Oct08
The Economy, How Bad Is It?
The economy is so bad:
That I got a pre-declined credit card in the mail.
I ordered a burger at McDonalds and the kid behind the counter asked, “Can you afford fries with that?”
That CEO’s are now playing miniature golf.
If the bank returns your check marked “Insufficient Funds,” you call them and ask if they meant you or them.
Hot Wheels and Matchbox stocks are trading higher than GM.
McDonalds is selling the 1/4 ouncer.
Parents in Beverly Hills have fired their nannies and learnt their children’s names.
T truckload of Americans was caught sneaking into Mexico.
Dick Cheney took his stockbroker hunting.
The Mafia is laying off judges.
Exxon-Mobil laid off 25 Congressmen.
And finally
Congress says they are looking into this Bernard Madoff scandal.
Oh, great!! The guy who made $50 Billion disappear is being investigated by the people who made $1.5 Trillion disappear!
In the spirit of “we all need a laugh”, this list of jokes is doing the rounds in the USA:
The economy is so bad that:
- I got a pre-declined credit card in the mail.
- I ordered a burger at McDonalds and the kid behind the counter asked, “Can you afford fries with that?”
- CEO’s are now playing miniature golf.
- If the bank returns your check marked “Insufficient Funds,” you call them and ask if they meant you or them.
- Hot Wheels and Matchbox stocks are trading higher than GM.
- McDonalds is selling the 1/4 ouncer.
- Parents in Beverly Hills have fired their nannies and learnt their children’s names.
- A truckload of Americans was caught sneaking into Mexico.
- Dick Cheney took his stockbroker hunting.
- The Mafia is laying off judges.
- Exxon-Mobil laid off 25 Congressmen.
And finally one I don’t agree with, but in the interests of completeness:
- Congress says they are looking into this Bernard Madoff scandal.
- Oh, great!! The guy who made $50 Billion disappear is being investigated by the people who made $1.5 Trillion disappear!
“Boom boom”, as they used to say in Vaudeville.
ak, good morning
I’ve done some readings with regards to Alan Gresley’s information on “conspiracy theories”. I am still examining evidence pointing to an overall agenda behind this relentless global societal breakdown which is driving people against people, nations against nations, and regions against regions. I may not be able to come to any conclusion but the global community is undoubtedly facing too many divisive issues exploding all the same time that there is little chance of resolving any of them. Whether these issues are deliberately created or only evolved naturally, we will not be able to avoid the consequences.
Lyonwiss@46
“If only we have good economic theories, governments cannot then do whatever they like (without justification). That’s why it is important not “to let a good crisis go waste”. We must grasp the (once in a century) opportunity to build better economic theories for the sake of the economy, democracy and the planet. A journey of a thousand miles begins with a single step.”
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There is little doubt in my mind that Steve Keen is one of the most “scientific” of economists at all time. Is his work being funded in accordance with its significance?
GSM@35
“Folks, this is a time honored formula for re-election, esepecially for Socialist Govts. Borrow from the future NOW to fund consumption/wealth distribution NOW, then present the astronomical invoice to you AFTER the election to be paid down many years ahead ,well AFTER the current crop of political parasites has moved on from having their fill at the taxpayer’s expense. We cannot avoid the parasites, but we can avoid the debts”
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I think our children and their children will be paying the compound interest of those debts for a long time.
Steve Keen@31
“Flying pigs Philip! -:) Even more unlikely than Obama winning the Peace Prize–or at least I would have said that two days ago.”
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Just to say thanks, for the generous handouts.
Could someone please explain why “crowding out” from excessive taxation isn’t a problem?
- Ernie.
Thanks Steve,
National accounts are mathematical identities, which have to be true or “add up” (e.g. ABS National Accounts statistics). If they don’t add up, it is due to error, arithmetical or conceptual. The identities have to hold for all economic theories, otherwise they are wrong for failing basic mathematics.
Any economic theory must satisfy those basic identities (e.g. ABS National Accounts) and have a causal theory of economic processes. Your theory is one of endogenous credit creation, as a principal explanation of the economic cycle, which is a great start. But government action (arbitrary fiscal and monetary manipulations) can upset (at least temporarily) your predictions when compared to outcomes as measured against ex-post empirical data.
Your theory is causal, has economic processes developing over time and can make predictions which can be checked against data. It satisfies my basic criteria for a scientific theory. Congratulation! However, it is not yet a successful scientific theory, because it has not yet explained the major features of empirical economic data which are relevant to your theory.
Most economic theories are just rhetoric: all talk and no action to explain empirical data. Neoclassical economics have no economic processes developing over time, since economic equilibrium is the termination of all processes. There is therefore no need to understand economic processes. No understanding of economic processes means no possibility of predicting the global financial crisis will develop.
Apart from your theory, I do not see systems of differential equations in any other schools of economics. Can you correct me, if there are other schools that satisfy my criteria of a scientific theory?
Very few I’m afraid Lyonwiss,
Apart from the econophysicists of course, but most of their work has been focused on financial markets behaviour rather than the broader economy. A developing exception there is the very advanced work of Joe McCauley, and of all things an Adam Ponzi (no relation so far as I am aware) is attempting a computer simulation model.
Most economists of all schools still use difference equations if and when they do dynamics, with all sorts of problems arising from that. The best of such work however is that within the Post Keynesian school, developed and inspired by Wynne Godley and Marc Lavoie, as several bloggers have noted.
Steve,
Thanks for confirming what I thought. Econophysicists do good work on non-normal distributions, proving that most of the time most markets are in disequilibrium. However, they focus too much effort on mathematics and not enough on understanding economic processes. McCauley’s book: “Dynamics of markets” deals mostly with stochastics of financial markets. Has he done anything on economic processes? Computer stimulation models are mostly data mining, as they suggest causality rather than hypothesize and describe causal processes.
Difference equation approaches have severe limitations, as you are aware. There is no basis to believe that economic processes develop accord to any particular time step, just because we happen to collect economic data on weekly, monthly, quarterly or yearly intervals.
I’m not familiar with Godley and Lavoie’s work, which I’ll look into more closely in future. But reading the table of contents of their book does not inspire a great deal of excitement. They discuss “the role of time” on page 250 of their book. Have we heard the cliche: “time is money, money is time”? Also, there is no mention of verification with empirical data.
Steve – thanks for your interruption – the post was on humor but it seems the comments are far away from it!
Lyonwiss,
Firstly the obession with having a model which predicts the GDP to the last dollar will lead you nowhere. Tough luck if you are searching for such a model. Wall street collapsed because it thought that it has these Copula models for CDOs. Even in other disciplines, they do not have such a model/theory. Physicists are accurate in predicting atomic spectra but ask a physicist what the weather is going to be this week and he/she has no answer!
As far as identities are concerned, the reason Bill Mitchell and Co. for example, place so much importance to them is that people simply do not get it. It is easy to dismiss them saying “Oh national accountants keep them” but only a few seem to appreciate them. The obsesssion with government debt and pressures to cut down the deficits seems be a big threat to the world economy to me.
Also, I have seen the explanations/theory/model for overnight rate targetting only from the neo/post Chartalists. Actually most stuff – open market operations, detailed operations of government bond sales, taxes. Plus of course the endogeneity of money, how banks work and incorporation of ideas of Kalecki with that of Keynes. They even model inventories which others rarely!
I have a copy of ‘Economic Dynamics’ by Giancarlo Gandolfo in the most accessible place in my table drawer – nice book for quickly looking for some methodology for solving some stuff and I am game for using any advanced methodology of using differential equations but as far as the ‘real world’ is concerned I would spend more time in looking at the “Flow of Funds” and what George Osbourne, Tim Geithner and Pranab Mukherjee (India’s FM – I am from India) are saying.
At any rate, the marginal utility of using differential equations over difference equations seems little to me, given the nature of uncertainty in the real world.
Godley and Lavoie conclude their preface saying “It has taken many years to generate the material presented here. But we are painfully aware that this is only a beginning which leaves everything to play for.” Very true – however I am painfully aware that you are not even willing to first understand the empirics and demand verification of empirical data.
Their work is mostly toy models but you can have a look at forecasts such as http://www.levy.org/pubs/sevenproc.pdf
Just to give an example of how dynamic such work is here’s a situation: If households decrease their marginal propensity to consume, it leads to a recession. The fiscal authority tries to step in and increase deficits and this causes a recovery. However fiscal austerity leads to sharp cuts in future deficits and the GDP will never back to the previous state. As far as I can make out from whats happening in the present scenario, seems to make sense.
At any rate, if you think you can make models which fit to the third place of decimal, good luck Lyonwiss. That would mean you have a theory which will be more accurate than what Cosmology is.
Superpoincare,
I’ll “out” Lyonwiss to some extent, to say that he is a physicist and one of the leading exponents of an econophysics-oriented approach to economic and financial modelling. He is far too aware of the shortcomings of dynamic models of chaotic systems to even consider accuracy of the order of “the last dollar” of GDP. I think you are over-reacting to his insistence on verifiable models. He knows far too much about complexity theory to even consider wanting models that “fit to the third place of decimal”; but he does demand models that can be tested against data, and whose evolution is data driven.
Also from my point of view, there is not just a “marginal utility” advantage in moving from difference to differential equations but an order of magnitude improvement in technique.
Wynne and Marc have done excellent work within the limitations of that approach, but even they will admit on occasions that the use of difference equations compromises their approach. There are times when Wynne notes that he has introduced a lag not because one is warranted but because not to do so causes an algebraic loop.
Thanks Steve,
But I left physics for finance and economics 24 years ago and I also think econophysics is too narrowly focussed (with some exceptions) on mathematics, and not enough on economic processes.
superpoincare,
Thank you. I didn’t connect that Wynne Godley was one of the “six wisemen” of the Treasury and the new Cambridge school. By the way, he is also in the Bezemer group. To the extent that his models make empirical predictions, they appear scientific. But what changes in his models, when predictions do not match outcomes? What is his prediction from here? Inflation or deflation? The answer does not need “third place of decimal”.
Marco2,
Thanks for your comments.
“Socialism is government intervention directed to correct social and economic imbalances.”
And how is this achieved by Socialist Govts.? Hint: HIGHER TAXES and wasteful spending.
I am fully aware of what constitutes Socialism.The problem is, these social and economic imbalances are in the eye of the beholder- in this case Socialist Govts. In the eyes of other beholders, these imbalances are brought on by sloth, the “free lunch” and Govt owes me a living attitudes that essentially are a blight on society.We have successive generations living off the backs of taxpayers. I don’t think productive hard earned taxes should go into financing that type of wasteful lifestyle. The more we encourage people to be a burden on taxpayer funds, the more people will do exactly that. Pretty soon, you have a population with their hands out and money being printed hand over fist to pay for it all. There are no short cuts. Production, manufacture, enginuity, entrepenureship, technological advances, old fashioned hard work- this is the road to a healthy and sustainable economy. I know it’s not sexy. Those not willing to contribute then reap the rewards they deserve.
Govt needs then to make absolutely certain that no matter what the individual’s background, a high standard of education is made available on a FREE basis to anyone so inclined. Rather than the waste of hundreds of millions (Billions?) of dollars building new school rooms, halls and bus shelters that simply will contain larger (NOT smaller)classes. This is a national scandal. It should also not escape one’s attention that the beneficiaries of such a wasteful policy would largely include those in Unions – a basic plank in our present Socialist Govt.
Lyonwiss,
“GSM
If only we have good economic theories, governments cannot then do whatever they like (without justification). That’s why it is important not “to let a good crisis go waste”. We must grasp the (once in a century) opportunity to build better economic theories for the sake of the economy, democracy and the planet. A journey of a thousand miles begins with a single step.”
I hear you. But the reality is Govts can and often do exactly whatever they like (mostly for votes) and provide the “justification” to suite it later. The current situation is a perfect example. Fundamentally, the GFC is a Political event. And the Socialist solutions of creating much higher Sovereign deficits, enabled by the printing of fiat money, has created nearly a whole generation’s worth of DEBT in just under 2 years,and that is IF Govt decides to stop/reduce it’s ridiculous spending, which is by no means a certainty. This debt will be a burden on at least one generation of taxpayers, perhaps more, going forward. This is acceptable Govt behaviour?
Debt and excessive credit is not and never was any kind of solution and that applies to private and Govt debts.It is simply a recipe for enslavement. Just like drugs, credit and debt must be strictly regulated.It is in that league of lethality.
Steve,
Thanks for the interruption again. The reason I attempted to corner Lyonwiss is that he/she had this preconceived notion about Chartalism. I was just trying to point out to him/her that is an open-minded approach to Economics. The groups closely associated with Levy Institute have research which are very honest and not based on some ideologies. You may call the inclusion of the government sector an ideology but it is not really. Everywhere, unless an economy is strongly export dependent, you see the government running deficits and that is the way money works. Any attempt to model an economy without the government will never work because Government debt keeps increasing (fact of life). Trying to force the government to stay away will put the world in another crisis! That is the reason Bill talks a lot of the government sector is that it is the ‘elephant in the room’! As Wynne and Marc point out in their book, for an economy (closed) to keep growing, the government has to be in deficit forever! Now, I understand that differtial equation is a powerful tool and believe me all my life I have dealt with differential equations but the use of differntial equation over difference equation will not change the fact.
Not only that the deficit has to be big enough so that it accomodates the private sector’s net desire to save. The higher the propensity of the private sector to save, the higher should be the deficit. Again I do not see if the use of differential equation over difference equations can change this fact. I love reading Wynne and Marc’s book and I have been trying hard to finish it and I would have loved if they had used differential equations (in my case just for the sake of neatness and more intuitive more than anything else).
If you read Bill Mitchell’s blog, that is what he has been saying – in fact according to Wynne, Randy Wray and Bill the crisis started long back – in 1999 when the Clinton government ran into surpluses. The private sector was forced to go into debt and a brief period of reasonable fiscal policy made the US economy come out of a temporary recession. However the ignorance of sector balances approach which Bill shows so well in his blog has caused so much trouble to the world now!
I understand that modeling the ‘euphoric’ period of this decade has been given less attention in Wynne Godley’s work and that is where you have worked a lot but again there are automatic stablizers which partly come into play because people will pay less taxes and the government will have to make some non-discretionary spending – though that will still lead to a lot of trouble.
Lyonwiss,
Good to know about you from Steve. I was mainly emphasising that there can be so many ‘model-independent’ statement made using the accounting approach which are not so intuitive. I had the same attitude as yours until I looked at this approach carefully. That is why I am such a fan of these approaches. For example if you read Bill’s blog, you can see that an export led country will have the same amount of domestic money supply (~M3) as the case with a government having a domestic led growth where the government spends additionally as much as the exports.
Another thing is that simple enough assumptions led the neo/post Chartalists very far in their conclusions. In the end, the recognise uncertainty however – however just by the use of these toy models, its easy to understand that insisting that the government deficit be 3% is not good. It depends on how much the people want to save. The deficit number will not be easy to corner. To corner it one has to forget the total debt level and pay close attention to price levels and inventories and it will vary from country to country.
Wynne Godley wrote to the FT recently and he said “Sir, George Osborne is committing himself unconditionally to making very large cuts in the budget deficit. I think he may be very seriously mistaken. If these cuts were all to be made immediately he would obviously make the present recession very much worse than it already is. To make sense of his proposed cuts it must be assumed that there is a rise in private expenditure relative to income (ie, a fall in net private saving) that roughly matches them in both scale and timing. But it is quite likely that private saving will not fall nearly enough. If, as I foresee, it does not do so, then Mr Osborne’s cuts will be much too large.”
Has it occurred to you how NSW ended up broke? Has NSW offered a substantially lower tax rate than other states? Why no. Actually, NSW had windfall revenue from stamp duty all through the real estate boom years… did they spend all that on hospitals? Hmmm, no… on education? No, didn’t go there. What about public transport? No not there either.
Let’s think about where it did go.
Olympics — made a substantial loss at taxpayer’s expense, but accounting was fudged to make it impossible to figure out how big was the loss.
Underground road tunnel, with secret contract involving penalty clauses if not enough cars would use the tunnel. Still the details are not public.
Pope visit — millions of taxpayers dollars spent as a nod to the Catholics.
Desalination plant — contract signed AFTER the rains started and Warragamba Dam started refilling, still not operational but we have committed the money (a bit less than $2G)
New electronic ticketing system (Tcard) — quietly scrapped after $60M spent, money we will never see again.
School halls — every school must have a new hall, regardless of whether this is useful to them, our central planner has decreed a hall (and a sign on the fence telling people to vote Labor).
Huge security fence for George Bush visit, and a special police water-gun tank to menace protesters with. More millions blown. Beaten by the Chaser team in rented suits and Canadian flags. Sad.
Oh so neoliberal poison caused the NSW government to screw so many things up so badly? Please give details of how.
How about the very simple cause and effect of people being able to spend someone else’s money without accountability? Seems a more plausible explanation.
Remove this poison by handing even more money to proven incompetents in the hope that a bigger budget makes them magically become more responsible? Hit me harder, hit me harder, it’s starting to feel numb.
Never mind, NSW electricity prices just went up (close to the highest in Australia now), ensuring that anyone who might have been thinking about starting a business in NSW goes elsewhere. I’m 100% sure you will get your wish of higher taxes before this government is done.
Hi superpoincare,
I agree about the openness and importance of the work Wynne and Marc have done. My differences are with what I see as the larger elephant in a room that has two of them–the government and the private credit system. I think a proper theory requires both elephants, and that’s something I’ll try to construct.
On ODEs vs difference equations, it’s possible the modelling approach I’ve developed will work both. But there are technical reasons for the former’s superiority (most of which I think you’re aware of). These also I believe make the difference between understanding a problem and misinterpreting it. This is certainly what has happened in Circiut Theory with the interminable confusion over whether capitalists can make a profit. Stated in ODE terms, the answer is obviously yes. Without those terms, I doubt that I could have proven it, though I would still have believed it true.
Steve,
Interesting that you concluded in your last post: “Without those terms, I doubt that I could have proven it, though I would still have believed it true.”
There are a lot more that is true than can be proven. But proofs are worth the effort. Someone once asked me why I spend so much effort proving the obvious. I had to think awhile before I came up with an answer.
The answer is: a fact, an observation or a theorem may be obvious to me and the questioner or even to more than 50% of the population. But it may still not be obvious or accepted by a significant number of other people. If it is something important, then it has to be accepted by 100% of the people. The only way to do this is to provide a compelling proof, either through iron-clad logic or through factual evidence or both.
Ah if there were more proofs in economics, we would not be having so many antagonistic economic schools or religions.
Tel,
At least the Cross City tunnel (and Lane Cove as well) are examples of private-public partnership – clearly a neoliberal invention.
http://en.wikipedia.org/wiki/Cross_City_Tunnel
cost=680M
http://en.wikipedia.org/wiki/2000_Summer_Olympics
cost total=6.6bln, public= between 1.7 and 2.4 billion (don’t know how much was actually spent by NSW government).
Regarding the Pope – I fully agree but this is probably the best example how far the Labor party has departed from any progressive traditions (if ever had any). It is difficult to find a politician or religious figure who is more conservative.
Desalination plant – I agree that this is a waste of money. People should use less water instead.
I am not a supporter of this kind of policies you listed above but the last party I will vote for are the Liberals or anybody who will leak preferences to them. Because of this guy and a few others with similar attitude:
http://en.wikipedia.org/wiki/David_Clarke_(Australian_politician)
However…
Currently the deficit is about 1.3bln/year. It looks that we are having Olympics every second year … or that simply the federal system is fundamentally flawed – designed for year 1900 not 2010. Too much responsibility and not enough money – the quality must deteriorate.
OK let’s not increase taxes. Let’s lower them and privatise health care which costs NSW a lot. We will have exactly the same situation which is in the US. Everything private. Will we pay less or more for the health care in that case?
Can you prove that the same services can be delivered cheaper by private sector? Maybe this is just right-wing propaganda? If privatisation of everything is so good why UK and US are in such a deep trouble and countries which had more balanced approach in Continental Europe are doing a bit better?
Note: I was trying to get access to budget data but all the servers were off-line.
Steve
Regarding your comment about proving that Circuitistes had dynamics wrong . . . from what I can gather talking with some of them, they don’t think you’ve proven anything. This isn’t because they don’t understand differential equations (I have no idea if the do or don’t, but I imagine that at least some of them do), but rather has to do with the fact that they don’t think the model as you have set it up is consistent with the Circuitiste model. The basic point being that, of course, the results of the model are ultimately deduced from the original assumptions (deductive vs. inductive . . . albeit dynamically in the sense that the results aren’t ascertainable before the model is simulated as they might be with a linear model) and in their view the starting assumptions or setup of the banking system in your model aren’t the same as theirs. I believe their position runs something along the lines of JKH’s lengthy comments on your paper (aside from his points regarding the govt sector and chartalists) in the chartalist thread from a few weeks ago. (Indeed, shortly thereafter LP started following the discussion.) Sorry I can’t be more precise than this about their views (though, again, LP said he agreed mostly with JKH,) but I don’t want to suggest anything more than I can know for sure and don’t want to put words into their mouths (at least no more than I already have!).
Where would you go with that?
Best,
Scott
Good question Scott. I’m going to find out in Dijon I think. The best thing I can do is start directly with Graziani’s initial insights and then show step by step that my starting point simply codifies those in a dynamic framework. The consequences then flow from that codification.
If that reaches results that contradict the expectations Circuitists have derived from their own attempts to codify Graziani, then I’ve shown their attempts were wrong.
The funny thing to me with all this is that in fact my results drastically strengthen the Circuitist argument–you get a model that explains how capitalists can borrow money in a pure credit economy and make a profit, and you get Circuit results that agree with Keynes (in “Alternative theories of the rate of interest”) rather than contradict him. And you also explain the inherent tendency of banks to create too much debt.
The main objections I’ve got to what I’ve done–as much as I’ve heard them–relate to arguing that repaying debt doesn’t destroy money, and showing that a constant stock of money can sustain constant economic activity. On the former point I hope that discussions like the ones you and I had that initially led to you joining the blog (most appreciated by the way!) might work, but if not I can show the second point on its own without considering debt repayment.
The starting point is incredibly simple too: if firms pay the interest on debt as it is compounded, then debt remains constant. Then firms hire workers with a flow of funds from their current deposits; then workers and bankers pay a stream back to firms from their current deposits. All that’s necessary for constant deposits–and hence a constant capacity to maintain those streams–is that:
* The flow of funds from firms to banks equals the interest accruing on outstanding debt;
* The flow of funds from firms to workers in wages equals the flow of funds from workers and bankers to firms in consumption.
That ain’t hard. So I believe the resistance I’m getting to these ideas is simply because contrary false deductions have been ingrained for too long, and because, yes, the audience isn’t used to thinking in terms of differential equations, which are the essence of thinking in terms of flows. I’ve spent enough time in the PK community to know that, for most of them, their underlying knowledge of genuine mathematical dynamic methods has been constrained by the misfortune of having been trained in mathematical methods in their youth by neoclassical economists. A good course in differential equations would clear away most of those neoclassical cobwebs.
Thanks, Steve.
I’ll give it a closer look when I have a bit more time (not as busy as you, but close!).
Wish I was going to Dijon . . . maybe next year. LP’s been talking it up quite a bit.
Best,
Scott
Tel,
“How about the very simple cause and effect of people being able to spend someone else’s money without accountability? Seems a more plausible explanation.”
Correct, commonsense can see the cause immediately.Greedy and corrupt politicians. Can we go one further? This is a corrupt, Trade Union dominated and completely faction ridden, failed Socialist State Govt in question here. This is how we have seen “wealth redistribution” and social justice at work in real time. And the results? You have nailed it Tel.
Nobody should be under the impression, particularly chartalists, that any Govt would be faithful to any particular school of economic theory when retaining power is concerned.There is only one general solution: Place explicit limits on Govt powers and Govt spending.Remove from them the ability to deficit spend without electorate approval. Govts produce NOTHING. They consume the earnings of citizens. They need to operate under strictly confined financial conditions.
superincare,
“If you read Bill Mitchell’s blog, that is what he has been saying – in fact according to Wynne, Randy Wray and Bill the crisis started long back – in 1999 when the Clinton government ran into surpluses.”
Just a theory. This disregards the one real accomplishment of Clinton’s term in kicking off the GFC, namely the repeal of Glass-Steagal. To ignore the ownership of Clinton’s Administration by Rubin and his GS cabal is true head in the sand stuff. These are real influences over the most inflencial decisionmakers on economics in the world. Yet Chartalism seems to consider Govt as an inert unbiased mass whose main functionality seems to be benign redistribution of tax wealth. Nothing could be more wrong- as Tel above has clearly pointed out about the NSW Govt.
Was Clinton running “surplus” in any case?It is a well known fact that US social security commitments are grossly underfunded so any surplus would be just an accounting gimmick.
ak,
How about spending within our means? How about cutting back on costly waste and rampant corruption. How about doing away with stupid and costly roads and bridges to nowhere pork projects? How about a commonsense executable plan for NSW public transport? How about a fully funded health and education system? How about Govt based and measured on services delivery and not costly jobs and projects for corrupt mates, factions and Union stand over merchants?
There are far more options to delivering services than simply higher/lower taxes, public or private ownership. Although I must admit, in the case of NSW I think it would be FAR better removing monetary control and operation of essential public services from these Union dominated fiefdoms where they would have at least some chance of being successful.
The reason US health care is expensive is they let that lawyers get involved. The result is that at least half the healthcare money goes to the legal system and compensation payouts (generally through insurance companies first). Government has the job to lay down the ground rules, but the US government does not have the courage to keep their legal system under control, thus the courts have become a war of attrition and a role of the dice.
The other reason is the hugely complex system of licensing and administration that goes into controlling who is entitled to do any healthcare. Someone providing basic but cheap healthcare for poor people would have to break the law in the USA in order to achieve that.
Beyond that, the drug companies essentially function as an arm of government (or possibly the other way around). We have all of the features of a centrally planned economy — the powerful few trying to make decisions for the many. Ordinary people being told they are too stupid and helpless to make their own decisions. Inevitably these powerful few make decisions to suit themselves.
Government needs to stand as an arbitrator to ensure that there is real competition in the industry, and not play favourites. Once there is real competition, the consumers decide where they want to spend their money.
Obama’s health reform system does not address any of the fundamental problems, it merely further centralises the decision making.
If you want an example of the sort of corruption we operate under in NSW, punch the words “healthquest” and “whistlblower” into google and follow the links to the personal stories of the victims. It’s very similar to Soviet era methodology.
Has this story ever been seen in a mainstream newspaper?
Tel,
You may be surprised that actually I agree with many of your points:
“Beyond that, the drug companies essentially function as an arm of government (or possibly the other way around). We have all of the features of a centrally planned economy — the powerful few trying to make decisions for the many. Ordinary people being told they are too stupid and helpless to make their own decisions. Inevitably these powerful few make decisions to suit themselves.”
The main difference is I don’t believe that removing the government from the equation will help. Other powerful forces will seize control. Not all the governments are equally corrupt and incompetent – just look at the tricks Berlusconi is pulling – even in Poland he would last a year and then go to the same jail where a few corrupt post communist ministers already have ended. But in Italy he is a sort of national hero.
The most difficult task is to clean up the mess and solve real problems.
I think the debate about providing services has been hijacked by the spin doctors (forgive the pun).
We are constantly told that we can have it all and that govt can provide it all for us while at the same time offering to reduce taxes. The spinners tell us that if we can reduce waste then everything will be OK. But all these spun messages are just put out there to distract us for another few months until they concoct another message.
We need leaders that will tell us the truth and put in place policies that match that truth.
Truths:
Free health care for all is not possible.
Inadequate road taxes require top up funding from money earmarked for public transport.
Everyone must pay for climate change and the cost of everything will increase.
If you cant afford children dont have them.
Middle class welfare is unaffordable.
Tax free housing is no longer sustainable.
I agree ak that govt should be there to provide and manage the essential services but they should stop trying to give us what we think we want and get back to giving us what we need.
But herein lies the problem – as a society we dont want the truth if it effects us. We only want the truth if effects anyone else but me.
Imagine introducing a means tested user pays health system. Imagine taxing the little old ladies waterfront mosman mansion. Imagine increasing everyones road taxes by 400%. Imagine tightening the means test to include the family home in the assets test for retirees.
While all these steps are required for the long term support of essential services and delivering on societies needs, with the election cycle the way it is I cannot see it happening.
Tel and Ak,
There are always some hard ones like:
What about a nod to Pope or Mama from England/Australia and other members of the Royal family? Not sure if we are paying taxes for having a Queen Mama but we are definitely paying for their visits.
Money to fund US and UK personal agendas like the Iraq or Afghan war?
Providing rehab for pedophiles, criminals etc and other such ex members?
The above are debatable topics but the easiest ones for me are forms of tax evasion to support speculation.
Other things that get to me are:
Outsourcing: It is ok for our Jobs to go overseas along with manufacturing, production etc and no tax penalties but it is not ok for me to buy an item that cost upto 5 times cheaper in another country online? They call it free trade/globalization.
Also misusing the skilled shortage visa to get people from offshore to do the work at 1/4 the price (and probably 10 times longer) while there are plenty of skilled Australians with no work.