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Why tax the productive sector to sustain the unproductive sector? watch

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    (Original post by Beneb)
    It's called war.
    You don't think war is ever justifiable?
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    (Original post by py0alb)
    Oh come on, the US government didn't force the mortgage lenders to make toxic loans, or the ratings agencies to rate junk bonds as AAA, or the investment banks to take on the bonds without more than preliminary research into the contents. Blame the culture of alcoholism, irresponsibility and corruption within the financial sector.
    The banks knew they had nothing to lose. The actions of the US government in the 80's showed that the government would intervene with failing banks. It set a dangerous precedent.

    The banks knew that any profits would be kept private and any losses would be socialised if they were big enough to matter. No matter what happened it was win/win for them, because the heads of the banks knew that their policy making buddies would bail them out. Low interest rates just furthered the profits made in the short term and encouraged them down the dangerous road.
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    (Original post by RyanT)
    x
    I think you're the one struggling with the concept of society. The state emphatically does NOT equal society. People associate with and benefit from one another through voluntary exchange under the division of labour, not because they are forced to at gunpoint.

    You have a problem with the control of society.
    Yep.

    I don't see how undermining the areas where ordinary people come together, building roads etc is going to help your cause. If all roads were built by corporations they could charge massive tolls. If they did that, they would be much richer and much, much more powerful. I don't want to live in a country dominated by unelected corporations. We're already too close to that. Your denial of government productive works simply implies they should be done by the private sector.
    From Wikipedia; you may look for alternative definitions if you wish:

    "A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members."

    Corporations are government created entities granted special privileges by the ruling elites. They would not exist in a free market.

    You show a frightening lack of awareness of the role that competition and profit play in reducing the price of goods. If road operators charged massive tolls, competitors would undercut them until supply equaled demand. Just like in any private industry.

    Have a look at the statistics for how many people die on public roads in America per year. Why does this happen? Because there is no profit motive, no motive to improve the roads other than the benevolence of the politicians (good luck with that).

    When you think about it, its a marvel that nearly every person in Britain has access to cheap, abundant food at low prices. After all, food is a far more immediate need than healthcare, right? The whole country would starve immediately if deprived of it. Have we socialised food? Of course not. Private industries competing to provide the best available product to consumers for the lowest prices drive the price of food down and the quality up. The state has the opposite effect: it drives costs up and quality down, because it is not subject to economic competition.
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    (Original post by Beneb)
    When you think about it, its a marvel that nearly every person in Britain has access to cheap, abundant food at low prices. After all, food is a far more immediate need than healthcare, right? The whole country would starve immediately if deprived of it. Have we socialised food? Of course not. Private industries competing to provide the best available product to consumers for the lowest prices drive the price of food down and the quality up. The state has the opposite effect: it drives costs up and quality down, because it is not subject to economic competition.
    You clearly have never heard of the common agricultural policy.

    If we had the "free market" you advocate, Britain would not grow any of its own food. This was the situation in world war II and a lot of people starved because of the security implications of ferrying food to the island.

    The UK has food that is expensive because the imported elements are brought with an increasingly devalued currency and the home-grown elements are price-inflated by the CAP in order to provide minimium living standards for farmers. British food is not produced in a free market and you are wrong to say it is cheap. Will address your other points later but I have to go now.
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    (Original post by RyanT)
    If we had the "free market" you advocate, Britain would not grow any of its own food.
    Of course it would grow some, but it is not a bad thing to outsource production in which other nations have a comparative advantage. This is the very basis of the huge increases in production possible under the division of labour and free trade. If you can't understand this, there's not much point going on here.

    This was the situation in world war II and a lot of people starved because of the security implications of ferrying food to the island.
    No, really? Britain suffered a food shortage during a World War? Of course, this scenario still applies today, when the risk of incoming vessels being torpedoed by German U-boats remains so high. /sarcasm

    The UK has food that is expensive because the imported elements are brought with an increasingly devalued currency and the home-grown elements are price-inflated by the CAP in order to provide minimium living standards for farmers. British food is not produced in a free market and you are wrong to say it is cheap.
    CAP is just another form of state protectionism. Any tariff benefits some state-selected, usually underproductive industry at the expense of more productive and efficient industries, and especially at the expense of consumers, who have to foot the bill through higher prices. The removal of CAP would reduce the price of food. We seem to be in agreement that if food prices are artificially high, it is the fault of governments.

    The devalued currency is also the fault of the government; fiat money would not existence in a truly free market.
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    (Original post by Beneb)
    Of course it would grow some, but it is not a bad thing to outsource production in which other nations have a comparative advantage. This is the very basis of the huge increases in production possible under the division of labour and free trade. If you can't understand this, there's not much point going on here.
    Why should an African have our custom and money when a British person could do the job and be employed. Supporting British people must come first and if that means paying a fair price for food then that is something we should all gladly accept. Better to be paying 20 pence extra for a pint of milk then paying unemployment benefits to an out of work farmer.

    Why on earth do you think we should take away a good standard of living for our own people and give it to every mohammed, jaroon and jose?

    I do understand free trade, I do have an economics degree. I also feel it is not worth the benefit in some parts of the economy.

    (Original post by Beneb)
    No, really? Britain suffered a food shortage during a World War? Of course, this scenario still applies today, when the risk of incoming vessels being torpedoed by German U-boats remains so high. /sarcasm
    Short sighted people said the same thing in the 20s.

    (Original post by Beneb)
    CAP is just another form of state protectionism. Any tariff benefits some state-selected, usually underproductive industry at the expense of more productive and efficient industries, and especially at the expense of consumers, who have to foot the bill through higher prices. The removal of CAP would reduce the price of food. We seem to be in agreement that if food prices are artificially high, it is the fault of governments.
    Food prices can be high for many reasons. Some are profiteering companies, some could be government regulations. Personally, if my food prices are higher because firms are banned from spraying cancer causing chemicals on food and to ensure that a farmer can have a reasonable standard of living then that is acceptable.

    You seem to value British people on the same level as foreigners with all your talk of free trade. Free trade isn't free, it kills our ability to offer the full employment economy. A fair days work for a fair days pay should be something offered to every member of the British nations. Your idealogy cannot offer something as fundamental as work and bread. If anything we have too many free-trade agreements with poorer countries and the slack of employment in the UK has to be taken up by the state because of it. Less free trade would mean more jobs for British people (half our factories are currently located in China). More jobs would mean that the government wont have to offer "five a day coordinator" roles to try and hide the real unemployment in our economy.

    You cannot ship productive jobs abroad under a false mantra of free trade and then scream about "unproductive jobs" in the UK.
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    (Original post by RyanT)
    The UK has food that is expensive because the imported elements are brought with an increasingly devalued currency and the home-grown elements are price-inflated by the CAP in order to provide minimium living standards for farmers. British food is not produced in a free market and you are wrong to say it is cheap. Will address your other points later but I have to go now.
    The CAP is a dreadful collection of programmes that actively suppresses the economies of third world countries by maintaining an essentially competition free internal market. It's a horrible protectionist program which encourages over production and stifles the market place while costing tax payers a fortune.
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    (Original post by Keckers)
    The CAP is a dreadful collection of programmes that actively suppresses the economies of third world countries by maintaining an essentially competition free internal market. It's a horrible protectionist program which encourages over production and stifles the market place while costing tax payers a fortune.
    I agree, CAP should be scrapped. So what if that means Europe import half our basic foodstuffs from Africa? It would drag millions of people out of poverty.
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    (Original post by Keckers)
    The CAP is a dreadful collection of programmes that actively suppresses the economies of third world countries by maintaining an essentially competition free internal market. It's a horrible protectionist program which encourages over production and stifles the market place while costing tax payers a fortune.
    Why would we want to enrich the third world? We live on a planet of finite resources. More wealth in the third world means the prices of metals, energy, rare materials etc being driven very high. This is against our interests. We should leave the third world to trade amongst itself but there is no good reason to help it develop at our own expense.

    It doesn't stifle the market place, we still have a European market place. It just means that farmers don't have to compete directly with people who will work for a $1 a day and why should they?
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    (Original post by RyanT)
    Why would we want to enrich the third world? We live on a planet of finite resources. More wealth in the third world means the prices of metals, energy, rare materials etc being driven very high. This is against our interests. We should leave the third world to trade amongst itself but there is no good reason to help it develop at our own expense.
    At our own expense? It would benefit us massively, food prices would be substantially lower for a start.

    More wealth in the third world means more trading opportunities for our technological industries and less government expenditure on foreign aid.
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    (Original post by RyanT)
    Why should an African have our custom and money when a British person could do the job and be employed. Supporting British people must come first ...
    This is standard isolationist, nationalist guff.

    and if that means paying a fair price for food then that is something we should all gladly accept. Better to be paying 20 pence extra for a pint of milk then paying unemployment benefits to an out of work farmer.
    The farmers are being maintained in unproductive industries. If production is outsourced, goods become cheaper and the standard of living rises. Yes, the farmers may become unemployed, but that's because the service they provide to consumers (i.e. comparatively more expensive food) is not valued by consumers. The farmers will eventually become reemployed in more productive sectors, or will improve their services to recapture some of the market.

    Why on earth do you think we should take away a good standard of living for our own people and give it to every mohammed, jaroon and jose?
    Tariffs impoverish consumers at the expense of producers who, faced with competition in the form of cheaper and better goods, look to the coercive power of government to prevent voluntary transactions in the marketplace. Every 'mohammed, jaroon and jose', as you put it, has every right to compete on a free market and, if he provides a better product for a cheaper price, supplant inefficient British workers.

    Short sighted people said the same thing in the 20s.
    What the hell does this mean? That we should restrict trade because, at some unspecified point in the future, the world might erupt in total war? Protectionism causes war; it impoverishes nations, and leads to animosity instead of a system of mutual benefit.

    I'm starting to think you're trolling me.

    Food prices can be high for many reasons. Some are profiteering companies, some could be government regulations. Personally, if my food prices are higher because firms are banned from spraying cancer causing chemicals on food and to ensure that a farmer can have a reasonable standard of living then that is acceptable.
    You assume that companies could turn a profit selling products which cause cancer for consumers. A strange assumption, to say the least.


    You seem to value British people on the same level as foreigners with all your talk of free trade.
    What a thought! Those damn Poles, taking our jobs!

    Free trade isn't free, it kills our ability to offer the full employment economy. A fair days work for a fair days pay should be something offered to every member of the British nations. Your idealogy cannot offer something as fundamental as work and bread. If anything we have too many free-trade agreements with poorer countries and the slack of employment in the UK has to be taken up by the state because of it. Less free trade would mean more jobs for British people (half our factories are currently located in China). More jobs would mean that the government wont have to offer "five a day coordinator" roles to try and hide the real unemployment in our economy.
    There is so much wrong here, my head hurts.

    You cannot ship productive jobs abroad under a false mantra of free trade and then scream about "unproductive jobs" in the UK.
    Jobs are shipped abroad because they are (comparatively) unproductive! If they were (comparatively) productive, they would be making a profit. Keeping jobs in sectors which are stagnant or declining benefits nobody except the protected employees (in the short-term). Work is valued for what it produces, not as an end in itself.

    Let's say there are two towns, A and B, both of which house a mobile phone business. Company A produced mobiles which break often, have poor signal, and are quite expensive. Company B produces mobiles which offer much better quality at a lower price. Should we 'protect' the workers at company A? Of course not! The company should go bankrupt, the consumers should benefit from the mobiles offered by company B, and the former employees of the insolvent business should look for jobs in a more productive industry. This scenario is the same across nations as within them. The consumer is king.

    I do understand free trade, I do have an economics degree.
    I think you'd better ask for a refund. You have no understanding of basic economic ideas.
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    (Original post by Keckers)
    At our own expense? It would benefit us massively, food prices would be substantially lower for a start.

    More wealth in the third world means more trading opportunities for our technological industries and less government expenditure on foreign aid.
    The problem with that view is that under free trade these countries end up developing their own versions of the industries that we operate anyway. Look at China, they can do all the technological industries as well. This is the fallacy, that third world countries can do all our poor people jobs and middle class people can export their services all around the globe.

    Third world countries will develop their own middle class, who will work for cheaper. So we cannot export technology like you seem to think we can. In addition, they can export back to us.

    Some people on this site call me a supremacist, but I don't hold the implicit view that third world people are intellectually incapable of competing with us on high technology projects. They can and they will. They will also beat us on a cost basis.

    We end up making our own working class unemployed and the middle class will get no long term benefit either, just more competition. It is bad business.

    As for foreign aid, it shouldn't be paid anyway.
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    (Original post by Oswy)
    Another display of your ignorance. Welfare capitalism and, indeed, public infrastructure under capitalism, have nothing to do with socialism but everything to do with the internal contradictions of capitalism itself.
    Ignorance? I provide clear figures demonstrating how socialist the UK economy is but because it's not working you apply a little cognitive dissonance and disregard it as capitalism. Only the most dogmatic socialist would attribute every failure to free market economics, I suppose the USSR collapsed into tyranny and chaos too because of those eeeeeeeevil capitalists..
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    (Original post by Beneb)
    The farmers are being maintained in unproductive industries. If production is outsourced, goods become cheaper and the standard of living rises. Yes, the farmers may become unemployed, but that's because the service they provide to consumers (i.e. comparatively more expensive food) is not valued by consumers. The farmers will eventually become reemployed in more productive sectors, or will improve their services to recapture some of the market.
    No, the standard of living rises for some people and decreases for other people. There is a net gain but it is shared between the foreigner and the consumer. Unless the consumers net gain is bigger than the loss for the farmer then it is not good for the UK. It is good for the economy that consists of all three (foreigner, consumer, farmer), but as the foreigner will not be paying taxes or spending in the UK it is a net loss for the UK.



    (Original post by Beneb)
    Tariffs impoverish consumers at the expense of producers who, faced with competition in the form of cheaper and better goods, look to the coercive power of government to prevent voluntary transactions in the marketplace. Every 'mohammed, jaroon and jose', as you put it, has every right to compete on a free market and, if he provides a better product for a cheaper price, supplant inefficient British workers.
    Consumers are producers. Your attempt to partition the two into separate groups is bizarre.

    The British workers are not inefficent. They are extremely efficent. The comparative advantage that foreigners have is that they're willing to accept very low living standards. This does not make them more efficent in any usage of the word, just cheaper.

    No they don't have every right to. British people must come before foreigners. We share blood and culture, it is only morally right that we help each other before we help non-Europeans.






    (Original post by Beneb)
    You assume that companies could turn a profit selling products which cause cancer for consumers. A strange assumption, to say the least.
    Yes they can.

    http://en.wikipedia.org/wiki/2008_Chinese_milk_scandal

    You see, unlike you I know that a lot of "Free trade" models rely on free information. Which does not occur in reality.


    (Original post by Beneb)
    Jobs are shipped abroad because they are (comparatively) unproductive! If they were (comparatively) productive, they would be making a profit. Keeping jobs in sectors which are stagnant or declining benefits nobody except the protected employees (in the short-term). Work is valued for what it produces, not as an end in itself.

    Let's say there are two towns, A and B, both of which house a mobile phone business. Company A produced mobiles which break often, have poor signal, and are quite expensive. Company B produces mobiles which offer much better quality at a lower price. Should we 'protect' the workers at company A? Of course not! The company should go bankrupt, the consumers should benefit from the mobiles offered by company B, and the former employees of the insolvent business should look for jobs in a more productive industry. This scenario is the same across nations as within them. The consumer is king.
    I have already said that I understand that free trade reduces prices, losing this it is a fair cost for keeping one of our own in a job. I don't advocate a full autarky, we should take part in free trade upto the point where we are unable to maintain a full employment economy.

    As long as we have jobs that we can give, say the farmer after withdrawal of CAP then free trade can be tolerable. However, the simple fact is we don't have these jobs. Until we can do that then there is no point in shipping productive jobs abroad. Sure, China can do them cheaper. So what? Better to have jobs in the UK.

    (Original post by Beneb)
    I think you'd better ask for a refund. You have no understanding of basic economic ideas.
    I recognise the limit of natural resources. You appear to think there is a magical jobs fountain from which full employment for an entire planet of 7 billion people can sprout forth.

    I think I know who is economically illiterate.
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    (Original post by RyanT)
    I recognise the limit of natural resources. You appear to think there is a magical jobs fountain from which full employment for an entire planet of 7 billion people can sprout forth.
    There is a magical jobs fountain though, it's called want. Humans need certain resources such as food, heat and shelter and in turn this creates jobs for people to do, all things being equal the more people there are the more work that needs to be done.
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    (Original post by chefdave)
    There is a magical jobs fountain though, it's called want. Humans need certain resources such as food, heat and shelter and in turn this creates jobs for people to do, all things being equal the more people there are the more work that needs to be done.
    Unfortunately the water supply to this fountain is called technology. There is simply not enough natural resources in the world to provide these jobs. If everyone had jobs they would be using a lot of energy. We saw what damage $150 oil prices did to our economy and jobs. Well, $400 oil would be what you'd be facing (at least) with 7 billion consumers. How could you run a full employment economy, globally, with such high costs for energy?

    Pig farming in the UK runs at a loss at the moment because the cost of feed has sky rocketed. That is because of Chinese demand. When we add in the cost of billions more consumers of crops, we would not be able to do any pig farming at all.

    The simple fact is, if this "free market" economy gave full employment, we would be seeing it already and many more jobs than currently exist in third world countries. These jobs do not exist, where are they?

    They are constrained because of the cost of resource extraction is bounded both by the quantity and quality of deposits and technology. We are unable to supply enough jobs for the entire world because we simply do not have enough iron, oil etc in the ground.

    This is the truth that is staring at us in the face. People must understand that academic models based on false assumptions are rarely applicable to the real world. I spent years studying them and realise how broken they are when applied to the world as it is.
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    (Original post by RyanT)
    Unfortunately the water supply to this fountain is called technology. There is simply not enough natural resources in the world to provide these jobs. If everyone had jobs they would be using a lot of energy. We saw what damage $150 oil prices did to our economy and jobs. Well, $400 oil would be what you'd be facing (at least) with 7 billion consumers.
    We never saw the impact of $150/barrel oil. Unless you can disaggregate that from the fact we were ten months into a liquidity crisis...
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    (Original post by Quady)
    We never saw the impact of $150/barrel oil. Unless you can disaggregate that from the fact we were ten months into a liquidity crisis...
    My apologies, just checked a graph appears to peaked around ~$137. Headlines speculating on whether it would reach $150 must of replaced headlines on the actual price in my memory.

    Either way increased demand for oil will damage western standards of living.
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    (Original post by RyanT)
    My apologies, just checked a graph appears to peaked around ~$137. Headlines speculating on whether it would reach $150 must of replaced headlines on the actual price in my memory.

    Either way increased demand for oil will damage western standards of living.
    Well $145 was technically the highest price, but it wasn't the $150 value I was questioning, it was the timing. When Northern Rock went under oil was under $100/barrel - so I don't see how it was the rise in the oil price that was the root of our problems as the price continued to rise until the second wave of Liquidity problems that within weeks took down Lehman and all asset prices were hit.

    Well in 30 years we'll know if you're right or not
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    (Original post by chefdave)
    Yes it's fair to say the public sector creates wealth, but it's a lot more difficult to put a figure on the exact amount of wealth they create so they may be overestimating their economic usefullness to the public.
    Of course, some things are much more important than "economic usefulness".
 
 
 
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