumers of his products are paupers.
Originally posted by leo:
quote:Well of course he does. That is how capitalism works - people competing for crumbs while the rich stay rich.
Originally posted by Sioni Sais:
the awful possibility that George Osborne and his pals want the ordinary man and woman in the UK, employed or not, to remain poor for decades to come.
quote:How is conservatism illogical? Maybe you specify elsewhere, but not having a eidetic memory I don't know.
It's the fallacy of composition, and perfectly obvious, but greed isn't logical. Neither is conservatism.
quote:You ask how conservatism is illogical? I would point you to this post. It's full of conservative ideological truisms, presented as if each were such an obvious reality that no proof is necessary. When, in fact, nothing could be further from the truth. Every single one of your a priori assumptions has, in fact, proven to be false. Government DOES create jobs-- in fact, has been the primary driver of job growth coming out of most every recession. Lower taxes DON'T automatically create growth-- as we have seen in the last decade here in the US. Supply & demand does NOT automatically ensure product safety, as we have seen time & time again.
Originally posted by Sergius-Melli:
quote:How is conservatism illogical? Maybe you specify elsewhere, but not having a eidetic memory I don't know.
It's the fallacy of composition, and perfectly obvious, but greed isn't logical. Neither is conservatism.
I do believe it has already been said in one form or another, governments cannot create jobs, only provide the situations in which it is possible for companies to need and have the ability to hire people to fulfill functions to meet demand.
The best way to ensure sustainable growth and job creation is not public expenditure on infrastructure, but to decrease the size and scope of the state, freeing people from the burden of taxes and companies from legislative red tape. Supply and demand will, in most conditions, ensure that safe, reliable products are made without the need for governments to legislate. With reduced taxes and beurocratic burden citizens use their purchasing power to buy goods and services, companies then hire people to meet the increased demands, thereby ensuring that more people have a disposable income they wish to use so causing the cycle to continue on.
quote:Well outsourcing to China has brought hundreds of millions of people out of grinding poverty there and enabled poor people all over the world to buy cheap Chinese manufactured products so I am not sure that is a very good example. There are arguments that the Chinese have given themselves an unfair advantage through currency manipulation to achieve this but that is hardly a fault of capitalism.
Originally posted by Timothy the Obscure:
quote:That was Henry Ford's insight when he decided to pay all his workers $5 a day (instead of the $1.50 that was the going rate at the time). Who was going to buy all those Model Ts?
Originally posted by aumbry:
quote:Actually capitalism has a vested interest in promoting individual consumption. A capitalist is hardly going to make a killing if all the consumers of his products are paupers.
Originally posted by leo:
quote:Well of course he does. That is how capitalism works - people competing for crumbs while the rich stay rich.
Originally posted by Sioni Sais:
the awful possibility that George Osborne and his pals want the ordinary man and woman in the UK, employed or not, to remain poor for decades to come.
But now it seems they all hope that their competitors will pay the high wages that make consumption possible, while they can outsource to China. It's the fallacy of composition, and perfectly obvious, but greed isn't logical. Neither is conservatism.
quote:What if a government hires people to work to fulfil demand? As happens so often in China (and quite a lot in France and some other countries, and as used to happen in Britain from the 1940s to the 70s/80s). That's state capitalism rather than any kind of socialism, where the state is acting as the capitalist rather than an individual owner or a corporation. A capitalist owner or investor doesn't have to be a wealthy individual or a private profit-making corportion. It might be a government, or a military unit (common in China), or a trade union, or a church, or a club, or a charity, or a co-operative.
Originally posted by Sergius-Melli:
I do believe it has already been said in one form or another, governments cannot create jobs, only provide the situations in which it is possible for companies to need and have the ability to hire people to fulfill functions to meet demand.
quote:That's obviously why new businesses prefer to set up in deserts in the middle of nowhere rather than in cities with
The best way to ensure sustainable growth and job creation is not public expenditure on infrastructure...
quote:My argument may have appeared illogical but that does not mean conservatism itself is illogical...
Originally posted by cliffdweller:
You ask how conservatism is illogical? I would point you to this post. It's full of conservative ideological truisms, presented as if each were such an obvious reality that no proof is necessary. When, in fact, nothing could be further from the truth. Every single one of your a priori assumptions has, in fact, proven to be false. Government DOES create jobs-- in fact, has been the primary driver of job growth coming out of most every recession. Lower taxes DON'T automatically create growth-- as we have seen in the last decade here in the US. Supply & demand does NOT automatically ensure product safety, as we have seen time & time again.
Perfect examples of illogical conservatism-- ignoring inconvenient facts which don't fit your ideological narrative.
quote:Unlike these?
Originally posted by ken:
London and Paris and New York are looking so quiet and deserted these days.
![[Big Grin]](biggrin.gif)
quote:This notion that government spending is somehow limited while private sector spending is fairy dust for other activity is truly bizarre. Why is the electricity generated by TVA dams a temporary stimulus, while electricity from a private utility an engine for growth going forward?
Originally posted by Sergius-Melli:
I will make one concession, where I said governments don't create growth I should have stipulated that governments do not create long-term, sustainable growth.
Government spending might well have helped growth to recover after a recession, but the point is not that the government spent and there was growth, but that through the schemes governments used they put money in people's pockets, money those people then went out and spent on goods and services.
quote:I have said that public expenditure can generate growth, I just wonder at it's sustainable and long-term reliability.
Originally posted by tclune:
quote:This notion that government spending is somehow limited while private sector spending is fairy dust for other activity is truly bizarre. Why is the electricity generated by TVA dams a temporary stimulus, while electricity from a private utility an engine for growth going forward?
Originally posted by Sergius-Melli:
I will make one concession, where I said governments don't create growth I should have stipulated that governments do not create long-term, sustainable growth.
Government spending might well have helped growth to recover after a recession, but the point is not that the government spent and there was growth, but that through the schemes governments used they put money in people's pockets, money those people then went out and spent on goods and services.
The whole notion that money comes in two flavors -- "government" (the only kind I've ever seen) and "private," with the private money having super powers and the government money being a black hole that sucks the growth out of an economy is laughable on its face. It strikes me that it is only the constant repetition of this howler that has gotten us to a point that we are able to hear it without laughing out loud -- rather like how we no longer feel the need to laugh at "Why did the chicken cross the road?"
--Tom Clune
quote:It would be tough to argue that government spending never brings any benefit and that all private spending has the opposite effect. The problem with government spending is that it has a danger of being driven by political motivations which can often be short-term or that it can crowd out more productive private expenditure. That said there will be occasions when public expenditure can be a worthwhile catalyst to private expenditure.
Originally posted by tclune:
quote:This notion that government spending is somehow limited while private sector spending is fairy dust for other activity is truly bizarre. Why is the electricity generated by TVA dams a temporary stimulus, while electricity from a private utility an engine for growth going forward?
Originally posted by Sergius-Melli:
I will make one concession, where I said governments don't create growth I should have stipulated that governments do not create long-term, sustainable growth.
Government spending might well have helped growth to recover after a recession, but the point is not that the government spent and there was growth, but that through the schemes governments used they put money in people's pockets, money those people then went out and spent on goods and services.
The whole notion that money comes in two flavors -- "government" (the only kind I've ever seen) and "private," with the private money having super powers and the government money being a black hole that sucks the growth out of an economy is laughable on its face. It strikes me that it is only the constant repetition of this howler that has gotten us to a point that we are able to hear it without laughing out loud -- rather like how we no longer feel the need to laugh at "Why did the chicken cross the road?"
--Tom Clune
quote:Thank you! This is what I always thought, but from hearing some politicians talk you'd never get a clue.
Originally posted by Sober Preacher's Kid:
Employee pay is a business expense and thus deductible from taxes (personal or corporate, if you are a sole proprietor/partnership/corporation). So taxes don't enter into the calculation.
Fail on relevance.
quote:Actually CAP (why don't we call it the "food tax?) disproportionately favours large farms. Very large ones. Its not a bungled attempt to help small farmers, its a very successful programm eintended from the begining to channel our money to a small number of rich individuals and corporations who own vast amounts of land.
Originally posted by aumbry:
A classic example of pointless and wasteful public expenditure would be the EU's Common Agricultural Policy which over the years has put 100s of billions of dollars into small unproductive farms. Doubtless this has benefits for European small farmers but at the cost of the average household that has to pay the additional costs through their taxes. It has been a political fix to get the farmers backing but has put off having a productive and efficient farming sector in many European countries. The money spent could have been more usefully used to reduce the costs through taxes and boost investment on the more efficient larger farms and other businesses and would have probably created large numbers of jobs which would have been viable without constant government support.
quote:I spent a brief period as a self-employed person. Long enough to file an income tax return reflecting my self-employed status.
Originally posted by Alogon:
quote:Thank you! This is what I always thought, but from hearing some politicians talk you'd never get a clue.
Originally posted by Sober Preacher's Kid:
Employee pay is a business expense and thus deductible from taxes (personal or corporate, if you are a sole proprietor/partnership/corporation). So taxes don't enter into the calculation.
Fail on relevance.
quote:All of which seems to point to the fact that government spending DID create long-term sustainable growth-- by setting in motion precisely the chain of events that you outlined above. A chain that, in a recession, does not seem to happen w/o such a (pardon the dirty word) stimulus.
Originally posted by Sergius-Melli:
I will make one concession, where I said governments don't create growth I should have stipulated that governments do not create long-term, sustainable growth.
Government spending might well have helped growth to recover after a recession, but the point is not that the government spent and there was growth, but that through the schemes governments used they put money in people's pockets, money those people then went out and spent on goods and services. That act of spending then generates the growth in the private sector as their goods and services are demanded and output increases to cope with that. Those firms then hire more people, make R&D and infrastructure investment to provide that output, employing more people in their own firms and the causing the firms they commission the R&D and infrastructure from to employ more people. The longterm growth comes from these additional people employed, these people demanding goods and services with their disposable income from the private sector which companies then provide for through output.
quote:Ah yes, the classic "crowding-out" zombie idea. It is a fallacy. Amply described here by Paul Krugman.
It would be tough to argue that government spending never brings any benefit and that all private spending has the opposite effect. The problem with government spending is that it has a danger of being driven by political motivations which can often be short-term or that it can crowd out more productive private expenditure. That said there will be occasions when public expenditure can be a worthwhile catalyst to private expenditure.
quote:It should be noted that while spending by the U.S. federal government increased briefly due to the stimulus bill, government spending as a whole has actually held pretty steady due to the actions of what Krugman describes as "fifty little Herbert Hoovers". In short, increased spending at the federal level has pretty much just filled the gap created by a recession-driven decrease in spending by state governments.
Originally posted by Sober Preacher's Kid:
quote:Ah yes, the classic "crowding-out" zombie idea. It is a fallacy. Amply described here by Paul Krugman.
It would be tough to argue that government spending never brings any benefit and that all private spending has the opposite effect. The problem with government spending is that it has a danger of being driven by political motivations which can often be short-term or that it can crowd out more productive private expenditure. That said there will be occasions when public expenditure can be a worthwhile catalyst to private expenditure.
Government spending has risen dramatically during this recession, I might even say soared, but interest rates are still at rock bottom, which is precisely opposite to the Crowding Out Thesis, which states that interest rates should rise to ration scarce credit.
quote:If that's true then the government could just stop maintaining the M25 and the loss to businesses would be exactly offset by the tax savings. Which doesn't seem plausible to me, unless I've misunderstood something ...
Originally posted by Sergius-Melli:
a one-off infrastructure programme such as building a new motorway has a one-off growth effect but then has a very small growth effect, if any, once the public expenditure on resources is factored into the growth generated for those companies the resources are purchased from (ie, growth generated in the economy is £1 but the government spent £1 to maintain the motorway thereby cancelling otu the growth effect.)
quote:You are quite right with regard to countries like the UK that have large farms but it effectively makes it difficult to consolidate the small farms in countries where these predominate. But as a subsidy to large farms it is even less sensible.
Originally posted by ken:
quote:Actually CAP (why don't we call it the "food tax?) disproportionately favours large farms. Very large ones. Its not a bungled attempt to help small farmers, its a very successful programm eintended from the begining to channel our money to a small number of rich individuals and corporations who own vast amounts of land.
Originally posted by aumbry:
A classic example of pointless and wasteful public expenditure would be the EU's Common Agricultural Policy which over the years has put 100s of billions of dollars into small unproductive farms. Doubtless this has benefits for European small farmers but at the cost of the average household that has to pay the additional costs through their taxes. It has been a political fix to get the farmers backing but has put off having a productive and efficient farming sector in many European countries. The money spent could have been more usefully used to reduce the costs through taxes and boost investment on the more efficient larger farms and other businesses and would have probably created large numbers of jobs which would have been viable without constant government support.
The set-aside polices of recent years were a considerable improvement on the previous subsidies, but they still benefit the rich more than the poor.
Also small farms are not automatically, or even usually, less efficient than large ones.
quote:The multiplier effect can be equally attributed to a private firm spending as well though. Public expenditure is not a unique case. If as a private business I stimulate my own companies growth by investing in new technology for production I produce a multiplier effect that stimulates growth in the chain, shareholders wish to see a decent return on their investment, they desire to see the company succeed even during a recession so encourage, probably demand, something is done to ensure their return on the investments they have made so the private firm invests as best it can.
Originally posted by cliffdweller:
[QUOTE]All of which seems to point to the fact that government spending DID create long-term sustainable growth-- by setting in motion precisely the chain of events that you outlined above. A chain that, in a recession, does not seem to happen w/o such a (pardon the dirty word) stimulus.
quote:Except private businesses don't do that, for a variety of reasons already noted. US businesses are sitting on record piles of cash, they have the means to do as you're suggesting, but they're not. So, while it would be nice in theory, real life doesn't work that way.
Originally posted by Sergius-Melli:
quote:The multiplier effect can be equally attributed to a private firm spending as well though. Public expenditure is not a unique case. If as a private business I stimulate my own companies growth by investing in new technology for production I produce a multiplier effect that stimulates growth in the chain, shareholders wish to see a decent return on their investment, they desire to see the company succeed even during a recession so encourage, probably demand, something is done to ensure their return on the investments they have made so the private firm invests as best it can.
Originally posted by cliffdweller:
[QUOTE]All of which seems to point to the fact that government spending DID create long-term sustainable growth-- by setting in motion precisely the chain of events that you outlined above. A chain that, in a recession, does not seem to happen w/o such a (pardon the dirty word) stimulus.
quote:And neither does private business. Your point?
Originally posted by Sergius-Melli:
Since governments do not create new money when they tax to spend
quote:This is essentially a re-capitulation of Say's Law, which was largely debunked by John Stuart Mill in the mid-nineteenth century. The biggest problem with it is that it assumes that all money is spent as soon as it is acquired, that there is no such thing as savings, or a possibility of such a thing as a savings glut.
Originally posted by Sergius-Melli:
Since governments do not create new money when they tax to spend (£1 taken out of the economy in taxes = £1 that can then be put back into the economy by the government in expenditure, no new money is created, nor value added to that intial £1 tax taken out of the economy - in the same way borrowing from abroad is similarly governed, £1 has to flow out of the British economy to say India before the UK govt. can then borrow £1 from the Indian government.)the government is effectively rearranging deck-chairs from one place to another, taxing a firm which sheds 50 employees so the state can create 50 jobs.
quote:My point is that government is mearly acting as an unnecessary link in a chain, acting as a middle-man transferring my purchasing power from one part of the economy (normally my local economy) to another (which inevitably is not my local economy but some marginal constituency which needs a boost before the next general election).
Originally posted by cliffdweller:
quote:Even if this is true, savings do not just drop out of the economy... unless they've literally squirreled it away under the bed they are hardly sitting on piles of cash. They pop it in a bank account, the bank then uses that money to invest, and lend to others to spend etc. etc. Or the company invests in stocks and bonds or even on company debt reduction. All that happens is that the financial systems transfer the savings from one place to another to be spent. The banks are not holding onto all this extra money, they are investing them in bills to keep having it circulate through the economy and generating interest.
Except private businesses don't do that, for a variety of reasons already noted. US businesses are sitting on record piles of cash, they have the means to do as you're suggesting, but they're not.
To use the US, the Federal Fund Market exists so that banks can lend excess cash to each other, even if it is only over night so that it is not sitting idle.
I do have to ask where you think all this ‘sat on cash’ is hiding... since it can only be taken out of the market by being popped under the bed for safe keeping... and if it is hiding, how can government itself use this existing money to then use as a stimulus? If people are hoarding money then the government would not be able to access it to use as stimulus?
quote:And neither does private business. Your point? [/QB]
Originally posted by Sergius-Melli:
Since governments do not create new money when they tax to spend
quote:Except that banks are largely failing to do this. At present they're mostly either going through a period of de-leveraging (increasing cash-on-hand as opposed to investment) or limiting their investment to "safe" instruments like government bonds. In other words, the type of economic activity the market seems to be demanding is government spending. Private sector investment seems to be stuck in the paradox of thrift.
Originally posted by Sergius-Melli:
Even if this is true, savings do not just drop out of the economy... unless they've literally squirreled it away under the bed they are hardly sitting on piles of cash. They pop it in a bank account, the bank then uses that money to invest, and lend to others to spend etc. etc. Or the company invests in stocks and bonds or even on company debt reduction. All that happens is that the financial systems transfer the savings from one place to another to be spent. The banks are not holding onto all this extra money, they are investing them in bills to keep having it circulate through the economy and generating interest.
quote:And that is partly due to the increased capital requirements placed on them.
Originally posted by Crœsos:
Except that banks are largely failing to do this. At present they're mostly either going through a period of de-leveraging (increasing cash-on-hand as opposed to investment) or limiting their investment to "safe" instruments like government bonds. In other words, the type of economic activity the market seems to be demanding is government spending. Private sector investment seems to be stuck in the paradox of thrift.
quote:Yes. There is a sort of statistical side-effect because poorer countries in Europe tend to have smaller farms (and often more inefficient agriculture). But they get relatively more subsidy, or used to. So within countries the subsidies benefit larger farms, and, if not exactly efficient farmers, in the past it benefited those who are willing to tear up their land and plant a monoculture of whatever is currently fashionable (the rules have improved a lot on this) But between countries the subsidies are a relative benefit to - well, lets be blunt, to Polcand and Ireland. I've nothing against Poland and Ireland, it might be a good idea that the rest of Europe pays their small farmers billions a year, but it would be better if it was made clear. Maybe a little addition to the labeling on every food packet in a supermarket.
Originally posted by aumbry:
You are quite right with regard to countries like the UK that have large farms but it effectively makes it difficult to consolidate the small farms in countries where these predominate. But as a subsidy to large farms it is even less sensible.
quote:Ah, but efficiency is not viability... small farms often grow more food relative to input than big farms - and usually do less envirionmental damage as well. So sthey are more efficient. But the total amount of profit to be made from a typical small farm is less than required to sustain a middle-class lifestyle. They are in that sense less viable. So it can pay efficient small farmers to sell up to less efficient big ones, and go and get a job in town.
With regard to your point about the relative efficiency of small and large farms it surely depends on what size is considered small. Farms of less than 750 acres are only on the edge of commercial viability.
quote:But what we're seeing is that they are not an unnecessary link. The chain of consumer spending/ employment/ growth that you envision does NOT happen spontaneously, at least not in a recession. Private enterprise or "local economies" do NOT step in to make that happen-- again, as we have seen, and for the reasons already enumerated. The catalytic effect of government spending is necessary to begin that chain.
Originally posted by Sergius-Melli:
]My point is that government is mearly acting as an unnecessary link in a chain, acting as a middle-man transferring my purchasing power from one part of the economy (normally my local economy) to another (which inevitably is not my local economy but some marginal constituency which needs a boost before the next general election).
quote:I'd hazard a guess and say it's because your economy is not a closed system but is instead closely aligned with that of your neighbor to the south of the world's longest border. Just a guess, though.
Originally posted by Sober Preacher's Kid:
Works for me, but as a subnote Canadian provinces are not constrained by any such nonsense, or if they appear to be it is merely a window-dressing law of absolutely no substance. See Election Dates, Acts regarding the fixture thereof.
Both the Federal Government and the provinces have all increased their deficits and Canadian interest rates are still on the floor.
quote:This happened to my dad. He worked for decades for General Electric, going into people's homes and fixing their major appliances. He was really good at his job, because he's an excellent diagnostician and has a really good work ethic. His customers loved him, often requesting him by name or giving him gifts.
Originally posted by ken:
quote:...
Originally posted by the giant cheeseburger:
If workers were to be promoted to higher pay rates only when they applied for it and had demonstrated that they could maintain the higher level of productivity, then it would be demonstrable that they contribute a higher amount of value to the company.
And once you've promoted someone for making a bit more money for their boss than the next bloke what do you do when they get a little older or slower? Chuck them out and replace them with a younger model? That's what most manual employers used to do in the 19th and early 20th centuries. There never was a golden age when all those lovely paternalistic bosses valued their workers. In many manual occupations your earnings peaked in your early 20s and it was downhill from then on.
quote:Perhaps it has yet to be invented.
Originally posted by deano:
quote:Anyone going to answer BA?
Originally posted by Beeswax Altar:
quote:Such as?
Originally posted by leo:
quote:One that is not based upon usury.
Originally posted by Beeswax Altar:
quote:What system would that be?
Originally posted by Caissa:
What we need to do is abolish capitalism and get on with a more equitable economic system.
Anyone prepared to nail their colours to the mast?
Go on - for old times sake. I miss the cold war.
quote:Probably not on a large scale.
Originally posted by Mere Nick:
quote:Is Somalia always the way it is, though? Were the Cherokees like that before Europeans showed up?
Originally posted by mousethief:
quote:Just ask Somalia.
Originally posted by Mere Nick:
quote:There's no government like no government.
Originally posted by Sioni Sais:
If governments are so bad, why don't you do your Christian duty and form a better one.
Can there be anarchy, tastefully done?
quote:Indeed, as this brief documentary demonstrates...
Originally posted by churchgeek:
Probably not on a large scale.
I know people who use the model on a small scale, though, for their own community.
quote:]
Originally posted by RuthW:
quote:I'd hazard a guess and say it's because your economy is not a closed system but is instead closely aligned with that of your neighbor to the south of the world's longest border. Just a guess, though.
Originally posted by Sober Preacher's Kid:
Works for me, but as a subnote Canadian provinces are not constrained by any such nonsense, or if they appear to be it is merely a window-dressing law of absolutely no substance. See Election Dates, Acts regarding the fixture thereof.
Both the Federal Government and the provinces have all increased their deficits and Canadian interest rates are still on the floor.
quote:Nope - this does create jobs. The point is that such purchases make rental housing available to people. This will
Originally posted by no prophet:
Example. A typical family home sells from 350 to 600K here (Cdn and USA $ are approx at par). But the USA market in Arizona has collapsed. People who bought their house in western Canada 10 or 20 years ago for 150K take out credit against the house at 3.5%. They then fly direct to Arizona and buy 2 or 3 homes, one to use in the winter for holidays, and the others to speculate. None of this does anything to help create jobs or anything else.
quote:Yes - but the question there - and note that I explicitly excluded a situation of housing shortage due to a refusal to build - is why there is such a shortage. In the case of Paris I'm guessing it's because there's nowhere to build; the suburbs are social disaster areas and too many people want to live in Paris. You're right - this is a market failure, and requires a different government response; unfortunately the obvious one - rent controls - tends to have very pernicious effects in the medium term. A solution is probably a policy promising a rapidly rising tax on land ownership in the medium term, discouraging new landlords as they will see their income falling, with the money redistributed by something like a general tax reduction. Of course it won't happen...
Originally posted by la vie en rouge:
The trouble with the argument that this makes rental property cheaper is that in certain contexts at least, it's er... not true.
It all depends how much housing is available in the first place. France is a good example of this because for the last few years now, we have been in the middle of the worst housing crisis since the end of the second world war. France has round about a million fewer homes than it needs.
Consequently, real estate is astronomically expensive. Rich people buy it, and then rent it out, and the rents are CRIPPLING. Within the Parisian region, especially, most people cannot possibly afford to buy their own home. We have to rent. When you turn up to view an apartment, there will probably be about forty other people there (and no, that's not an exaggeration at all). My housemate and I spent three months finding an apartment, and we had a very good dossier - we both work and had an excellent guarantor. Other people have even more trouble than we did.
Upshot is, when you finally find someone willing to rent an apartment to you (and not one of the thirty-nine other people who wanted it), you take it, however bloody overpriced it may be, because it's that or the street and most of us prefer to have a roof over our heads. It's not at all uncommon to spend 50% of your income on housing.
Short version: round my way, rich people are buying up all the housing because they're the only ones who can afford it. And it's really, really not making life more affordable for the rest of us.
quote:Indeed.
Originally posted by churchgeek:
Perhaps it has yet to be invented.
I also don't think it's fair to say that just because a solution can't be named (especially among already existent options), one can't criticize the way things are. I have a friend who believes that if you don't have a solution, you shouldn't point out a problem. He gets that from his training in the Marines, he says. Which makes sense in the military, but in the rest of life? What if business or medicine functioned that way? The person who can solve a problem may not be the person who can identify it. Sometimes it takes someone pointing out the problems for others to start working on solutions. And with something as big as an economic system, solutions should be collaborative anyway.
Sarcastically taunting the person who points out the problem and citing past failures to correct the problem do NOT prove that no problem exists.
quote:Capitalists buy me lunch fairly often.
Originally posted by no prophet:
Was Jesus a capitalist? Seemed he had a different idea. Notable is that he gave away the loaves and fishes and didn't sell them.
quote:Yeah, but Jesus took the bread and fish from a small boy and redistributed it to others. On second thought, that does sound rather like a capitalist...
Originally posted by Mere Nick:
quote:Capitalists buy me lunch fairly often.
Originally posted by no prophet:
Was Jesus a capitalist? Seemed he had a different idea. Notable is that he gave away the loaves and fishes and didn't sell them.
quote:And of course banks and mortgage companies don't.
Originally posted by ken:
In the long run renting is always going to be more expensive than buying because the landlord wants a profit.
quote:You're on to something there. It does seem that the Christian myth is about getting something for nothing though.
Originally posted by tclune:
quote:Yeah, but Jesus took the bread and fish from a small boy and redistributed it to others. On second thought, that does sound rather like a capitalist...
Originally posted by Mere Nick:
quote:Capitalists buy me lunch fairly often.
Originally posted by no prophet:
Was Jesus a capitalist? Seemed he had a different idea. Notable is that he gave away the loaves and fishes and didn't sell them.
--Tom Clune
![[Smile]](smile.gif)
quote:In the context of all of someone's financial affairs, this isn't always the case. If you can make more money investing in something other than real estate, for some it makes more sense to rent. Given what I could afford to buy -- a one-bedroom condo in an iffy part of town, which is a pretty crappy investment, given the location, the inevitable increases in homeowner association dues, the fact that the payment would be higher than my rent, and the traditional lack of demand for one-bedroom condos -- I'll come out ahead in the long run by investing elsewhere. I crunched the numbers again and again, and even when the housing market fell, it was still true. I ran it all past a professional money manager, and he said someone in my position should only buy a home if they are really attached to the idea of home ownership, but that financially it does not make sense.
Originally posted by ken:
In the long run renting is always going to be more expensive than buying because the landlord wants a profit.
quote:Indeed - and a landlord must make a profit on you, a responsible member of the community, in order to justify his taking a risk on anyone in the community. In practice landlords do SOMETIMES get messed about with. Given this happens, they make a profit to balance out these losses with profits elsewhere. This is why profits are inevitable in capitalism - they are the risk premium for investing in something other than a 100% surety.
Originally posted by ken:
In the long run renting is always going to be more expensive than buying because the landlord wants a profit.
quote:He wouldn't have taken it from the boy against his will. It ain't like Jesus was a Democrat or some such since he was without sin, and all.
Originally posted by tclune:
quote:Yeah, but Jesus took the bread and fish from a small boy and redistributed it to others. On second thought, that does sound rather like a capitalist...
Originally posted by Mere Nick:
quote:Capitalists buy me lunch fairly often.
Originally posted by no prophet:
Was Jesus a capitalist? Seemed he had a different idea. Notable is that he gave away the loaves and fishes and didn't sell them.
--Tom Clune
quote:At last, the REAL reason pilgrims came to America.
Originally posted by ken:
Mortgages don't lock in in Britain. Fort us a "fixed rate" mortgage is one where the interest rate is reviewed less frequently than once a year. Usually after two or three years. Almost never more than five.
quote:An oversimplification because you are assuming that everyone is in a position to be a homeowner. Once you remove that assumption, it rapidly gets a lot more complicated. Given that some people are forced to rent, then the rental market is a function of what they are prepared to pay, which may well be significantly above the cost of a mortgage plus reasonable profits, because potential landlords have been deterred by talk of rent controls. Therefore someone buying a house and making available to person C - presently being overcharged for his rental premises - is a positive development, even if person A doesn't get the house.
Originally posted by ken:
Mortgages don't lock in in Britain. Fort us a "fixed rate" mortgage is one where the interest rate is reviewed less frequently than once a year. Usually after two or three years. Almost never more than five.
But anyway, in general and inthe long term commerical rents (i.e. not someone letting out a room in their own house to help pay their bills or while they are away for a few months) will ineveitable be higher than rents.
A house is for sale at a particular price. Person A wants to buy it to live in it. Person B wants to buy it to rent out. If B gets it, A still has to live somewhere so rents the house. But B has to repay the mortgage and make a profit, so the rent *has* to be higher than the mortgage. (assuming they both have access to the same mortgage rates, which is broadly true in England)
quote:The housing market where I live peaked in 2005, and I promise you people who bought condos in my neighborhood that year will in 2015 wish they'd stuck with renting. And their mortgages are way higher than my rent.
Originally posted by mousethief:
But RuthW, the thing about renting is, the rents go up. Once you lock in your mortgage, it stays the same. If you're in a place 10 years your mortgage is going to be a hell of a lot less than someone else is paying for rent for the same space.
quote:No. Twice in my adult lifetime the mortgage rate has briefly gone over 15% which caused all sorts of problems.
Originally posted by Mere Nick:
Is there a cap on those mortgages in the UK and Canada? It seems that if rates go up that the two countries could have their own bit of a problem like we had here with adjustable rate mortgages.
quote:Really? In five years we will have paid off a touch under 10% of our original loan balance. If our rate went up to 15% our payment would more than double. But then, if I had a mortgage that adjusts in five years paying everything I could becomes something to consider.
Originally posted by Sober Preacher's Kid:
In Canada and the UK, the term for which the interest rate is fixed is less than the amortization.
When you buy for the first time, most buyers take a 5-year fixed term to secure their payments. By the time their mortgage comes up for renewal, they have paid off enough principal to absorb any interest rate increases.
quote:1.7%. That all? Impressive. It is unimaginable that it would be something other than a complete and total disaster here.
When interest rates spiked in the early 1980's to over 15%, the default rate reached a record of 1.7%. Between Canadian banks prudent underwriting and Canadian homeowners' desire to keep their homes and pay their mortgage at all costs, it was an avoided problem.
quote:When the bubble burst here it was hard to sell because so many people were trying to sell, houses were underwater and it was very difficult to get a loan. What you describe is pretty much how it normally is here, but like in that old Simply Red tune, money was too tight to mention when it all burst.
A bank manager I know who worked during that time said that friends and family were the saving grace of Canada, helping out distressed relatives. If that didn't work, the standard line was to gently suggest that perhaps renting might be easier for the homeowner and they should sell and cut their losses. Most people saw the light and that the bank manager wasn't trying to be cruel. Banks don't want to foreclose/exercise power of sale up here, they're just not set up to do it on a large scale.
quote:What is done, then, if the folks in Canada ever find themselves in a situation like we were in?
Mortgages are recourse in Canada, even in Alberta if the CMHC is used (default insurance for the lender). Jingle mail is illegal and just isn't done.
quote:May I introduce you to the lump of labour fallacy which challenges your assumption that 'the work should be shared around'. It's a complex area, but this insight is one that needs to be taken on board; certainly the extraordinary growth of employment in the UK without a matching decline in unemployment over the past 20 years suggests there is more truth in it than the layman may want to recognise.
Originally posted by Russ:
Seems to me that there three aspects of creating jobs.
One is to do with growing the economy generally, and we've seen that managing the banking system is part of that.
One is to do with making labour-intensive methods and products and services cheaper relative to less-labour intensive methods, products and services.
One is to do with sharing the available work - how do you make it worthwhile to employ four people for thirty hours a week rather than three people for a forty-hour week.
Pity that most people can't seem to see beyond the first...
Best wishes,
Russ
quote:It might be appropriate as a short term strategy. During the great depression, my grandfather worked for Ma Bell. The company decided to put all workers at 1/2 time rather than to go thru massive layoffs in a time of 25% unemployment. It was probably a kind micro-response to a difficult situation. But it wasn't a long-term strategy for growth and full employment.
Originally posted by Ender's Shadow:
quote:May I introduce you to the lump of labour fallacy which challenges your assumption that 'the work should be shared around'. It's a complex area, but this insight is one that needs to be taken on board; certainly the extraordinary growth of employment in the UK without a matching decline in unemployment over the past 20 years suggests there is more truth in it than the layman may want to recognise.
Originally posted by Russ:
Seems to me that there three aspects of creating jobs.
One is to do with growing the economy generally, and we've seen that managing the banking system is part of that.
One is to do with making labour-intensive methods and products and services cheaper relative to less-labour intensive methods, products and services.
One is to do with sharing the available work - how do you make it worthwhile to employ four people for thirty hours a week rather than three people for a forty-hour week.
Pity that most people can't seem to see beyond the first...
Best wishes,
Russ