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Expanding the economy ?

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Sussexlad
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Expanding the economy ?

#31962

Postby Sussexlad » February 16th, 2017, 10:28 am

Yet again this morning, I've heard the comment that we need more people to expand the economy.
Where does this stop then ? How do less populated countries survive at all e.g. NZ with it's 5 million, Australia's 20 million + or Canada's 30 +.
We're told about the damage humanity is inflicting on the planet, apart from the more practical problems like housing, energy, food & water, yet economics appear to demand permanent growth.
So could we be imposing a more sustainable model ? From a simplistic point of view, it just doesn't appear to make any sense.

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Re: Expanding the economy ?

#31971

Postby gryffron » February 16th, 2017, 10:50 am

I concur. More GDP at the expense of more population is not necessarily a "good thing". I said so frequently during the brexit debate. Such "growth" ignores the additional burden of finding houses, roads, schools and hospital beds for all those extra population.

It would be much better if meeja and politicians focused on quality of the economy (pcGDP), rather than quantity (GDP).

gryff

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Re: Expanding the economy ?

#32011

Postby mark88man » February 16th, 2017, 11:54 am

If I might be cynical, its probably because pcGDP is a harder number to improve, and no one lost a vote by going bigger is better

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Re: Expanding the economy ?

#32103

Postby funduffer » February 16th, 2017, 5:03 pm

I think the answer to this question depends on the demographics of the country concerned.

A country with a very young population does not usually need much immigrant labour to grow its GDP.

For a country with a large older population (EG UK, Germany, and soon China), then an influx of younger labour is required to earn the GDP, as many of the older population are retired, and not generating GDP. In these circumstances I would think it is difficult to grow, or even maintain pcGDP without immigrant labour, particularly if the older demographic is growing not shrinking.

Germany is one of the most acute examples, where the natural birth rate is well below 2, and the population is projected to shrink and age very considerably over the next 30 years or so. Perhaps this is why Merkel is quite keen on immigration, as she fears shrinking & aging population = lower GDP and lower pcGDP?

The UK has a higher birth rate, so the problam may not be so acute to require a lot of immigration, but the baby-boomers are retiring in increasing numbers right now (I am one of them!)

FD

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Re: Expanding the economy ?

#32173

Postby gryffron » February 16th, 2017, 9:14 pm

funduffer wrote:For a country with a large older population (EG UK, Germany, and soon China), then an influx of younger labour is required to earn the GDP, as many of the older population are retired, and not generating GDP.


Three possible scenarios there:
1) A short term blip of ageing population. Could indeed be supported by immigration as a short term fix.
But immigration to Europe has been ongoing for decades. It doesn't look like a short term fix to me.
2) A declining population. Which could easily be sustained by immigration - no shortage of humans on the planet as a whole.
But this would imply overall national population remaining constant. Is that happening anywhere?
3) Retirement benefits are too generous and people should be working for longer.
Endlessly bringing in immigrants to support early retirement is a ponzi scheme. And like all ponzi schemes, is ultimately unsustainable.

I know which I think is the case - especially for UK.

gryff

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Re: Expanding the economy ?

#32197

Postby Nimrod103 » February 16th, 2017, 11:32 pm

gryffron wrote:
funduffer wrote:For a country with a large older population (EG UK, Germany, and soon China), then an influx of younger labour is required to earn the GDP, as many of the older population are retired, and not generating GDP.


Three possible scenarios there:
1) A short term blip of ageing population. Could indeed be supported by immigration as a short term fix.
But immigration to Europe has been ongoing for decades. It doesn't look like a short term fix to me.
2) A declining population. Which could easily be sustained by immigration - no shortage of humans on the planet as a whole.
But this would imply overall national population remaining constant. Is that happening anywhere?
3) Retirement benefits are too generous and people should be working for longer.
Endlessly bringing in immigrants to support early retirement is a ponzi scheme. And like all ponzi schemes, is ultimately unsustainable.

I know which I think is the case - especially for UK.

gryff


What about the scenario where industry becomes increasingly automated and robotic, while all the unneccessary jobs created by successive Governments are eliminated, so that the existing population (properly deployed) can successfully continue to grow the economy without needing to import lower skilled workers and shirkers?

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Re: Expanding the economy ?

#32222

Postby Sussexlad » February 17th, 2017, 6:34 am

gryffron wrote:3) Retirement benefits are too generous and people should be working for longer.
Endlessly bringing in immigrants to support early retirement is a ponzi scheme. And like all ponzi schemes, is ultimately unsustainable.

I know which I think is the case - especially for UK.

gryff


I think that's the reality. Most people used to work from 15 > 65 and be dead by 75. Now too many don't start work until their early 20s still want to retire at 65, yet now most likely live for twenty years. It's simply not sustainable and as you say, expanding the population as a solution is not the answer, only making the issue worse. Retirement has to be pushed back and resources better allocated across all of society but..... ?

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Re: Expanding the economy ?

#32274

Postby funduffer » February 17th, 2017, 10:04 am

Some interesting discussion here.

On later retirement age - this is already happening. The state pension age is getting later, and private pension schemes are less generous necessitating longer working careers. Triple lock state pension days are numbered. The baby boomers really are the golden generation - many of us have generous final salary pensions which have allowed early retirement, and the state pension age is still around 65-67 for us. As has been said, it is not sustainable, and I can see this generation eventually being taxed more to compensate.

On automation, I agree this is going to become pervasive - not just in manufacturing, but into services as well (Eg robo-financial advisors!) We will maybe see it even in labour-intensive areas like care homes, and hospitals eventually, although that may seem fanciful today.

It is going to be difficult to adapt to a society where many do not work. It could be a great society to live in with more time for leisure and for cultural activities, but the trick will be to ensure we do not end up in a grossly unequal society where all the rewards go to the few. This will be a recipe for strife and unrest. I have yet to see a government around the world adapting to this prospect, although I know there are some experiments in universal income going in in various places - Finland I believe to be one. It remains to be seen if these turn into something that is sustainable.

Interesting times ahead.

FD

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Re: Expanding the economy ?

#32281

Postby gryffron » February 17th, 2017, 10:31 am

funduffer wrote:the trick will be to ensure we do not end up in a grossly unequal society where all the rewards go to the few.


IMO the real trick will be ensure we do not end up in a grossly unequal society, where all the WORK is done by a few.

It really annoys me that all those who talk about "equality" only ever talk about reward, and never effort. Whatever happened to "from each according to his ability"?

Gryff

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Re: Expanding the economy ?

#32334

Postby Sussexlad » February 17th, 2017, 1:07 pm

gryffron wrote:
funduffer wrote:the trick will be to ensure we do not end up in a grossly unequal society where all the rewards go to the few.


IMO the real trick will be ensure we do not end up in a grossly unequal society, where all the WORK is done by a few.

It really annoys me that all those who talk about "equality" only ever talk about reward, and never effort. Whatever happened to "from each according to his ability"?

Gryff


That's a great point. We have also moved from a position of it being your responsibility to provide for yourself and no one else's, unless of course you come to some private agreement to work together.

The sense of entitlement now is unbelievable. I equate it to a primitive village, where all but one family go out hunting and gathering fuel and are then expected to hand some to their lazy neighbour. I'd extend it to those who have children when they don't have the resources to provide for them. The burden that places on the economy is enormous. Responsibility has become a dirty word....

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Re: Expanding the economy ?

#32527

Postby Nimrod103 » February 17th, 2017, 9:11 pm

funduffer wrote:Some interesting discussion here.

It is going to be difficult to adapt to a society where many do not work.
Interesting times ahead.

FD


I don't understand this concept of a society where many do not work. Just because many jobs can be taken over by automation doesn't mean that some people can sit around paid for being idle. That is completely immoral in my view. There is always litter to be picked up, public parks and gardens to be maintained, children to be minded, refuse could be collected every other day rather than every other week as it is at present. Nobody should be drawing money from the state without working for it.

Taxing the automated factories (in order to pay these otherwise useless people to do some worthwhile work) may be a bit of a conundrum, but I am sure some way could be found.

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Re: Expanding the economy ?

#32716

Postby NeilW » February 18th, 2017, 8:13 pm

Nimrod103 wrote:I don't understand this concept of a society where many do not work. Just because many jobs can be taken over by automation doesn't mean that some people can sit around paid for being idle. That is completely immoral in my view. There is always litter to be picked up, public parks and gardens to be maintained, children to be minded, refuse could be collected every other day rather than every other week as it is at present. Nobody should be drawing money from the state without working for it.

Taxing the automated factories (in order to pay these otherwise useless people to do some worthwhile work) may be a bit of a conundrum, but I am sure some way could be found.


You'll be interested in two things then

(i) the Job Guarantee - where everybody has access to an offer of a living wage job, working for the public good.

(ii) the Noble Lie, which explains why taxes don't actually pay for anything (in reality it is the other way around - government spending comes first and causes taxation and extra saving). Government has no need of your tax to put people without work to work.

It's all very easy to do. So ask yourself who benefits by not doing it. And funnily enough that was answered many years ago as well

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Re: Expanding the economy ?

#32796

Postby Nimrod103 » February 19th, 2017, 11:13 am

NeilW wrote:
Nimrod103 wrote:I don't understand this concept of a society where many do not work. Just because many jobs can be taken over by automation doesn't mean that some people can sit around paid for being idle. That is completely immoral in my view. There is always litter to be picked up, public parks and gardens to be maintained, children to be minded, refuse could be collected every other day rather than every other week as it is at present. Nobody should be drawing money from the state without working for it.


You'll be interested in two things then

(i) the Job Guarantee - where everybody has access to an offer of a living wage job, working for the public good.



Quotes from article 'If you are short of work you would go to the Job Centre and ask for a job. The Job Centre would then match you with voluntary, community and public services who have work on offer, and that are offering the sort of work you want to do. What type of job would it be? It’s really down to what you want.
I’ve got this great idea for a business. Great. Take your business plan down to the Job Centre and pitch it to them. They’ll even help you write that business plan. If the business support people there like the sound of it'
.
This not what I had in mind. This is paying a lot of busy bodies, political malcontents and agitators, and other groups chosen by the Govt of the day, to cause trouble in society, doing what they want to do, rather than what is useful. I wouldn't rely on people down the job centre knowing anything about the viability of a business plan - that is what a bank is supposed to do. I had in mind something more like Victorian workhouses.

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Re: Expanding the economy ?

#32873

Postby NeilW » February 19th, 2017, 4:16 pm

Nimrod103 wrote:Quotes from article 'If you are short of work you would go to the Job Centre and ask for a job. The Job Centre would then match you with voluntary, community and public services who have work on offer, and that are offering the sort of work you want to do. What type of job would it be? It’s really down to what you want.
I’ve got this great idea for a business. Great. Take your business plan down to the Job Centre and pitch it to them. They’ll even help you write that business plan. If the business support people there like the sound of it'
.
This not what I had in mind. This is paying a lot of busy bodies, political malcontents and agitators, and other groups chosen by the Govt of the day, to cause trouble in society, doing what they want to do, rather than what is useful. I wouldn't rely on people down the job centre knowing anything about the viability of a business plan - that is what a bank is supposed to do. I had in mind something more like Victorian workhouses.


What makes you think that the bank has any idea about business plans?

Banks are liquidity providers, not investors. They discount collateral. No collateral, no loan.

And your suggestion of workhouses requires people to run them. Why would those running a workhouse be any different to those running a job centre? Other than the underlying desire to punish people for something that isn't their fault - the systemic lack of jobs in any economy.

There are not enough jobs to go around. Somebody has to create them, and that requires a public operation - because the task of the private sector is to automate jobs out of existence and eliminate them. The end point is always a matching problem that requires jobs to be created to match the people remaining and allow them to do the best they can. That requires a creation of social value, because by definition they have no market value.

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Re: Expanding the economy ?

#32931

Postby funduffer » February 19th, 2017, 7:30 pm

NeilW wrote:
You'll be interested in two things then

(i) the Job Guarantee - where everybody has access to an offer of a living wage job, working for the public good.

(ii) the Noble Lie, which explains why taxes don't actually pay for anything (in reality it is the other way around - government spending comes first and causes taxation and extra saving). Government has no need of your tax to put people without work to work.

It's all very easy to do. So ask yourself who benefits by not doing it. And funnily enough that was answered many years ago as well


Thanks for these links. I had not heard of this monetary theory before. It sounds almost too good to be true - full employment without inflation. I guess it is all in the implementation so may be possible in theory but difficult in practice.

Are there any examples of this operating in the real world?

FD

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Re: Expanding the economy ?

#32955

Postby Nimrod103 » February 19th, 2017, 8:38 pm

NeilW wrote:What makes you think that the bank has any idea about business plans? Well the banks do have people who are used to loaning and risking money, but it could be investment banks or groups of investors. The whole point is that they and the entrpreneur have skin in the game, and therefore their investment decisions will be significantly better than somebody employed by the Govt

And your suggestion of workhouses requires people to run them. Why would those running a workhouse be any different to those running a job centre? Other than the underlying desire to punish people for something that isn't their fault - the systemic lack of jobs in any economy. My suggestion of Victorian workhouses was slightly facetious, but the Victorians of the 1830-60s were actually grappling with issues of industrialization eradicating traditional jobs which are similar to those we have today. Their solution was to reward hard work and apply constraints on idleness, via the workhouse. But they realized rather quickly that people in the workhouses were often better fed and educated than the poor outside who had to pay for it (the story of Oliver Twist notwithstanding). Somewhat similar to today where some who I would deem undeserving are given council housing and benefits, while others who work hard cannot afford houses, and cannot afford to live close to their work.

There are not enough jobs to go around. Somebody has to create them, and that requires a public operation. That is true perhaps, but when I look around, I see so many jobs crying out to be done - I listed some in a previous post - yet so many are employed by the state doing things of little or no value. So there has to be not just an intelligent system of assigning labour to worthwhile projects, but some degree of compulsion as well.

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Re: Expanding the economy ?

#32966

Postby gryffron » February 19th, 2017, 9:18 pm

NeilW wrote:(ii) the Noble Lie, which explains why taxes don't actually pay for anything (in reality it is the other way around - government spending comes first and causes taxation and extra saving). Government has no need of your tax to put people without work to work.

Nice theory. Unfortunately it looks to me like the usual socialist fantasies. Explain how this fantasy economy will pay for imports? Explain Zimbabwe and its hyperinflation? Why isn't it working there?

Gryff

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Re: Expanding the economy ?

#33347

Postby NeilW » February 21st, 2017, 10:39 am

gryffron wrote:Nice theory. Unfortunately it looks to me like the usual socialist fantasies. Explain how this fantasy economy will pay for imports? Explain Zimbabwe and its hyperinflation? Why isn't it working there?

Gryff


Imports are paid for with exports. In a floating rate currency there can be no more exports than imports as the price moves to eliminate the differential.

The bit people miss is that currency and financial assets are an export - which export-led nations hold as the balancing import and use in their financial system to discount their own money.

What you will find when you examine your own thinking is that you are operating in a fixed exchange rate paradigm rather than one where money has to be exchanged across borders with a counterparty who desires the opposite transaction.

As to the other point, that is a variant of Godwin's Law which I dealt with seven years ago.
Last edited by NeilW on February 21st, 2017, 10:54 am, edited 1 time in total.

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Re: Expanding the economy ?

#33354

Postby NeilW » February 21st, 2017, 10:51 am

Nimrod103 wrote:Well the banks do have people who are used to loaning and risking money,


Banks discount collateral. That's all they do. If you've ever been to a bank to borrow money for a business you'll know what I mean.

The Job Guarantee supports businesses in the way the Enterprise Allowance Scheme supports businesses. It allows people without collateral and with no prior income stream some time to have a go. And since that has social value, there is no harm in it. It is a way of creating a Job of social value, and you never know what it might turn into.

Nimrod103 wrote: Somewhat similar to today where some who I would deem undeserving are given council housing and benefits


Why would they be underserving if they have taken a Job under a Job Guarantee - working for the public good? They would then receive the living wage the same as everybody else, without any discrimination.

Nimrod103 wrote: I So there has to be not just an intelligent system of assigning labour to worthwhile projects, but some degree of compulsion as well.


There is no need for compulsion. IF you are guaranteed a Job - one that is useful to you and useful to others - and you choose not to a take it then you just don't get paid. That's the point of just having jobs. You get paid after you do one.

But there is no need for the jobs to be onerous. The job can be specifically designed for the person - designed to allow them to be the best they can be.

The question of what to do with people who refuse to take a job (as opposed to being unable due to age or infirmity) is then a separate question. Arguably, once a Job Guarantee is in place, they should be referred to charities funded by people who believe individuals should have the option of being paid for doing nothing.

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Re: Expanding the economy ?

#33397

Postby scotview » February 21st, 2017, 12:41 pm

Creating "social" jobs in the public sector, who would supervise their productivity.

From what I see, the existing public sector jobs have extremely low productivity, with white council vans parked for "tea breaks", council road works labour taking an age to do relatively small jobs, council landscape departments taking inordinate time to cut grass and plant up and in winter time their productivity must be approaching 15%.

So how these new social jobs would be monitored for effectiveness I don't know, probably by creating new auditing departments to monitor these new social jobs.

Productivity and delivery is what work and jobs are all about.


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