Jump to content
House Price Crash Forum

Selling up

Members
  • Posts

    2,669
  • Joined

  • Last visited

Posts posted by Selling up

  1. The reason the public sector are often criticised for not generating wealth is because they create neither assets nor commodities (with the possible exception of the BBC). They offer services, which are a form of wealth, however many people question the true value of some of the services provided (especially considering the size of the tax burden generated to pay for them).

    Agreed. Having started this thread, I've been lurking silently; and in fact the thread has confirmed what I suspected. Few seem to be able to give a coherent account of what they mean by 'creating wealth', and how this relates to the public and private sectors.

    Injin's view of wealth as a quasi-moral phenomenon dependent on freedom (if a house is built, wealth is created, if a house is built at gunpoint wealth is destroyed) has the virtue of being novel and interesting, but the failing of being frankly bizarre, and somewhat subjective (the distinction between freedom and slavery, for instance, is not always as clear as one might hope. Is 21st century consumer behaviour the epitome of freedom or of slavery?)

  2. The state takes an equivalent amount of wealth as it spends from the private sector.

    For instance, if by 'wealth' you mean 'money' then this is evidently true. But it's equally true of any private sector business. Which takes in money from one group of people (customers) and hands exactly the same amount to another group (employees, suppliers and investors). So the transfer of money does not distinguish between a public and private sector enterprise. Both are redistributing a fixed amount of money. Along the way, either may or may not engage in beneficial activity.

  3. I want to examine something I read here time and again; where it seems to me that even posters I otherwise admire lapse into confusion and inconsistency.

    Again and again I read that the private sector 'produces wealth' and the public sector does not. But nobody ever explains what they mean by this phrase.

    It seems to me that 'Producing wealth' has at least 3 relevant meanings: 'increasing the amount of money', 'making a profit (IE transferring money from one person to another)' and 'producing a beneficial effect'.

    First consider 'producing a beneficial effect', which would include producing goods and services: It is clear that many human activities are can generally be considered to be beneficial: Baking bread, healing the sick and defending borders might all be considered beneficial to the citizens of a country. Other alleged goods and services might be of doubtful benefit: Heroin manufacture and diversity enforcement come in this camp. One can (and some will) quibble over the exact balance of costs and benefits, but it appears self-evident that there is no clear dividing line here between 'private enterprise = beneficial' and 'state-funded = non-beneficial'.

    Next consider 'increasing the amount of money'. Neither private enterprise nor state enterprise does this in general; only two activities do so: banks making loans and governments printing money. As it happens, the making of bank loans in the UK has historically been a private sector activity, but now that the government is a major shareholder in at least one bank, it can be seen that the making of loans can equally be a state-owned operation. Therefore there is obviously no clear dividing line here between 'private enterprise = creates money supply' and 'state-funded activity = does not increase money supply'.

    Most problematically, consider 'making a profit'. This means the transfer of existing money from one person to another. It does not increase the amount of money in circulation (except for the special case of profitable bank loans); it does not imply that beneficial activity is occurring (as witness the fact that I believe heroin manufacture for street use to be a remarkably profitable activity), nor is it a prerequisite for beneficial activity to occur (consider charities and free childcare by grandparents). I concede that private sector activity is more likely to 'make a profit'. But if economic liberals want to praise private enterprise on this ground alone, they will need to explain further why making a profit should be considered a good thing of itself, when it has no necessary connection with the production of beneficial effects.

    (By the way, I think there is a lot to be said for private enterprise, and I think it will often be more efficient than state activity. The quarrel I have is with the peculiar idea that the private sector alone 'produces wealth'.)

  4. I've always thought it's a good idea.

    Some details are problematic though. Will it include a housing component? Because that will make it a pretty bloody big amount!

    (Edit: I just mean, will it be expected to cover housing as well as food etc?)

  5. Many more people live in flats and converted homes that were originally whole houses. The figures do not take account of that atall. So in fact, it is much more expensive to buy a home than those figures suggest as you cannot really compare like with like, when homes have gotten smaller and the density of living is often far greater.

    It is vehicles, central heating, inside bathrooms, foreign holidays and electrical goods which have made us feel better off. Our debts will be much greater though. Now our pensions have been plundered by Brown, the figures may be even more debateable, since the likely pension is much less in actual value per pound.

    You're being inconsistent here. If you (rightly) recognise that like-for-like comparisons are skewed because houses have become smaller, you must also recognise that this is (to some extent) compensated for by the presence of, say, central heating, loft conversions and inside bathrooms. While the reduced size has tended to decrease the quality of the property, said improvements have at the same time tended to increase the quality.

  6. It was always going to be the case though such a shame some of you have been caught up with HPC deflation nonsense. You were placing your bets against the mosts powerful VI's in the world, there was going to be one winner.

    This argument isn't supported by history though.

    The tulip boom? I bet all the 'mosts powerful VI's' were buying bulbs for all they were worth. Didn't stop the bust.

    Same goes for every boom in history.

  7. My 25k gold investment (2007 or so) just reached 50k.

    Now I don't know what to do. Like many goldbugs, I freely admit to not having an exit strategy.

    I bought the stuff because I wanted long term protection against inflation, not because I wanted to speculate in the short term. But now it's becoming tempting to cash it in (or half of it?) in favour of, say, index-linked bonds (edit: I mean certs) of which I've already got a bundle.

    Anyone want to help me make up my mind?

  8. I can't believe how high the rents in London are, looking at rightmove. I must say.. even though I personally don't get it, all around the world people move to these great cities. And will accept a very low material standard of living to live in these great cities, even when they could be living it up in a medium size city.

    There is an energy and a draw to these great cities.

    It's worth considering the role of LHA ("housing benefit"): If the government didn't pay highs rent for many out of taxpayers' pockets, market forces would ensure that rents would fall.

×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.