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Member since 23 May 2012
Member from Mangere East
Ted...disposable income is income in a family unit after taxes. When you do anything to decrease the DI figures you decrease projected growth. When you have a decrease in the major purchasing sector of DI (middle income group) you will have a decrease in growth. What worries me at the moment is the international uncertain future of growth in both Europe and The USA.
(austerity programs) We are all looking at a global downturn that will effect all nations. Prices will rise while income will remain status quo. My question is can you hedge against this portent event?
Member since 03 May 2006
Member from Point Chevalier
Dear haro004 - I will check what Ted had to say, but your line of reasoning is misleading, because if you decrease DI (Disposable Income) for private consumption for consumptioon in other areas, nothing changes in the national economy (there is no reduction nor increase in growth) - and contrary to your statement - reduction of DI for consumption for transferring into investment IS ACTUALLY THE ONLY POSSIBLE WAY FOR GROWTH OF PRODUCTION THROUGH CAPITAL INVESMENT.The only way to hedge against widening poverty is in raising the savings and investment rate in useful (profitable) productivity, wich will make possible increasing consumption in a sustainable way.If we EARN more and consume more, there is growth. But if our DI is for consumption only - without a capital savings rate accounted for - and comes from someone else's income or from existing reserves, owned by ourselves or borrowed - diminishing consumption potential and economic bankruptcy is inevitable when the reserves run out, and we don't save enough at least for debt reduction or restoring the reserves.If you doubt in that, can you give just one practical or theoretical example of wealth creation without someone's contributions at the expense of hand-to-mouth consumption?In other words, economic growth is physically impossible without saving and investment, which therefore should be our priority if we want to achieve more Disposable Income for consumption in a sustainable way.So haro004 - the suggestion to raise DI without raising the savings rate for investment and debt reduction first, is a recipe for "the Greek way" - unless my arguments as above can be shown as misleading or false.
Member since 06 May 2006
Member from Papakura
Dear haro004 & Jens. We are in the situation with many on low incomes not having any disposable incomes. Many on low incomes are not keeping up with inflation. It seems to be imperative that this trend does not continue. It also seems that those in the upper 10% of incomes seem to have no trouble in having their remuneration increased in excess of inflation.
I have been reading a bit about "MONDRAGON Corporation" and find many of their principals worth emulating. Particularly their ideas on executive remuneration. I wonder if there is a way of starting something like that here?
TedE - could you please let us know about the "Mondragon" proposals, or where they can be found.
But what can you do, if a political party takes them up, but does not win elections on them?
So, it is very important to look for PRACTICAL propositions among these proposals, if they are different from the common current ones of introducing Capital Gains Taxes, and restoring even if only temporarily, the pre Cullen higher tax rates for higher income earners.
But even then, if our collective savings rates are not increased in relation to our consumption, our relative economic decline will not be cured, and we will become collectively poorer and the higher freely consumable DI (Disposable Income)of lower income earners will not last long.
Well, when I was a relatively low income worker in my young days earning the maximum possible at the effort acceptable to me - I raised my own DI through a higher savings rate - and - coming to think of it - still have to do it now - admittedly - for relative luxuries.
As I have drawn attention to many times before, even the poorest could be participating in wealth creative saving through the GST they pay, if National had not reduced higher earners' taxes and introced the higher rate of GST to replace the reduced taxation revenue!!!
If this immoral "trade off" is reversed, we might be on the road of more effective economic recovery than what we have now.
But there is popular support needed for that
Member since 12 Jun 2007
Member from Linwood
TedE, regarding your postings 263 & 264.Of course high economic growth cannot and need not go on indefinitely, and that's why growth in all well developed countries slows down, and sustainable stabilization at a certain SATISFACTORY level is actually what mankind should aim for.BUT - as long as we have population growth, we need economic growth or become progressively poorer until degenerating into hand-to-mouth feeding savagery fighting for a bigger share of what Mother Nature provides.Therefore I see it as an urgent priority for the developed world to move towards OWNERSHIP DEMOCRACY, defined through at least a minimally meaningful level of personal (retirement) wealth ownersip by all citizens eventually.This would also make it possible to take better care of the diminishing proportion of the really unlucky - of which there at present seems to be an INCREASING proportion or demand of welfare entitlements, due to the poverty through insuffient savings in relation to consumption.
Furthermore, regarding TedE postings # 263 7 264:A carbon tax makes sense only if invested into carbon emissions reducing or absorbing undertakings, such as forest planting for New Zealand was mentioned at some stage, which would also create employment.To spend "carbon tax" on more welfare consumption would not pass an honesty test.Yes, TedE - there are many things needing to be done - but the market itself does not do anything, it is people who buy and sell that create the market - and if you have nothing to sell, you are not in the market. If you want to be int the market and get anything done, you have to save from what you could consume, to enter the markt for buying or selling.If you consume all your income, you are destined to become destitute from the moment your income ceases, so it is immoral to ask for higher benefits without being prepared to save - or have saved - some of it for your own poverty relief bill.For argument's sake - isn't it similar to borrowing without an intention to repay?Is it fair and morally sustainable for taxpayers to pay more to those in need only to perpetuate an increasing commitment in that direction?Wit the proportion of eager and able taxpayers diminishing and consequent "needs" increasing, only Greek style bankruptcy will result from "from each according to abilities, to each according to needs", which is the natural state with primitive hand-to-mouth tribalism at near starvation level, with which our poor don't seem to be satisfied.Or - beg your pardon - they are, at least those who in principle refuse to save or have something saved for them, for their own and society's welfare sustainability
Mondragon is a great Model. It's the best example globally of a business that is for the people by the people. If I recall Executive pay is now limited to 10 x the lowest employees pay. It use to be 7x However, outside companies would headhunt their managers so the Cooperative had to increase their amount to 10x lowest employees pay.
COMMENT: The proper purpose of an economy is to secure just, sustainable, and joyful livelihoods for all. This may come as something of a shock to Wall Street financiers who profit from financial bubbles, securities fraud, low wages, unemployment, foreign sweatshops, tax evasion, public subsidies, and monopoly pricing. David C. Korten
I am preparing another post on Mondragon and the opportunity if offers low-income people and organisations in New Zealand.
Jens, probably an impartial place to start re Mondragon is on Wikipedia: http://en.wikipedia.org/wiki/Mondragon_Corporation#FinanceThis model has been around for quite a while.Do you remember the visits we had in the early to mid-seventies from the fellow who wrote "Tools for Conviviality", "Medical Namesis", "Deschooling Society"' and some other interesting books regarding the wisdom of exporting the USA way of life to the rest of the world. He was the first critic I heard to voice concern at the actions of the World Bank and IMF in Latin America. His name escapes me for the minute. His name was Ivan Illich! His books were Prophetic. ( I think that there is mention of him on Wikipedia also.) Sufficient to say that the purpose of the economy is to serve the citizens and not the other way round. Economics seem to have been turned into a religion by the Chicago School of economics to the point that if you question their orthodoxy then you are shot down rather than the proposal debated, Very much like the present debate on "Climate Change".
I often wonder what useful purpose the "Futures Market" fulfills? It seems to me that it is extremely inflationary and is a means of establishing growth without production and is extremely inflationary. Maybe I don't understand it!
Regarding spending the Carbon Tax on subsidizing the low income families adversely affect by the price increases resulting from it. I see that as necessary because the presently those resource based industries that are producing the problems are subsidized by those adversely affected by their pollution . There needs to be a period of adjustment to the changes in the market. Further the way that industry increases efficiency leads to job destruction and while their is insufficient work to go round then we need to ensure that those people are engaged in a productive way. Whether it is in tree planting, installing solar panels or PV systems or insulation or other similar work that needs to be done then I feel that is legitimate use for carbon taxes. Certainly not additional conference facilities or bigger and better stadiums.
Another item that needs to be aired is the addition of feed in tariffs for small and medium electricity generation facilities. This is a very important item that needs to be addressed before the sale of the present State owned generation/distribution systems.
Australia I think is addressing this now as NSW went it alone and introduced it and then got shut down, but not before they reached there target of adding 50gwatts of PV from the NSW householders. That seems to me to be a very good way of overcoming electricity generation while there is a search for alternatives to Carbon based power projects.
NZ Power companies are not enabling this to happen with their current contract stance.
TedE - yes, the "Mondragon model" is remarkable as a SUCCESSFUL workers co-operative, because that does not happen too often in a long lasting way.Practically all the Soviet Union collective farms reverted to individual ownership, I don't know what happened to Tito's successful workers' (not state )owned enterprises after Tito, but the Israeli collective kibbutz(?)farms work successfully.I don't know how many - if any - of our own "ohu"(?) communes survive, founded with enthusiasm in the 1970ies.I am sure it is possible to start "workers co-operatives" here - which would be a very effective lesson in capitalism, because without capitalism there is nothing apart from what Mother Nature provides, regardless how hard you work without saving anything.To my understanding, "Futures Market" is just a kind of insurance against market price fluctuations, if a farmer or trader (in America, of course) wants to make a deal and be certain of a minimal price for his "wheat" next year. No guilt in this of excessive investment or consumption on credit, the cause of Western World troubles at present.On electricity your views might be nationally profitable or not - but unless there are scientific breakthroughs, the increasing investments needed if we want cleaner power and more of it from more expensive sources (because the clean and easiest hydroelectrical sites are all in use already) - electricity prices are bound to go up, and more investment (and saving for it) will be inevitable.And it is worth it, if you look at all the marvels and comforts delivered to us through electricity!!!
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