TedE - Since I believe New Zealand has not required anything from the World Bank and IMF yet(?), I don't think we need to worry over the rights and wrongs of it? Or - why should we?

And I am puzzled by the view you articulate in the same posting #273, that "the purpose of an economy is to serve the citizens and not the other way round" !

Yes, we have an economy to "serve us", but without us, there is no economy, so basically, we have JUST US TO SERVE US - and there is no other way round than JUST US TO SERVE US !!!

Or explain please - how can there be an economy without the citizens
"serving it"?

All the newspapes are full of our increasing indebtedness and the recession we are in, and the expected long time to "get out of it" - usually ending with the recommendation "something has to be done, and there should be vigorious public debate about it".

A variety of opinions have been publicised, but there is no to-the-point debate on anything so far, comparing the pros and cons of one proposition against the other, such as e.g. comparing compulsory KiwiSaving with resuming Cullen Fund contributions which, as financed through the Govt. revenue system, is practically compulsory (automatic) saving with participation by 100% of citizens.

One inconclusive debate so far, has emerged about how our current NZ Super with entitlement age at 65 could be sustainable for the longer living superannuitants - our children - in the future.

Increased taxes have been mentioned - but not as the means of increased saving and investment to grow the economy to keep our current NZ Super sustainable for our chidren after the baby boomer bulge has passed.

Both major parties promised to resume NZSF contributions, so all that has to be done is to amend the Cullen Fund into a permanent institution to keep helping NZ Super sustainability for ever.

If the savings rate has to be raised eventually to achieve that, it would be and effective economic growth accelerator if the new savings are committed to be immeditely invested in infrastructure construction as a priority at least until excessive unemployment has been overcome - and with that get us out of the recession faster !!!

Our concern about better NZ Super sustainability would be transformed into a more straightforward and better economic growth policy than anything "on the table" at present.

Thank you for your thoughts Jens on 277. My thoughts were based on, what I hear from our politicians/IMF/Euro bankers is that the economy is in dire straights and those unfortunates with low income will have to tighten their belts further to save the economy. Well I feel it's the bankers and the "Economy" that needs to be sorted out to save the population of the countries concerned.

Jens re your 278: One of the things that we used to debate in the 60's was the advent of new technology and how it would create the leisure society. The main items were the introduction of the pelting machines and the containers and roll on roll off shipping. The men who were replaced were then for the most part said to be bludgers and unemployable. I worked with a lot of them in the Muldoon era and they were not work shy. There were not enough jobs for all those looking for work. It seems to me we should be managing our economy to ensure that there is work for all at a living wage. there are so many jobs on offer with 5 hour shifts and minimum wage today that many of those at the lower end of the work pile are really struggling with 3 and 4 jobs per household to try and keep their head above water. I feel that much of our problem is created by the currency/share traders who seem to be considered the smartest and highest paid members of our community yet i find it hard to understand how they add to the "common wealth"? I have a fair idea that the "Robin Hood" (FTT) tax is what is needed now! We should be using that on all cross border currency transactions.

Ted E - "belt tightening" applies to all, and actually more to the richer than to the poorer, because the "belt tightening" of the richer is only a symbolic expression for them, as they can easily achieve it through giving up some luxuries without any real belt tightening involved, as it would be with those habitually consuming all their income.

But yes, when the belt tightening is to be achieved mainly through Govt. expenditure reduction, it hits hardest a proportion of those on the Govt. payments list.

Therefore a universal savings proportion built into our taxation system is the fairest and more effective way of "belt tightening" than Govt. expenditure reductions, because the latter don't create anything, whereas the "belt tightening" through saving and immediate investment is wealth creative.

Ted E - at #280 you raise the matter of jobs lost through investment and application of machinery.
Yes, that happens - but that is the only way to raise productivity and earning capacity.
I think you understand that, so there is no need to explain?

But your concern is with the unemployment through that, and that the skilled among them frequently end up in lower paid jobs.\

This is an inevitable, but temporary price for progress to benefit the majority, including ultimately, the poorest. (? - This can be debatd)

How to overcome that, or be protected against it?

Well, for trying to ensure that we have the capacity to employ people for whom no jobs seem to exist, what better remedy can there be than to have accumulated wealth reserves?

In New Zealand during the great depression (I was told by an Auckl. University economics Professor in 1951) there were idle capital and savings reserves in the banking system, so Keynesian credit creation worked well - but at present with our excessive indebtedness, saving for job creation would be far more economically "healthy" than borrowing even more for it - unless it is for an extremely secure and profitable proposition, which would have been taken up already, anyhow.

So - what can be more fair and effective for starting to create those job security reserves, than introducing a NZ Super Fund accumulation component into our taxation system under the condition, that all of it is immediately invested in financing needed infrastructure etc. as a priority at least until excessive unemployment has been overcome?

Please let us know what faults you find in that, or what better alternative you might be aware of.

Ted E - coming back to your post #280 - yes, a Transactions Transfer Tax looks fair in that it taxes among others also purely speculative money transfers, but I suspect there would be too many ways for the big speculators of avoiding it, unless it is world wide universal.

But I believe a trial period of say a few years would be worth while to see how it would affect the economy and all its needed transactions that cannot be evaded by shifting them to other countries.

But tell us Ted E - while we don't complain about big winners at the races and with lotteries, why should we be so alarmed about the big winners in big business risks, as long as no fraud is involved?

But yes - to risk heavily with other people's money is deplorable, especially if there is no adequate personal stake in the risks taken by the operator.

So, in principle I come back to what I believe the most constructive way to move towards a more egalitarian society - not by depending on nationalising the wealth of the rich, but through widening increased personal wealth ownership at least up to a minimally meaningful level by all citizens eventually, achievable through a universal effort built into our taxation system.
In value, that would be say $400 000 worth of marketable assets and/or cash in the bank at present.

Post deleted at 25 Jun 2012 12:27pm by Bluecod

I agree with your aims Jens. It's just that the GST system seems to hit those with the least the hardest.

Yes, Ted E - GST hits the poorest relatively the hardest, because they consume all their income, whereas higher income people don't consume all their income, and perhaps consume some of it in a country without GST.

But - in view of the widespread pressure for flat proportional income tax, GST strengthens the justice of higher income earnes paying a higher rate of income tax, although that should not be "punitive" either, so as not to kill the "goose that lays the golden eggs".

Yes, GST hits the poorest the hardest - but if GST paid by the poor is channelled into their own savings , it achieves for the poorest what they need most - the way out of poverty!!!

In this way, beside some other advantages, GST is fair and wealth creative at the expense of a fraction of wealth consumption.

Unfortunately the GST is not channeled into the savings of the low income portion of our country. Instead those on the minimum wage are having an increasingly difficult time making ends meet their needs. I would like to be able to say that NZ is a fair society but it is becoming less fair as time goes by. I cannot remember the arguments that must have been presented when they introduced "Income Tax" on a progressive basis but do recall that when I started work the average tradesman paid the SS tax and only paid income tax if we worked consistent overtime averaging something like 52 hours/week. Then there were the rebates for wife and dependent children etc. It all seemed a much fairer way of doing it.
I'd like to see the average labourer able to support his wife and 2 children on a 40hour week than the present situation where he needs to work 60 to 80 hours to do it. I like the idea of one parent being at hone to greet the children when they come in from school instead of the present system where the majority of children seem to go home to an empty house.

Ted E - yes, the welfare state worked well for many years after depression and war time frugality.

But people wanted it even better - equal pay for women, higher wages, expanding welfare benefits, lowest possible (reduced!) taxation - which all led to the situation as at present.
(Tertiary education has exploded into overproduction beyond domestic needs, the health system delivers much more - but also much more expensively, and we consume on motoring now what was simply impossible then, because we did not have the money!)

Have you noticed, that demands for reduced taxation and higher profits and benefits and wages are in principle exactly the same? (Or - is there a difference in principle?)

But they exert pressure on govt. from opposite directions, resulting in govt. resorting to borrowing, in the effort to please the self-contradictory demands of the electorate.

Briefly - our national savings and ionvestment rate was inadequate for improving - (or even keeping up with) - the widening commitments by govt. on a sustainable basis.
That's why, Ted E. - if you want to look ahead for better days in the future, we should passionately canvass for raising our savings rates nationawide, with participation by the poorest of us.

This would have been possible through the increased GST which the poorest are paying already despite the extra hardship - and all that needs to be done, is to make it happen from the minute contributions to the NZSF are being resumed, which is promised to be done by our major political parties already.