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wonderpup

If Poverty Is The Solution- What Is The Problem?

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Trying to get my head around the concept of 'internal devaluation' AKA 'Austerity' as a long term strategy for economic well being.

I get the opening gambit- you degrade your living standards re both wages and social infrastructure in order to both reduce your running costs and wage costs, thus gaining a competitive advantage in the competition for shrinking global demand.

But to me this does not look like a win- you seem to have ended up worse off and living in a degraded social environment.Why is this a good idea?

But maybe there's a plan 'B' here? Let's see- suppose having ended up poor and living in a slum you come up with a cunning plan- you decide to try to raise your wages and spend more on your social infrastructure?

But wait- is this not exactly where you started- are you not now repeating the very error that caused Herr Doctor to prescribe austerity in the first place? After all if you now start paying yourself more and spending more on frivolities like healthcare do you not lose the very competitive advantages you so painfully won by making yourself a poor slum dweller in the first place?

So-in reality- if austerity works then it only works so long as you keep on doing it- and if you stop doing it some other bugger who is doing it will each your lunch.

This being so it seems to me that the fruits of austerity are.....austerity.

Why is this such a great idea?

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I want austerity to break up entrenched long-wave VI positions - including that of the champagne socialists.

To open market up to new competition, at lower prices, and less money going to freeloader non-producers means they're more likely to put a 2nd home on the market... rents may fall, and so on. Others want to keep on the spending party, seemingly no end of debt you can add to the book, for someone else to pay in the future.. party!

Thursday, January 29, 2015
"Austerity" - It's Greek to Me!

Austerity in both the dictionary and in real world economics means cutting government spending so you run a surplus, usually in order to pay down or at least stem ballooning government debts.

However, "austerity" has a different meaning to communists, socialists, leftists, democrats and other varied sorts of the same Marxist political spectrum - "bloody murder."

[..]But was what Greece was going through really "austerity?" Did the government "tighten it's belt," run surpluses, and give a much needed, reality based, come to Jesus meeting, rah-rah pep talk to its citizens about knuckling down, doing their share "so we can get through this and see the dawn of tomorrow?"

Ha! Like all leftists you are nearly guaranteed that what comes out of their mouths is 100% false.

First, the Greek government came nowhere close to running a surplus. Deficits as a percentage of GDP are still laughably in double digits which, for normal countries, could indicate they were engaged in a war.

[..]It is to point out that these people are delusional. They literally have a mental problem and that is the inability to live in the real world. However, unlike other instances where there is a working class or a productive class to bail them out, thereby keeping the delusion up, Greece does not have that. It is at the mercy of the EU. And this will be one of the first (of what I predict to be several more) instances where socialists and leftists will be told "no" and for the first time in their lives face the economic reality that you can't have a society of "professional activists," "teachers," "professors," "government workers," and other parasites because in the end they produce absolutely nothing of real economic value.

And we, my friends, are going to have a front row seat to watch these communists explode with cognitive dissonance.

http://captaincapitalism.blogspot.co.uk/2015/01/austerity-its-greek-to-me.html

Edited by Venger

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My take on it....

Imagine you have a massive state machine, and this machine needs to borrow £+XXX,XXX,XXX,XXX every year to fund it's free bar, private cars/planes, extra homes, rent, expenses, etc etc...

That's not a good use of borrowed money. So when times are hard it has to be cut back.... but if the people in power decide what to cut back, then it isn't the free bar, private cars etc etc. that get the chop. It's road repairs, the plebs wages, plebs benefits and all the services ordinary people use. Why would it be any different?

The free bar is still running, so it won't get any better, well not for the ordinary person.

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People were losing faith in the fiat money system - there were too many people talking about printing presses, and that the debt will be inflated away.

The money monopoly men need to restore trust in the current money system. Pain and austerity is the solution, to the real problem, the financial monetary system.

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Not sure I understand.

The has been no proportional austerity - the UK is running a hefty deficit.

The select few (many actually) on family tax credits are raking it in.

The public sector is stuffed + overpaid.

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On the lowest level, I do see customers coming in, and saying they have had their benefits cut. A young chap with learning difficulties broke down and said he must try and find a job - but that was a while ago, and now he is volunteering in a charity shop. At least he will continue to get his job seekers allowance. There has been halt and slight pull back on benefits, but nothing like what would be needed to roll back the deficit into surplus.

True austerity will lead to riots and blood on the street. This is just taste of what it could be like, I think from what I am experiencing. Another boom in something will come along and save us all! We await the second coming!

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The problem is that the top 0.1% don't produce enough of value to maintain their lifestyles by selling goods and services in a competitive market, so instead they have to steal value from others through government-enforced taxes and rents.

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There has always been a boom and bust cycle because during the bust the bad companies and bankrupt people are cleared out and assets redistributed.

The last 2 cycles the govt have gone all out to ensure that no one lost anything which means the country is left in an inefficient state. They tried to delay any pain felt until (what they thought was the inevitable boom) came along and didnt realise you can't have one without the other.

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On the lowest level, I do see customers coming in, and saying they have had their benefits cut. A young chap with learning difficulties broke down and said he must try and find a job - but that was a while ago, and now he is volunteering in a charity shop. At least he will continue to get his job seekers allowance. There has been halt and slight pull back on benefits, but nothing like what would be needed to roll back the deficit into surplus.

True austerity will lead to riots and blood on the street. This is just taste of what it could be like, I think from what I am experiencing. Another boom in something will come along and save us all! We await the second coming!

That is a policy decision on who will suffer.

Austerity, in the current context, means living beyond the tax take means, but not so much as last year.

Nothing is fixed, but Public sector is still a cancer on the wealth of the nation...Its just too big, too well paid and wont go away..Look at Rotherham...total denial, nobody in trouble, nobody can do anything about the neglect and criminality rife in that particular set.

I beleive that self same selfishishly correct attitude is rife in the sector...and why wouldnt it be, there are no sanctions for people who indulge.

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The problem is the inequality gap is growing wider again......the only thing keeping it at bay is the growing sum of debt the government is accumulating, how long can they continue doing this?.... Remove that support and we would quickly to go back to having poor houses again......the cost of living now out strips more and more paying jobs many people now do.....more people than living wage jobs to support them, so debt is supporting them.

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Internal devaluation is not the same thing as austerity.

Internal devaluation is the same thing as deflation (which is cheered on consistently throughout the comments on this website), and simply refers to a reduction in prices and wages. It doesn't necessarily harm the poor because prices fall along with wages leading to zero net change, though it does increase the costs of imports relative to domestically-produced goods and exports.

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Internal devaluation is not the same thing as austerity.

Internal devaluation is the same thing as deflation (which is cheered on consistently throughout the comments on this website), and simply refers to a reduction in prices and wages. It doesn't necessarily harm the poor because prices fall along with wages leading to zero net change, though it does increase the costs of imports relative to domestically-produced goods and exports.

Wage earners cheer on price deflation, not wage deflation. The two should not be conflated.

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The problem is the inequality gap is growing wider again......

Well don't measure the "inequality gap".

Isn't the poverty measure having at least a weeks holiday and several pairs of shoes and a console?

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Well don't measure the "inequality gap".

Isn't the poverty measure having at least a weeks holiday and several pairs of shoes and a console?

And broadband! I've had no holiday for 2 years! I must be living in poverty then! :P (I don't have a console either).

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Well don't measure the "inequality gap".

Isn't the poverty measure having at least a weeks holiday and several pairs of shoes and a console?

So as I said.....withdraw the props completely and there would be thousands sleeping on the streets......withdraw the non jobs and many thousands more would be......I know of people doing a full time job £20 a day is the payment, who benefits from that? The worker, The taxpayers, The employers or the country and the future prosperity for the people that live and work in it?.....growing indebtedness does not come cheaply. ;)

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So as I said.....withdraw the props completely and there would be thousands sleeping on the streets......withdraw the non jobs and many thousands more would be......I know of people doing a full time job £20 a day is the payment, who benefits from that? The worker, The taxpayers, The employers or the country and the future prosperity for the people that live and work in it?.....growing indebtedness does not come cheaply. ;)

I'm already fed up from having to carry so many of them. What, the landlords wouldn't be forced to lower rents perhaps? Not more likelihood of leading to HPC?

Where more of these 'victims' may have incentive to buy or improve their in other ways, and any money they've saved up against the coming harder austerity in advance, going further in the future?

You want to earn more than £20 a day... ? Go out there and earn it. Society doesn't owe it to you - paid for by others. Carry the non-jobbers? When so many of your victims have a superior spending lifestyle / top up benefits, than many younger capitalists.

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Thousands of not so bright, able, capable, sick, addicted, educated...thousands leave school unable to read, add or write....how come in a so called wealthy prosperous country?

The poor, sick and unemployed create many, many jobs...agencies are paid to pass people from pillar to post, applying for this and that ticking this and that box...when in reality there is no job for most of them......just lots of jobs created finding others jobs that do not exist and if one is created at cost or subsidised by the tax payer it will certainly not pay a living wage.....these systems are there to support the system and the people that work within them, not the people in need looking for a valued and worthwhile job that fits with the talents they do have, be it music, art, compassion or whatever.....you can only clean bogs for so long for £20 a day......stick that on your CV and smoke it. ;)

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Thousands of not so bright, able, capable, sick, addicted, educated...thousands leave school unable to read, add or write....how come in a so called wealthy prosperous country?

So called wealthy? Those of us who create the wealth are carrying too much of the weight of carrying the slackers, and suffered years of VI protection to lock in wealth for over-stretched idiots (really to lock in HPI for the higher/older end)

How come? We problem gets worse by removing incentives to advance oneself - for benefit culture 'someone else will pay for it' being very very generous benefit levels.

Sympathise with waste and inefficiency and glory levels of benefits that slow production, and you only get even more the same. Popping out ever more babies.. 'Want bigger house and more benefits' - sure thing...

http://www.dailymail.co.uk/news/article-2913336/Supersize-benefits-family-claims-50-000-handouts-year-spend-cash-designer-trainers-mopeds.html

They don't even bother creating CVs or looking for work. Smoke that sunshine. :P

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So called wealthy? Those of us who create the wealth are carrying too much of the weight of carrying the slackers, and suffered years of VI protection to lock in wealth for over-stretched idiots (really to lock in HPI for the higher/older end)

How come? We problem gets worse by removing incentives to advance oneself - for benefit culture 'someone else will pay for it' being very very generous benefit levels.

Sympathise with waste and inefficiency and glory levels of benefits that slow production, and you only get even more the same. Popping out ever more babies.. 'Want bigger house and more benefits' - sure thing...

http://www.dailymail.co.uk/news/article-2913336/Supersize-benefits-family-claims-50-000-handouts-year-spend-cash-designer-trainers-mopeds.html

They don't even bother creating CVs or looking for work. Smoke that sunshine. :P

Create the policies get the behaviours......that is one of the reasons why so many are free to avoid paying taxes due, because the system created allows them to do so....so they do....simples. ;)

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But to me this does not look like a win- you seem to have ended up worse off and living in a degraded social environment.Why is this a good idea?

...

This being so it seems to me that the fruits of austerity are.....austerity.

Why is this such a great idea?

Because we are currently living beyond our means, and when economic equlibrium re-establishes, yes, we will be poorer than we thought we were. In reality we are that poor now, we are just putting off paying the bills and living on credit. You can only consume more than you produce for so long. Edited by Steppenpig

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Internal devaluation is not the same thing as austerity.

Internal devaluation is the same thing as deflation (which is cheered on consistently throughout the comments on this website), and simply refers to a reduction in prices and wages. It doesn't necessarily harm the poor because prices fall along with wages leading to zero net change, though it does increase the costs of imports relative to domestically-produced goods and exports

Deflation is where prices shrink relative to wages- the austerity strategy is where wages and living standards fall in order to achieve prosperity.

Exactly how getting poorer in a degraded social environment can be defined as 'prosperity' is less clear.

Perhaps the missing element here is viewpoint- if you are among the elites who benefit from a low wage workforce who are cheap to maintain then yes, for you, austerity works.

The question is why the majority who get poorer and end up with worse social conditions should agree to adopt this strategy.

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Because we are currently living beyond our means, and when economic equlibrium re-establishes, yes, we will be poorer than we thought we were. In reality we are that poor now, we are just putting off paying the bills and living on credit. You can only consume more than you produce for so long.

My point was that austerity is touted a means to achieve greater prosperity in the future- the core idea being that pain today will result in jam tomorrow.

However since the reason for the pain is to achieve competitive advantage by becoming a low wage and poorly served society the only way this advantage can be maintained is to continue to be a low wage poorly served society.

So for everyone but the 1% austerity is a one way ticket- once you start down this path forever will it dominate your destiny. The fate of those who enter a race to the bottom is that they will eventually end up there.

Edited by wonderpup

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