Paul Krugman Attacks Britain's Austerity Drive As 'deeply Destructive'

[bmf]

This is not really true, its only true in the sense that you/we have accepted the money men and the monetary system they have imposed on us.

Yes there are trade deficits among some nations amounting to a couple percent of gdp. A gap which could easily be bridged with western levels of productivity, by a small percentage of the currently unemployed or miss-allocated workers being put to productive use.

Outside of that future consumption in any nation of goods and services is not in reality constrained at all.

So unless we have somehow created worm-holes in time and space and are shipping goods/services from the future to now, in exactly what way are future individuals western societies constrained to reduce their consumption and quality of life? In what way except in an absurd monetary way that we have self-imposed on ourselves (or at least self-accepted) are future generations constrained?

The limit on what we consume should be decided by what productivity enables us to produce, by the earths limits, and by what we collectively decide on a rational basis should be the limit, not by an idiotic monetary system. We are not medieval self-flagellating monks that must punish ourselves for the sake of it.

Have we not been pulling demand forward from the future in four ways:

1. deficit spending by importing more than we can produce - we now have to perform a soft default and will be unable to continue to live beyond our means whilst the Chinese work their backsides off

2. spending pensions - people over 50 do not have enough savings. They have boosted the economy by living as if they will never have to retire. They will get too old to work and will require looking after. This will have to be paid for from future income of the now young. The opportunity cost of this will impact their quality of life. They should have been saving and investing at home and abroad so they can recoup the benefit of this instead of forcing the next generation to make up the difference.

3. Demographics - the ratio of old to young is changing. We will be, per person, less productive.

4. Selling of and dereliction of wealth generation in favour of short-term behaviour eg stoking house prices instead of making things. I also believe we are in an educational death spiral that will be very hard to pull out of.

These will mean less productivity.

Edited June 1, 2012 by bmf

[alexw]

The endgame is a vastly smaller state because as in all socialist economies the amount of money taken by the state from its citizens has now killed virtually all genuine wealth creation in the economy.

Sorry but that's total BS.

If that were the case then communist USSR would have had zero wealth creation and have everyone at Ethiopian standards of living. Clearly that did not happen.

You have a habit of coming out with idiotic and absurd statements arising from your dogmatic beliefs, you should widen your thought processes and your world view, you need to grow out of it.

[Bloo Loo]

That's not how it works.

If the economy is 90% gov, then of the total system (90% gov + 10% private), 90% is taken in taxes and spent by the gov.

Ok, so you spend £90 on Government.

The economy has earned £10, taxed at 90% so £9.

the Government sector is a tail eating snake, so its earnings are irrelevent, except they add to the deficit every month and eventually ALL the government spend is interest.

[Bloo Loo]

Sorry but that's total BS.

If that were the case then communist USSR would have had zero wealth creation and have everyone at Ethiopian standards of living. Clearly that did not happen.

You have a habit of coming out with idiotic and absurd statements arising from your dogmatic beliefs, you should widen your thought processes and your world view, you need to grow out of it.

USSR went bust.

[alexw]

Have we not been pulling demand forward from the future in four ways:

1. deficit spending by importing more than we can produce - we now have to perform a soft default and will be unable to continue to live beyond our means whilst the Chinese work their backsides off

2. spending pensions - people over 50 do not have enough savings. They have boosted the economy by living as if they will never have to retire. They will get too old to work and will require looking after. This will have to be paid for from future income of the now young. The opportunity cost of this will impact their quality of life. They should have been saving and investing at home and abroad so they can recoup the benefit of this instead of forcing the next generation to make up the difference.

3. Demographics - the ratio of old to young is changing. We will be, per person, less productive.

4. Selling of and dereliction of wealth generation in favour of short-term behaviour eg stoking house prices instead of making things. I also believe we are in an educational death spiral that will be very hard to pull out of.

These will mean less productivity.

1. yes i've said so.

2. No. When someone saves they do not 'save' goods for the future, no warehouse is built containing future goods. This is a monetary phenomenon only and should not impact the total level of consumption. In a sane monetary system the real world economy should not grow or shrink depending on monetary phenomenon but on real world constraints. Money should ebb and flow depending on the real economy and not the other way around.

3. And productivity is increasing massively. We are also increasing retirement ages. If anything these will allow even more production of goods and services in the future on a per person basis rather than less than now.

4. These are problems but can be reversed pretty sharpish if we put our minds to it. Though I don't think the educational death spiral is at all as great as the MSM says. Its mostly a propaganda tool to allow replacement of UK workers with cheaper and compliant foreign labour.

[Game_Over]

That's not how it works.

If the economy is 90% gov, then of the total system (90% gov + 10% private), 90% is taken in taxes and spent by the gov.

If you take 90% of what people produce - they just don't bother.

In fact if you take more than 50% of what people produce and give it to others who do nothing, people just don't bother

this is where we are now.

[Game_Over]

Sorry but that's total BS.

If that were the case then communist USSR would have had zero wealth creation and have everyone at Ethiopian standards of living. Clearly that did not happen.

You have a habit of coming out with idiotic and absurd statements arising from your dogmatic beliefs, you should widen your thought processes and your world view, you need to grow out of it.

Err...... it pretty much did happen.

And if you think it didn't, why did they have to build a wall and shoot people to stop them trying to escape?

I would also like to add that I am not dogmatic at all. I started off a Socialist, then after reading extensively about the history of the 19th and 20th Centuries I discovered that Socialism just doesn't work.

I would describe myself as a pragmatic realist.

You are the one who comes across as dogmatic - unless you are going to claim that you started life as a Conservative.

Edited June 1, 2012 by Game_Over

[alexw]

Ok, so you spend £90 on Government.

The economy has earned £10, taxed at 90% so £9.

the Government sector is a tail eating snake, so its earnings are irrelevent, except they add to the deficit every month and eventually ALL the government spend is interest.

Actually my previous post was incorrect.

Its not possible for a government to tax at 100% otherwise it would be like giving you £100 then immediately taking that £100 away and saying what you have left is what you have to live on for the rest of the week.

At some point you'd have to swap from privately created money to a centrally created money system as the size of the state vs private sector increases. That does appear to be how the USSR worked.

http://faculty.vassar.edu/kennett/Lieberman.htm

"Money in the Soviet Union

In developed market economies, the fundamental types of money are cash (coin and currency) and the private checks of households and businesses. In the Soviet Union (as in most other STEs), there were few private checking accounts. Nevertheless, there was something like a checking account in the enterprise sector, and that was "bookkeeping money" on account with Gosbank.

Indeed, these bookkeeping accounts were the only type of money used between one enterprise and another. Whenever one enterprise shipped its output to another enterprise which used it as input, the Gosbank account of the "output-enterprise" would be credited, while that of the "input-enterprise" would be debited. In this way, goods made their way through the production process without occasioning any exchange of cash.

Besides this "bookkeeping money," there was cash, which was used for only two purposes. First, enterprises paid their workers with cash provided by Gosbank (the account of the enterprise would be debited). Second, households purchased goods with cash, which was then turned over to Gosbank (the account of the store would be credited).

The participation of Gosbank in virtually every financial transaction not only provided the financial clearing operations for these transactions to take place, but also enabled Gosbank to closely monitor adherence to the production plan. This monitoring function of Gosbank was known as control by the ruble."

[bmf]

1. yes i've said so.

2. No. When someone saves they do not 'save' goods for the future, no warehouse is built containing future goods. This is a monetary phenomenon only and should not impact the total level of consumption. In a sane monetary system the real world economy should not grow or shrink depending on monetary phenomenon but on real world constraints. Money should ebb and flow depending on the real economy and not the other way around.

3. And productivity is increasing massively. We are also increasing retirement ages. If anything these will allow even more production of goods and services in the future on a per person basis rather than less than now.

4. These are problems but can be reversed pretty sharpish if we put our minds to it. Though I don't think the educational death spiral is at all as great as the MSM says. Its mostly a propaganda tool to allow replacement of UK workers with cheaper and compliant foreign labour.

I'd agree all these problems can be overcome. I look forward to observing this triumph from another country over the coming years.

[Game_Over]

So apparently the Soviet Union didn't collapse

and they didn't have armies of secret police who murdered millions of people in order to prevent them opposing or escaping what was apparently paradise on Earth.

[Game_Over]

I'd agree all these problems can be overcome. I look forward to observing this triumph from another country over the coming years.

Funny how everyone always seems to want to escape from these model societies

[alexw]

Err...... it pretty much did happen.

And if you think it didn't, why did they have to build a wall and shoot people to stop them trying to escape?

I would also like to add that I am not dogmatic at all. I started off a Socialist, then after reading extensively about the history of the 19th and 20th Centuries I discovered that Socialism just doesn't work.

I would describe myself as a pragmatic realist.

You are the one who comes across as dogmatic - unless you are going to claim that you started life as a Conservative.

Again no it did not! What an absurd statement. I have/had relatives that lived there and even visited once so I 100% know what the living standards were like. I am in no way shape or form a supporter of that former regime but no way were they Ethiopian.

From wikipedia and the cia factbook link therein.

http://www.umsl.edu/services/govdocs/wofact90/world12.txt

GDP Per Capita 1989 ($) USSR 9,211 USA 21,082 Ethipoia 130

Given the above data a statement such as

"The endgame is a vastly smaller state because as in all socialist economies the amount of money taken by the state from its citizens has now killed virtually all genuine wealth creation in the economy."

Is proven to be absurd. I am not saying communism is great or a 100% government run economy is desirable or wanted in the UK, but your posting idiotic dogmatic posts, based on your preconceived beliefs, and not on reality. Think more, post less.

Edited June 1, 2012 by alexw

[Jack's Creation]

Sorry but that's total BS.

If that were the case then communist USSR would have had zero wealth creation and have everyone at Ethiopian standards of living. Clearly that did not happen.

You have a habit of coming out with idiotic and absurd statements arising from your dogmatic beliefs, you should widen your thought processes and your world view, you need to grow out of it.

If Communist USSR had had the same level of natural resources as Ethiopia (or lack of them), then they would have had an even worse standard of living than the Ethiopians.

Some 7 million people died in the 30's famine.

They were so desperate for foreign currency they forbid the peasants from eating their own food and shot children in the fields for picking up left-over grain.

Ever heard of "The law of Spikelets"

law of Spikelets

[alexw]

If Communist USSR had had the same level of natural resources as Ethiopia (or lack of them), then they would have had an even worse standard of living than the Ethiopians.

Some 7 million people died in the 30's famine.

They were so desperate for foreign currency they forbid the peasants from eating their own food and shot children in the fields for picking up left-over grain.

Ever heard of "The law of Spikelets"

law of Spikelets

Ok. This is getting way of tangent my argument was with game over who was saying that 'socialism' in his own words "has now killed virtually all genuine wealth creation in the economy."

Which is just BS. If we had no wealth creation we would be all living in mud huts starving to death. I was using the USSR as an illustrative point.

[Game_Over]

Ok. This is getting way of tangent my argument was with game over who was saying that 'socialism' in his own words "has now killed virtually all genuine wealth creation in the economy."

Which is just BS. If we had no wealth creation we would be all living in mud huts starving to death. I was using the USSR as an illustrative point.

You were the one who chose Ethiopia as an example and I completely ignored this comparison as it is absurd.

We now have a situation in the UK where hardly anyone is engaged in genuine wealth creation and the gap is being filled by the Government adding 100 Billion+ every year to the national debt just to prevent total economic collapse.

Taking money off people who actually add to the wealth in an economy in order to pay literally millions of people to do nothing can only end one way.

And if you think the Soviet Union is a model for our economic future then you are bat sh*t crazy

[Game_Over]

If Communist USSR had had the same level of natural resources as Ethiopia (or lack of them), then they would have had an even worse standard of living than the Ethiopians.

Some 7 million people died in the 30's famine.

They were so desperate for foreign currency they forbid the peasants from eating their own food and shot children in the fields for picking up left-over grain.

Ever heard of "The law of Spikelets"

law of Spikelets

I never lived in Russia but as I am able to read I know that the Soviet Union only survived by murdering tens of millions of it's own citizens.

Apparently the fact that they weren't living in mud huts?????

or starving????????

means that Socialism is now the solution to all our problems.

[alexw]

You were the one who chose Ethiopia as an example and I completely ignored this comparison as it is absurd.

We now have a situation in the UK where hardly anyone is engaged in genuine wealth creation and the gap is being filled by the Government adding 100 Billion+ every year to the national debt just to prevent total economic collapse.

Taking money off people who actually add to the wealth in an economy in order to pay literally millions of people to do nothing can only end one way.

And if you think the Soviet Union is a model for our economic future then you are bat sh*t crazy

No it is not. You said and are saying the UK had/has close to zero wealth creation, that MEANS Ethiopian type living conditions.

Do you get that? Do you understand that?

Zero wealth means you and I are living in mud hutsright now, starving to death. Heck zero wealth means we don't even have mud huts because mud huts ARE wealth.

And yet again i have to state, I am using the former USSR as an illustrative point.

[Game_Over]

That's the bloody problem with this country

It is full of people who have managed to escape from failed states and they then try and recreate the thing they have fled from here.

I have a family friend who was forced to flee Iran when the Shah was deposed and the other day he actually said to me

'what we need in this country is a revolution'

The irony of this statement was completely lost on him.

[alexw]

I never lived in Russia but as I am able to read I know that the Soviet Union only survived by murdering tens of millions of it's own citizens.

Apparently the fact that they weren't living in mud huts?????

or starving????????

means that Socialism is now the solution to all our problems.

Since you don't appear to know what illustrative means -

ThesaurusLegend: Synonyms Related Words Antonyms

Adj. 1. illustrative - clarifying by use of examples

exemplifying

informatory, informative - providing or conveying information

2. illustrative - serving to demonstrate

demonstrative

instructive, informative - serving to instruct or enlighten or inform

[durhamborn]

Ok. This is getting way of tangent my argument was with game over who was saying that 'socialism' in his own words "has now killed virtually all genuine wealth creation in the economy."

Which is just BS. If we had no wealth creation we would be all living in mud huts starving to death. I was using the USSR as an illustrative point.

We do have wealth creation,but it is now smaller than state wealth destruction,or better state wealth consumption.The state through spending rather than investing,running a huge client state and such like is destroying capital,malinvesting capital,and creating an enviroment not to invest,not to work,not to create the formation of capital.

We would not be living in mud huts starving to death YET,because we are pulling consumption forward though deficit spending.The fact almost all this is spent on consumption by millions who create no wealth will indeed end in no wealth creation and collapse,as all socialist regimes always do.

Socialism has indeed killed off,or more crowded out wealth creation in the UK,or at the very least turned it negative.We are consuming chinese wealth creation now,not ours as the state spends all that for us.

[Game_Over]

No it is not. You said and are saying the UK had/has close to zero wealth creation, that MEANS Ethiopian type living conditions.

Do you get that? Do you understand that?

Zero wealth means you and I are living in mud hutsright now, starving to death. Heck zero wealth means we don't even have mud huts because mud huts ARE wealth.

And yet again i have to state, I am using the former USSR as an illustrative point.

How many houses were built in the last 10 years?

And how many millions of additional people entered the country?

So we are living in houses that were built when this country actually had a wealth creating sector.

And you are the one saying zero wealth creation - all that needs to happen is for wealth destroying activity to overtake wealth creating activity and the direction of travel is inevitably economic stagnation and ultimately economic failure.

[KingBingo]

That's not how it works.

If the economy is 90% gov, then of the total system (90% gov + 10% private), 90% is taken in taxes and spent by the gov.

wtf??

You do realise, you communist moron, that the state can create no wealth only destroy it. In your bat shit crazy feces eating madness you have somehow come to the conclusion that a country that is 90% state is remotely viable. It would subject its citizens to the most horrendous poverty and go bankrupt. Just like the murderous oppressive hell hole that was your beloved soviet Russia.

[KingBingo]

No it is not. You said and are saying the UK had/has close to zero wealth creation, that MEANS Ethiopian type living conditions.

Do you get that? Do you understand that?

Zero wealth means you and I are living in mud hutsright now, starving to death. Heck zero wealth means we don't even have mud huts because mud huts ARE wealth.

And yet again i have to state, I am using the former USSR as an illustrative point.

Do you understand what wealth creation means? Clearly not. He did not say all previously accumulated wealth had been destroyed, but was pointing out that there has been bugger all productivity increase since Labour came to power, thus no new wealth creation.

[alexw]

wtf??

You do realise, you communist moron, that the state can create no wealth only destroy it. In your bat shit crazy feces eating madness you have somehow come to the conclusion that a country that is 90% state is remotely viable. It would subject its citizens to the most horrendous poverty and go bankrupt. Just like the murderous oppressive hell hole that was your beloved soviet Russia.

What utter utter moronic nutjob garbage.

So in communist russia there were no homes, no food, no clothes, no electricity, no cars, no nothing? Because thats what you are saying

And I am no supporter of communist russia it was a fairly poor, despotic regime, that killed millions of its own citizens. Nor do I want a 90% state nation.

You appear not to know what the word illustrative means either. To help you along -

Legend: Synonyms Related Words Antonyms

Adj. 1. illustrative - clarifying by use of examples

exemplifying

informatory, informative - providing or conveying information

2. illustrative - serving to demonstrate

demonstrative

instructive, informative - serving to instruct or enlighten or inform

[alexw]

Do you understand what wealth creation means? Clearly not. He did not say all previously accumulated wealth had been destroyed, but was pointing out that there has been bugger all productivity increase since Labour came to power, thus no new wealth creation.

********.

Productivity is NOT the same as wealth creation.

Wealth is the stuff, the goods and services we consume. Productivity is an increase in the rate of wealth creation. You clearly have no idea of what wealth creation is.

"Adam Smith, in his seminal work The Wealth of Nations, described wealth as "the annual produce of the land and labour of the society". This "produce" is, at its simplest, that which satisfies human needs and wants of utility. In popular usage, wealth can be described as an abundance of items of economic value, or the state of controlling or possessing such items, usually in the form of money, real estate and personal property."

If there had been no new wealth created no new houses would have been built since labour came to power, no food would have been grown, no electricity generated, no patients treated in hospital, no criminals prosecuted, no internet access available over the past decade, no clothes in shops, no petrol in petrol stations, etc ,etc. ALL of that is wealth!