Voice of Doom Posted August 20, 2018 Share Posted August 20, 2018 It’ll take more than shopping to save our debt-addled economy https://www.theguardian.com/commentisfree/2018/aug/20/shopping-debt-economy-britain-growth-model-consumption-production-inequality This article neatly summarises many arguments people on here have made. The most eyebrowing-raising statistic of all - which you might have seen before - is " figures last month showing that households had become net borrowers for the first time since records began in 1987." We're running out of metaphors to describe this craziness: house of cards, smoke and mirrors, keep the plates spinning, kick the can down the road... Quote Link to comment Share on other sites More sharing options...
eric pebble Posted August 20, 2018 Share Posted August 20, 2018 13 hours ago, Voice of Doom said: It’ll take more than shopping to save our debt-addled economy https://www.theguardian.com/commentisfree/2018/aug/20/shopping-debt-economy-britain-growth-model-consumption-production-inequality This article neatly summarises many arguments people on here have made. The most eyebrowing-raising statistic of all - which you might have seen before - is " figures last month showing that households had become net borrowers for the first time since records began in 1987." We're running out of metaphors to describe this craziness: house of cards, smoke and mirrors, keep the plates spinning, kick the can down the road... Yup --- This country is well and truly F*CKED. F*CKED. Quote Link to comment Share on other sites More sharing options...
nothernsoul Posted August 20, 2018 Share Posted August 20, 2018 A good article. Be frightened if you carry too much debt. But if the excrement hits the fan be worried if you have cash savings too. Quote Link to comment Share on other sites More sharing options...
hurlerontheditch Posted August 20, 2018 Share Posted August 20, 2018 It’s been a subject of water cooler talk for a while. “What do we actually produce of value in this country anymore ?” Selling lattes to each other doesn’t add value Quote Link to comment Share on other sites More sharing options...
Noallegiance Posted August 20, 2018 Share Posted August 20, 2018 I wonder what word will be used to label this new socialist phase. Quote Link to comment Share on other sites More sharing options...
Queasing Posted August 21, 2018 Share Posted August 21, 2018 The article is based on a longer (96 page) essay available here: https://policyexchange.org.uk/publication/brexit-and-the-british-growth-model/ Quote Link to comment Share on other sites More sharing options...
btl_hater Posted August 21, 2018 Share Posted August 21, 2018 Good article. What a short-termist shambles the UK is. Quote Link to comment Share on other sites More sharing options...
Si1 Posted August 21, 2018 Share Posted August 21, 2018 10 hours ago, hurlerontheditch said: Selling lattes to each other doesn’t add value Why not? You'd prefer we supper on widgets and relaxed on wooden crates? Quote Link to comment Share on other sites More sharing options...
zugzwang Posted August 21, 2018 Share Posted August 21, 2018 10 hours ago, Noallegiance said: I wonder what word will be used to label this new socialist phase. Corbynism, of course! https://www.birminghammail.co.uk/news/news-opinion/heres-jeremy-corbyn-still-popular-15037728 Quote Link to comment Share on other sites More sharing options...
hurlerontheditch Posted August 21, 2018 Share Posted August 21, 2018 20 minutes ago, Si1 said: Why not? You'd prefer we supper on widgets and relaxed on wooden crates? What generates the initial value? An economy can’t be fully based on services. Sooner or later you need to actually produce something Quote Link to comment Share on other sites More sharing options...
Slimline Posted August 21, 2018 Share Posted August 21, 2018 Venezuela Quote Link to comment Share on other sites More sharing options...
Riedquat Posted August 21, 2018 Share Posted August 21, 2018 19 minutes ago, hurlerontheditch said: What generates the initial value? An economy can’t be fully based on services. Sooner or later you need to actually produce something Lattes are something produced, just as much as widgets are. The widget manufacturer might be making widgets for the coffee machines. A bigger problem than producing things is being tied to an economic system which relies on producing things for the sake of producing things and thus falls apart if people are satisfied with the things they've already got. Quote Link to comment Share on other sites More sharing options...
cashinmattress Posted August 21, 2018 Share Posted August 21, 2018 12 hours ago, eric pebble said: Yup --- This country is well and truly F*CKED. F*CKED. So are most 'advanced' western economies... especially Canada. The bigger problem is the demographic profiles for the same nations. Nobody is going to be ready for the real crisis starting in about seven years: funding geriatric health care. I have a few older relatives, mostly females, who've got wallets fat with store cards. Granny always said... "don't buys things on tick". Quote Link to comment Share on other sites More sharing options...
Si1 Posted August 21, 2018 Share Posted August 21, 2018 1 hour ago, hurlerontheditch said: What generates the initial value? An economy can’t be fully based on services. Sooner or later you need to actually produce something Well yeah. Or you can exchange services for goods. And besides we do both. Quote Link to comment Share on other sites More sharing options...
Captain Kirk Posted August 21, 2018 Share Posted August 21, 2018 1 hour ago, hurlerontheditch said: What generates the initial value? An economy can’t be fully based on services. Sooner or later you need to actually produce something That's what wealth is isn't it? The ability to drink a cup of coffee every day made from beans that only grow 5000 miles away in a different climate. The path from growing the bean to drinking it as a cappuccino involves a lot of services that all add a little bit of value. Real wealth is limited because resources are limited, but money supply is infinite and so the wealth effect is infinite. I doubt a UK house is worth 120,000 cappuccinos or Apple Inc is worth 500,000,000,000. Quote Link to comment Share on other sites More sharing options...
hurlerontheditch Posted August 21, 2018 Share Posted August 21, 2018 20 minutes ago, Captain Kirk said: That's what wealth is isn't it? The ability to drink a cup of coffee every day made from beans that only grow 5000 miles away in a different climate. The path from growing the bean to drinking it as a cappuccino involves a lot of services that all add a little bit of value. Real wealth is limited because resources are limited, but money supply is infinite and so the wealth effect is infinite. I doubt a UK house is worth 120,000 cappuccinos or Apple Inc is worth 500,000,000,000. what does selling coffee(just an example) do to the productivity figures for the country Quote Link to comment Share on other sites More sharing options...
Captain Kirk Posted August 21, 2018 Share Posted August 21, 2018 4 minutes ago, hurlerontheditch said: what does selling coffee(just an example) do to the productivity figures for the country I believe it's just added to the GDP figure. So you buy a coffee for £2.60 the GDP goes up by £2.60. Each of the service costs involved shouldn't get added because GDP is the value of the final goods and services produced within a country and costs are already accounted for in the £2.60 end price. Oddly, I believe also, if you own a house outright with no mortgage, a rent figure is added to the GDP. The assumption is that you are renting your house from yourself. So UK GDP is quite dependent on the housing bubble. Quote Link to comment Share on other sites More sharing options...
Guest Posted August 21, 2018 Share Posted August 21, 2018 Good article. Thank you for posting. 5 hours ago, Queasing said: The article is based on a longer (96 page) essay available here: https://policyexchange.org.uk/publication/brexit-and-the-british-growth-model/ For an article to be based on a publication called "Brexit and the British Growth Model" - yet not mention the word "Brexit" once, the Guardian editor must really not like any positive Brexit references. Quote Link to comment Share on other sites More sharing options...
zugzwang Posted August 21, 2018 Share Posted August 21, 2018 53 minutes ago, Captain Kirk said: I believe it's just added to the GDP figure. So you buy a coffee for £2.60 the GDP goes up by £2.60. Each of the service costs involved shouldn't get added because GDP is the value of the final goods and services produced within a country and costs are already accounted for in the £2.60 end price. Oddly, I believe also, if you own a house outright with no mortgage, a rent figure is added to the GDP. The assumption is that you are renting your house from yourself. So UK GDP is quite dependent on the housing bubble. AFAIK imputed rent is a factor only in the income measure of GDP not in the expenditure or output measures. Obviously all three figures should be identical. Imputed rent has become the primary means of squaring the income measure of GDP with the other two. On a year by year basis these adjustment are modest but in 2013 the ONS recalculated the index from 1997 resulting in a whopping overnight increase in UK GDP of £158bn! All of which makes a mockery of Tory pretensions re. deficit reduction. Quote Link to comment Share on other sites More sharing options...
Captain Kirk Posted August 21, 2018 Share Posted August 21, 2018 6 hours ago, zugzwang said: AFAIK imputed rent is a factor only in the income measure of GDP not in the expenditure or output measures. Obviously all three figures should be identical. Imputed rent has become the primary means of squaring the income measure of GDP with the other two. On a year by year basis these adjustment are modest but in 2013 the ONS recalculated the index from 1997 resulting in a whopping overnight increase in UK GDP of £158bn! All of which makes a mockery of Tory pretensions re. deficit reduction. Ah yes, I did read about that. I've always been a bit skeptical of GDP, but I guess it is what it is and possibly does represent the wealth of a nation. Some wealth is just temporary I guess since it is simply consumed. Quote Link to comment Share on other sites More sharing options...
Lurkerbelow Posted August 21, 2018 Share Posted August 21, 2018 9 hours ago, Si1 said: Well yeah. Or you can exchange services for goods. And besides we do both. What matters is the rate of "wealth" creation per person per unit of time. Latte makers make very little of it. The person making Airbus aircraft wings makes a lot of it. So sure we can have lots of people making Lattes but don't expect us to be a prosperous country with high living standards as a result. This is why wages have gone nowhere since 2008. Too many makers of "lattes". Quote Link to comment Share on other sites More sharing options...
Captain Kirk Posted August 21, 2018 Share Posted August 21, 2018 12 minutes ago, Lurkerbelow said: What matters is the rate of "wealth" creation per person per unit of time. Latte makers make very little of it. The person making Airbus aircraft wings makes a lot of it. So sure we can have lots of people making Lattes but don't expect us to be a prosperous country with high living standards as a result. This is why wages have gone nowhere since 2008. Too many makers of "lattes". I remember years ago a shoe company that made shoes in the UK had to move production to Asia because they couldn't compete with others that had already moved. Does it change the wealth generated in the UK because the shoes are now made/constructed in Asia? I guess you could argue that they are produced in the UK from a design point of view. Quote Link to comment Share on other sites More sharing options...
Lurkerbelow Posted August 21, 2018 Share Posted August 21, 2018 31 minutes ago, Captain Kirk said: I remember years ago a shoe company that made shoes in the UK had to move production to Asia because they couldn't compete with others that had already moved. Does it change the wealth generated in the UK because the shoes are now made/constructed in Asia? I guess you could argue that they are produced in the UK from a design point of view. They are producing that wealth not us. If we want to have access to that wealth then we have to give them something of value in return. To a significant extent that has involved giving them other wealth creating assets, but what happens when we run out of wealth creating assets to give them in return? It looks to me like we are scraping the bottom of the barrel already. Quote Link to comment Share on other sites More sharing options...
Captain Kirk Posted August 21, 2018 Share Posted August 21, 2018 2 hours ago, Lurkerbelow said: They are producing that wealth not us. If we want to have access to that wealth then we have to give them something of value in return. To a significant extent that has involved giving them other wealth creating assets, but what happens when we run out of wealth creating assets to give them in return? It looks to me like we are scraping the bottom of the barrel already. I'm not saying you are wrong but according to mainstream economics (Alan Greenspan, for example) that is not the case since the sales of shoes still gets added to UK GDP. Labour is just another cost that should be minimised, and what matters is the value added, i.e. sale price - all costs. Quote Link to comment Share on other sites More sharing options...
Si1 Posted August 22, 2018 Share Posted August 22, 2018 6 hours ago, Lurkerbelow said: What matters is the rate of "wealth" creation per person per unit of time. Latte makers make very little of it. The person making Airbus aircraft wings makes a lot of it. So sure we can have lots of people making Lattes but don't expect us to be a prosperous country with high living standards as a result. This is why wages have gone nowhere since 2008. Too many makers of "lattes". Eh? Lattes are just answering a demand that comes from wealth in the first place. It's not like they're made according to govt dictat. Quote Link to comment Share on other sites More sharing options...
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