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Burton - "Welfare keeps the economy ticking"
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Well, what we know is an independent Irish stimulus does nothing for nobody no-time, so it's irrelevant under any scenario.KyussBishop wrote: »Independent Irish action certainly has the potential to be highly damaging alright, but we don't know for sure yet, whether or not it will be more damaging to wait out the rest of the crisis within the Euro.
No, you are consistently missing the point made many times. The point about an SOE is that an increase in its exports are negligible in world trade terms. So, as I've pointed out several times at this stage, it doesn't actually require anyone to increase their imports. An SOE can aspire to increase its tiny share of a declining world market, without it amounting to a hill of beans for anyone else. A major economy can't do this.KyussBishop wrote: »I mean you're talking about increased imports as a bad thing, without realizing that someone (some nation or set of nations) must do this, in order for the remainder of the world to get a boost from exports (and ignoring that this inherently balances out, as the rest of the world recovers, resetting trade-balances to, mostly, pre-crisis levels).
No, there's no conflict at all. You're confusing the fact that a measure of total imports and exports at a particular point in time should add to zero (but doesn't because of inaccurate statistics), with the contention that any change is a zero sum game. Your confusing the static measure of a point in time, with the dynamic of change.KyussBishop wrote: »That you are inherently contradicting yourself here, recognizing that World Exports - World Imports = 0, i.e. sums to zero (because we can't trade with Mars..), yet you say it is not a zero sum game (when it certainly is when it comes to the balance sheets) - when you inherently contradict yourself like that, that makes me unsure whether you really do understand that it's not possible for the world to have a trade surplus.
I've already supplied the material that explains the concept of gains from trade, now two posts ago.0 -
It's relevant if the Euro ends - if (maybe when) it does, it'd be our only way to restore full employment, without having to waste a decade or mores worth of labour potential to get there.GCU Flexible Demeanour wrote: »Well, what we know is an independent Irish stimulus does nothing for nobody no-time, so it's irrelevant under any scenario.
Every day that passes (and every day that has passed) with such high unemployment, we permanently lose that wasted labour potential forever. That is a real loss to the economy, and it's compounded every day, has been for years now, and will be still for up to a decade more unless recovery policies are enacted.
You're deliberately ignoring what is being said to debunk your point, just for the sake of reasserting it endlessly.GCU Flexible Demeanour wrote: »No, you are consistently missing the point made many times. The point about an SOE is that an increase in its exports are negligible in world trade terms. So, as I've pointed out several times at this stage, it doesn't actually require anyone to increase their imports. An SOE can aspire to increase its tiny share of a declining world market, without it amounting to a hill of beans for anyone else. A major economy can't do this.
We're not just going to magically outcompete the rest of the world on exports, especially when practically every other country out there has already had that idea and is actively trying to do the same.
Saying we are a 'small open economy' is just another way of saying we have féck all resources with a tiny population, with an economy that is overdependent on good economic performance in the rest of the world, and trying to spin those massive disadvantages around, to sound like they are really an advantage.
Your talking nonsense now. Since World Exports - World Imports = 0, that means that for Ireland to increase its export rate, the rest of the world has to import more, or some other country has to export less.GCU Flexible Demeanour wrote: »No, there's no conflict at all. You're confusing the fact that a measure of total imports and exports at a particular point in time should add to zero (but doesn't because of inaccurate statistics), with the contention that any change is a zero sum game. Your confusing the static measure of a point in time, with the dynamic of change.
I've already supplied the material that explains the concept of gains from trade, now two posts ago.
It all has to sum to zero in the end, no matter what, and if Ireland wants to export more without anyone importing more, another country has to lose, by exporting less; a zero-sum game.
You can't spin your way around basic maths/accounting rules.0 -
KyussBishop wrote: »It all has to sum to zero in the end, no matter what, and if Ireland wants to export more without anyone importing more, another country has to lose, by exporting less; a zero-sum game.
You can't spin your way around basic maths/accounting rules.
I don't think anyone is disputing the accounting. What is lost in looking at nominal aggregates is that people benefit regardless. And even if the nominal figure for exports for a country drops or stays stagnant the tangible goods being exported can still increase, likewise for imports. Also lost is the changes in the actual goods being imported, even if a country's imports fall it can be importing different goods that are more valuable to them than goods they were previously importing. Increases in trade and the benefits of division of labour continue regardless of the zero-sumness of the accounting.0 -
Frank Lee Midere wrote: »Not too many people get Keynes. To me as an engineer it makes sense as it is merely a stabilizer - a form of negative feedback. Classical economics never seems to treat workers as consumers. Leading to all kind of absurdities. If I have time tomorrow I will explain these points - on a phone now - and why QE should work. I will also poor out a major flaw with QE which hasn't been mentioned.
Keynes makes sense but he wasn't right unfortunately. I think much of what he talked about makes sense, i.e. counter-cyclical policy by Governments (unfortunately people only like to interpret as talking about what to do during recessions, the idea of running large surpluses in order to have money to throw at the economy when the inevitable recession comes is long on people), but one has to understand that very little was understood about economics both on a micro and macro scale when he was active as a theorist and if he was alive today his theory would look remarkably different in many respects to account for what has been learned.0 -
It seems not much more is known about economics these days.
Or at least if it is it's mostly ignored.
The US did handle it's recent crisis fairly well though, compared to us for example!0 -
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It seems not much more is known about economics these days.
Or at least if it is it's mostly ignored.
The US did handle it's recent crisis fairly well though, compared to us for example!
It's more we realise how little we know more than we did back then than anything else. We realise one can't treat certain ideas as truths. One has to remember also the mathematical limitations Keynes and his contemporaries had to work with.0 -
What you are talking about here are (at best) only efficiency improvements in how we manage our exports/imports (which presumably business/'the markets' are already trying to maximize, to stay competitive - thus if we were to get out of the crisis this way, it would have already happened).I don't think anyone is disputing the accounting. What is lost in looking at nominal aggregates is that people benefit regardless. And even if the nominal figure for exports for a country drops or stays stagnant the tangible goods being exported can still increase, likewise for imports. Also lost is the changes in the actual goods being imported, even if a country's imports fall it can be importing different goods that are more valuable to them than goods they were previously importing. Increases in trade and the benefits of division of labour continue regardless of the zero-sumness of the accounting.
This is not a solution to the crisis as there are nowhere near the level of efficiency improvements available, to help us restore full employment anytime soon.
This is why I've been focusing on zero-sumness with accounting with regards to increasing exports, because that is largely what determines how effective this would be for getting us out of the crisis - this is directly tied to the willingness of the rest of the world, to import more.
That's also why stimulus that increases imports, is not really a bad thing - some countries somewhere, have to start importing more, to boost their own economy and also other economies who export, until those other economies have recovered enough economically, the restore the trade balance.0 -
The idea of running surpluses during good economic times, and deficits during bad economic times, is actually based on the gold standard, and is out of date now with fiat currencies.Keynes makes sense but he wasn't right unfortunately. I think much of what he talked about makes sense, i.e. counter-cyclical policy by Governments (unfortunately people only like to interpret as talking about what to do during recessions, the idea of running large surpluses in order to have money to throw at the economy when the inevitable recession comes is long on people), but one has to understand that very little was understood about economics both on a micro and macro scale when he was active as a theorist and if he was alive today his theory would look remarkably different in many respects to account for what has been learned.
The problem with modern understanding of Keynes, is that Keynesian economics doesn't actually represent his views very well at all - classical economists largely put together their own bastardized theory, and tacked his name on it, to make up current neoclassical economic theory.
A surprisingly large amount actually is known about macroeconomics, but economics in academia (and in general - since it is almost an entire half of politics itself) is so highly politicized, that it's suffering from the academic problem of progress moving forward "one death at a time", where it could take a long time for a proper clearing-out of out of date economic views, in academia and politics (and the world is suffering for it, in its handling of the economic crisis).
Just understanding 'endogenous money' (easily proved - with bank/central-bank balance sheets) and how that affects fiat currency, falsifies most mainstream macroeconomic theory, and gives the seed for completely rewriting it.
When you rewrite macroeconomics to take endogenous-money/fiat-money into account (which makes a lot of macroeconomics really simple and intuitive, as you learn more about it), macroeconomics is almost entirely about tracking movements of money across accounting balance sheets and understanding the effects of that - so it's not even theoretical, it is pretty much backed by basic maths.
Using this, you can build up factual ways of looking at economies like 'sectoral balances' (which look at accounting-accurate flows of money between private, public and external sectors), and an endless amount of other things which eventually form a complete description of macroeconomics; that's basically what Modern Money Theory is (naming it a 'theory' was a big blunder really, seeing as a lot of it is just accounting - it's all about endogenous and fiat money, i.e. 'modern money').0 -
KyussBishop wrote: »The idea of running surpluses during good economic times, and deficits during bad economic times, is actually based on the gold standard, and is out of date now with fiat currencies.
You're going to have to justify that one. Bear in mind that not all fiat currencies are equal in this regard.0 -
Indeed, any fiat currency in a fixed exchange rate system behaves (in some respects) a lot like the gold standard (money creation isn't, or is far less, available), which means building up surpluses (might, compared to alternatives) make sense in such a system.You're going to have to justify that one. Bear in mind that not all fiat currencies are equal in this regard.
In any nation with full sovereign control over their currency though (like the UK, US, or potentially a federal EU), with a fiat currency not in a fixed exchange rate, the idea of running surpluses during good times to build up a war-chest of money doesn't make any sense.
Doing that means depressing the private sector in good times, holding it below full potential; lets say it holds back the private economy 5% below full economic output (full output will eventually be reached, but just more slowly - that is still a waste though):
You can't save that 5% of economic output and 'spend' it later, that is 5% of output permanently wasted, every day the economy is below full potential.
You do save up money however, but if you spend that during bad economic times, it is precisely the same as using money creation, with the same inflationary pressures (manageable as they are), and the same pressures upon the trade balance and thus currency valuation, as created money. Due to this, it is pointless not to just use money creation in its place instead, to fund public spending.
Here is a good related article (not the exact topic, but explains very well the problem of government running a surplus), which actually gets into 'sectoral balances' a bit, with Stephanie Kelton (who is one of the more prominent MMT'ers):
http://www.businessinsider.com/how-bill-clintons-balanced-budget-destroyed-the-economy-2012-9
That shows how 'surpluses in good times' in the US helped lead directly to the debt-fueled economic crisis - a public sector surplus is a private sector deficit (with the trade deficit putting an even bigger squeeze on the private sector), and the private sector compensated for the reduction of money with (massive) debt.
Another, (less related) which gets into sector balances (this author has done some very good articles):
http://www.forbes.com/sites/johntharvey/2012/07/18/why-you-should-love-government-deficits/0 -
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KyussBishop wrote: »You do save up money however, but if you spend that during bad economic times, it is precisely the same as using money creation, with the same inflationary pressures (manageable as they are), and the same pressures upon the trade balance and thus currency valuation, as created money. Due to this, it is pointless not to just use money creation in its place instead, to fund public spending.
This logic indicates a very serious problem with your economic thinking. Yes, injection of money into an economy affects inflation (not quite true but we'll roll with it). You are however ignoring the key difference here between your two scenarios, they do not have the same price level coming into the recession. Where money was taken out of the economy there was a deflationary effect in previous years which negates to an extent the inflationary effect from the cash injection. Where the private sector was left run free and then money was printed for the cash injection you have inflationary pressure greater on both sides of the equation. (It also ignores exchange rate effects etc)
You cannot take an economic policy act out of context like you've done, you have to take into account the path to the point you're starting from. As someone highly interested in heterodox economics I'm surprised you're making this mistake as it's something mainstream macroeconomics is often criticised for.0 -
Moving back towards the topic.......
Would imposing a cap on the amount of social welfare a person can receive work here. Such an initiative kicks in over the water today....
Benefits cap of £500 a week rolls out across BritainA cap on the total amount of benefits that people aged 16 to 64 can receive has begun rolling out across England, Scotland and Wales.
Couples and lone parents will now not receive more than £500 a week, while a £350 limit applies to single people.
Personally, I think it's a good idea.0 -
If the euro ends, and we try a stimulus, we'll just quickly debase our new currency.KyussBishop wrote: »It's relevant if the Euro ends - if (maybe when) it does, it'd be our only way to restore full employment, without having to waste a decade or mores worth of labour potential to get there.
To quote Pris in Blade Runner, "Then we're stupid, and we'll die".KyussBishop wrote: »We're not just going to magically outcompete the rest of the world on exports, especially when practically every other country out there has already had that idea and is actively trying to do the same.
Not really. It's identifying what is and isn't relevant to our situation. Demand stimulus irrelevant. Competitiveness relevant.KyussBishop wrote: »Saying we are a 'small open economy' is just another way of saying we have féck all resources with a tiny population, with an economy that is overdependent on good economic performance in the rest of the world, and trying to spin those massive disadvantages around, to sound like they are really an advantage.
You seem to be the only one who hasn't got the point here.KyussBishop wrote: »It all has to sum to zero in the end, no matter what, and if Ireland wants to export more without anyone importing more, another country has to lose, by exporting less; a zero-sum game.0 -
KyussBishop wrote: »Criticizing a poster for their methods of argument, and apparent dishonesty/bad-faith in argument, is perfectly acceptable - worthwhile debate would actually be impossible without it - it is not an ad-hominem, it is a valid criticism directly backed by the content of your posts.
Kyuss you seem to want to have a theroetical argument. You seem to have an issue with discussing the practical application of it. It is impossible for Ireland to have a money creation policy without the blessing of the EU unless we leave the EU
In other threads I have been for quantive easing however you proposal is not quantive easing rather that Governments should gaurantee jobs for all. This is somthing that governments are very poor at. In the late 1970's and early 1980's we tried this in Ireland where Semi-state bodies took on large amounts of staff to expand there o/p it added cost and made these bodies inefficent and we still are paying for it to this day.
Public works in general equate to construction work. This is no longer the low skilled area that it was 30 years ago. it is also captial intensive with a cost of maybe 100-150K minimum per job per job per year between labour cost and materials costs. If we look at most job creation programs by FAS they usually equate to manual low cost work. People working for local sports orginisations or community based orginisations such as tidy towns etc.
My issue with what you propose is the practical application in general I am not interested in such answers as technical inovation or public works as I know that the ( or any government) government has not got the ability or skill set to manage such programs0 -
On the question of public works, even if it was a good idea and projects that would benefit the country could be found (which actually should be easy enough) - they would have to go to tender under EU procurement rules.
Obviously, that means we could have a situation where a bidder from elsewhere in the EU wins the competition and brings in a large fraction of the necessary labour, materials etc.
There'd be some local spending, but not much.
Which means it's very difficult, if not impossible, to devise a meaningful public works programme that generates projects that benefit the country long term, and keep the bulk of the spending here.
The classic example (for me, anyway) is the paving in Dublin. Not 15 miles from the city centre are the Wicklow mountains, but it's cheaper to import Chinese granite paving sets - when they did Henry St a Wicklow company sourced the stone from China!0 -
You're thinking of this in the wrong terms, you need to look at it from the point of view of economic output: When you deflate the economy with surplus causing 95% economic output for a time, you do not 'save' that lost 5% output, and can not spend that money to achieve 105% economic output later.This logic indicates a very serious problem with your economic thinking. Yes, injection of money into an economy affects inflation (not quite true but we'll roll with it). You are however ignoring the key difference here between your two scenarios, they do not have the same price level coming into the recession. Where money was taken out of the economy there was a deflationary effect in previous years which negates to an extent the inflationary effect from the cash injection. Where the private sector was left run free and then money was printed for the cash injection you have inflationary pressure greater on both sides of the equation. (It also ignores exchange rate effects etc)
You cannot take an economic policy act out of context like you've done, you have to take into account the path to the point you're starting from. As someone highly interested in heterodox economics I'm surprised you're making this mistake as it's something mainstream macroeconomics is often criticised for.
For the same reasons, causing some deflation in a way that reduces economic output, does not 'save up' money that can be spent without causing inflation as a side-effect - inflation is largely a problem when you are at 100% economic output, so if you try to use that money to push to 105% output you just get inflation.
Government surplus does not prevent 100% economic output being achieved either, it just delays it, and forces it to rely upon greater private debt; same with the price level.
When you hit 100% economic output (reasonably analogous to full employment), all previously idle money that is spent (whether it be sourced from a surplus-era warchest, or from money creation), is going to be pushing up against the wall of 100% economic output, and causing some inflation (save a few minor exceptions) if it is not pulled back.
So long as economic output is below full potential (i.e. below full employment roughly), you have room to spend (so long as you are not spending inefficiently, i.e. into a bubble) before you hit inflation barriers.
This (government surplus) isn't a topic I've debated directly before, so I'm forming my views while I debate, and am open to the idea that I may be making a mistake - I don't think that's the case though, as looking at this issue from the point of view of economic output (and how that relates to inflation), does seem to show the flaw in the idea of running a surplus.0 -
The UK has sovereign control over its currency, so public sector moving towards surplus (reducing welfare payments) moves the private sector further into deficit.Moving back towards the topic.......
Would imposing a cap on the amount of social welfare a person can receive work here. Such an initiative kicks in over the water today....
Benefits cap of £500 a week rolls out across Britain
Personally, I think it's a good idea.
That reduces the money that will be available to the UK's money-starved private sector - so that is bad and will have a negative effect on aggregate demand and such (will slow down its recovery).0 -
That is an assertion based on outdated gold standard era-economics, and a lack of understanding of how inflation works with a non-fixed-exchange-rate fiat currency.GCU Flexible Demeanour wrote: »If the euro ends, and we try a stimulus, we'll just quickly debase our new currency.
That's not much of a solution to the crisis.GCU Flexible Demeanour wrote: »To quote Pris in Blade Runner, "Then we're stupid, and we'll die".
Those are, again, totally unbacked assertions. That is trying to use our massive disadvantages as a means of trying to get out of the crisis, which just displays a bad understanding of economics and the current international trade situation.GCU Flexible Demeanour wrote: »Not really. It's identifying what is and isn't relevant to our situation. Demand stimulus irrelevant. Competitiveness relevant.
Ok, well if the level of argument has gotten as productive as this, I'll leave it there.GCU Flexible Demeanour wrote: »You seem to be the only one who hasn't got the point here.0 -
Unbacked assertion, since I've explicitly made clear how my views are not based on theory - but you know this and don't care, because you are more interested in trying to straw-man and denigrate than debate.Farmer Pudsey wrote: »Kyuss you seem to want to have a theroetical argument.
And you know I know that, and that I have explicitly addressed that, and that this point is a political not economic argument - you don't care though, because you want a jumping off point for the usual rhetoric.Farmer Pudsey wrote: »You seem to have an issue with discussing the practical application of it. It is impossible for Ireland to have a money creation policy without the blessing of the EU unless we leave the EU
Unbacked assertions, and straw-manning me with policies from decades ago which I do not support.Farmer Pudsey wrote: »In other threads I have been for quantive easing however you proposal is not quantive easing rather that Governments should gaurantee jobs for all. This is somthing that governments are very poor at. In the late 1970's and early 1980's we tried this in Ireland where Semi-state bodies took on large amounts of staff to expand there o/p it added cost and made these bodies inefficent and we still are paying for it to this day.
You've shown more than enough bad faith in discussion that I'm not going to even get into this line of argument, where you make unbacked claims and then flip the burden of proof around, and make demands for details/information, with no intention of debating, only to being 'eternally unconvinced' so you have a jumping off point for repeatedly denigrating the policies put forward.Farmer Pudsey wrote: »Public works in general equate to construction work. This is no longer the low skilled area that it was 30 years ago. it is also captial intensive with a cost of maybe 100-150K minimum per job per job per year between labour cost and materials costs. If we look at most job creation programs by FAS they usually equate to manual low cost work. People working for local sports orginisations or community based orginisations such as tidy towns etc.
I'm not going to play that game - if you can't think of any useful jobs that can be done, that displays a total (willing) lack of imagination - we're talking about the entirety of Europe here (you always like to pretend I only ever talk of Ireland, when it comes to these policies), so we're not lacking resources, people, or things to be done.
You don't give a toss about any practical issues, your level of dishonest argument in these debates shows your primary interest is denigrating the policy regardless of how applicable it is - likely because of your general anti-government ideological views (no surprise, that ardent anti-government posters, find such a policy offensive - and will do everything to denigrate/deny its effectiveness).Farmer Pudsey wrote: »My issue with what you propose is the practical application in general I am not interested in such answers as technical inovation or public works as I know that the ( or any government) government has not got the ability or skill set to manage such programs0 -
Well, that is how it would work in the current system sure, but there is no reason why a EU-wide 'employer of last resort' program would be implemented like that - it'd be aimed at ensuring local employment for projects (as much as practical), and I don't think anything less would go down well.On the question of public works, even if it was a good idea and projects that would benefit the country could be found (which actually should be easy enough) - they would have to go to tender under EU procurement rules.
Obviously, that means we could have a situation where a bidder from elsewhere in the EU wins the competition and brings in a large fraction of the necessary labour, materials etc.
There'd be some local spending, but not much.
Which means it's very difficult, if not impossible, to devise a meaningful public works programme that generates projects that benefit the country long term, and keep the bulk of the spending here.
The classic example (for me, anyway) is the paving in Dublin. Not 15 miles from the city centre are the Wicklow mountains, but it's cheaper to import Chinese granite paving sets - when they did Henry St a Wicklow company sourced the stone from China!0 -
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KyussBishop wrote: »You're thinking of this in the wrong terms, you need to look at it from the point of view of economic output: When you deflate the economy with surplus causing 95% economic output for a time, you do not 'save' that lost 5% output, and can not spend that money to achieve 105% economic output later.
I'm not talking about output but price level.0 -
Yes but economic output partially determines the price level, especially with regards to spending money the closer you get to 100% economic output, and it is 100% economic output which is the wall you run up against.I'm not talking about output but price level.
You can't 'save up' inflation (i.e. ameliorate inflation from spending in the future) by engaging in deflationary policies in good times, same way as you can't 'save up' lost economic output - you still have an upper-limit to acceptable amounts of inflation, just as you have an upper limit to economic output, which is no different between straight-out money creation, and using a war-chest of surplus-era money.
A government surplus doesn't even necessarily depress the price level that much, since it can be compensated for with private credit/debt, which can become an even greater problem when a crisis hits (as we can see).
If you hit an economic crisis, and your economy is running below 100%, why would it matter if you use a war-chest of surplus-era money or just use money creation, to get back to 100%?
Running a surplus before the crisis just generates more private debt (worsening potential debt-deflation problems), and causes you to have a temporary period where you waste productive potential by running at less than 100% economic output.
Forgoing the surplus, means there would be less private debt, and you can safely boost the economy back to 100% economic output before pushing up the price level becomes an issue (so long as you don't spend the money into overheating areas of the economy).
I don't understand the fixation on price level there, because it is pushing against 100% economic output which is the danger when it comes to inflation/the-price-level - prices at the point you enter crisis doesn't really matter all that much, it just matters that you don't start inflating them by overspending once reaching 100%-output/full-employment.0 -
None of the above. If the euro breaks up, any replacement Irish currency will need to establish credibility. If the Government start papering the walls with the stuff, it won't have credibility.KyussBishop wrote: »That is an assertion based on outdated gold standard era-economics, and a lack of understanding of how inflation works with a non-fixed-exchange-rate fiat currency.
Which is why I'm not proposing it.KyussBishop wrote: »That's not much of a solution to the crisis.
What I'm stating are the well-understood principles of what a small open economy means. There is no effortless way out of the crisis; the only option is achieving competitiveness. Equally, there is no way of sustaining a standard of living based on anything other than what our level of competitiveness supports.KyussBishop wrote: »Those are, again, totally unbacked assertions. That is trying to use our massive disadvantages as a means of trying to get out of the crisis, which just displays a bad understanding of economics and the current international trade situation.0 -
That's not how a fiat currency works - government will demand tax payments with the currency, which will automatically generate demand for it and force it as the primary currency - anyone who then wants to trade with Ireland, has to accept the currency.GCU Flexible Demeanour wrote: »None of the above. If the euro breaks up, any replacement Irish currency will need to establish credibility.
These are assertions without backing. The way out of the crisis, is for us and the rest of the world to restore full economic output - that is the end of the crisis, and your argument is aimed only at helping us get a miniscule greater slice of the far-too-limited economic pie, when we need the whole 'pie' to grow through economic growth worldwide.GCU Flexible Demeanour wrote: »If the Government start papering the walls with the stuff, it won't have credibility.Which is why I'm not proposing it.What I'm stating are the well-understood principles of what a small open economy means. There is no effortless way out of the crisis; the only option is achieving competitiveness. Equally, there is no way of sustaining a standard of living based on anything other than what our level of competitiveness supports.0 -
Anyone who wants to help the Irish economy - send me a PM and I'll arrange for you to give me as much money as you want.
I'll spend it all - and help keep the economy ticking!
What? Why don't *YOU* just spend YOUR money? The money YOU worked for? Well, see, you'd probably just save it, or invest in your future.....and that's not *fair*. Better for everyone if I get your money!0 -
I'm afraid what you've said is meaningless. If you paper the walls with the new currency, it will become valueless.KyussBishop wrote: »That's not how a fiat currency works - government will demand tax payments with the currency, which will automatically generate demand for it and force it as the primary currency - anyone who then wants to trade with Ireland, has to accept the currency.
There's a whole hog of difference between "us and the rest of the world" and "us". You'll recall, so long as we agree that independent Irish action to stimulate demand is suicidal, I'm satisified.KyussBishop wrote: »The way out of the crisis, is for us and the rest of the world to restore full economic output0 -
KyussBishop wrote: »You're thinking of this in the wrong terms, you need to look at it from the point of view of economic output: When you deflate the economy with surplus causing 95% economic output for a time, you do not 'save' that lost 5% output, and can not spend that money to achieve 105% economic output later.
Having "smaller output(gdp)" is not necessarily a bad thing, if we had dis-incentivised housing rather than the opposite, the housing bubble would not have grown as big, the oversupply of houses would not have been as big, and the amount of people attracted into an unsustainable industry would have been less. All of that would be a positive for counter cyclical policy. Your making the same mistake most do by following the simplistic gdp up = good, gdp down = bad manure.0 -
You don't need to sacrifice output in order to solve a housing bubble, you just need to redistribute the labour more efficiently (preferably keeping it all within the private sector, but the private sector may take time to readjust).Having "smaller output(gdp)" is not necessarily a bad thing, if we had dis-incentivised housing rather than the opposite, the housing bubble would not have grown as big, the oversupply of houses would not have been as big, and the amount of people attracted into an unsustainable industry would have been less. All of that would be a positive for counter cyclical policy. Your making the same mistake most do by following the simplistic gdp up = good, gdp down = bad manure.
By all means, stamp-out the housing bubble, but if the private sector doesn't want all of the workers at present, put the workers into a temporary employment program until the private sector recovers enough to want them again (this program actually helps the private sector recover faster, due to the influx of money it provides to the private sector - making it an excellent economic stabilizer, far better than unemployment).
That way, you don't waste any of that labour potential (which would be a permanent irrecoverable waste - a very real physical loss to the economy), and thus don't waste any output.
I agree fully that 'GDP up = good' is flawed, when GDP is artificially increasing through a bubble or other counterproductive way; that is a distribution problem separate to GDP though, which doesn't change the fact that you still want as close to full employment (analogous to full economic output) as possible, just distributed efficiently so that work is being put into useful areas of the economy.0 -
I hear ya... but we are too stupid to spend our own money :PAnyone who wants to help the Irish economy - send me a PM and I'll arrange for you to give me as much money as you want.
I'll spend it all - and help keep the economy ticking!
What? Why don't *YOU* just spend YOUR money? The money YOU worked for? Well, see, you'd probably just save it, or invest in your future.....and that's not *fair*. Better for everyone if I get your money!
Ironicly, there is *some* truth to this. If the government rolled back all the tax increases tomorrow, there would be an immediate national cross party/community effort to drive house prices back to 2006 levels.
But sure it would keep the economy ticking .............
Targetting the most vulnerable in society eh? Nil points for you ;-)Moving back towards the topic.......
Would imposing a cap on the amount of social welfare a person can receive work here. Such an initiative kicks in over the water today....
Benefits cap of £500 a week rolls out across Britain
Personally, I think it's a good idea.
But of course we should look at welfare and pension reform. But how do we get some meaningful action given Joan's attitude?
here's some figures from joanburton.ieTotal social welfare expenditure in 2012 amounted to €20.774 billion, a decrease of 0.9% over 2011. The expenditure in 2012 represented 40.6% of all day-to-day Government expenditure and was equivalent to 15.6% of GNP.
The main areas of expenditure by programme group were Pensions (30.2% of Departmental expenditure), Working Age Income Supports (28.8%), Working Age Employment Supports (4.6%), Illness, Disability and Caring (16.1%), Children (11.5%) and Supplementary Payments (5.7%). Administration of the social welfare system accounted for 3% of total expenditure.0 -
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She's still banging the drum.As part of this, Ms Burton has been instructed to reduce her €20.3 billion budget by €440 million next year, a decrease of more than 2 per cent.
Speaking on RTE Radio earlier, the Minister said the size of the adjustments in each department was matter for Government and, as yet, there had been no detailed discussions on the upcoming Budget.
However, she said, in her view, a €440 million fiscal consolidation would be “very likely to shrink” economic activity in the country.
She said the social welfare spend remained the biggest fiscal stimulus in the economy as it put “money in the tills of business right around the country.”
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I just don't get it her argument.“Because of reductions that have been made, the overall take out of social welfare is coming close to €3.5 million, some of which will be carried over into this year.”
“To take that kind of take out of the spend of the country would actually deflate, particularly in areas like retail, which rely on people spending,” Ms Burton said.
In addition to the proposed 2014 cutbacks, Ms Burton is understood to have been told to plan reductions of 3 per cent in both 2015 and 2016.
Welfare spending is being reduced by €390 million in the 2013 budget, after an initial Government demand for €540 million. It was cut by €475 million in 2012, after an initial demand for €665 million.
http://www.irishtimes.com/business/economy/ireland/cutting-welfare-by-440m-would-deflate-economy-burton-1.14735570
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