The rich - poor gap
Discussion
speedy_thrills said:
I think essentially the reason this has ballooned so quickly is that we now starting to fear of the present form of capitalism what we used to fear of communism. That is it could become an economic system that could in effect whimsically take a person’s job, house or saving. Perhaps even condemn ordinary people to a life of meagre wages without chance of career progress, squanders human talent and devalues educational achievement without rational reason.
If not such a monster then what is capitalism now? We have created, by our inaction, a colossal industry based around credit and leverage but often make little of bread-on-the-table value. As soon as that industry coughed our only course of action was to devalue our currency and hence punish those who has been prudent, pushed debt obligations that nationalised high risk private debt and we are still kicking the can further down the road by redistributing debt such that it becomes intergenerational. How can a businesses operate in an environment where it may rapidly be forced to stop important business activities like R&D or new market growth to concentrate on short-term cash flow? How can ordinary people live with a highly cyclical economic system when they have constant needs? Regardless of the present economic situation ordinary people still need jobs, sustenance and shelter. On a societal level it’s just not negotiable to post-enlightenment human morality, that’s why economic affairs are presently of pressing concern to society. The societal and economic impacts are inextricably linked IMO.
I’m not expecting everyone to rush out and join the communist party but it would seem irrational not to expect people not to have some questions and thoughts about if the way our economy is run wouldn’t benefit from better management. The way workforce participants are rewarded is a major and important part of that.
For active share market participants though how predictable though that we are back to staring at near imperceptible shapes in the darkness and listening carefully for a rustling or leaved or breaking of twigs with our fingers over the “sell” button. We still fear this form of capitalism that can wildly swing to destroy previously profitable companies, how can investors be expected to price for that or moral hazard?
Well we start by taking no notice of nonsense like that. If not such a monster then what is capitalism now? We have created, by our inaction, a colossal industry based around credit and leverage but often make little of bread-on-the-table value. As soon as that industry coughed our only course of action was to devalue our currency and hence punish those who has been prudent, pushed debt obligations that nationalised high risk private debt and we are still kicking the can further down the road by redistributing debt such that it becomes intergenerational. How can a businesses operate in an environment where it may rapidly be forced to stop important business activities like R&D or new market growth to concentrate on short-term cash flow? How can ordinary people live with a highly cyclical economic system when they have constant needs? Regardless of the present economic situation ordinary people still need jobs, sustenance and shelter. On a societal level it’s just not negotiable to post-enlightenment human morality, that’s why economic affairs are presently of pressing concern to society. The societal and economic impacts are inextricably linked IMO.
I’m not expecting everyone to rush out and join the communist party but it would seem irrational not to expect people not to have some questions and thoughts about if the way our economy is run wouldn’t benefit from better management. The way workforce participants are rewarded is a major and important part of that.
For active share market participants though how predictable though that we are back to staring at near imperceptible shapes in the darkness and listening carefully for a rustling or leaved or breaking of twigs with our fingers over the “sell” button. We still fear this form of capitalism that can wildly swing to destroy previously profitable companies, how can investors be expected to price for that or moral hazard?
Capitalism now is a system that, whilst not perfect, works. It generates growth, it generates prosperity and when it hits problems it heals itself. In the UK we are seeing good growth levels, falling unemployment and rising standards of living.
The standard of living today in all top rated economies has been down the capitalism, nothing else comes close. You mention communism, really, are you putting that up as a model? Do you have any shining examples to put up of economies where that does or has worked?
Whatever the answer to capitalism's ailments may be, the answer definitely isn't 'join the communist party'. Lenin and Marx didn't give communism a strapline, but if they had it might have been, 'Communism; bringing you badly made goods that you don't want, rotten vegetables and starvation since 1917'. Welcome to the glorious workers' paradise, comrade!
speedy_thrills said:
I think essentially the reason this has ballooned so quickly is that we now starting to fear of the present form of capitalism what we used to fear of communism. That is it could become an economic system that could in effect whimsically take a person’s job, house or saving. Perhaps even condemn ordinary people to a life of meagre wages without chance of career progress, squanders human talent and devalues educational achievement without rational reason.
If not such a monster then what is capitalism now? We have created, by our inaction, a colossal industry based around credit and leverage but often make little of bread-on-the-table value. As soon as that industry coughed our only course of action was to devalue our currency and hence punish those who has been prudent, pushed debt obligations that nationalised high risk private debt and we are still kicking the can further down the road by redistributing debt such that it becomes intergenerational. How can a businesses operate in an environment where it may rapidly be forced to stop important business activities like R&D or new market growth to concentrate on short-term cash flow? How can ordinary people live with a highly cyclical economic system when they have constant needs? Regardless of the present economic situation ordinary people still need jobs, sustenance and shelter. On a societal level it’s just not negotiable to post-enlightenment human morality, that’s why economic affairs are presently of pressing concern to society. The societal and economic impacts are inextricably linked IMO.
I’m not expecting everyone to rush out and join the communist party but it would seem irrational not to expect people not to have some questions and thoughts about if the way our economy is run wouldn’t benefit from better management. The way workforce participants are rewarded is a major and important part of that.
For active share market participants though how predictable though that we are back to staring at near imperceptible shapes in the darkness and listening carefully for a rustling or leaved or breaking of twigs with our fingers over the “sell” button. We still fear this form of capitalism that can wildly swing to destroy previously profitable companies, how can investors be expected to price for that or moral hazard?
'Active share market participants'. LOL. Extraordinary popular delusions and the madness of crowds, published in 1840ish, probably worth a read; you appear to lack any historical context of capitalism, markets or even human nature. A long winded turn of phrase does not give drivel meaning, it just makes it long winded drivel.If not such a monster then what is capitalism now? We have created, by our inaction, a colossal industry based around credit and leverage but often make little of bread-on-the-table value. As soon as that industry coughed our only course of action was to devalue our currency and hence punish those who has been prudent, pushed debt obligations that nationalised high risk private debt and we are still kicking the can further down the road by redistributing debt such that it becomes intergenerational. How can a businesses operate in an environment where it may rapidly be forced to stop important business activities like R&D or new market growth to concentrate on short-term cash flow? How can ordinary people live with a highly cyclical economic system when they have constant needs? Regardless of the present economic situation ordinary people still need jobs, sustenance and shelter. On a societal level it’s just not negotiable to post-enlightenment human morality, that’s why economic affairs are presently of pressing concern to society. The societal and economic impacts are inextricably linked IMO.
I’m not expecting everyone to rush out and join the communist party but it would seem irrational not to expect people not to have some questions and thoughts about if the way our economy is run wouldn’t benefit from better management. The way workforce participants are rewarded is a major and important part of that.
For active share market participants though how predictable though that we are back to staring at near imperceptible shapes in the darkness and listening carefully for a rustling or leaved or breaking of twigs with our fingers over the “sell” button. We still fear this form of capitalism that can wildly swing to destroy previously profitable companies, how can investors be expected to price for that or moral hazard?
Edited by anonymous-user on Wednesday 30th April 06:07
Siscar said:
The standard of living today in all top rated economies has been down the capitalism, nothing else comes close.
But within developed countries that argument doesn’t hold as well. Some of the countries that outrank the UK on GDP (PPP) are clearly not more capitalists (Norway, Sweden, Denmark, Finland etc.) and others like Singapore and Germany have economies heavily reliant on central planning (Stalin would approve no doubt!).I think it’s possible to have a more nuanced discussion about the way countries and plan and regulate their economies.
greygoose said:
I am not sure a pure capitalist system exists either, otherwise the banks would have been allowed to go bust rather than being propped up.
Well no one does really, it would be anarchy. I mean the closest you could get would probably be some African countries where there isn't an effective government in place to impose regulation, planning, taxation etc. but clearly they are not outperformers.fblm said:
'Active share market participants'. LOL. Extraordinary popular delusions and the madness of crowds, published in 1840ish, probably worth a read
I was going to say "investors" but actually quite a lot of investment is passive.speedy_thrills said:
Siscar said:
The standard of living today in all top rated economies has been down the capitalism, nothing else comes close.
But within developed countries that argument doesn’t hold as well. Some of the countries that outrank the UK on GDP (PPP) are clearly not more capitalists (Norway, Sweden, Denmark, Finland etc.) and others like Singapore and Germany have economies heavily reliant on central planning (Stalin would approve no doubt!)..
Siscar said:
speedy_thrills said:
Siscar said:
The standard of living today in all top rated economies has been down the capitalism, nothing else comes close.
But within developed countries that argument doesn’t hold as well. Some of the countries that outrank the UK on GDP (PPP) are clearly not more capitalists (Norway, Sweden, Denmark, Finland etc.) and others like Singapore and Germany have economies heavily reliant on central planning (Stalin would approve no doubt!)..
greygoose said:
No, he is saying that they use central planning. There is a huge range between Communism and pure capitalism but there seems to be a tendency in these threads for the extremes to be picked out.
Germany certainly does not use central planning, the govt does not decree how many RHD M3s to build. greygoose said:
Siscar said:
speedy_thrills said:
Siscar said:
The standard of living today in all top rated economies has been down the capitalism, nothing else comefs close.
But within developed countries that argument doesn’t hold as well. Some of the countries that outrank the UK on GDP (PPP) are clearly not more capitalists (Norway, Sweden, Denmark, Finland etc.) and others like Singapore and Germany have economies heavily reliant on central planning (Stalin would approve no doubt!)..
Edited by turbobloke on Wednesday 30th April 08:46
Dr Jekyll said:
greygoose said:
No, he is saying that they use central planning. There is a huge range between Communism and pure capitalism but there seems to be a tendency in these threads for the extremes to be picked out.
Germany certainly does not use central planning, the govt does not decree how many RHD M3s to build. They have, for some time, had a better IMHO, longer term system of business banking for SMEs (Mittelstand). The Germans are also much more insular and protective of their sovereign businesses and not nearly as welcoming to all forms of inward investment, takeovers especially. This latter point may be argued to hold them back, but nonetheless, Germany does seem to be on the socialist side of capitalism and yet also reasonably successful by most measures.
As for Speedythrill's point about responsible workers and savers being at the mercy of confiscation, domestic default is one of the oldest tricks in the book. See Rogoff and Reinhart.
Edited by Digga on Wednesday 30th April 08:56
Digga said:
The relationship between governments, banks, businesses, unions and workers is quite different to the UK though. They have, somehow, managed (and in my mind this is best illustrated by the huge disparity of success our respective motor industries enjoyed since the 1970's) to engage the workforce and unions to form better co-operation with management.
They have, for some time, had a better IMHO, longer term system of business banking for SMEs (Mittelstand). The Germans are also much more insular and protective of their sovereign businesses and not nearly as welcoming to all forms of inward investment, takeovers especially. This latter point may be argued to hold them back, but nonetheless, Germany does seem to be on the socialist side of capitalism and yet also reasonably successful by most measures.
As for Speedythrill's point about responsible workers and savers being at the mercy of confiscation, domestic default is one of the oldest tricks in the book. See Rogoff and Reinhart.
A good post though I suspect ref the car industry the difference has been more about the grass roots work and quality ethic of the workforce rather than anything the respective govts have influenced. We are also at very different points in what may prove to be drawn out cycles (British car industry boomed in the 40s to 60s and declined 70s to 90s, arguably taking off again perhaps?). It will be interesting to see how the German car industry is doing in another 20-30yrs. Though the advent of mass scale globalisation probably changes the complexion again making direct comparison difficult.They have, for some time, had a better IMHO, longer term system of business banking for SMEs (Mittelstand). The Germans are also much more insular and protective of their sovereign businesses and not nearly as welcoming to all forms of inward investment, takeovers especially. This latter point may be argued to hold them back, but nonetheless, Germany does seem to be on the socialist side of capitalism and yet also reasonably successful by most measures.
As for Speedythrill's point about responsible workers and savers being at the mercy of confiscation, domestic default is one of the oldest tricks in the book. See Rogoff and Reinhart.
On their finance industry, as you note they have very much protected their own interests across the board better than we have. It does feel like we've been the blithering idiots where the EU is concerned and opened ourselves fully up to takeovers in the name of the EU whereas others in Europe, not just the Germans, have taken a much more cautious approach.
It'd be interesting to see a like for like comparison of govt expenditure between the two countries. Have just looked up the GINI indices and whilst the different ones give different values (e.g. UN has UK at position 64 (7.2%) v Germany at position 122 (4.3%) and the World Bank has 113 (34%) v 141 (28.3%) respectively) which indicates how subjective these comparisons are, it does look clear that the gap between "rich" and "poor" is greater here than Germany.
Mind you, there is also no "ideal" level mentioned either. Both figures seem to put both countries in the fat of a bell curve of the countries rated so who's to say what is "right" and what is "wrong"?
Murph7355 said:
A good post though I suspect ref the car industry the difference has been more about the grass roots work and quality ethic of the workforce
... which is closely linked to a long-standing culture of tradespeople having proper standing in society and being well organised including an apprentice system that is deeply ingrained in corporate culture, versus one where the concept of 'class' (with the upper classes living off the fruits of capital accumulated over generations, and typically holding key positions in the banking/financial services industry, and labour - no matter how skilled - being seen as more or less expendable) still alive and well below the surface. 900T-R said:
Murph7355 said:
A good post though I suspect ref the car industry the difference has been more about the grass roots work and quality ethic of the workforce
... which is closely linked to a long-standing culture of tradespeople having proper standing in society and being well organised including an apprentice system that is deeply ingrained in corporate culture, versus one where the concept of 'class' (with the upper classes living off the fruits of capital accumulated over generations, and typically holding key positions in the banking/financial services industry, and labour - no matter how skilled - being seen as more or less expendable) still alive and well below the surface. Also, and I [i[should[/i] have added and was remiss in failing to, that German management also played a lot more positive and pro-active role than many of their UK counterparts. I met some years back with the former power train manager at Longbridge and he went to great lengths to point out the errors on both sides.
pork911 said:
Piketty is a b
k, no doubt and "French economist" is an oxymoron, but I still feel there is a huge benefit to not to net savers of all levels, but disproportionately to those in a position to exploit the ongoing equity rally - which tends to be the wealthier, higher net-worth element of population.We then have ultra-low base rates, but access to very-low cost money is, once more, restricted to those who have money in the first place. For the rest, mortgage and loan rates are not fantastically different to normal, pre-crunch levels.
pork911 said:
What's your point?Or are you just a human news aggregator?
iphonedyou said:
I did it again. I read the comments.
Why do I do that? Why do I actively seek out the frothing dross posted by jealous, grasping, gimme-gimme types? I'm positive the stress has shortened my life expectancy.
I've not looked at the Guardian or BBC websites for a long, long time for exactly this reason.Why do I do that? Why do I actively seek out the frothing dross posted by jealous, grasping, gimme-gimme types? I'm positive the stress has shortened my life expectancy.
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