George Osborne, the Chancellor of the Exchequer, a man whose salary totals £134,565 receives government welfare.
But he claims he is about to give up the dole in the interests of fiscal sanity.
In an Op Ed in the Daily Mail Osborne writes:
This week my family will not receive the child benefit we’ve been getting every week since our children were born. Any household where at least one member is earning more than £60,000 will be in a similar position.
They can either choose to stop receiving child benefit, as we have done, or they can have the equivalent sum taken away through the tax system later.
Those earning between £50,000 and £60,000 will lose a portion of that child benefit cash.
It’s not an easy decision we’ve taken as a Government – these days, there aren’t any easy decisions.
Osborne’s claim is that only through contracting spending can we reduce the deficit, and only be reducing the deficit can we have a brighter future. He couldn’t be more wrong.
While it is absurd that rich men like Osborne receive child benefit that they don’t need while severely ill and seriously disabled individuals are thrown off welfare and told they are have to find work (even though unemployment is already elevated, with eighteen people applying per vacancy in 2012, so just how disabled and sick people are supposed to find work in such a depressed economy is quite a conundrum) this is merely a side issue to the wider folly of Osborne’s economic policies.
Balancing a government budget is not simple arithmetic like balancing a household budget. The two policy tools typically discussed in dealing with deficits — cutting spending, and hiking taxes — have powerful hidden effects that often (paradoxically) make deficits bigger, as has happened in the case of the extreme austerity in Greece.
If spending on welfare is cut, then the income of those who would have received that spending is cut, in turn cutting the incomes of others — shops, manufacturers, service-providers — who could have otherwise sold things to them, cutting the incomes of their suppliers, and so on. And the government will also lose any tax revenues that would have been paid, shrinking revenue and leading to bigger deficits.
If taxes are hiked, then not only does this shrink disposable income — leading to a similar contractionary effect as welfare cuts — but it also leads to Laffer-curve-style tax avoidance, as those subjected to higher tax rates move their income offshore, and use loopholes and creative accountancy to avoid paying taxes. This too can actually drink revenue and lead to bigger deficits.
The better option is to stop trying to balance the budget using contractionary budget cuts and tax hikes and instead focus on increasing output and decreasing unemployment by growing the economy. If the economy grows significantly, and government spending remains the same, then the budget deficit will by definition close itself (and the welfare bill will by definition shrink as more people find jobs). Although the capital markets are offering governments the ability to borrow at very low rates, there is really no straight binary choice between debt-fuelled stimulus and austerity. Policies that promote growth are possible without adding a penny of debt.
- Attract more foreign capital into Britain — there are trillions of dollars of foreign capital in emerging markets like the middle east, Russia and China. Britain could offer British citizenship and other incentives for citizens of foreign countries that invest in the UK. Foreign capital can be used to improve British infrastructure, like improving the road, rail and broadband networks, which will in turn provide new jobs.
- Increase entrepreneurship — use the bailed-out part-nationalised banks as a vehicle to offer business startup loans to unemployed people. There are millions of jobless people who want to work or a start a business, but cannot because of credit conditions and the weak job market.
- Deregulate small business — decrease the regulatory and tax burden for new businesses. Make it easier and simpler to achieve planning permission to build new homes.
Indeed, the current government has paid lip-service to some of the above, but with few tangible results. Britain’s difficult immigration laws continue to deter foreign investment. Four years after the bailouts and in spite plenty of promises from the government, the banking sector is still not lending to small business. The overwhelming thrust of the government’s policy has been contractionary austerity. And the overwhelming result has been weakness and contraction:
If Cameron and Osborne don’t change their strategy — move away from trying to cut absolute government spending, and move toward trying to boost the wider economy, and so cut government spending as a percentage of GDP, then the economy is highly likely to stay depressed.
And that would be a cut to everyone’s welfare.
“The better option is to stop trying to balance the budget . . and . . focus on . . decreasing unemployment.” Keynes (very unusually for him) was more succinct. He said: “Look after unemployment and the budget will look after itself”.
I am not a natural Keynesian, in fact I am naturally sympathetic to a lot of Cameron’s rhetoric, but I cannot ignore the results: contraction, mass unemployment, and weakness. His policies are not working. “Time to cut is the boom, not the slump” — Keynes.
Hullo? Is this the John Maynard Aziz blog?
The factors affecting our current economic problems are so varied and inter-related that it makes one’s head swim, but there are some which are no brainers. Importing labor while we export jobs is as close to insanity as we can get.
France has imported millions of Muslims. 75% of them are unemployed, and the ‘no-go’ areas they have established are crime ridden, Muslim only, and will never be part of an integrated France.
One of the greatest problems is that, short of outright rebellion, this particular problem is irreversible. Once in there is no getting them out. The perfect parasite has met the perfect host.
According to recent data, unemployment of French Muslims is around 20-30%, and over 80% of the Muslim population support secularism, which shows they are more integrated than you seem to think.
Personally, I support an open immigration policy (although welfare should only become available after 5 years of tax-paying residency), with citizenship priority and other incentives (e.g. tax exemptions) for people who want to invest money and create jobs.
If there are good jobs to go to, French Muslims will find jobs. France needs to attract more and better investment.
An “open immigration policy” would render the continent my ancestors stole into an unrecognizeable land mass within 50 years.
“75% of them (Muslims) are unemployed, and the ‘no-go’ areas they have established are crime ridden, Muslim only, and will never be part of an integrated France.”
If their areas are crime ridden and ‘no-go’ areas then the crime is confined to themselves, victim and perpetrator are Muslims. So not anything for the non Muslim to worry about. Pre-revolutionary France was a patchwork of dialects and subcultures, the secular Revolutionary state destroyed this and created a nation-state, it killed many people in attempting to do this and it was still not perfect. All modern-nation states depend on national myths to create a sense of imagined unity…everyone living within the borders of France are one and the same, people living within France but hundreds of miles apart are one and united. This is of course nonsense. When people deploy this myth in order to identify and create outsiders, they are playing with words. Sometimes people need to shed their national myths and see beyond them…Why cant nation-states accommodate sub-cultures don’t they do this already to some extent (France has sub-cultural youth movements for instance)? What do you mean by ‘integration’…someone can be working and living in France and still be not integrated in what way?
Maybe France should have not tried to colonize others?
“Why can’t nation-states accommodate sub-cultures..?” Simple. Because when two or more cultures are forced to co-exist in a small geographical area, they eventually merge. E.g. England used to have three languages: Latin, French and Anglo-Saxon. Those three have merged to present day English. Or for another example, there is the great US melting pot.
I’m all in favour of the World retaining it’s sub-cultures (e.g. Tibet). And it is precisely that that multiculturalism destroys!!! That is, given mass world-wide immigration the cultures of the world will eventually merge and we’ll have one pan world culture.
I.e. it’s the politically correct whose policies destroy cultures (though they’re far too thick to see it). In contrast, far right parties like the British National Party want their national cultures retained.
Keynes said, “…we should encourage small political and cultural units. It would be a fine thing to have thirty or fourty capital cities in Europe, each the center of a self-governing country entirely free from national minorities (who would be dealt with my migrations where necessary).” He’d get arrested for saying that nowadays: it’s un-PC. It’s very important to keep on good terms with PC fascists: else you lose your job, as several BNP members have discovered.
You seem to be forgetting that the merging of cultures takes time…and there are always sub-cultures in any nation-state. The centralized government together with the mass media presents cultures as one…minorities and subcultures are either ignored and classed as being ‘outside’. This is done by power not because it is real or true but to perpetuate the myth of the nation-state that we are all one. There is nothing wrong if people speaking a different language live in a geographic area within a nation-state…it is only a problem when ‘busy bodies’ with a strong belief in the myths of the nation-state that problems occur, Power and the nation-state also exploit and use such policies to for divide and rule purposes. In Farnce prior to the French Revolution many different dialects of Franch were spoken, people living within a 30 mile radius would have been different. Technology and the diffusion of ideas over a larger space has allowed the nation-state to create these artificial worlds (myths) of national unity. There are no real links between 2 individuals living within the same nation state seperated by 100 miles, you may speak the same language, use the same currency, support the same national football team…but all of this has been created by the state and its propaganda.
All too true. Despite the wishes of an elite class of political leaders who actually believe in the principle of diversity for the sake of difference, the nature of that idea flies in the face of scientific reality.
People identify with their own race, want their children to share in the culture of their own people, want to continue a way of life developed by them, and fear the loss of racial and cultural heritage.
Social scientists have long known that homogenous societies are happier ones, and deliberately seeking to make it something else is to seek conflict.
I am the product of two cultures and I adopt the one that influenced me as a child. When sub cultures have their own schools and TV shows and children program, they will never mix in the host country.
The world’s cultures will eventually merge. Even religion will wane. Kids are less religious than their parents. They don’t believe in fairy tales anymore. The internet will drive it. Going off Google trends it will be a shallow culture. Sub Saharan Africa has lost its wonderful clothing and cultural diversity due to container loads of recycled clothing being dumped at its Ports. It’s youth listen to Rap. The internet makes sub Saharan Africa an extension of Detroit.
Then the logical step is One World Government.
This is a reply to your 04:45:28 comment (which might be above or below THIS comment).
Strikes me there is a very big problem when people speak “a different language live in a geographic area”: they don’t understand each other. As I think Ed Balls pointed out, it’s a bit difficult for a public sector employee to deal with the public if they aren’t proficient in English.
I have no objection at all to adopting the best practices of other cultures. What I object to is the PC pro-immigration idea that mixing peoples and cultures for the sake of it brings benefits. The classic case is Islam. That is a culture which incorporates a large number of what I regard as completely odious aspects: e.g. killing the authors and cartoonists one doesn’t like, homophobia, treating women like dirt, the fact that about 20% of young Muslims in the UK think that anyone leaving the faith should be killed, Halal animal cruelty, etc. The idea that we’re supposed to benefit from that bizarre collection of ideas is nonsense, seems to me.
If we are going to import people as we export jobs we should at least select the very best , most assimilable people available. Immigration was never intended to be an affirmative action program for the Third World.
Cultures have never been homogenous. Racially maybe Europe was always white generally speaking, but culturally they differed in time and geographically. Britain has Celtic, Viking, Norman etc.stock. English only gained a standard spelling recently, like I said people living 20 miles apart would have been like foreigners historically. Dialects were radically different.
“What I object to is the PC pro-immigration idea that mixing peoples and cultures for the sake of it brings benefits. The classic case is Islam. That is a culture which incorporates a large number of what I regard as completely odious aspects: e.g. killing the authors and cartoonists one doesn’t like, homophobia, treating women like dirt, the fact that about 20% of young Muslims in the UK think that anyone leaving the faith should be killed, Halal animal cruelty, etc. The idea that we’re supposed to benefit from that bizarre collection of ideas is nonsense, seems to me.”
You are entitelled to your opinion. However you are creating a caricature or a cartoon cut out of Islam the absolute ‘other’ which has no redeeming qualities or teachings (me good, you bad basically). Christians are also against homosexuality. It is obvious to me that the people who create these media events which result in Muslim mobs rampaging and killing people do it for a specific purpose. Muslim women are not treated that badly. Women are abused by non Muslims too in massive numbers, and women are objectified and commodified by the Capitalist machine. The other side of the coin is that feminism itself is an extremist reaction…gone too far and made women the playthings of capitalist employers. Women have been encouraged to work for wages and have been told this is freedom.
Perhaps Europe can deport the Muslims, or it can lock them away in camps or terminate them in large numbers. They are ‘outsiders’ afterall. Or Europe can drop the rhetoric. The ruling class bankers like conflict and diversions, it keeps people out of the business of the bankers…so I think this will be an ongoing event for many more decades….we shall see how it pans out. Muslims were in Spain or Andalucia for almost 800 years before they were finally kicked out by the Catholic monarchs.
When that person “working and living” in France lives in enclaves hostile to outsiders, proposes death for those who convert from Islam, believe women should be subjugated, insist on their own language, religion, law and culture, burn automobiles in protest against government, murder people like Pym Fortuyne and Theo Van Gogh, threaten the death of leaders such as Geert Wilders, carry signs which read, “To Hell with Democracy” and promise a second holocuast, there is just a bit of reason to suspect they are not part of an integrated populace, wouldn’t you say?
Good God, man. What planet have you been living on?
Azizi, love your commentary. However, your chart is hilarious. Using government data to show US has real GDP growth. Please—they have to fudge the numbers every which way just to show nominal GDP growth. Without a doubt it’s the same in the UK and in every other country burdened by the same political and bureaucratic classes.
As you say, GROWTH is the key. The reality of the situation, however, is that the UK (and the US) are not close to the “place” where the necessary policies will be implemented: a very hard “bottom” where there are no other options.
I’m not going to accuse anyone specifically of manipulating data, but if that were the case, I think the UK has just the same incentives and powers to fudge the data as the USA. So if the US data is fudged, the UK must be too. So it’s a fair comparison.
I see it more as a case of — Obama is incompetent, not really assisting in generating a real recovery, and seemingly quite complicit with the bankers in their looting. And the USA is STILL doing vastly better than the UK… THAT’s how bad the UK is doing.
John, I believe you are suffering from a case of severe case of hopium. You might wish to consider that Obama is doing EXACTLY what he has been instructed [or, brainwashed himself into doing, if that works better].
Almost everything that happens, does so because that’s how its designed. To consider otherwise would be like tossing a thousand coins that all come up heads, and not checking as to whether these coins possess a tales side.
The system has bared itself about as much as it possible can. To be in denial of this massive systemic fraud which has witnessed the transfer of trillions upon trillions of currency units to the few, seems a bit naive.
I think Obama is a terrible President on many levels. Yet the UK’s economic performance in terms of output (lower), deficits (higher), inflation (higher), unemployment (higher) has actually been worse than Obama’s America. That tells quite a story about how bad the UK is.
As for what has been “designed” — yes, I think the massive systemic looting by the financial sector (that of course, George Osborne loves) was designed, and most of the authorities on both sides of the Atlantic have pretty much played along. But what I guess I need to get across is… Britain was left in a worse state, and is not even recovering the tiniest bit.
Britain has been a mess since WWII, as I am sure you know better than myself. Bigger the boom… . It might take GB a century to get its act together considering the power of the London financial aristocracy.
There has been no recovery in the U.S. And it’s impossible to assess much of anything because the data is manipulated [although John Williams @ “Shadow Stats,” tries]. What you can know is that housing, health care, education, financial services, food, and energy have all gone up a great deal in real terms while the vast majority [90%] of Americans have seen their real incomes drop since the late sixties.
Add on top of this, the fraud that has taken place [the real amount of wealth lost], and it makes for a pretty sad picture. BUT, this kind of thing happen to all systems and it will be purged [eventually]. Again, anybody with an IQ over 75 has to realize what’s going on.
I talk to people all the time in my office [people in banking and real estate and such], and most of them feel really bad that nobody can afford to buy a house around here [unless you have $$ or your are willing to become a life-long debt slave], but, that doesn’t seem to alter their mood a great deal as they go out into the parking lot and get into their MB or BMW.
There has been a kinda bubblecovery in the USA… some reinflation of housing, some recovery of unemployment, but lots and lots and lots of recovery in stocks. And what everyone is ignoring is that the debt load is still a massive burden that will sooner or later drag the economy back into recession. But at least in the USA there has been a little deleveraging. And at least in the USA there are some fairly serious efforts to create energy independence to release US dependence on global oil markets.
In Britain, we haven’t even had a bubblecovery. We’re just in a straight-up depression, and we have had even less deleveraging than the USA. We’re more energy dependent than ever — our domestic oil is running down, and our infrastructure is just as bad as America. And our housing bubble didn’t fall to rock bottom like the USA, so young people in Britain very often can’t afford housing (we’re a smaller country, so by definition less land to build).
The US situation looks worrying to me overall. The British situation looks dire.
Hard to compare the former British Empire with the current American version as the British gained a great deal of its wealth through colonization, whereas, the U.S. has tremendous sources of wealth within its political boarders.
The so-called bubblecovery you allude to is simply inflation, as you know, and therefore more destructive in the long-run. If things are getting to a dire stage in GB, then you are closer to resolution, so this is a good thing [in the long run].
I can tell you one thing, in small to medium business, if you are not somehow tapping into government money, you’re not doing so great. In my town, eight of the largest ten employers are government/government agencies. Not so great.
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Whilst transfer payments such as welfare recycle capital throughout the economy evenly, an excellent way to boost wealth in the economy is do what they do in Australia. offer a family relocation visa to people investing a certain level in a business, then the opportunity for citizenship. The money invested in business is a job enabler. But do what most governments do and suffocate the business with regulation, higher taxes, and most of the opportunity for innovation and advancement is snufffed out.
I think Putin was very smart in using the French debacle to advertise to the worlds wealthy that they are safe in Russia from higher taxation. Russia is in a modernation programme, has excellent scientific and engineering capabilities, and vast resources. It will be a beacon for the worlds rich to relocate and set up shop. The need capital to modernise the factory and export products, much like China does. Their youth have little opportunity to marry and populate the country, so they need capital to improve the opportunity to start a family.
Watch this space. When you cut through the propaganda, Russia is a safe place to reside. Only the post Soviet Criminals who try to grab political power will find themselves on the receiving end of Putin’s wrath.
Putin wants to be remembered by the people as a great leader, he is being relegated as a Saint by the Orthodox peasantry. This is intoxicating to leaders and no money can buy this. During. This time it is a great opportunity for honest Capitalists to improve Russia. They are his tools of ascension to heaven so to speak.
i sense this is a very important article, although i dont really understand it…but selling the legal right to be part of a (national) economic community to international capital combined with tax incentives to draw opposed to repel capital does seem like a smart idea
i have often thought, regarding australia, i have no idea why the government doesnt just make some advertisements saying that if you setup work in factories or research zones in the local (australian) area with a focus on renewable energy then you can avoid paying tax for the next 20 years, say, or pay a special flat rate of only 5%, for example. like, create instead of an international tax haven a more focused international free trade zone for research into renewable energy. you could try and just get heaps of the smartest scientists to your area by offering them way higher living standards than they can get anywhere else with better opportunities to profit from their research/businesses, and then when energy becomes way, way cheaper debt/gdp will naturally fall, no? sounds too simply, anyway…
Australian government immigration website
ps on immigration my thoughts are:
there should be a price payable by international people (i.e. ‘foreigners’) to legally setup shop and/or work in the economic area concerned, set by whoever is the reigning authority, but a condition of buying a ‘citizenship pass’ like this should be that you (permanently) wave your right to any type of tax-funded welfare now or into the future. this would ensure you are not attracting free loaders
it would be deeply ironic if the West were to institute such policies as a co-ordinated means of trying to re-instigate trade on a mass scale within their sphere of influence if at the same time the East is only just beginning to setup “welfare States” – people say it is the flow and not the stock, dont they? why is national economic thinking any different?
The important point to realise is that said “rulers” are not only restricted to people like Steve & Frances or to just the rich, nor is it one particular group set in time without requiring any need to justify their preeminence
The New Global Rulers:
The Privatization of Regulation in the World Economy
“top economists agree about a lot of things. For example, 100% opposed a gold standard”
If you take what most “professional” economists expect to happen and project the opposite you are more likely to be right rather than wrong. Therefore, it stands a fair chance that a flood into hard gold till be the global siren for a voluntary, mass migration into various forms of inelastic money.
I am not really sure that inelastic money is really desirable for everyone. In a stable fiat system, I think it is the natural domain of the elite who wish to use a stable unit of account and store of value. In an unstable fiat system, inelastic money only becomes relevant at the moment of the hyperinflationary collapse. Until then — and we could still be a very long way from a hyperinflationary collapse — I expect the masses to continue to sell their “broken and unwanted” gold to unscrupulous merchants.
We’re getting there, though:
Umm. Going off the Gold Standard occurred in the 70’s right?
Who got the cheap credit in the 70’s? I wish I had taken out loans and bought equities!
Didn’t 401k funds come out then? I know in Australia we lag behind the USA by 10 years, and I know when Superannuation (compulsory employer contributions to retirement funds in lieu of wages (No pay rises but money went to equities)) the market had a certain “demand” which boosted stocks.
Would have been great to be the 1% in the know. Legislation always has an effect, and architects of legislation use their Politicians to pass it. Great return on investment.
The printed money has been used to buy equities, sell out at the “right” time and buy up distressed assets. The theft is so clear.
In Australia we have what is known as a “Royal Commission” with extreme investigative powers. I would like to know who did what, said what. But this would be impossible because the “Terms of reference” Code for the Judge to “not go there” would make the Commission impotent.
The sooner the average Joe is educated in this the quicker the 100% Taxation of the 1% and capital outflow controls, Interpol requests to extradite and imprison. The better.
Interesting…I wouldn’t dare argue against you! But to say, is it possible we are undergoing hyperinflation at the moment except that it is in a very elongated form? Probably a stupid question, but is it possible for an exponential increase in information to stretch out/buy more time? I don’t know. I am just speculating, obviously 🙂
I imagine that, as with attaining (relatively) free energy (compared to today’s costs, at least), you first need to burn through enough pollution to first achieve the technical competence then required to produce the cheaper, more renewable energy on a mass scale. Perhaps the same occurs in corruption terms. To break through into a very classical system of fairly good incentives sustainably evolving to increase wealth and reduce instability you first need a crescendo in corruption so that our mistakes are more clear. I imagine many people may engage in activity which to themselves is not at all intended to be corrupt, but appears that way to other people, for example.
Interestingly (to me, at least!!) Sir Roger Penrose has recently speculated about the cosmos in a somewhat similar manner.
The biggest form of corruption is incentive induced purchasing. e.g. Doctors prescribing medicines for certain kickbacks from the Pharmaceutical companies.
Then local/state/federal government tenders where regulations limit competitors (Price not a factor)
And finally Union officials promising to “keep the workers happy”, or not make a fuss about Health and Safety for various inducements.
Can you scatter plot China vs America vis a vis elites per capita, however defined? It looks like China is way more decentralised than the US/Europe, but is it? Which is more flexible? I don’t know…
Bankruptcy regime for nations urged
That crazy lady in Argetina is pissing off everyone, from the Brits to “her own” citizens, trying to default on international financiers while at the same time imposing all this dumb stuff on ‘her’ poor citizens.
Frankly I’m simply not smart enough to seriously judge Muddy Waters or Jim Chanos but if a competing group of legal regimes (ground in the principle of private property and the sanctity of contracts) emerge…will it not be the case that politicians will at once be both subordinated to their financiers and their more direct employers (i.e. citiznes) to the extent that they may not be always able to sign up people onto debt without first requiring their individual consent? “Property does not exist because there are laws, but laws exist because there is property.” — Frédéric Bastiat. Following classical rule of Law could prove highly lucrative for the West. I’ve often said that the English common law system, or things approximating it, is London’s best global asset, and NYs, too, perhaps….
I think the “US bankruptcy proceedings” are more likely to be amenable to what the FT calls the “obscure legal clause” in question – ie respect for voluntary contract based in principle on private property.
Notice how the article says the EU has “mandated” (IE FORCED) certain non voluntary contractual clauses so the politicians can subordinate bank owners/investors/financiers. I doubt the US will be so easily pushed about
Growth, growth and more growth! Just add more “growth”, like adding salt and pepper, and it will all taste better. Maybe we can find another frontier out there to settle, fill it up with more and more people, and continue on our merry way.
“Infinite economic growth is not possible in a finite world. Unless people no longer need to consume anything at all, then unlimited growth is not possible. Yale’s Henry Wallich opposed active intervention, declaring that limiting economic growth too soon would be ‘consigning billions to permanent poverty’.
Do you want billions in relative poverty now or do you want many more billions in abject poverty (with far fewer resources to support them) in twenty years?”
As Naomi Klein puts it, we always think something (technology, magic, the invisible hand) will come along and save us. 20 minutes long and a very good talk.
Growth will collapse once the Third World has access to iPhones, Internet, and consumer tastes. Who would want to start a family when there a “life to live”.
I see it happening in India now. Small families are becoming fashionable. Only poor people have big families.
I agree. Uncontrolled growth is another term for a malignancy.
Growth can be sustained. The next frontier is space. Humans have many motives (desire for self-determination, avoidance of government control, trillions and trillions of dollars of resources, curiosity, etc, etc, etc)
In an interview in a French business magazine, Edmond Adolphe de Rothschild said that of all the countries in the world where he did business, the United States appealed to him most:
“For me it symbolizes free enterprise, where a man is responsible only to himself, a place of endless opportunity and limitless space.” Then he added, “I am fundamentally a citizen of the world” http://www.nytimes.com/1997/11/04/business/baron-edmond-de-rothschild-71-french-financier-dies.html?scp=1&sq=Edmond%20de%20Rothschild%20chateau%20clarke&st=cse&pagewanted=1
If you care about a particular thing, be it an area of water in which whales are known to live, a favourite city of yours or some general patch of forest, then to preserve what you love a respect for the principle of private property is required. The Sea Shepard is arbitrarily chasing boats without any legal authority because “public law” is still being adhered to in the areas concerned. Under a “public law” regime it’s totally unclear as to who is supposed to have responsibility for a thing or area. And so it is totally unclear who might be able to argue in a court of law that they had a lawful right to protect said area of water, favourite city of patch of forest. And from this leads to the conservation of resources via efficient savings for the future and consumption for the present which would naturally allay alarmist individuals declaring that ‘we are about to run out of food!’
“Decisions regarding both the terms of the restructuring and the activation and maintenance of the stay would be made by the requisite majority and would be binding on the dissenting minority” p 29 http://www.imf.org/external/pubs/ft/exrp/sdrm/eng/sdrm.pdf – The dissenting minority is only bound by the rule of Law, not mob rule.
Make of it what you will, but Elliot indicates the trend.
“Markets react rationally to the incentive governments create”
“the principle of private property” just formalises the self evident factor of self-onwership that each of us on Earth partakes in for the benefit of not only our own selves but also the global architecture for commerce in the 21st century, seeing as a nobody benefits from weaker global trade
in any event, you can’t have neighbours arbitrarily telling you what pet you can and cannot keep in your own house/apartment – sign up to a ‘no pig’ neighbourhood if that’s your thing. outrageous.
Aziz – “If spending on welfare is cut, then the income of those who would have received that spending is cut, in turn cutting the incomes of others — shops, manufacturers, service-providers — who could have otherwise sold things to them, cutting the incomes of their suppliers, and so on. And the government will also lose any tax revenues that would have been paid, shrinking revenue and leading to bigger deficits.”
Charles Hugh Smith looks at austerity:
“In economies dependent on ever-rising consumption, austerity had a negative connotation even before its politically charged meaning commandeered the public debate. When the entire Status Quo depends on discretionary consumption not just for “growth” but for its survival, austerity is welcomed with approximately the same enthusiasm Superman reserves for Kryptonite.
This is of course a contradiction: an economy based not just on consumption of all net income but debt-based consumption is an economy devoid of savings, i.e. capital to invest in productive assets.
An economy without capital is lacking a key component of classic capitalism. […]
The loss of resilience and cost sensitivity has consequences. We have created an economy with an extremely high cost-basis, and as a result it is brittle, fragile and vulnerable to even modest “austerity.”
Charles Hugh Smith also had a good article entitled “Spoiled Teenager Syndrome”.
“What are the core characteristics of the spoiled teenager? The conventional view is that the spoiled teen “gets everything they want.” In my view, the key characteristic of Spoiled Teenager Syndrome is that risk, cost and consequence have been masked.
This is a systemic point of view, meaning that the masking of risk, cost and consequence help us understand not just the eventual failure of spoiled teenagers but the eventual failure of every group or enterprise that masks risk, cost and consequence as a strategy to paper over an unsustainable Status Quo. This includes families, companies, states and nations. […]
Did all their “help” masking risk, cost and consequence actually aid their child in the long-term? Or did it cripple the child by leading him into a false sense of security, an illusory state where someone will always save you from consequence? […]
Is masking risk, cost and consequence a strategy that leads to success? No; it is a pathway to repeated catastrophic failure. What is the Central Planning strategy being pursued by our Central State and the Federal Reserve? Masking risk, cost and consequence.
Masking risk, cost and consequence is disastrous not just for teens, but for entire nations.”
Another Aziz Anti-Austerity piece, nice. Spend, spend, spend until we recover. Then we can cut. If we don’t give people free lunches they won’t get free lunches, deep.
Cutting government spending will obviously hurt the economy in the short term. Do you really think we’re going to get out of this mess without some pain?
The UK is in a depression. Cameron and Osborne are depressing economic activity. Cutting spending during a depression is abso-fucking-lutely the wrong time to do it, and will almost certainly lead to the re-election of Labour, which will ultimately lead to bigger and more expansive government. Look where Cameron is in the polls! His support is collapsing. Even on the right, Cameron is losing support to UKIP who have been heavily critical of Merkel and European-style austerity.
Cut spending during the boom, not the slump. Cut the deficit by stripping back barriers to entry and over-regulation and so helping people get jobs and start businesses, not by slashing spending. If the economy recovers and begins to grow strongly, the deficit takes care of itself if spending is held constant.
Cut spending in Government departments, and reduce Taxation for the first 10 years for small innovative start up businesses. Welcome immigrants with money to invest.
The UK could lead the next Industrial revolution.
You say “Cut the deficit by stripping back barriers to entry and over-regulation and so helping people get jobs and start businesses, not by slashing spending.” These are two different topics. I am only addressing the spending issue by governments.
Your philosophy is taken from Keynes. We can go back in the past and say we should have cut when times were good. That’s irrelevant. Spending is out of control. More spending is not the answer. It is just kicking the can and making the eventual pain worse.
I agree with you on most topics, but TPTB have convinced just about every single person that austerity is bad, when it is actually the moral/ethical choice, while spending fiat that you know will never be repaid is wrong.
We should use the system we have been stuck with to create real wealth, e.g. energy production, infrastructure, new businesses, new housing etc. I’m not advocating more debt or spending than the current trajectory, either. Just maintain spending levels, deregulate, and watch the budget balance itself.
This is not really a Keynesian idea. As I noted in comments above, I am not naturally a Keynesian (although I do think he had some interesting ideas, and I have read a lot of his books — as all critics of Keynesianism should). Keynes himself (like Krugman) got into some fairly silly arguments about digging ditches, and maximising unemployment or the “socialisation of investment” when really I am advocating no such thing . I’m not arguing for fiscal stimulus, or more central direction of the economy. In all honesty, unwanted austerity is more like “central planning” than my plan which is to deregulate business, and to help the private sector grow its way out of the depression. When there is a jobs boom, and the private economy is growing strongly, then it is possible to reform various government sectors to increase their fiscal sustainability. These cuts will also offset the growth in the private sector, making future bubbles less likely to form.
Removing barriers to development means firing regulators, i.e., cutting spending. Making it easier to do business means slashing spending to some degree. Them’s the breaks.
Eric – “If we don’t give people free lunches, they won’t get free lunches, deep.” Thanks for the laugh. I had a good chuckle with that one.
You are right, of course. Speaking personally, it was only when I felt pain (and lots of it) that I got smart; suffering has been my greatest teacher.
People trying to escape pain has been the story of history. Short-term fixes, trying to get something for nothing, shirking responsibility never works. Oh, it works for awhile, but then you’re left with an even bigger mess. Example: can’t get enough pickers? Well, bring in slaves from Africa. How did that work out in the long run? Always short-term thinking!
You either pay the price now or you pay an even bigger price later. Which do you want?
I don’t doubt that lots of people who are suffering in Britain will learn some important life lessons from this time. But, looking at the polls, the “lesson” people are taking from Cameron’s depression seems to be “vote Labour”.
And the bottom line on this is that Iceland — which prosecuted corrupt bankers, nationalised the banks and helped homeowners — is outperforming ALL of the Eastern European nations held up as paradigms of austerity. Creative destruction is necessary, but the thing that needs to be destroyed and rebuilt is the thing that caused this mess — the financial sector.
The UK needs to make great classic cars, aeroplanes etc, designer suits. You need to leverage your upper class sophistication and style, especially using Royal endorsement of the products. Why not make new Spitfires. They seem like the Rolls Royce of Monoplanes.
You need to give your working poor class a reason to feel proud to be British!
It should not be surprising to see that the only individual (KD) in this article inclined to second-guess the legal principle of sovereign immunity hails from the Law School in Chicago University
Click to access An_Austrian_Approach_to_Law_and_Economics.pdf
robc – “The ruling class bankers like conflict and diversions, it keeps people out of the business of the bankers…so I think this will be an ongoing event for many more decades….we shall see how it pans out.”
They certainly like the conflict and diversions, but they mostly could give a frig. Corporations bring in poor immigrants to “use” them. It’s as simple as that. They really could care less whether the immigrant gets anything out of the deal. After they’re not needed anymore, the country and its people (who never wanted the uneducated immigrants in the first place) are left to pick up the pieces, pay for the welfare, medical and other associated costs that the immigrants may be forced to turn to.
People just wanna make money! They don’t really care how. If it’s doing something they enjoy, all the better, but conflict tends to just increase costs and/or backfire by deterring new potential customers from engaging with you. Could ZeroHedge IPO itself in some weird way? Does China have a Zerohedge equivalent? First mover, no? What if the US purposely restructures prior to the Chinese hard landing
I don’t trust Zerohedge. I can’t get an account with a Gmail email or hotmail email. They want an account with an ISP. Yo can’t use your real name, so they encourage people to blurt out inner most values that should not be divulged. They also have a policy section which is pretty blatantly clear that you have no privacy.
They are either CIA backed or a Hedge fund looking to trade on information blurted out by Juniors, wanting to be “cool” and on first terms base with “Tyler”
I told Tyler to go “fuck himself”, as I wrote about my concerns for not getting an account.
Some of the stuff people write on there is pretty incriminating.
But I do enjoy their articles for in depth questioning.
Meanwhile, things are getting serious
Pennsylvania architects build hobbit house
Extreme US Tolkien fan commissions an inspired Lord of The Rings folly for his Middle Earth memorabilia
A Coming Medical Revolution?
The Creative Destruction of Medicine: How the Digital Revolution Will Create Better Health Care
by your logic the govt should spend an extra £5Tn this year easily blowing away the GDP slump. So what if the govt spend is 99% of the economy – tax receipts are great! At least for this year….wash, rinse and repeat for next year? Or lets QE every family £100K to spend this year (or it “expires”) – bam, no “deficit” and everyone’s a winner!
The obvious golden rule of any healthy economy is you must create before you can consume – something the entire West seems to have forgotten – bloggers included.
I am proposing a serious and realistic way to “create”. Deregulate small business, use the bailed out banks to offer business loans to unemployed people, deregulate house building, deregulate energy production. Austerity today is not a creative force. It is purely contractionary, because the systemic rot, e.g. the financial sector is protected and backstopped by billions of QE money. That money should go to the public for creative and productive projects to build wealth, not just to sit in bank vaults and do nothing.
“Creating” is a voluntary economic exercise which cannot be mandated and government distortions make the process much more difficult/impossible today. There are not the jewels on the floor to be be picked up by small businesses if only they had the cash – all businesses are in decline because 80% of their growth for 30 years has been credit fuelled, not earned and the Minsky Moment of payback has finally arrived but is staved off by 0% interest. Much as we would all like to just magic the problem away the fastest solution would be for mass bankruptcy/mass write-downs and out of those ashes opportunity will spring. As it stands extend-and-pretend sucks the life out of the economy and eliminates opportunities arising – capitalism requires failures to renew itself but no govt is allowing the failures!
As to UK “austerity”, it hasn’t seen even nominal cuts – thumb twiddling. Japan shows us our future as planned by politicians….
Build Spitfires using modern manufacturing techniques, abolish licence requirements. Everybody will want one.
Oh at the turn of the century all types of planes were built before they regulated licensing. Maybe that is why there will be less demand.
I like the unregulated old days!
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good article, osborne truly is a waste of skin. totally useless, can’t wait until he’s gone.
It was modified in 1977, with the payments being termed “child benefit” and given for the eldest child as well as the younger ones; by 1979 it was worth £4 per child per week. In 1991, the system was further altered, with a higher payment now given for the first child than for their younger siblings. In October 2010, the Conservative-Liberal Democrat coalition government announced that Child Benefit would be withdrawn from households containing a higher-rate taxpayer from January 2013.
The timetable is for all IB claimants to have been reassessed by 2014. There is controversy surrounding the WCA, and while the government has accepted recommendations on reforming the test – which stemmed from a review by Professor Harrington – it is proceeding with the national reassessment before these have been implemented in full.
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