The People Are Not Stupid 103


I have been most impressed today by the ordinary strikers who have been interviewed on all broadcast news media. While some of them have been very low paid, they have not just been talking about their own problems and their own pensions. They have rather continually referred to the fact that they are suffering so much because hundreds of billions of public money have been given to the bankers, who continue to give themselves massive salaries and bonuses. There have also been many references to tax evasion by the wealthy and their massive income increases.

Plainly this is not just a strike about specific pension issues; in the mind of the ordinary people, this is action against the sickening levels of inequality in society.

I have also been struck by the horrible braying Tories, who to a man have stripped off their masks of social decency. How long will the Lib Dems go along with it?

Unfortunately, much of the detail on pensions is, just as the difference between Osborne’s and Balls’ spending plans, is irrelevant. The effects of the inevitable collapse of the South Sea Bubble model of western economy, are only just starting to be felt. They are not rearranging the deck chairs on the Titanic. Ed Balls is suggesting there should be a few more deck chairs, and special chairs for the old and sick, and better pay and conditions for the crew. But the ship is still going down.


103 thoughts on “The People Are Not Stupid

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  • Mary

    Quite Komodo. They live in hope of winning the lottery, buying a new car and house and going to Disneyland on holiday.
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    BBC counting backwards on Clarkson now. Do they do that with all complaints?
    .
    2 hours later than the link above
    .
    2 December 2011 Last updated at 10:16
    .
    Complaints over Clarkson strike comments reach 21,000
    Jeremy Clarkson made his remarks on the BBC’s The One Show
    .

    The BBC has received more than 21,000 complaints over Top Gear presenter Jeremy Clarkson’s remarks that striking public sector workers should be shot.

    /…. http://www.bbc.co.uk/news/uk-15999234

  • Iain Orr

    I liked Paul’s comment (1 Dec above) on the limits to growth. Surely we need an economic theory that measures the efficiency with which resources (human and material) are deployed in order to achieve such goals as good health, education, housing and flourishing arts and sciences?

    .
    One does not need to aim at Utopia (on which there would never be agreement in any case) to recognize that many people as doing jobs that are either unnecessary or bady designed and for which the rewards are wildly out of kilter with how the results of the work contribute to society. Equally, resources such as food, water and energy are used in very wasteful ways.

    .
    The GDP of the UK and all “developed” economies could be reduced by 10% (on conventional measurements) but with better health etc for all. Some current vested interests would suffer, but they too would have plenty to eat, would be able to work productively at decent salaries and could look forward to adequate care provisions in old age.

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    It would serve us far better if economists and politicians set themselves the goal of working out ways in which economic contraction – but improved deployment of resources – could produce a fairer social system and a more satisfying life for all. The idea that improvements can only come with economic growth is not just a counsel of despair – it flies in the face of all the evidence of waste and misplaced effort. I admit that lots of waste is also controversial: eg Trident, many security measures, unnecessary legislation. But a great deal of economic activity is patching symptoms with little attention to root causes (eg housing, public transport, education).

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    “Less but better” is a slogan that should appeal to genuinely free marketeers. The bicycle or car that has a lifetime of 50 years frees up other resources for better hospitals and better care of the environment. Growth kills.

  • Uzbek in the UK

    @ Iain Orr
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    The only thing that is missing from your points is that according to the basic principles of economic theory growth is required in order to meet demands. You cannot meet growing demands by only reducing the waste (it it possible but to only some limited extend).
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    For instance one can drive a car for 50 years (like my father back in Uzbekistan) but as older car is as more energy inefficient it is and as more environmental unfriendly it is.
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    But at the same time simple improvement in resources management starting from schools and all the way to Whitehall including hospitals etc could save enormous amount of cash without limiting quality of services provided. But this will lead to something that we all so much oppose – redundancies. Considering the cost of workforce in the UK one can easily acknowledge that the most efficient management of recourses that is aimed to the reduction of the cost is reduction of the workforce. That what government is trying to do.
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    Also putting it simply UK and for that matter European economies are in the last 20 years are so much service oriented to that extend that service sector has been artificially inflated. We here do like to purchase goods but what we like even more is to pay for them less. So we produce them there were workforce is cheap (China, India, Malaysia). Instead we open shops where these goods can be sold, we employ driver that can deliver these goods, and we employ accountants that can count profit from sale. Basic rules of economic theory are broken. We do not produce goods but we like to be able to afford them by just servicing their production.
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    We should re consider much more in our economy and for what it takes current government is not going to do it.

  • Komodo

    Uzbek; Economic theory is not something that seems to have much predictive power. Economic theorists promoted financial deregulation. Now look at the finance sector. Which is no doubt still awash with economic theorists. Our government, also in thrall to economic theorists, is continuing to remove consumer spending from the economy…which, in another economic theory, should close it down completely.
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    “Growth” is not a measure of purposeful activity. If I could seduce some investors into paying me to print and then tear up copies of the first page of “Finnegan’s Wake”, that would be recorded as growth. If NHS expenditure grows in a fiscal year, it qualifies as part of the growth of the national economy.
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    It would be a step forward if we could altogether stop thinking about growth and start thinking about the balance of trade in tangible items. And of the conversion of R&D into technological advantage – for us, not for US patent-collectors.
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    Without a manufacturing base, and dependent on the service sector for the illusion of “growth” , we are locked into a cycle in which every new market innovation for creating money from thin air creates first a boom, and then, as its credibility collapses, a bust.

  • Iain Orr

    Uzbek in the UK and Komodo

    You both make good points. However, one aim of a better deployment of human resources would be to reduce overall unemployment. Yes unproductive and counterproductive jobs would go in both public and private sectors, but there would also be extensive retraining for new jobs in manufacturing, energy efficiency, improved housebuilding standards, more teachers so that class sizes can be reduced – ultimately resulting in better-educated citizens with the skills we need from tree-planting to design and care of the elderly.

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    Yes, we need to put a far greater effort into capitalising on our own R&D. Perhaps we need the banking system to be restructured to that some banks are geared to engage closely with manufacturing industries, developing skills that will help them steer investment towards good long-term prospects. Bankers could then be rewarded for the value that they add to rather than subtract from the economy.

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    My car example was meant to be of ones with energy-efficient, low-pollution engines and long-lasting tyres, not the ones that make Uzbekistan and Cuba museums of the motor motor industry.

  • Uzbek in the UK

    @ Komodo
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    Agreeing with you about economic theories and economists I shall add that there are basics of economics that are quite simple and have been foundation of human life since ever. For instance one has to either work in exchange to what he needs (money since they have been invented) or one needs to own something (land or instruments) so that he allows someone to work on/with them to produce a product that would benefit both.
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    Since Washington consensus these basics have been forgotten and western economies have transformed into service economies and with the exception of few minor recessions have grown. This growth, however, did not come from production of goods and their realisation (as it used to be for millennias) but from inflating service (particularly financial) sector and creating more of so called ‘products’.
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    But growth is needed in order to employ all 30+ million of British workforce. Whenever you go to the supermarket and spend lets say 1 quid to buy 2 pints of milk you benefit thousands of people. And this is called growth because if you stop buying milk all these thousands will lose their income and this will somehow be negatively reflected on your own income because it could be a case that few of these thousands are your own customers.
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    Economy is a wonderful science but horrible instrument when in hands of Bullington chaps.

  • Uzbek in the UK

    @ Iain Orr
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    All what you stated sounds quite nice in theory but practical implementation will be far more problematic. For instance you stated that Britons can be re trained to work in manufacturing. But manufacturing what? Everything that can be manufactured here can be manufactured at least twice cheaper in China or India. Would you or anyone else be willing to pay twice more for a product just because it has been manufactured here? The only way would be to force you by increasing custom duties for products imported from China. BUT then your 1 quid will eventually be turned into 50p.
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    Once I read somewhere that if world’s population (all 7 billion of us) had the same standards of life like westerners there would not have been enough resources in whole world to provide such level of life. Your point about having goods for longer and not throw away goods is quite useful. But even here by doing this we will ultimately kill growth on global level and making rich Chinese poorer we will also make poor Chinese even pooper.

  • Duncan McFarlane

    yep, very like the South Sea bubble. Governments are still listening to “the markets” and “maintaining market confidence” in the pretence that the people who make up “the markets” aren’t the same set of people some of whom made up the frauds and others of whom bought them and believed they were valuable.

    If a drug addict drove your car into a brick wall while trying to get more drugs, then demanded compensation from you, would you ask their advice on everything and assume that anything that made them happy was the right thing to do and anything that upset them was a mistake?

    Because that’s pretty much what “listening to the markets” involved.

    The markets have no interest in what’s good for the majority in the long term and don’t even know what’s for their own good, never mind anyone else’s. They do know that they want everyone else forced to pay for their mistakes and frauds forever.

  • Duncan McFarlane

    Prosperity Without Growth is well worth reading – the book basically argues that
    1) Increased income beyond a certain point has no benefits (economists should understand this based on ‘marginal utility’, but most don’t seem to). He provides plenty of evidence by charting GDP per capita against life expectancy, happiness etc for different countries over time

    2) GDP (and GDP per capita) are faulty measures of both wealth and social well being (e.g GDP includes the costs of cleaning up oil spills as if they were income rather than costs)

    3) Infinite growth is impossible in a planet with limited energy and material resources – e.g demand for oil, gas and metals is increasingly exceeding supply as China and India and others begin to fully industrialise and long before supply runs out prices will become exhorbitant

    4) Poverty in the developed world is not caused by lack of economic growth (overall theres been plenty since WWII) but by unequal distribution of wealth. So the only solution to it is to redistribute wealth

    5) Poverty in the developing world can be reduced by economic growth in many cases, but that would require allowing them to protect their markets as developed countries still do (and did to an even greater extent through centuries of development – also see Ha Joon Chang’s books on this) ; and if growth is carried out with no concern for environmental and health problems it may not even be beneficial e.g polluting farmland and water supplies in China has increased food costs and illnesses in China

  • Duncan McFarlane

    Mary – i agree – those mascots are weird looking – especially the one eyed alien ones. Someone will have been paid a fortune to design them.

    At the prices they charge for tickets i wouldn’t be going to the olympics even if i lived in London or was interested in sport.

  • Komodo

    What Antelope said:
    “Why are they picking on Xstrata? It’s a mining company – it actually does something useful. It never got a public bailout. I thought they were supposed to be picking on the banks that are gambling and then being bailed out.
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    Just because its boss is well paid – so what? The problem is not well run industrial companies.
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    Sorry Craig, some of the people are stupid.”

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    What I was trying to point out to Antelope was that Xstrata isn’t a company that does mining. It is a company that buys and sells companies that do do mining. And part of the problem (note, Antelope, part. I don’t generalise as you do) is that this kind of company makes its money by leveraging real assets and enterprises into funny money. Like private equity firms, hedge funds and banks, it adds profit to a product without adding value. And then takes that profit.
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    [Mod/Jon – partly removed, abusive. If a discussion gets out of hand, please bow out]

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