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Speaker: The End of Consumerism

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  • K J Aldous,

    Russell Brown wrote:

    Woah, Ken: you're in danger of tilting into nihilism here.

    The British Parliamentary expenses system, established in good faith, turns out to have been unacceptably abused by many MPs. That abuse reeks of entitlement. But many other MPs have not behaved in this way -- some of them seem quite saintly in their claims. Operating a democracy does cost some money.

    And who brought this to the attention of the public? The newspaper owned by the billionaire Barclay brothers, The Daily Telegraph. I'm not sure it's all as cut-and-dried as you suggest.

    Most parliamentarians behave honourably, just as most citizens do. It is, of course, quite reasonable to expect all parliamentarians to behave honourably. What we have witnessed is unreasonable and dishonourable assault on the public purse. Saintliness transcends honour, and if some have exhibited unexpected sanctity, then let us be grateful.

    Don’t shoot the messenger. Even if he is false, within his lies there may yet glint scintillas of truth.

    Tom Semmens wrote:

    Woah, Ken: you're in danger of tilting into nihilism here.

    I am not so sure. The fact that the attack on the credibility of the democratic institutions is being led by a flagship newspaper of the very oligarchs that Ken says are incapable of reform surely reinforces his argument, more than those MP's who behaved well weaken it.

    I don’t think that any person or any system is incapable of reform: rather that the cure of the present disease requires desperate remedies. Not explosives, one would hope, but more akin to the “incoherent” fuss of the Tea Party-goers.

    Shay Lambert wrote:

    Kafkaesque bureaucracies

    Don't knock 'em - lots of people are employed by Kafkaesque bureaucracies. Their work maybe pointless and contribute nothing to society, but no more so than most jobs if you look at them from a high enough perspective.

    Most jobs are not unproductive – if they were, we would all be starving. What is a concern is not the existence of non-contributing bureaucracies – they are the waste product of any large organisation and just have to be tolerated. In firms subject to the discipline of the market, they must be regularly purged or the firm fails. Organisations that perform tasks which the market cannot are in danger of suffering a fearful expansion of this waste, examples of which are the proliferation do-nothing commissions and university bureaucracies over the past 30+ years.

    Angus Robertson wrote:

    Has the purchasing power of the majority actually faded? Adding together the poverty reduction that has occurred in China, India, Brazil and other developing countries over the last 50 years gives a figure that would seem higher than any possible number of middle class 1st worlders who have seen their relative income drop.

    Purchasing power has not diminished absolutely, but relative to the goods and services available for purchase, it certainly has. It plainly has increased in mainland Asia, but the present problems stem more or less entirely from the US, whose economy remains overwhelmingly dominant.

    Christchurch • Since Apr 2007 • 3 posts Report Reply

  • Blake Monkley,

    If any recovery is to be lasting, USA and China will have to rebalance their trading relationship. China runs a huge surplus with the USA, USA sends money to China, China recycles those dollars into USA treasury bills, thereby keeping interest rates low which encourages debt and consumption. Consumers might think that's a good thing but it does come with problems for both China and the USA.

    Here is the blog of Prof Steve Keen who wrote a great book called Debunking Economics and is calling for the replacement of an economic theory that misunderstands credit and ignores debt, and its replacement with it with one that takes credit and debt seriously.

    Auckland • Since Jul 2008 • 215 posts Report Reply

  • Steve Barnes,

    From the article linked to above.

    With its utter failure to see this crisis coming, why does anyone still take the OECD seriously? Probably for the same reason that people still generally obeyed the Captain of the Titanic after it had struck the iceberg: authority counts for a lot in a crisis, even if the person in authority actually caused it.

    In my informal studies of economic theories I have, more often than not, been stuck by the notion that what we are dealing with is more of an ideology than something actually related to the real world, more of a religion than a science.
    The amount of "cash" in any economy is never as much as the total amount of funds available, the fractional reserve system is the basis of this fact.
    All the while commercial banks are allowed to "print money" the growth of the economy can be totally illusory. Instead, it has been suggested, central banks should create the funds it deems necessary to maintain the economy and "gift" it to the Government to spend into the economy.
    Creating New Money: A monetary reform for the information age, by Joseph Huber and James Robertson
    Has this to say.

    It should become infeasible and be made illegal for anyone else to
    create new money denominated in an official currency. Commercial
    banks will thus be excluded from creating new credit as they do now,
    and be limited to credit-broking as financial intermediaries.
    We refer to this as “seigniorage reform”. While adapting to the new
    conditions of the Information Age, it will also restore the prerogative of
    the state to issue legal tender, and to capture as public revenue the
    seigniorage income that arises from issuing it. Originally, seigniorage
    arose from the minting and issuing of coins by monarchs and local
    rulers. Extending it to the creation of all official money will correct the
    anomaly that has grown up over the years, resulting today in 95% of
    new money being issued, not by governments as cash (coins and
    banknotes), but by commercial banks printing credit entries into the
    bank accounts of their customers in the form of interest-bearing loans.
    This costs the public large sums of money in seigniorage revenue
    foregone, in the UK, for example, of the order of £47bn a year
    . It gives the commercial banks a hidden subsidy
    in the shape of special, supernormal profits of the order of £21bn a year
    in the UK . We estimate that, in total, the resulting
    cost burden for the UK economy is about £66bn a year.

    That was written back in 2001 which makes this a little gem.

    However, we both agree that the question whether the money supply will
    continue to grow indefinitely raises a relevant point. It is sometimes
    suggested that, in an environmentally sustainable economy, growth of
    the money supply may have to slow down, then stop, and eventually
    perhaps go into reverse.

    Peria • Since Dec 2006 • 5521 posts Report Reply

  • Russell Brown,

    In my informal studies of economic theories I have, more often than not, been stuck by the notion that what we are dealing with is more of an ideology than something actually related to the real world, more of a religion than a science.

    The New Yorker had a lovely little story about a regular gathering of Randians in New York (I can't be arsed finding my New Yorker print subscriber details to get the full text), where one disciple quoth thus of Alan Greenspan's crisis of faith in free markets:

    I learned from Ayn Rand many years ago that contradictions do not exist in reality. Is Alan Greenspan an Objectivist or a statist? Is he controlled by the power in Washington, or did he go there to spread free-market ideals?

    I love this. If reality doesn't cohere with theory, then reality must be wrong.

    I should also note that I am driven nuts by people of The Left who can't see the virtue of markets at all. People at both extremes seem to find it hard to grasp that conflicting ideas might be worth their attention.

    Auckland • Since Nov 2006 • 22848 posts Report Reply

  • Sacha,

    I should also note that I am driven nuts by people of The Left who can't see the virtue of markets at all. People at both extremes seem to find it hard to grasp that conflicting ideas might be worth their attention.

    Agree, Russell. Totally frustrates me when people supposedly working for long-term change can't see the whole political context for what it is. Engaging with both the left and right over time gives access to ongoing influence and to useful ideas wherever they may come from. I have yet to find libertarian concepts useful or popular beyond the privileged, but who knows.

    Ak • Since May 2008 • 19740 posts Report Reply

  • Steve Barnes,

    I particularly liked this comment,

    The moral of Rand books should be, appreciate intelligent people because that's what keeps this country going. Not going all John Galt because humanity hasn't built you a gold statue and given you a pony.

    Peria • Since Dec 2006 • 5521 posts Report Reply

  • Steve Barnes,

    I have yet to find libertarian concepts useful or popular beyond the privileged, but who knows.

    Yeah, 'cause libertarians claim to champion freedom and then go all Lily Alan on yer ass.

    Peria • Since Dec 2006 • 5521 posts Report Reply

  • Blake Monkley,

    I should also note that I am driven nuts by people of The Left who can't see the virtue of markets at all. People at both extremes seem to find it hard to grasp that conflicting ideas might be worth their attention.

    The challenge is to devise a new financial system that preserves capitalism and entrepreneurship. I’d prefer to see banks lending overwhelmingly focused on working capital and genuine investment needs of firms, rather than speculative housing and share purchases.

    Right, I'm off to the surf club to watch the test with a bunch of Ockers....Fingers crossed.

    Auckland • Since Jul 2008 • 215 posts Report Reply

  • Ross Mason,

    It surprises me that the world has allowed the iincredible nanosecond response of capital shifting from and to anywhere in the world to 1) develop and 2) to keep on keeping on. It seems all for the sole pupose of betting on making a fast (ultra!) buck. It is easy to see that if splurges occur in any part of the sytems then "cycles" - chaotic or planned - will occur. Where is the 'value' in this system? Convince me that me or my country is benefiting.

    International trade can never be equal. If someone has a trade suprplus it has to be balanced by someone having a deficit. Something else has to happen if everyone wants to see "an increase in wealth"...whatever that means. We have a fractional money system but if the ratio is 30:1, who really "owns" the other $29?

    If a manufacturer transfers his labour force to a lower wage economy how does the country that WAS producing the good get the benefit?

    Is it those who allow this to happen (Politicians) and those who make money from it (corporates, ticket clippers and hangers on) the elites that Ken is talking about?

    I dunno.....maybe Douglas had some good small points in his diatribes on Social Credit. Somethings got to give.

    Upper Hutt • Since Jun 2007 • 1590 posts Report Reply

  • tussock,

    Always something else to consider: cheap oil, and how it no longer exists. How do we get the 50's back again when their production was driven on fuel costing a small fraction of what it now does, and forever more will?

    And yes, those grand scams that payed all the world's capital out as a book profit on unrealised gambles, that's going to be interesting for a while. We've all spent our next two years income already, on average, and as more people become unemployed and real wages fall that's going to get a lot worse. Inflation will soon enough destroy the debt and the paper capital with it (especially with all and sundry printing money fit to burst), but then you're back to rebooting without cheap oil to do all the work. We may all yet live in interesting times.

    Since Nov 2006 • 610 posts Report Reply

  • Andrew Stevenson,

    Just been re-reading E.F. Schumacher's Small is Beautiful, subtitled Economics as if people mattered.
    This was written in 1975, but still seems relevant

    Wellington • Since Nov 2006 • 206 posts Report Reply

  • Blake Monkley,

    Auckland • Since Jul 2008 • 215 posts Report Reply

  • Bart Janssen,

    throttling of creativity by the deadweight make-believe managerialism

    I love this line. If I can be forgiven for ranting a little...

    I work in one of New Zealand's research institutes and have done for nearly 20 years. When I started the place was full of scientists and technicians working hard to discover something new and/or pass knowledge on to people who might benefit from it, like orchardists. There was a bureaucracy of course but it was made up of civil servants, many of them ex-science staff and almost all of them felt part of the process of science. There was some dead weight but surprisingly little. There was bad management, but it was honest incompetence, which is somehow more forgivable.

    Over 20 years we have become a business. We have management structures that change every few years and bright CEOs with real business experience. We have processes and milestones and reports and commercial managers and... well you can see where this is going.

    It isn't that we can't still do good research, we can and do. It's just that so many of the people here now have no interest or involvement in doing research or getting that research to those who would benefit from it. Instead they manage. And to be fair some of them are very good at managing. But you get a very real sense that they don't care what they manage, they will be happy to move on in 3 years. Their goal is a KPI, not getting a new technology to the growers.

    To me that's the sad part of the change. In the good old days (as if things were always sunny back then) I like to think pretty much everyone who worked here felt they were personally part of a research institute and if they didn't do the research themselves then what they did do helped others do the research. And now ... not so much.

    The people who did the research used to be the whole point of the institute, their creativity was the institute. And now they are simply productive units to be replaced with cheaper productive units if possible ... sigh. The point of the institute seems to rest behind a suit and is no longer really fathomable to a mere scientist, only a manager has the skill to understand it.

    What does this have to do with economics? I think it reflects so much of what modern economics is about. There is the idea that one does not need to be connected to actually doing something. There is no need to justify ones salary and the benefit your job genuinely imparts to society. The mere act of moving money is an end itself.

    It is of course more complicated than that, or so I'm told.

    Auckland • Since Nov 2006 • 4460 posts Report Reply

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