Why Die With Money? 60


I seem to be completely out of sympathy with every commentator in the debate on care for the elderly, which is today’s mainstream news agenda. The Dilmot report recommends that the asset level you can have before you start getting charged for residential care, is raised substantially to £100,000. I don’t have a major problem with that.

But it also suggests that the total amount you have to pay for residential care is capped, at £35,000. That means that someone with assets of £90,000 would pay nothing, someone with assets with £110,000 would pay £10,000, someone with assets of £135,000 would pay £35,000 and someone with assets of £10,000,000,000 would pay £35,000. What a stupid proposal.

I am totally out of sympathy with the whole concept. Am I entirely callous? It seems to me perfectly natural, that in your childhood years you are a net cost. Then you have economically active years where you accumulate a certain amount of wealth. Eventually you have economically inactive years when you are a net cost again, and your accumulated wealth dissipates. Then you die.

Why on earth try to adapt the system so you die with money? What are you going to do with it when you are dead? It is crazy. Why should taxpayers fund a system of state paid care, so that people can pass on unearned (by the recipient) wealth to their children?

I favour without any quibble or reservation, care provided fot the elderly so that everybody – no matter how poor – has dignity in life right until the end. But I also believe that those who can pay for it, should. That “callous” system also contains an economic incentive to those wanting to get their hands on inherited wealth, to look after their parents themselves rather than pack them into a battery farm.

As far as I can see, this proposal that taxpayers shell out untold billions to protect inherited wealth, is a scam to protect our ludicrously overpriced housing market.


60 thoughts on “Why Die With Money?

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  • Canspeccy

    But really, Techno, you’d be better off saving your money and moving to Michigan, where you can get a nice place for a dollar.
    *
    You might have to enter the US illegally, but that’s easy enough, and nobody here will think any the worse of you for doing it. Just fly to Toronto and take the Greyhound bus south on a trip to visit yer aunt. Then just stay. Eventually, the Dems or the Republicans will legalize illegal immigrants, then you can apply for welfare, food stamps and all the rest.
    *
    Detroit is really a very fine city with a golden future behind it and the near certainty of a revival ahead as people from all over zero in on nice old houses for next to nothing.

  • ingo

    Point taken Jon, direct democracy was worth a try and still is and as long as decentralised direct democracy has an ethical philosophical manifesto, elected local leaders sign up to, in the interest of their electorate, its worth a try. The moment you argue that trans national companies should be able to have the same access to those ‘local markets’ as those already supplying/employing the socials, showing some social responsibility, the proposal goes awry. I like the policy that says you have to site to sell, at least this would establish some sort of relationship, any other arrangements will inevitably feed those outside your jurisdiction and local power base.
    Whjat of liberal attitudes and not pulling one’s weight in such a direct democracy? what of those who don’t want to play by the book and try and wreck it?

    Now, looking through environmental specs, I would argue that we haven’t got the time for long wielding restructuring of our systems, that the required actions can’t wait, that we had over 100 years to sort ourselves into governable units, that we cannot afford to waste energy that includes the wholesale change of a system. Both Marxists and fascists have the tendency to tear everything down and reconstruct a system to their liking, i.e. Adolf and Stalin, such follies cannot possible add to our already unsustainable woes.

    My choice would be for those to go ahead who are ready for it, cut them loose from a national state and let them establish their systems, as carefull as they choose to.

  • Canspeccy

    Jon, I’m glad you’re not a Commie. Any model of society that assumes the need of a dictatorship is odious to me. Any model of society that assumes that the state will eventually whither away, seems nuts to me. So I not really interested in any theoretical work based in the assumption that Communism is anything but a delusion and a scam.
    *
    It seems to me that virtually any revolutionary proposal is likely to be disastrous in application, as the transformation will be hijacked by insiders and opportunists who exploit a period of instability to grab power and wealth for themselves.
    *
    Therefore, I see incremental reform as the only hope for social improvement. Since we live under a nominally capitalistic system, we should work to reform it. Imagine the scorn with which Adam Smith would have regarded our self-serving monopolists, their lobbyists and their paid political front men.
    *
    Then one can see where to start work:
    *
    Gaol for politicians taking money or benefits (while they are in power or afterwards)From lobbyists, whether Friends of Israel, friends of Glaxo SmithKline, friends of the arms industry, or friends of JP Morgan (who currently pay Tony Blair $5 million a year for a day or two’s work each year);
    *
    Anti-monopoly legislation;
    *
    And much more…

  • Jon

    Canspeccy, perhaps your view is not too far away from what Evgueni was discussing, insofar as it might be achievable in incremental steps.
    .
    Interestingly it has long been suggested by parts of the Left that even revolutionary economic changes should be tackled slowly and incrementally. The revolution part is getting large sections of society behind the need for change, in a democratic fashion! It surprises some that Chomsky, for example, is in favour of incremental economic adjustment even though he is an anarchist.
    .
    One item I would say though – communism isn’t necessarily dictatorial, and I tried to emphasise this in my last post. Of course, past examples have been, but often opponents of the model don’t realise how democratic a single party system could be. The idea, as I mentioned, is a sort of direct democracy inside the soviet model via referendums and discussion in the workplace. Would it work? I don’t know. Do I think it is the pinnacle of democratic involvement? Well, as outlined above, probably not: I quite like the multi-party model. But I think it is important to understand why modern-day communists are communists – they are not generally in favour of dictatorship!

  • Canspeccy

    “I think it is important to understand why modern-day communists are communists – they are not generally in favour of dictatorship!”
    *
    Not til they got the power!
    *
    Then dictatorship is inevitable, since it’s a one party state. Anyone who doesn’t want to participate within the party framework is a traitor. The Parliamentary system at least allows a “loyal opposition.”
    *
    But it is interesting to see how liberalism has mutated into a form or elitist totalitarianism with a contempt for the judgement of the masses, e.g., on mass immigration; on war in Afghanistan, Libya, Pakistan, Yemen, etc.; on the EU.
    *
    When the stench of your racket can no longer be ignored, change the name. Windscale is now Sellerfield, Philip Morris is now Altria, Blackwater is is now Xe, and communism is now liberalism!

  • Jon

    > Not til they got the power!
    .
    Yes, hence the necessity for mechanisms to prevent the centralisation of power. “Balanced Job Complexes” sounds mundane but it is really quite critical, and worthy of your reading time even if you don’t like radical writers generally.
    .
    I agree that we have elitist totalitarianism, but I think that your examples all illustrate that as an emerging feature of capitalism, not liberalism. Or neo-liberalism, if you like, which is not very liberal at all.

  • Azra

    Mary, there is a campaign going on to stop Murdoch take over, go to http://www.Avaaz.org
    there are 8 campaigns and one of them Stop Murdoch. Sign and send to everyone in your address book. I have written to them asking them why are they quiet about the Frotilla, and so far have had no reply! which has surprised me as in the past they have been very active when it came to Gaza and Palestinian.

  • davidb

    The issue is real and needs to be talked about. Like so many things in our society we bicker and politicise them and in the end we take poor PC decisions, or half decisions or kick the can down the road.

    I was kind of interested in a property recently which had a granny flat. It is something which could be rented out. It is something a family with a teenager might find useful. It is something which would be ideal for when my aging mother gets too old to look after herself she can be both independent and close to us. And yet this is very rare. I have a big house. Many of my contempories have big houses. During the boom I was told by builders that they couldn’t sell 2 bedroom semis but people queued out to by 5 bedroom detatched properties. Should there not be some boom in construction of properties with granny flats? Perhaps it should be incorporated into building regulations that above a certain size all houses should have granny flats.

    I heard a chap on the radio today mention his inheritance. His inheritance is in his chromosomes. Monetery gain is a disgraceful thing to consider in relation to your parents. What kind of a money grubbing monsters have we turned into?

    There needs to be a debate about so many things in our society. The comments about the fairness of millionaires getting capped equally with poorer people is just the usual partisan crap that results in the end in the debate becoming accrimonious and being politicised and never reaching a satisfactory conclusion. It is our duty to look after our old folks. It is shameful to look at it in monetery terms.

  • Canspeccy

    “hence the necessity for mechanisms to prevent the centralisation of power.”
    *
    I agree. And the monarchy is one of the few remaining checks on the centralization of power in Britain, which is why, I take it, Liberals are so keen to demolish the institution.
    *
    Direct democracy would be another. A few referendums would pretty well sort out the bastards — they would bring the troops home, jail every member of Conservative Friends of Israel and the takers of bribes after office, end the construction of minarets, and send the illegal migrants packing. They would almost certainly result also in a capital tax similar to that imposed in most if not all Swiss cantons.
    *
    Now Switzerland is a sensible conservative country where respect for individual liberty is combined with a high standard of living, and the absence of wars of colonial aggression. So no need for ideology or fancy new theories of government.

  • dreoilin

    Off Topic
    .
    French writer Tristane Banon is to file a complaint for attempted rape against former IMF chief Dominique Strauss-Kahn, her lawyer says.
    .
    Ms Banon’s lawyer, David Koubbi, said on Monday that she had instructed him “to file a formal criminal complaint for attempted rape” against Mr Strauss-Kahn. He said the complaint would be filed on Tuesday.
    http://www.bbc.co.uk/news/world-europe-14018727

  • mary

    From the horse’s mouth or rather from the FCO, confirmation that the mineral and gas reserves in Afghanistan are valued at $3 trillion.
    ,
    Mining is the future for Afghanistan”: UK Special Representative
    04 July 2011
    .
    UK Special Representative for Afghanistan and Pakistan, Mark Sedwill, UK Trade & Investment Asia Director, John Saville, and Afghanistan’s Minister of Mines, Mr Wahidullah Shahrani, co-chaired a mining symposium at Lancaster House on 30 June.
    .
    The Foreign Office-UKTI mining symposium focused on the opportunities for investment in the mining sector in Afghanistan, where much of the potential for the country’s long term economic development lies. Minister Shahrani estimated the value of its mineral resources such as deposits of iron ore, copper, gold, lithium and rare earth minerals, as well as undiscovered gas resources, to be three trillion dollars.
    .
    This film shows the progress being made on the ground in terms of building up the mining industry within Afghanistan. There are a number of profitable businesses which are growing rapidly thanks to the improvements in infrastructure.
    .
    The Afghan economy is growing video
    http://ht.ly/5wlGG

  • ingo

    Thanks for bringing up this unfortunate story about millie Mary and sorry for busting the thread.
    After a long drawn court case, her family are faced with BBC newsmanagement heaping insult on to injury. By showing her picture and linking it continuously to the NotW phone tapping, at every possible opportunity they are acting like vultures, regardless of what the family feels, they keep on showing the pictures of a happy Millie doing the ironing, a dagger to their hearts, every time they transmit these pictures, its heart raking.
    The BBC, by following their own news agenda are torturing the Dowler family with reminders of her happy daughter, thats what it amounts to, I despise their arrogance.

    Anmd what for? Just to cover up uncomfortable news, they knew for weeks that the Horn of Africa was going to be at drought conditions, Daahab was full of famine refugees a year ago, now they fawning and using this issue to cover up the one’s they do not want to report on.

  • Jon

    > And the monarchy is one of the few remaining checks on the centralization of power
    > in Britain, which is why, I take it, Liberals are so keen to demolish the institution.
    .
    I suspect you say that because you know that the idea that liberals dislike checks on power to be incorrect – cat amongst the pigeons, and all that! As you know, liberals who oppose the monarchy do so in order to oppose one of the biggest symbols of hereditary wealth and privilege in the country. I think that liberals feel that with each symbol gone, the next symbol might fall more easily (say, the unelected Lords). As symbols fall, so goes the theory, the practices and customs that widen the inequality gap would then shrink.
    .
    I don’t see how the British monarchy are a check on power, in any case. As far as I know, the Queen is obliged to sign off on anything “her government” can push through Parliament. Any thoughts?

  • Rugeley Web

    Excellent, if a little controversial Blog Craig, a brilliant read!

    @Peter Neary-Chaplin: What an outstanding idea, but 90 I feel would be too late to run out of fuel. I will take 80!

  • Canspeccy

    “I don’t see how the British monarchy are a check on power,”

    Jon, by virtue of the monarchy, David Cameron is plain Mr., living in terrace house in Downing St. Otherwise, it would be President Cameron living at Buckingham Palace.
    *
    Furthermore, as head of state, head of the armed forces and supreme governor of the Church of England the monarch effectively limits the power and, as important, the prestige of the prime minister.
    *
    As it is, if David Cameron wants to call out the troops to shoot down anti-war demonstrators, he faces the possibility of the Queen using her residual powers to countermand the order and humiliate him. In that event, with whom would the public align? The Monarch, obviously.

  • mary

    It’s worse in America though.
    .
    Criticise Israel And Lose Your Career: Interview With Alison Weir
    .
    If you’ve ever tried to search for reliable information and analyses which expose the concealed and obscured side of the Israeli – Palestinian conflict, you’ve surely come across to the website “If Americans Knew.” This website belongs to a non-profit organization which focuses on the Israeli – Palestinian conflict and the foreign policy of the United States toward the Middle East. “If Americans Knew” publishes commentaries and articles that the American mainstream media pusillanimously shun and reject because of their fear of the influential Zionist lobby which predominantly rules the U.S. administration and Congress. “If Americans Knew” releases statistical reports on the history of Israeli – Palestinian conflict including the number of Palestinian casualties, the number of children murdered by the Israel Defense Forces, the number of Palestinians detained in the Israel jails and the number of Israel’s illegal settlements on the Palestinian lands.
    .
    http://www.intifada-palestine.com/2011/07/criticize-israel-and-lose-your-career-interview-with-alison-weir/
    .
    Cynthia McKinney the former Congresswoman who stood as a Presidential candidate was also similarly undermined. Imagine if we had had her instead of Obama, how wonderful that would have been. She would have been wasted of course.
    An example of her plain speaking. {http://www.youtube.com/watch?v=UlfeLs0GJPo} Her integrity stands out. She has been reporting from Libya recently.

  • Jon

    Canspeccy, interesting; sounds like a good feature to have. But could a head of state, with the power to limit obvious misuses of state power, be a democratically elected figure who lives on a reasonable salary in an ordinary house? The points I made about the power of symbols to perpetuate inequality still stand, in my view.

  • evgueni

    Jon,
    Thanks, she is turning out to be a rather well-behaved rugrat, comparatively 🙂
    .
    I am afraid my pessimism with regard to Brits accepting of the ideas of direct democracy is more than an estimate. I have aired my views before an audience of assorted phy, chem, elec and materials research scientists at a former place of work with the result that most of them were reflexively resistant to these ideas. Although I am not aware of any open discussion on this topic in the media, somehow the intellectuals in particular seem almost inoculated against referenda (why is this, are they indoctrinated at an early age by the education system?). The usual ready refrains are “mob rule”, impracticality, expense, immaturity of the British electorate etc – all ridiculous in light of the available evidence. By contrast, majority support for DD at state level exists in the German parliament and the only remaining obstacle is the opposition of the ruling Christian Democrats who are able to use the (undemocratic) 2/3 majority requirement for constitutional changes to block the proposal. Elements of direct democracy have even been adopted into the constitutions of many of the former ‘Eastern’ European states, whilst politicians here prefer to avoid talking about it! Still, hope springs eternal and in the words of V. Hugo “there is nothing more powerful than an idea whose time has come”. Maybe you are right and the time is coming..
    .
    Perhaps the reason for the instinctive contempt of Joe Bloggs by intellectuals is in fact, as you wrote, the result of the concerted effort by elites to persuade all of us that politics is way above our stations. The intellectuals, of course, imagine themselves outside the majority by virtue of their elevated status in society. E.g. according to Chomsky the intellectual elites are the most brainwashed section of society, because they are more likely to read, watch and listen to the propaganda instead of just consuming entertainment.
    .
    With regard to economists, I am not aware of any who openly share my position that democracy is a pre-requisite for fair markets. This is merely a statement of my ignorance – I am new to economics and because I am not a man of leisure my progress is slow. I have read John Kay, Stiglitz, J.K. Galbraith and Henry George and scraps on the internet here and there. My impression so far is that there is a powerful selection mechanism in the field of economics which limits the theories that become accepted in the mainstream to those that do not threaten the foundations of the hidden slavery on which our society is based. That is – the role of private ownership of land, resources in it, and the money supply, in transferring wealth from us to the elites is thoroughly obfuscated. Instead, secondary effects are highlighted – monopoly power, the role of government in making up for the deficiencies of ‘capitalism’, inflation, international trade etc. It does not help that economists see the field as quite separate from politics and do not in general concern themselves with the practicality of trusting a minority government to implement policies intended to benefit the majority. Even the bogus USSR textbook on economics in my school was titled Political Economy, so it appears that something has happened to disassociate politics and economics in our minds.
    .
    With regard to senior bankers remuneration being largely unearned – I agree and I tried to state this in the original post, perhaps too vaguely. Yes, modern money exists because we (including elites) collectively need it and establish it through government. Money supply is therefore a social construct and should be property in common. Instead we allow the source of our money to be privatised by what is in effect a banking cartel. The banks by virtue of their position of issuing authority are then able to charge us for the privilege. This is absolutely unearned income in the same sense that land rent is unearned income.
    .
    The complication in distinguishing between earned and unearned income is where the income can be attributed to ‘return on capital’ (so neither ‘wages’ nor ‘rent’). Personally I am sanguine about such income, as was Henry George and Adam Smith and I imagine many others (though not Marx of course). Such income, in my view, enables creative innovation and drives human progress. Perhaps there is a case for taxing it at some non-prohibitive rate, but for me a much more important consideration would be to prevent establishment of monopolies. That is to say, to ensure that good business ideas are not encumbered from being replicated and developed further.
    .
    Marx’s theories, in my view, are untestable. Perhaps incomprehensible even – how can anything be comprehensible if it occupies three large tomes each the size of War and Peace. I remember seeing the obligatory Marx set on my father’s bookshelf and thinking what a daunting prospect it would be to read all of that. More recently, the discovery that Marx dismissed Henry George’s ideas has re-enforced my suspicion of Marx. So what does Chris Harman have to say on Marx’s position wrt Henry George? I find the thesis that land speculation is the driving force behind boom and bust cycles very persuasive, how does Marx counter this? There is another aspect to this – nowadays land value speculation can be fuelled by uncontrolled expansion of money supply, thus amplifying the effects.
    .
    Your description of the effect of competition does not accord with my experience. Remember competition was completely excised from the USSR internal market. The result of that experiment was that over decades there was indeed a race to the bottom. The quality of everything (save the military and space programme) deteriorated until this fact was no longer possible to ignore. It was this absence of quality goods to buy that eventually convinced the people of the USSR that socialism was failing. Through grey imports they gradually became aware of the disparity between the quality and abundance of goods in the West and in the USSR. This notion that the USSR was destroyed by growing inequality is bunk. To be sure, people grumbled about the perks enjoyed by the communist elite (mainly not being subject to shortages and foreign travel restrictions) but this had not changed substantially over the decades. What did change was that a sense of improving economic situation post WW2 and throughout the 60s then reversed and was replaced by a sense of going backwards as the quality and availability of everyday items steadily diminished. Enthusiasm for the future was replaced by a growing disillusionment. There have been two periods of re-introduction of competition into the USSR economic space – Lenin’s NEP in the 20s and following the collapse of the USSR. Both times what followed was an invigoration of innovation and improvements in quality and availability of goods.
    .
    This is not to say that a race to the bottom is impossible in a capitalist marketplace. This can happen in a captive market (monopoly or cartel situation) – when incentives to maintain standards are absent. This is my understanding of race to the bottom, however you may be talking of selection pressure in the market, resulting in businesses going under from time to time and the process being accelerated by whole-market downturns. Firstly, if the boom-bust cycles are caused by land value speculation and credit bubbles then competition is at worst an unwitting accomplice in the crime. Without boom and bust competition would have more gradual effects and opportunities for cannibalistic business consolidation would certainly be less frequent. Secondly, the undemocratic nature of our workplace is far more important in my view. Businesses are brought down by their inflexibility stemming from hierarchical structure, and by the fundamental conflict of interest between the owners and the employees which is invariably resolved in favour of the owners. What happens when the workplace becomes democratic is demonstrated for example by the Semco experience in Brazil and there are probably many other examples. I understand that worker-owned businesses are becoming more common in the USA and elsewhere. Such democratically run businesses are extremely resilient because adapting rather than cashing out is what is in the interests of the employees.
    .
    Participative Economics – do you mean along the lines of the Porto Alegre experience? This is indeed encouraging. The Swiss are also able to vote on financial matters and to block unpopular expenditure. The results are universally positive.
    .
    Can democracy act in perpetuity as an effective check against the corruption of markets? We had better hope that it can because if the people as a whole cannot ensure fair play than what on earth can! Surely if government by philosopher-kings were possible, we would have had it by now. I have not yet tired of repeating that democracy is more than the practical implementation of popular sovereignty. Full democracy is useless without accurate information on which decisions can be based. So I will qualify – full democracy and effective news media are what we need.
    .
    I am perplexed by your last comment regarding direct democracy possibly being dangerous in the UK. (Craig also dismissed DD rather lightly – another example of an intellectual being reflexively opposed to DD). This argument you realise is the exact same one used to oppose every single extension of the franchise! Tyranny of the majority? Surely you mean – democracy! How can ‘tyranny of the minority’ be preferable to ‘tyranny of the majority’! Besides, are you really saying that the British electorate now is less ready for DD than the Swiss electorate were 150 years ago? When will they be ready? And who will decide? Please explain!

  • Canspeccy

    Jon you ask “But could a head of state, with the power to limit obvious misuses of state power, be a democratically elected figure who lives on a reasonable salary in an ordinary house?”
    *
    An essential feature of history, as any reading of it will confirm, is that its course is highly accidental, unpredictable and generally chaotic.
    *
    That is one reason that I regard utopian political theories are a waste of time when they are not dangerous. They give people the idea that history can be shaped if only one were to create this or that institution, remove this or that obstacle to progress, kill off this or that faction of the population — the aristocracy, the bourgeoisie or, today’s target, the uncontrollably reproducing masses who consume the large quantities of resources required by the likes of Al Gore and Prince Charles.
    *
    My own view is that it is best to proceed by piecemeal reforms from where one is now, beginning with the most obvious evils, and keeping disturbance to the social structure to a minimum.
    *
    So on theoretical grounds I would not hazard a guess as to what form of government might most effectively limit state power. However, the monarchy in its present form has existed and functioned well in Britain for a long time, so I wouldn’t change it.
    *
    However, it seems to me that an elected head of state would be a disaster. He or she would naturally assume that their authority was as good as that of the Government — a recipe for instability, as in Russia today.
    *
    As for a reasonable salary, the Queen does not receive a salary. What could be more economical than that!
    *
    The Queen receives a stipend to cover official expenses.
    *
    She has income from the Duchy of Lancaster. That private income is surprisingly modest compared with that of many film stars, athletes, former British Prime Ministers, members of the Russian mafia and the dozens if not hundreds of other immigrant billionaires living in London.
    *
    And the modesty of the Queen’s income is obvious from the way she lives. Unlike Google billionaires, she has not private 747. Unlike an Arab sheik she has no yacht. And on public occasions she has to ride around in a light-weight unarmored horse drawn buggy.
    *
    The glamor of the monarchy is essential a combination of tradition, make-believe, good props, and professional acting. If you watch a royal event, you need to remember that unlike film makers, these people don’t have the option to retake a scene, yet their performance is almost always near flawless.
    *
    I personally don’t think Charles has a good temperament for a King, much too inclined to radical theorizing. But the problem could easily be resolved with a succession bill that set a retirement age for the monarch, whoever it is, who succeeds QE2.

  • Jon

    Thanks again for continuing the discussion, Evgueni.
    .
    > I am afraid my pessimism with regard to Brits accepting of the ideas of direct
    > democracy is more than an estimate.
    .
    I sympathise with your view on this – I regarded the recent No at referendum as a reflection of the average Briton’s distrust for other voters’ optimism (as well as a victory for reactionary propaganda, even though I concede that AV was not ideal).
    .
    > My impression so far is that there is a powerful selection mechanism in the
    > field of economics which limits the theories that become accepted in the mainstream
    .
    Oh yes, I am sure that is the case. The process is well described for all sorts of professions in Jeff Schmidt’s excellent book, Disciplined Minds; although you sound like you have a lot to read at the moment, put it on your list if you can. On the process of breaking a profession free from its destructive inertia, it is most illuminating.
    .
    I think you have read more classical economists than I have, so I have some catching up to do! Like you I am relatively new to this, but I read on it as – again like you – I think it is important. Marx is complex, yes, but then so many areas of human behaviour are, and I don’t think we should shy away from them for that reason. If we can make a substantial change in the economic mechanism, whatever we end up with will be technically analysed by someone, and I don’t think it is elitist to say that everyone will, or should be, able to describe its workings. Rather, we’ll hopefully end up with a series of independent experts, and one can then prefer one to another, based on ideas as well as trust.
    .
    > This can happen in a captive market (monopoly or cartel situation) – when incentives
    > to maintain standards are absent. This is my understanding of race to the bottom,
    > however you may be talking of selection pressure in the market, resulting in
    > businesses going under from time to time and the process being accelerated
    > by whole-market downturns.
    .
    Yes, I was talking about the latter. It is important, in my view, to understand that capitalists in a competitive situation cannot stand still, otherwise they will go bust, unless they are in a monopoly market. (I am not attacking your support for competition here, by the way – just responding to your point in the context of how capitalism works now). So, this creates a constant drive to create surplus value – which is also part of the reason why corporations do “bad” things. Not only can outrageous behaviour be blamed on a non-human entity (which salves the consciences of the people actually responsible) but it may help create enormous surplus value that may be difficult for a competitor to sufficiently counter in order to stay in the same market.
    .
    I don’t know Marx’s views on Henry George, but if the book mentions him I will be sure to give you a shout. I am only just started, and it is rather like Brief History of Time, I’m afraid – the prose and its technical nature make for a demanding read. I would be willing to believe that any item that has a financial value placed far above its worth has a negative distorting effect on the economic system, and I agree, land falls well within this description (as do financial instruments, but then it is well-accepted in the mainstream that they helped get us into the present predicament in the first place)!
    .
    I am not enough of a Marx reader (yet) to see whether his theories would counter the idea that land speculation is the (main) cause of boom and bust, but it seems to me that the position I gave earlier is a rough synopsis of this part of his theories. Essentially it is this: the de-synchronisation of buyers and sellers in a decentralised market causes a stoppage in the flow of money, such as a seller holding onto a large sum of money as an investment after a sale, rather than immediately purchasing something. My understanding is that because there is a lag between a set of cumulative financial actions and an economic downturn, capitalism essentially accelerates into trouble (from the need to perpetually increase surplus value) and like the proverbial oil tanker, cannot find a reverse gear fast enough when uncertainty bites. Generally a half-finished factory cannot be left as it is, and the troubled capitalist often tries to finish it in the hope it will generate enough revenue before he goes bust. I don’t know how land can be factored into that in itself, but as I mentioned before, I spy a nice parallel between Marx’s ownership of the means of production, and your land theory: “ownership of the means of rentier income”?
    .
    Anyway the point of the above was to underscore my view that a destructive race to the bottom is inherent in a capitalist economy. That’s not to say I reject your position outright; indeed, I think it has a number of very positive features, and clearly you propose it with the intention that it benefits everybody. No capitalist who insists on the present neo-liberal dogma can say the same about his system, without either lying or falling for the propaganda that was created in its service!
    .
    You make some other excellent points that I will respond to probably tomorrow, since I have to eat. But I will close with an excellent anecdote I heard at a Marx lecture, and I’d use it to persuade you not to throw Marx out entirely. Apparently at a university, a lecturer was doing a series of teach-ins on Marx, and this normally drew a predictable arts and liberals audience. However, a number of classical economics students started turning up, and they were asked why they were attending lectures on something they clearly disagreed with. Came the answer: “we might not be socialists, but if you want to understand how capitalism works, we agree you should read Marx”.
    .
    Presumably they nevertheless intended to go on to be stockbrokers! 😉

  • evgueni

    Jon,
    thanks for the recommendation, yes it sounds interesting and I have added the book to my Amazon wish list.
    .
    We may have to agree to disagree for now on the virtues or otherwise of enforced fair competition. One thing I now realise I did not make clear is the point that Henry George made forcefully and some modern economists make obliquely about rent representing *most* of socially created surplus value. Capital and labour are then left to share the left-overs, yet the role of the rentier is obscured whilst the conflict of interest between capital and labour is examined in detail.
    .
    To illustrate further – all economic activity is pointless without first taking care of food production, and this is impossible without land (incl. the aquatic surface and natural resources of the Earth). Whoever owns land thus wields real power over people, and inevitably uses it to extract maximum rent. George wrote about this from experience of observing what happened time and again in the USA as land went from abundant to scarce in newly established communities over a period of years and decades. As the supply of new land becomes constricted, land in private hands acquires rent value. This drives up the cost of land and fuels land value speculation cycles around population centres. Population centres amplify rents further precisely because the larger a community the more social surplus value is created through the now familiar division of labour, economies of scale and other efficiency gains.
    .
    This socially created value is always extracted by whoever is in a position to do it. Absent government taxes, all of it goes to the land-owner. Taxing production forces the land-owner to forego the corresponding portion of the rent. Thus the seeming paradox that taxing business more does not necessarily take away from capital and labour, or vice-versa: taxing less can in fact be detrimental to capital and labour as the corresponding portion of surplus value is then hoarded or used for speculative investments instead of being re-circulated..
    .
    I remember from one of the modern popular economics books in my small collection the example of the coffee shops at the concourses of major London train stations. These sell the most expensive coffee in the capital and yet they are apparently scarcely more profitable than their high street competitors. The benefit accrues instead to whoever owns the concourse and hence collects rent. Another, even more convincing example I have seen sighted recently was that of organised racket activities on the streets of post-Soviet cities, something familiar to me. At one time private kiosks sprang up in prime locations everywhere, taking advantage of the poor existing infrastructure for distribution of everyday goods. Immediately organised gangs appeared that went around extorting ‘protection’ payments from these. In the absence of an established mechanism for extracting rent – i.e. private land ownership and/or government taxation, the surplus value was there for the taking and there was no effective way to ensure that it remained in the hands of capital and labour (in this case often one and the same person). I think this is crucial to understand. So much surplus value is created socially (it is a kind of unconscious co-operation if you like) and so much of that is appropriated into private hands completely legitimately because we are oblivious of the mechanisms of our economic enslavement. We can add to this the rent that is extracted by the banks for the privilege of issuing our money supply.
    .
    So it seems to me that rent is by far the bigger fish to fry than labour-capital conflict. This is not to belittle the struggle of the working people. I have recently had the enlightening experience of being told by my boss (who is also owner of the business) that his intention is to grow the business at maximum rate that is achievable without resorting to borrowing, and in the next breath that the company was in a poor cash position and so his hands were tied with regard to pay rises. This exposes the conflict of interest clearly – although his objective of growing the enterprise is not achievable without the cooperation of his staff, he has no problem with the fact that the benefits of growing the company accrue solely to him. This is the case in all conventionally organised businesses. I would change the internal organisation of the workplace to enable employees to have real negotiating power (as opposed to the much less effective powers to strike, to sue or to walk away).
    .
    As for Marx, of course I would not dismiss his work lightly. I just wish there was an abridged version of Das Kapital, perhaps an executive summary! I have made a start by downloading the Communist Manifesto to my Kindle 🙂

  • Jon

    Very interesting, Evgueni. You may yet persuade me!
    .
    Last things first:
    .
    > although [the owner’s] objective of growing the enterprise is not achievable without the
    > cooperation of his staff, he has no problem with the fact that the benefits of growing
    > the company accrue solely to him.
    .
    Yes, and although this is selfish behaviour, it is so normalised that the capitalist can fall into this mode without themselves being a terrible person. I had a similar experience, but one over quality of life issues – in particular I wanted to work from home, or to benefit from flexitime. I repeatedly put this request to managers at reviews, and it was politely rebuffed every time. Eventually I found a job at a different firm, and when I handed in my notice – after five successful years – my superviser was surprised and admitted that he “didn’t think I would leave over it”. Translated, this means that without workplace democracy, business is unwilling structurally to maintain a fair balance between worker happiness and the drive for profit.
    .
    I like your phrase, “enforced fair competition”, and it prompts me to write a little on my conversion to anti-capitalism. The relentless drive for profit was the original reason why I gave up on capitalism as unworkable. Specifically, I felt that the increasing power of capital generated a lobbying force that would continuously seek to remove the legal constraints that prevents capitalism from eating itself. And now, the capitalist class is so well merged with the political class that “toughening up on capital” is nigh-on impossible in the short term, since it would directly impact on the fortunes (literally) of the millionaires in the cabinet.
    .
    I mentioned to AngrySoba on another thread that after the Wall Street Crash, the US administration ruled that retail banking had to be commercially separated from casino banking, and that only the former would ever receive state bailouts. To my mind this was remarkably effective in ensuring that capitalists would not again gamble with the public economy, but of course at some point that position must have been reversed – which I put down to the lobbying power of capital. Ditto Gordon Brown’s deregulation over here, which have been widely blamed for exacerbating the depth of the crash in the UK – again, the lobbying power of capital.
    .
    So my view has been in the past that, in an ill-educated society, capitalism needs to be sent packing – along with competition – because there is no sufficient counter-force (say, people’s referenda) to oppose the lobbying power I mention. Minor revolutions that genuinely benefit the people tend to come in waves (union laws, voting rights, etc) and so it is quite conceivable we’ll get some laws in the future that constrain capitalism in some way. But I think history shows that those constraints will be temporary, since capital is highly effective at deploying its actors to argue against those constraints in the long term. Eventually those laws are repealed or changed once people have forgotten why they were needed in the first place, and then the trouble happens all over again.
    .
    But in your model, a highly educated and perpetually alert populace is a pre-requisite. That would mean business could operate in a competitive environment, whilst at the same time it can expect to be “smacked down” by the people if it got above its station. That in itself would work, I think. My only quibble left is that the “dangerous element” of competition is still present, and so if the populace collectively take their eye off the ball, the gains could be reset back to our present neo-liberal injustices in very short order.
    .
    Still, I don’t propose that any other economic model would not need an alert populace at all – I just wonder whether it would be less necessary in a model that employed collaboration and cooperation at its core. I tend to think that the total sum of extrinsic motivations placed upon each actor in any economic mechanism add up to basically “good” or “bad” outputs in an unregulated environment. One can tell the value of a “live system” by witnessing those outputs – hence my cynicism about the current model, which literally kills people.
    .
    I think I will try to look into your rentier ideas in greater depth – I think they are very persuasive, notwithstanding our differences on competition. Is Henry George the best place to start? That all said, if you could organise a referendum upon it tomorrow, I would be certain to vote for it. It is without doubt a great deal more workable for the masses than what we have now!

  • evgueni

    Jon,
    I am glad that you find what I have to say interesting. Sadly not many people I meet do 🙂
    .
    > the capitalist can fall into this mode without themselves being a terrible person
    .
    Quite. My boss is not a bad person, in fact my wife and I count him as a friend. I have long wondered if hypocrisy is in fact so deeply part of our human nature that our own is all but invisible to ourselves. It must be an evolutionary adaptation, something that some evolutionary psychologists have posited I believe. It could have been an ‘evolutionary stable strategy’ in our evolutionary past to be opportunistic in this way. Which leads to the question – would I act in a similar way? I hope not, but suspect I might.
    .
    This is the reason for my conviction that the only way to counter the hypocritical tendency is through transparency and accountability, i.e. full democracy – in government and workplace. Apparently the human mind is particularly well adapted to spotting hypocrisy, and though not everyone does well in numeracy/logic tests nevertheless most are expert in a ‘spot the cheat’ type of test.
    .
    Lobbying – this one is easy. In a purely representative democracy which ours is in theory, but falls short in practice, just a small number of people in key positions are a very convenient target for lobbyists. Lobbying can be done in secret and money and/or favours can play an important part in the process. Lobbying therefore is often effective. On the other hand, in a full democracy there is the credible threat of counter-action by the people and this completely changes the dynamics. The more people are to be lobbied, the lower are lobbyists’ chances of success. There has been lots of research into the effectiveness of public lobbying campaigns at state level in the USA in states with DD rights and this shows a miserable success rate for the special interests. I really must recommend again Verhulst & Nijeboer’s summary of DD facts, research and practice around the world which covers lobbying amongst other things:
    http://www.democracy-international.org/book-direct-democracy.html
    .
    >in your model, a highly educated and perpetually alert populace is a pre-requisite
    .
    Three things I can say here. One, that a highly educated and alert *portion* of the populace is sufficient. Research into voting patterns shows that the most commonly stated reason for not voting is that of not feeling sufficiently qualified or knowledgeable. Such people in effect delegate their democratic mandate to others who do feel competent. In extremis this is precisely representative democracy – we surrender our democratic mandate to Parliament, imagining it to be competent at all times. Effectively, people who choose not to vote are signalling that they do not care enough to inform themselves of the issues and form an opinion – which is their democratic right. In Switzerland some referenda are decided on very low turnouts of say 20% and no one grumbles (and others attract turnouts of 70-80%). This leads to my second point, namely that research also shows that having real opportunities for democratic participation actually energises people to become informed and to educate themselves and vice-versa – having few democratic freedoms breeds apathy and indifference. This is also covered by Verhulst & Nijeboer and lots of other literature on DD available online. And third, this is no longer a ‘model’ as we have a functioning example in Switzerland with tremendously positive outcomes for the people of Switzerland. It is a kind of white elephant in the corner of the room that nobody talks about. Their highest unemployment rate ever was under 5% in the Great Depression years but is typically under 1% (contrast this with UK’s lowest ever unemployment rate of 4.5%!). Their cities are consistently ranked in the top 10 most pleasant to live in. They actually had a referendum on whether to abolish the Swiss army, in what other country is that even conceivable! I recommend highly Gregory Fossedal’s Direct Democracy in Switzerland if you are interested.
    .
    Henry George’s work is probably a good place to start with regard to understanding land rent. George pointed out in his book that classification of land rent as unearned was by no means controversial even in his day but that his contemporaries and predecessors failed to draw conclusions from the fact (he mentions Adam Smith, Ricardo, J.S. Mill and others). I understand there are modern-day followers of George’s ideas so there must be other texts out there on the subject. Plenty on the internet I should think. I read the edited/abridged edition by Bob Drake which I downloaded from the interned as a pdf.

  • Jon

    Ah, you raised I&R many moons ago – again, interesting. I have upon your recommendation downloaded the PDF on that topic, and will have a read.
    .
    Now, I don’t want to be seen as anti-progressive, but I do think the question of progressiveness – especially regarding the use of referenda by the far right – does need tackling. I note that the PDF does look at this, but at 90-odd pages it is going to take me a while to get there, so I can read it in context!
    .
    Firstly, Switzerland appears to have banned minarets, even though they do not have a problem with extremism in their country, have only four minarets anyway, and have rarely discussed the hijab. Needless to say, progressive and internationalist voices are not impressed. Neither am I – frankly I think it is based on sheer discrimination, given the circumstances.
    .
    winnipegfreepress.com/opinion/editorials/switzerlands-bad-example-78300622.html
    wsws.org/articles/2010/nov2010/swit-n30.shtml
    en.trend.az/news/islam/1594034.html
    .
    Defenders of the proposal endorse The Daily Telegraph, presumably because it once said something Islamophobic; furthermore, they cite Swiss feminists as being supportive of the ban. Right wing suddenly discovers women’s rights to support its anti-Islamic position? Novel!
    .
    danskfolkeparti.dk/No_to_minarets_.asp
    .
    I am not sure I agree with your earlier statement that tyranny of the majority is the same as democracy – there is something suspect about the outcomes of the Swiss referenda on this topic, but I will confess I am not sure I can put my finger on it. Perhaps the “well-informed populace” I mentioned earlier is missing? 😉
    .
    I agree however that the governing institutions of a DD country cannot then start picking and choosing what policies it is going to implement – that would defeat the point. I suppose in defence of I&R in general, one could say that initial misuse by reactionary forces would be a small price to pay for a gradual and perpetual improvement in the political education of ones fellow voters. Perhaps referenda of this kind might normally peter out, as the increasing enfranchisement of ordinary people improves levels of societal tolerance generally?
    .
    Sadly, the Swiss cannot claim however that I&R is new for them, or that they are experiencing the bumpy ride of a brave political experiment. I think in theory you’ll find me an easy convert to direct democracy, but in practise the potential for society to reverse its progressive gains through the false consciousness of an ill-educated ciizenry presents a very difficult paradox.
    .
    (Am away now until Monday, but do keep it coming – either here or on other threads! All the best.)

  • evgueni

    Jon,
    do not rush to judge DD on some of its outcomes. Consider first the entire process that is involved, because the binary result of the ballot is not all. The very fact that a ballot can be forced – by a minority – on a minority issue, is a tremendous advantage for minorities. That the votes are not always to your liking surely is neither here nor there – you do not claim to own the truth? There are losers in Swiss ballots of course, but these are satisfied losers compared to the marginalised minorities in the UK and elsewhere.
    .
    Let’s apply the same high standard of judgement to representative democracies around the world. They may not ban erection of new minarets, but many of them initiate or participate in aggressive wars that kill innocent people, many of whom are Muslims. If you wish to dismiss DD then you must posit an even better alternative. Do you disagree?
    .
    Actually I also think DD as exists in Switzerland has limitations, not least of which is the imperfect news media. As long as these are owned and operated for profit then we can expect bias of the most insidious kind – important ideas being omitted from discussion altogether, whilst issues of lesser importance are blown out of proportion to make up. Even so the Swiss media are in better shape than those of the UK because of the legal obligations that exist to allow equal space to all parties in a political campaign.
    .
    There is also a more fundamental limitation in a nation-state with popular sovereignty as the governing principle. And that is at the heart of democracy itself – democratically determined policy applies to ‘the people’ but in actual fact it is only individuals that can suffer and find happiness. So it should be individuals who are sovereign, not ‘the people’ as defined by a simple majority rule. How can this be implemented in practice? The only convincing answer I have seen is in John F Knutsen’s text Blueprint for a New Confederation / As the People Want It ( http://www.basiclaw.net/ ). His idea, what he calls devolved popular sovereignty, is to allow for individuals either alone or in association with others to choose how much of their sovereignty they surrender. The details are vague in my memory, but essentially it is an extension of the principle of federalism (also very important in Switzerland) down to the individual level.
    .
    Enjoy your weekend!

  • sjb

    Craig Murray wrote: “That “callous” system also contains an economic incentive to those wanting to get their hands on inherited wealth, to look after their parents themselves rather than pack them into a battery farm.”

    It is not uncommon for one or more of the children to have put in several years of caring prior to the parent entering a residential care home. Only one carer can claim the Carer’s Allowance benefit, which is paid at the princely sum of £55.55 (fifty-five pounds 55 pence) per week + Income Support of £42.95 (forty-two pounds 95 pence). The looked-after person may well require 24/7 care, particularly in dementia pts who are prone to wander; so the family carer receives a ‘wage’ of 59p per hour ( (55.55 + 42.95) / (24 x 7) ); contrast this with a care provider’s day rate of about £15 per hour.

    The family carer only has a spes (hope) that they will be a beneficiary vis-a-vis inheritance. Some carers will not have property of their own, having been priced out of the inflated housing market you identified. The local authority already regards the looked-after person’s home as capital so can put a charge on the property to fund the residential care. Unless the live-in carer is aged 60 or over they then face becoming homeless.

  • Jon

    @evgueni, a spirited defence of direct democracy! 🙂
    .
    Do I claim to “own” the truth? Well, despite that obviously being rhetorical, of course not. It is not a question of whether I simply dislike the minarets decision – it’s true, I don’t like it, but I also posit that it is a racist decision, based on nothing but scaremongering and xenophobia.
    .
    Do I think I am obliged to present a better alternative if I reject DD? I am not sure, to be honest. I think it is intellectually complete, but perhaps impractical, to criticise a position without offering another solution. But you have misread my view if you think I have rejected DD out of hand – I really haven’t. I am looking for solutions to a genuinely identified problem, and if a path can be beaten to that solution I would be quicker to call myself a supporter. I think the “tyranny of the majority” is an age-old and very thorny question, since the persecution of minorities has always been “democratic” in a narrow sense.
    .
    On the one hand, I’d like to see your support for DD tempered with the above questions, since the call for DD can be harmed by avoiding them. To your credit however, you do rightly concede that the news environment makes for profit-oriented propaganda, thus potentially tainting initiatives with a capitalist agenda. I would ideally like the nature of the news machine to be changed prior to the introduction of DD into the UK, but of course DD may well be necessary in order to bring that situation about in the first place! 😉
    .
    I still plan to read the PDF you recommended. Who knows, I may turn towards cautious support! I am at least warming to your “least harm” principle – the gains that might be brought about by DD could well trump the reactionary tendencies. Which brings me to an obvious question – are there any interesting radical or progressive decisions that have come out of Swiss I&R? You mentioned the initiative on closing down the army, but I wonder if there are any that have been specifically aimed at, say, setting maximum pay levels, maximum profits, toughening up on tax avoiders and getting to grips with media control? Such examples would be excellent backup to your arguments for permanently controlled competition, I would wager.

  • evgueni

    Ah Jon,
    You say you do not consider that you own the truth, and then go on to insist that the decision to ban minarets is indefensible. How so, you do not know the background to this (neither do I btw) but you are prepared to judge the people of Switzerland from your high moral tower! Did they really do it for xenophobic reasons, or was it more complicated than that? The binary decisions of referenda do not tell anywhere near the whole story, you must consider the process that leads up to it and also what happens afterwards. Nine out of ten Initiatives are rejected by the Swiss, reflecting their natural conservatism (natural conservatism of people in general I think). However in the national debate that precedes the ballot day, all points of view are aired. Often alternative proposals are put on the ballot by the government or by Parliament, sometimes new laws are passed to address the issues before or after the ballot. Political compromises and consensus – the results of the processes of DD are just as important as the yes/no outcomes of referenda. This is perhaps difficult to imagine if one’s only experience of politics is limited to the adversarial show-politics of the UK.
    .
    I am finding it hard to get my head around your position that criticising flaws in a proposed solution without reference to alternatives is fine! I believe that we are talking people’s lives here – without doubt those that die needlessly now in our neo-imperial wars of aggression, but also the lives of those on the receiving end of our governments’ insouciant domestic policies. It is inconceivable that the majority would vote for these foreign and domestic policies to continue, even with the propaganda machine remaining in place, whilst we can see very well what happens when the status quo is maintained. To defend the ugly status quo on the grounds that the proposed alternative is not perfect seems callous to say the least. DD is desirable on these simple humanitarian grounds alone. The drawback of occasionally stepping on minorities’ toes is small beer by comparison (I say occasionally because the Swiss experience confirms it). Show me a representative democracy that does not oppress minorities. Did I mention the Chagos Islands?
    .
    I do not feel the need to temper my support for DD because I do not see a *realistic* third alternative, yet alone one that is closer to perfection. As far as I can see, full democracy, or the status quo are the only choices facing us today. I’ve had a taste of authoritarian socialism and personally I do not believe it can be made to work. Quite aside from that, socialism of any hue including things that have the word ‘anarcho-something’ in their name, are a much harder sell than full democracy which after all has ‘democracy’ in the title and we are all brought up to believe that democracy is a worthy ideal. On the other hand I have a feeling that full democracy eventually leads to the establishment of properly functioning popular news media, which leads to eventual destruction of unjust institutions in society such as private land ownership, private control of the means of exchange, unfair business practices etc etc. In the end the kind of society that emerges may be indistinguishable from socialism in terms of the resulting fairness. My experience of living in Zurich for 2 years left an impression on me that already the kind of society that has resulted is much more agreeable to live in than say rip-off Britain.
    .
    I cannot offer you examples of radical positive referendum results at present. I am fairly certain that at least a partial list exists in literature in English (see e.g. “Guidebook to Direct Democracy in Switzerland and beyond” by Kaufmann et al), but I could not find anything online today, except in German ( http://www.swissvotes.ch/votes/?listmod=list ). But again, it is not the yes/no votes that really count, the true effects of DD run much deeper at the level of keeping politicians and vested interests on their toes. When issues are forced to the ballot, the resulting national debate and where it eventually leads are very important. So it is difficult to conclude much from a list of referenda by itself without reference to what other political action the referenda precipitated. If we simply judge DD on its overall outcomes in Switzerland over the last 150 years, we can safely say it is no worse than representative democracy in terms of oppressing minorities. The fact that circa 50% of the population of Geneva are not Swiss nationals (circa 40% for Zurich) and that in some places these non-nationals have been granted voting rights at the local level (by referendum) I think speaks volumes.
    .
    Finally, I think there is a certain inevitability about full democracy. It will come to the rest of the world in time, because that is what most people want. Opinion polls confirm this. All ideologies will be consigned to the dustbin of history 🙂

  • Jon

    Plenty to respond with, but can’t quite get past “callous”, which I think was probably used in haste rather than intended to spoil the civility of the exchange. Would you clarify? I am on day 16 of a cold, so concede that I am less than bulletproof at present, and wonder if I would normally have let it pass.
    .
    I trust that my being here, moderating for Craig, the tone of my views generally, and the fact that I am taking part in this conversation demonstrates convincingly that I am not callous, of all things!

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