World Economics Fully Explained At Last

[Slobodan Blagojevic]

the stupidiest thing is to suggest that everything is only a matter of your own desire...

If that is what you meant, Vlad, then I agree. And take back my "compliment."

However, that does not negate what Rob said. As suspected, even before his explanation, he actually got what he desired. Not everybody even desires to be a billionaire.

 

[RSL]

Is it communism that made them so rich (some) or is it capitalism?

No doubt it was the great leap forward.

[Rob C]

pffffff, might I suggest very friendly that you perhaps contribute more to the right-hemisphere activities that you seem to excel at?

The actually employed part of the working population usually pay for the retirees, disabled, and unemployed. Clearly, there is a limit to the sustainability of that situation with pensionfunds crashing and unemployment increasing. Unless of course you're one of those hardcore right-wingers. F**k the retirees, disabled, and unemployed… (Oh wait, you're retired yourself.)

1. A country's value = assets + productivity,
2. assets decrease because pensionfunds crash,
3. productivity decreases because unemployment increases,

Number 3 is very important, because a country can have all the resources in the world, but without productivity that is useless. And then there is the proverbial straw for this camel's back:

4. decreased productivity equates decreased tax-income

Clear enough?

Oscar, I find it difficult to see here you’re coming from in this post.

I think it’s perfectly obvious that it’s the working population that pays for everything else; where have I denied that to be the case? Do you mean, here, some play on the word worker or am I reading too much into your words?

Now perhaps we need to define the meaning of worker? There are certainly those here for whom worker means blue-collar and nothing  else. That, of course, is a fundamental mistake of huge import. Many of said workers are almost outside the taxpaying regime and can therefore contribute next to nothing towards the upkeep of all those flying balls that governments of all colours try hopelessly to keep off the ground. The reality is different: the workers without those blue-collars pay the huge sums of tax through everything they do. That modest (relatively) two-million pound yacht carries a lot of VAT and it’s impossible to buy it without that these days if you are domiciled in Europe and intend to keep it in European waters. That same hateful millionaire also happens to keep all of those glass fibre workers and joiners employed, those sailmakers, rope spinners and anchor foundries cookin’ but perhaps we should ignore all of that and condemn them instead as we do those in Ferarris and Lambos – you know – for living off the sweat of the ‘workers’ we mentioned earlier, the ones in blue? Heysoos, is envy an ugly, blind emotion!

The basic truth behind it all is this: we have become too accustomed to having a public service for every need we might develop in our lifetime. The more sophisticated the service on offer, the more expensive it has to become. You can’t escape from that, and our medical one (service) is a prime example. The higher the survival rate, the more the demand from those who survive and those who are next in line. Simply put, we outlive our usefulness to society as nett producers of wealth. If we are not to be left to die on the street we face two basic choices: we work our asses off whilst we can in order to raise the dosh to support ourselves to the end or, secondly, we do the minimum we can and hope enough other people pay an ever-increasing proportion of their earnings in tax to keep us going. Something in the latter choice strikes me as rather wrong.

Your four points certainly have merit, but they tell only a fraction of the reality.

You should have added:

5. Productivity also falls because confidence falls.

It takes us back to the document posted on LuLa a week or so ago, using the example of the drinkers in the pub. The guy who picked up the lion’s share of the tab is the guy whose confidence we need to reassure, not cripple further.

Perhaps No.5 is the most problematic one to resolve.

Rob C

[Rob C]

No doubt it was the great leap forward.

As outlined in the Ten-Year Plans, of course.

Or was it exploitation of the 'workers'? No, of course not, that's impossible under communism! Whose town shall we poison next?

;-)

Rob C

[32BT]

Oscar, I find it difficult to see here you’re coming from in this post.

I think it’s perfectly obvious that it’s the working population that pays for everything else; where have I denied that to be the case? Do you mean, here, some play on the word worker or am I reading too much into your words?

No play, I simply meant the generic term used for the age group of productive people. As generic as it is, it immediately shows the problems of statistics: who are included?

So you can't simply say that the stats suggest that "the other 74%" might be doing well. If they only represent 30% of the entire community and have to pay for that community in some unsustainable way, then they're equally toast, regardless of confidence- or tax-levels.

That's why I generally break these things down to their absolute basics. At macro economic level there are no distinctions in collar-color. We will equally have to fight for and "mine" the resources and add productivity. Productivity will be taxed, that is not the problem. The question is what numbers and percentages are sustainable. I have no idea, but I wish some of our representatives would come up with some numbers, so we can see whether it is 9 o'clock, or 5 minutes to 12.

I find it personally very hard to believe that the amount of money poured into the bottomless pit also known as Greece is in any way useful to their future survival if other larger economies within the EU are already struggling even with all of their riches and productivity. And Greece is not particularly known for its productivity, but fortunately productivity can be im- & exported quite easily, so I prefer to pour "productivity" into Greece and not unsustainable debts forced upon people that have not the slightest clue of the implications and simply want a reasonable income from a reasonable job etc...

It is a bit like a mortgage. The bank generally looks at your potential (read: future productivity) and adjusts the loan accordingly. High potentials get higher loans. Why would that be any different for countries?

[32BT]

Simply put, we outlive our usefulness to society as nett producers of wealth.

Yes, but as we grow increasingly older, we also grow stronger with more productive years. Those are merely arguments for retirement-age discussions, which are important but not relevant. The net productivity is probably equalized.

[32BT]

To expand upon my quasi funny solar panels remark: it is most likely Germany's solar panel lobby who are responsible for blocking cheap chinese panels. Which is both odd and stupid.

As Germany, you should grab the opportunity, move all those cheap panels to Greece and help them mine their huge solar potential so they can eventually pay off any debts they owe you and then some.

But no, protecting some overpaid, totally irrelevant job in Germany was probably more important. Exporting those knowledge workers to Greece would equally have them employed, and would benefit Germany, as well as the entire EU.

[Slobodan Blagojevic]

The forum's matador has arrived. Guaranteed to be a lot of gouging and thrusting now.

Now, I've been called a lot of different things on these forums, but you get extra points for originality A killer?

[PeterAit]

Good question, Stamper.

Not about saving the USA, but the first part: is China communist or capitalist?. With the fastest growing number of billionaires on this planet, it is certainly not the communism I know. Nor with the spread between Chinese poor and rich, which exceeds by far the ones in most capitalist countries. Is it communism that made them so rich (some) or is it capitalism?

China is neither capitalist nor communist. Is is closer to fascist than anything else.

[stamper]

Quote Rob post #42

If we are not to be left to die on the street we face two basic choices: we work our asses off whilst we can in order to raise the dosh to support ourselves to the end or, secondly, we do the minimum we can and hope enough other people pay an ever-increasing proportion of their earnings in tax to keep us going. Something in the latter choice strikes me as rather wrong.

Unquote

The problem is that hard work doesn't mean that you automatically get earn a good living. There are lots of hard workers - educated and intelligent - who are in poverty despite their efforts and millionaires who have plenty but don't work hard because others have sweated to provide his wealth. There is a conception in society that a millionaire deserves his money mostly because he has earned his money. The reality is that nobody- no matter how intelligent they are - can possibly earn the money purely by their own efforts. Why? Because society is at all levels a collective one with regards to production. A chain that is eternally linked. Nobody can produce anything purely by his/hers own efforts but needs others to to be part of the process. The capitalist looks to exploit their efforts by creaming off the profits of others to enrich himself. Without their efforts he wouldn't have a dime/penny to his name. Workers as a productive unit can exist and share their wealth among themselves without a millionaire being part of the process, but the millionaire will be penniless without the worker.  

[Tony Jay]

  Workers as a productive unit can exist and share their wealth among themselves without a millionaire being part of the process, but the millionaire will be penniless without the worker.  

Somewhat utopian.
Unfortunately, most workers cannot run a business themselves and will be unable to raise the capital to get going.
Most self-made millionaires have risked everything to get where they are.
Yes, they may employ people, sometimes a lot of people.
These employees benefit from having a job.
Few of them would have a job without the entrepeneur (read risk-taker).

BTW most self-made in business have failed several times before success arrives - there are no guarantees.

Tony Jay

[Rob C]

Quote Rob post #42

If we are not to be left to die on the street we face two basic choices: we work our asses off whilst we can in order to raise the dosh to support ourselves to the end or, secondly, we do the minimum we can and hope enough other people pay an ever-increasing proportion of their earnings in tax to keep us going. Something in the latter choice strikes me as rather wrong.

Unquote

The problem is that hard work doesn't mean that you automatically get earn a good living. There are lots of hard workers - educated and intelligent - who are in poverty despite their efforts and millionaires who have plenty but don't work hard because others have sweated to provide his wealth. There is a conception in society that a millionaire deserves his money mostly because he has earned his money. The reality is that nobody- no matter how intelligent they are - can possibly earn the money purely by their own efforts. Why? Because society is at all levels a collective one with regards to production. A chain that is eternally linked. Nobody can produce anything purely by his/hers own efforts but needs others to to be part of the process. The capitalist looks to exploit their efforts by creaming off the profits of others to enrich himself. Without their efforts he wouldn't have a dime/penny to his name. Workers as a productive unit can exist and share their wealth among themselves without a millionaire being part of the process, but the millionaire will be penniless without the worker. 

And this happens where, exactly? And it isn’t replicated because…?

Jesus, stamper, who the hell do you think creates those "chains of production" who do you imagine puts up the money to set them up and spends millions taking them through development to the point where - if they are lucky - they turn into profit machines?  Do you really believe that all businesses are successful, that entrepreneurs and investors never lose their shirts?

I know several millionaires quite well; they work or worked their butts off as, in some cases, did their families before them. If you really, honestly and sincerely  believe that anybody just sits back in the sunshine doing nothing and getting richer, you are living in a world of your own - well, not of your own, you have millions of the conveniently politically blind sharing the delusion. Making the money is hurdle number one; keeping it is hurdle number two and appears to be even taller a leap that number one: everyone, from certain 'friends' looking for a piece of your action to governments wanting all of it, is out to screw you and reduce you to where they'd love you to be: down beside them or, better yet, below, so that they can feel satisfied to have brought you down to their level of failure.

Some of those rich people get there because they can't help it: they have an instinct and it just can't be refused, no matter the cost to their lives in every other respect. There's the old one that goes: "You're a beautiful, twenty-year old girl; so, tell me, what was it that first attracted you to this old, fat millionaire you married?"  People laugh wisely, but nobody stops to wonder about it from the point of view of the millionaire. Can you imagine living your own life knowing that you can’t really take anyone around you at face value? That you can never know if your wife loves you or is simply setting herself up for life, trying to give you a child in order to make the chains even stronger and a divorce more unlikely, or more profitable if it happens?

The story of Life is that nobody comes out of it with a history of supreme bliss. From successes to disasters, from rags to riches and often right back to the metaphorical rags, it is never a smooth stroll along the golden path to nirvana.

People, broadly, get out of life what they deserve, and what they put in. You simply can’t regulate for success but you sure can for failure, as every socialist government through which I have lived and tried to work has shown me.

Rob C

[stamper]

Somewhat utopian.
Unfortunately, most workers cannot run a business themselves and will be unable to raise the capital to get going.
Most self-made millionaires have risked everything to get where they are.
Yes, they may employ people, sometimes a lot of people.
These employees benefit from having a job.
Few of them would have a job without the entrepeneur (read risk-taker).

BTW most self-made in business have failed several times before success arrives - there are no guarantees.

Tony Jay

I think the risk is in reality small. The banks provide the money in most instances and it is they that take the risk hence the financial crisis of late. Too much lent to entrepreneurs who hadn't a clue and the banks wanted a piece of the action that the entrepreneurs wanted to create. Creating limited companies shields them from most debts and simply closing down one company and starting another works for them. It is rather ironic If I had my way - and a lot of people who think like me - then that risk wouldn't exist for individuals. Tony your last sentence sums it all up for me .... failing several times. I would like to see a society in which that didn't happen or rarely happens. You didn't mention the effect that has on the workers employed in the failed businesses. Without them there wouldn't be any businesses.

[stamper]

Quote Rob Reply#51

Jesus, stamper, who the hell do you think creates those "chains of production" who do you imagine puts up the money to set them up and spends millions taking them through development to the point where - if they are lucky - they turn into profit machines?  Do you really believe that all businesses are successful, that entrepreneurs and investors never lose their shirts?

Unquote

Mostly the banks provide the money and individuals who weigh in with money borrow it from a bank or some similar institution. See my reply to Tony about failing. If individuals failing is such a disaster would it not be better that the horrendous burden is removed from them and spread out - if needed- over a number of individuals who all work for a business and if that business succeeds then they all benefit and just not one person,or two? I think there is nothing worse for someone employed who works for an individual who is greedy, grasping, possibly ill suited to ownership who pays poor wages, has poor conditions and little regard for the health and well being of his employers and dismisses them when he has accumulated his wealth. Do you want an example? Andrew Carnegie. His business was amongst the worst in American history and his money given to Scottish charities should have remained in America?

[Tony Jay]

The risk I refer to is not just financial.
And, most of the time, it is their own money and not the bank's.
If I default on my home loan I lose my house AND I am still responsible for the entire amount.
(It is only in the USA where handing th e house keys back satisfies the bank as to one's responsibilitie.)
It is only massive corporations borrowing billions of dollars where the bank is really at risk.
For the the up and coming entrepeneur they really are putting it all on the line.

If one borrows a million dollars from the bank and can't pay it back - one has a problem.
If one borrows a billion dollars from the bank and can't pay it back - the bank has a problem.

Tony Jay

[stamper]

Tony I don't know about Australia but in Britain it is simple to set up a limited company which means that the house isn't repossessed. The house ownership could be transferred to the missus but that means you will have to keep her sweet. There are plenty of semi- legal lawyers that will advise on ways of moving any of the money that has been "earned" from the business elsewhere before it crashes. That is a big problem in society. Shareholders getting fleeced by owners who evade their responsibility. There has to be a better way of creating a society that avoids all of the problems that you and Rob outline that will benefit most of society and not just the few. The biggest hurdle is overcoming greed.

[Tony Jay]

Stamper I am not confusing personal liability with corporate liability.
That example of a mortgage was merely to demonstrate a point that the banks want their money back.
Nonetheless most small businesses depend on substantial equity from the owner/primary shareholder so he is usually risking his financial future on the venture.
Generally only "successful" businesses can acquire substantial loans from a bank.
In the event of a default that bank will explore every avenue to recoup any losses.
True losses by the bank are subsequently written off against their tax obligations.
I think it incorrect to say that the bank is shouldering the risk - generally the entrepeneur will lose everything if the business fails.
In Australia, anyway, any hint of impropriety surrounding a business collapse generally results in criminal convictions and jail terms.

Tony Jay

[Rob C]

Tony, forget it.

That mindset is endemic in the West of Scotland, one of the reasons I left it. Envy of another's success is the keystone of life there, as is sectarian hatred. I remember an occasion when I was in an art director's office, overlooking Bothwell Street. Below his window I'd parked my brand new, fully-paid for '74 Humber. During our conversation about a shoot, he happened to look out the window and mused about whose car that was out there with the black vinyl roof. When I told him it was mine, his face fell and that car, forever after, was referred to as our car because I did lot's of work for him. That I did lot's of work for the agency because my photography kept some of their clients onside was never mentioned by him, but it sure was by an older copywriter who remarked that the AD simply took my pics and draped the writer's words around them... the fiscal input of my work for other clients wasn't mentioned by anyone in that incident: I though it diplomatically prudent to remain mute.

The basic problem with left-wing extremism is that it's a bit like religion: you have to accept it's tenets as God-given (though you may not believe in Him) dogma, never question anything nor look at life from a different perspective. The moment that you do, you have to realise, and accept, that if you live like a drone it's because you are a drone. Nobody likes that, especially the drones.

In my own case, I always knew that I was not cut out for business: it took me all my nerve to find work for myself and the thought of having to find work for an employee was a nightmare too far. I didn't like to think of photography as business: during tough periods relatives would ask why I didn't accept weddings any more, they would make me money; I would be told that money was money and that the bank didn't care where the hell it came from. I agreed, but I also told such people that it did matter to me, that I'd rather go bust than do photography that didn't please me - otherwise, why be in photography at all - almost every other job I might have done would pay more.

There were several advertising/industrial photographic studios operating in Glasgow at the time I started; I think a single one exists today, as a laboratory more than a studio. I do not, of course, include wedding photographers as photography businesses: none of us working as photographers during the 60s did. That, at least, we had in common. However, those wedding operators probably made more money than the rest of us.

Rob C

[stamper]

Stamper I am not confusing personal liability with corporate liability.
That example of a mortgage was merely to demonstrate a point that the banks want their money back.
Nonetheless most small businesses depend on substantial equity from the owner/primary shareholder so he is usually risking his financial future on the venture.
Generally only "successful" businesses can acquire substantial loans from a bank.
In the event of a default that bank will explore every avenue to recoup any losses.
True losses by the bank are subsequently written off against their tax obligations.
I think it incorrect to say that the bank is shouldering the risk - generally the entrepeneur will lose everything if the business fails.
In Australia, anyway, any hint of impropriety surrounding a business collapse generally results in criminal convictions and jail terms.

Tony Jay

Tony, a major factor of the collapse of the banks in the USA was that they were giving mortgages - essentially a loan - to people with little or no money who weren't in the least "successful", hence there downfall. Things are maybe tighter in Australia but it is generally the willingness of banks in the world to lend money to people, with little or no money, that has almost brought the world - with the exception of one or two - to it's knees and exposed the debts of Governments that were desperately trying to hide them from their citizens. As to criminal convictions in the UK then the incompetents who run their business into the ground are still - mostly - roaming the country looking to start up again and fleece the public.

[stamper]

Quote Rob Reply #57

Tony, forget it.

That mindset is endemic in the West of Scotland, one of the reasons I left it.

Unquote

Rob your tendency to personalize things once again comes to the fore. I take it is ingrained in your personality? A shame because you have in general an intellectual ability that is sometimes engaging but is marred by statements such as the one above.