We are developing the social individualist meta-context for the future. From the very serious to the extremely frivolous... lets see what is on the mind of the Samizdata people.

Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]

“Down with Reality”

One of the very many arguments in which I was embroiled while I was a student in the 1980′s involved one of my house-mates who steadfastly held that the government should pay students a handsome monthly salary in return for all the hard studying they did. Now this was at a time when, in fact, the government did pay most students an annual grant which covered the costs of their education and left them with a bit of spending money to boot.

But that was not enough for my protagonist. As far as he was concerned this was ‘mere crumbs’; a demeaning insult from a skinflint Tory government. No, students were so precious and valuable that they deserved an ‘executive’ style pay package so that they would not be subjected to the indignities of having to buy second-hand clothes from charity shops. When I explained (in some detail) why the government (Tory or otherwise) could not possibly afford such magnanimity, he responded by trying to convince me that arithmetic was but a political ‘mind-trick’ constructed to oppress the masses (and students, of course).

And, by jove, he was right. Well, after a fashion:

Hundreds of thousands of people across Europe, many of them elderly, have marched in protest at plans to reform welfare systems.
In Rome, pensioners arrived on buses, special trains and even boats from the island of Sardinia to demonstrate against the rising cost of living.

Various German cities saw people march against welfare cuts introduced to combat economic stagnation.

And in Paris they demanded more jobs and social justice.

Across Europe governments are trying to find ways to pay pensions to ageing populations, or to cut back on expensive social provision.

It is always tempting to sneer at people who think that the dried-up wells of government money can be refreshed by the act of marching up and down waving self-pitying slogans. Mind you, that has generally been the means of opening up the state spigots in the past so I suppose I cannot really blame them for giving it another try. That is the thing about street protests: they are the modern equivalent of rain dances.

There is also an extent to which I feel quite sorry for these people. They have been took, they have been had, they have been sold a pup. They have been ‘mind-tricked’ by a post-war political class that has mesmerised them into believing that a river of easy largesse could be conjured out of nothing and made to flow forever by sleight-of-hand. Yes, you can vote to abolish the iron laws of economics and two plus two can equal sixteen thousand four hundred and thirty five if only you are willing to let your ‘intellectuals’ handle the mathematics for you.

But now the dwindling numbers of producers have been taxed down to the bone and there are simply no more sweeties to hand out. That was not supposed to happen but it has happended and it heralds an end to the days of milk and honey.

These trains of irate Italian pensioners may appear slightly pathetic. Comical, even. But they are part of a generation (and maybe the front-line of two or even three generations) that is not so much ‘hitting the streets’ as hurtling towards a big brick wall into which they will eventually crash with sickening thud. When that day comes, a lot of dazed and angry people are going to be looking for something or someone to blame for their pain and, given Europe’s track record on these matters, I have little confidence that they will assign that blame correctly.

42 comments to “Down with Reality”

  • Sandy P.

    –In Rome, pensioners arrived on buses, special trains and even boats from the island of Sardinia to demonstrate against the rising cost of living. –

    The Euro is a likely cause.

    I read somewhere that restaurants are putting in price fixe menus. Look at the basket of goods the lira would have bot v. the Euro.

  • This is what the post-war welfare state has ultimately produced, entire generations of people who seemingly genuinely believe that government is truly the answer to their problems. But then again, isn’t this the paternal role the establishment has always wanted to take on? It seems the Italians were rather too convincing when they repeatedly told their people to trust in the government, that all of their ridiculously tax payments would ensure that they would always be cared for. They should have known better.

  • John Harrison

    Then where’s all the tax money gone? It’s all those corrupt multinational organisations and fat cat directors creaming off the profits through Globalisation, Big Oil, Halib Orange, the Zionist conspiracy, the Bilderberg Group, George W Bush, yes ESPECIALLY George W Bush.

  • John,

    Did you forget to read the last line of the story?

  • Brock

    The sad thing is the pensioners really are deserving of some pity. They’ve been sold lies for decades, and perhaps they’re fools for buying them, but they are poor, old fools and worthy of pity.

    When the pensioners are reduced to eating cat food because the State cannot make good on their promises, be sure to hold your fingers up to the Socialists and say – this if what you have wraught!

    They’ll just blame it on capitalist greed though, so I’m not sure I’ll be able to work up the energy myself. They’ll blame it on capitalist greed, and the pensioners will believe them. They won’t believe the Socialists out of any superior logic or arguments, but solely because to admit the socialists are wrong is to admit they themselves have been taken for fools – and that is too painful.

    A tragedy 60 years in the making.

  • Wild Pegasus

    I guess your housemate needed to learn a little bit about being a student. You’re supposed to run up a few thousand dollars in credit card debt while in college so you can dress like all the hip kids on your favourite TV show. Duh.

    - Josh

  • ernest young

    Brock, et al, please do not be so simplistic or so patronising in your condemnation of today’s pensioners as being duped by Government, or being so naive as to actually believe their promises.

    We knew damned well that the Government would renege on any promises, but for a long while it was impossible for anyone in the private sector to even buy, or contribute to a private penson fund. Socialist political dogma did not allow it. Even company schemes were initially disallowed.

    When the rules were relaxed, the annual contribution was then a princely 7.5% of income. as the average wage was some £60 a week, this produced an annual contribution of £234 a year. Obviously that pension fund was not going to make anyone rich when they decided to retire.

    The rules were later relaxed even further when the Government realised the problem they were facing with upcoming retirees. This ‘fix’ was not out of any consideration for the pensioner, although very welcome, it was done so that the Government could shift its resposibility to the individual. For most of today’s pensioners, it was too little, too late. During the 80′s double digit inflation and ‘early retirement’ (a.k.a. redundancy), were the order of the day, not making pension provision an easy task. So many employed people who were on the verge of making a worthwhile contribution to their pension funds in the two or three years prior to retirement, were being made redundant, and thus unable to increase their fund value.

    The Government, having neatly side-stepped their commitment, it was then the turn of the insurers to renege on their commitment to the private pension fund holders. Going to the House of Lord’s to get their bonus payments to policy holders declared illegal, thus enabling them to substantially reduce payouts to maturing pension funds. All very convenient…….

    When Bevan announced the State Pension scheme in 1946, or whenever, It was immediately seen as having great disaster potential by all but the Government. That this week’s pension payments were to be made from this weeks pension contributions, was seen as immediate cause for concern, yet the Government persisted. Even the idea of a Government run scheme, funded by pension contributions, was decried – as an idea too radical for the Socialist mentality. The State Pension scheme is, and always has been, a Grand Ponzi scheme. Lesser folk have served time for less……..

    Low interest rates have not helped the thrifty retiree, not only for cash savings, but also reducing the return on any annuity, which of course means that whatever funds were accrued produce much less than was planned initially,

    For all you ‘second mortgage’ investors, using the low interest cash provided by the very pensioners you find so pitiful, I hope you have a plan in place for when all that cheap money runs out, and the Government runs out of paper to print more. Rest assured the Government will keep on moving those goal posts. So please, a little less of the condescension, your parents and grandparents are not, nor were they ever fools, at worst they were misguided in adopting socialism, but then they are not alone in making that mistake.

    My old Granddad used to say ‘ Never forget, they have only lent it to you’.

    When the State scheme was introduced, there was no alternative, most of us did not have that much to save anyway. Government is far craftier today than sixty years ago, are you sure you are smarter? Remember, they are dedicated to getting their mitts on your money, they think it is rightly theirs anyway,

    Just in passing, when did you last talk to a pensioner who was not a relative?, have you ever bought that ‘old codger’ a half when you have been in your local? – just out of goodwill you understand, not out of pity, – or come to that – even out of pity! I didn’t think so –

  • The Wobbly Guy

    I always thought my country’s CPF system was a crock. But I know better now. Pensions are even worse.

    Even though the government still has a hand behind the scenes on the money, at least it’s still a slightly better system.

    Why not scrap the pension system totally? Or is it impossible because of sheer public ignorance?

    The Wobbly Guy

  • Gazaridis

    It’s just going to go the way of all the other pyramid schemes. Except this must be the most successful ever. It is impossible to scrap the state pension without creating massive civil disorder – there’ll be people who have paid 11% of their income throughout their entire working lives who will then be told that they’re not getting any of it back. Political suicide really doesn’t do it justice. It would make any riots ever in the history of civil disorder seem like an episode of Teletubbies. Because it would screw every man and woman in the country. The only people who have nothing to lose from scrapping the state pension are the dead and the under-16. The only way it will happen is if either we go bankrupt from it, or the rest of Europe goes bankrupt from it. Ultimately, this will be the issue that brings the end to democratic socialism.

  • Ernest,

    Thank you for that doughty contribution, a necessary antidote to the tendency we all have to trivialise in accusatory causes.

    I would add only one point. My grandfather, who served as a medical orderly at Gallipoli and was still only 48 when Attlee’s government came to power, was of a generation with a life expectancy of 68 years. My grandmother, God bless her, was expected to see 72. The post-retirement burden on the state was calculated accordingly. One should not, therefore, too readily accuse those who conceived the state pension of an egregious theft by taxation. They did not and could not predict the medical advances that would extend my generation, on average, into our 80′s (and our childrens’, perhaps, their 90′s).

    The libertarian critique of tax and a bloated and inefficient state apparatus is not advanced by this sort of trigger-happy thinking.

  • Verity

    Wobbly – I do not know how on earth you could have found fault with the CPF. If other countries adopted it, there would be widespread affluence among the retired. There are secretaries in Singapore retiring with almost a million dollars. CPF is absolutely brilliant, which is why the socialists would never copy it. It takes dependency away.

  • S. Weasel

    The math still wouldn’t work, Guessed. It would just take a bit longer to collapse.

    We hear “pension” and we think the money we pay goes to a discrete account where, through the miracle of compound interest, the bit we put in now becomes a nest egg for later. As if nanny government were merely forcing us to save what we know we should’ve saved anyway.

    It isn’t so, of course. The money we pay goes in the same big, sloppy pot as all the other money we pay. It’s really a pretty fine joke that the SS monies are called out as a separate line item on the paperwork. (Presumably, this is what Al Gore was blathering about when he vowed to put Social Security “in a lock box”, but I could never figger out how he meant to do it).

    So the money going out to pensioners is entirely made up of money coming in from current workers. This is the definition of Ponzi scheme. And it’s why all our governments are panicking about falling birthrates and declaring we need massive immigration to compensate for them.

  • Theodopoulos Pherecydes

    Charles K. Ponzi

  • Ben

    Hmm. Are we really ‘taxed to the bone’? Or do we just care more about luxuries than the welfare of old people? Take the UK, for example. In 2001-2002 the public spent 2.647 billion watching, renting, and buying films and in 2002-2003 spent 3.797 billion in casinos (Annual Abstract of Statistics 2004). If we simply gave this money to each of our 10.8 million pensioners (Census 2001) instead that would make an additional £11.47 per week each – which isn’t bad given the basic state pension for a single person is currently only £79.60 per week (Age Concern), or that the average retired woman has an income of only £161 per week (Fawcett Society). Obviously, this would be much more effective if targeted at those with lowest incomes.

  • Charles Copeland

    Guessedworker,

    It’s not just that medical advances have extended life expectancy. It’s that Konrad Adenauer’s defence of the ‘Intergeneration Contract’ (“Kinder kriegen die Leute immer” – “People will always have children”) turned out to be mistaken. People will not always have children — rather, they will let other people do the dirty work of species reproduction and rely, in their old age, on the tax contributions paid by other people’s children. The core problem is one of demographic decline rather than medical progress.

    BTW, why not simply extend working life indefinitely, until people are ripe for that nursing home in Weston-Super-Mare? Not everybody becomes an Alzheimer’s case or a paralytic at the age of 65. And if pensioners are fresh enough to demonstrate on the streets, they should be fresh enough to do a day’s work as well.

  • ernest young

    Guessedworker,

    The post-retirement burden on the state was calculated accordingly. One should not, therefore, too readily accuse those who conceived the state pension of an egregious theft by taxation.

    And why not? they set themselves up as ‘the experts’, and proceeded on that basis, to tell us what is right and proper for us. Surely it doesn’t take a genius to anticipate the longer life-span, after all, people have been living longer with each new generation, for the past one thousand years……

    I fail to see that my critique was an example of ‘trigger happy’ thinking, as I pointed out, the whole idea was criticised from day-one, as being disaster prone, for the very reasons we are seeing now. The idea of implementing such grandiose schemes, purely on the basis of, ‘let’s try it and see’, without giving due consideration to the long term effects are nothing short of criminal.

    That Bevan was an over-reaching, bigoted, loud-mouthed, bullying ignoramus, is neither here nor there, if we are to avoid the sort of scenario painted by Gazaridis, we are going to have to deal with the problem now, not after another sixty years of worthy discussion.

    Just how many more such disasters are needed to convince people that socialism is a failed philosophy? Health, Education and Housing are just a few of the problems waiting in line to develope into full scale disasters.

    I make no apologies for offending your sensibilties, but these half-witted non-entities have intereferred enough in my life, and I will not accept their, or your apologies for their ineptitude. ‘Sorry’ just doesn’t cut it!

  • Verity

    S Weasel – That’s what Wobbly Guy was talking about above. In Singapore, the CPF does go into a discrete account – yours.

    Wobbly will correct me if my figures are off, but it works like this: Every month, around 20% of salaries and wages are deducted from the employee and around 12% from the employer. In other words, approximately one-third of your salary is being saved each month. This is mandatory. Employers who renege are shut down.

    It goes into your personal Central Provident Fund account and there is a telephone number for you to ring anytime and you key in your own PIN and a recorded voice tells you how much you have accumulated in your account. Some people call almost daily.

    The government of Singapore pays you around 2% interest on this money (which is insured, by the way) and this is how they got cheap money to complete all their outstanding capital projects. But the money remains yours and remains credited to your account.

    At age 55, you can withdraw all your CPF and finance your own retirement. There are no state pensions, but with a million dollars to retire on, who needs the state?

    That’s it, basically. It doesn’t matter what temporary emergencies you have in your life, you cannot touch your CPF until age 55. It is an extremely well run scheme and retired people in Singapore have no money worries and are not dependent on the state in any way.

  • toolkien

    One, the people have to bear some responsibility for the straits they find themselves in, blaming the government solely is not right. “People get the government they deserve” still applies. People were too comfortable and too busy to analyze what the government was doing on their bahalf. People volutarily went to sleep to the government’s lullabies. This doesn’t give the grasping, Do Gooder bureaucrats a free pass, but if your house is robbed and you left your doors unlocked, you bear some responsibility.

    Two, people have to breakdown the act of saving, whether voluntarily or by coercion of the State. With both it is the act of turning over your property to another, who will invest it, they will have a liability to you, and you will have a paper asset. You hope to get your investment back, with a return, so current production is still necessary either way. The crux of the issue is that, hopefully, under a private method, the investor will pay more attention in whom they are investing (and it will involve their value judgements directly more of the time, i.e. the type of investment and buy into the raison d’etre of the enterprises) while with the State it is simply broadcast ‘investment’ into the population at large with little or no control over its end result (i.e. very little value judgement involved, except by a few bureaucrats, but mostly is just hemorrhage’s out of the system without a care in the world of ‘return on investment’). Another problem with this method is it makes the State a de facto (and yet largest) investor in the economy.

    That is the basic issue with State savings and transfer in general, the disengaging of production, and the underlying value judgements/systems that created it, and the value judgements under which it distributed and used. The end result, at least here in the US, is that the the average person, who thinks they will get those paper assets redeemed (i.e. chits for medical benefits, retirement supplement) is misguided. They either will, but only at the expense out of their own equity, or the paper assets will go worthless. We have a population of sheep who don’t seem to realize that they equity they think they have in their house and retirement accounts is actually debt, since the government has ‘loaned’ them money from the general fund which will have to be paid back. Their health and retirement expense will come out of that stack, but will filter back throught the bureaucracy first. Can it be any other way? Transfer your ability to make your own decisions based on your own value judgements for a comforting blanket made from theocratic cloth and one would expect anything different?

    The scariest part of the whole scheme is that either the promises will be reneged upon, or confiscation will have to increase from the ~50% that it already is (and of course the Do Gooders don’ t think that amount is near half enough). It will likely be a combination of both, and some sap generation will have to pick up the tab for the excess removed by the boomer generation.

  • Sandy P.

    Gazaridis – my husband’s a small business owner – try 12.4% which we probably won’t see, because we’re “rich.”

  • ernest young

    toolkien,

    Once gain, your reasoning is too simplistic. If the State coerces you into a scheme, and you decide it is ‘unsafe’, you then have two choices, either pay the State and then make your own provision. Which assumes that you have the funds to do so. For most this was not even an option.

    That is of course, if there are other options available to provide cover, in the UK in the 50′s and 60′s, there was no other option.

    Looking back, the only other viable option was to emigrate to Australia for a tenner….

  • S. Weasel

    I’d still resent the state forcing my hand, Verity, but that certainly sounds like a, ummm…sustainable way to go about it. Coercive but not crooked.

    Bush’s stock market idea isn’t a good one, even if we hadn’t had a crash since then. Too much potential to affect the markets, too much business and government overlap. Very bad juju.

  • bender

    Ben – are you being serious? I know in good ole jolly England its seen as a good idea to just work your rear end off and give away all the money you spend your time amassing – (and all that without any churchgoing! amazing folk you all are, I might add) – but is it really necessary to give up going to the movies?

  • Verity

    S Weasel – Yes, I take your point, but they do it to protect the state and keep it strong and solvent. They don’t want to be responsible for feckless people who aren’t able to marshall the willpower to save or invest wisely (although who’s to say what’s a wise investment?).

    So they force you to be self-reliant whether you like it or not. You cannot get your hands on your CPF before age 55 no matter what tragedies have forced themselves into your life or how much you need the money. So the government forces you to save, and it uses your savings (insured) for very low cost loans to put in the incredibly efficient infrastructure. I mean, this is a whizz bang country where everything is as new as tomorrow and everything works all the time.

    Even thrifty people who are inclined to save money don’t save enough. But in Singapore, you and your employer are obliged by law, between you, to sock away around a third of your salary for 25 or 30 years. And for those 25 or 30 years, it also earns 2% interest from the government.

    It’s to force people to be independent of the state. The Chinese people historically eschew dependency. There is no unemployment benefit. None. N.o.n.e. If you don’t have a job, your relatives take you in or you don’t eat. I asked a colleague in Singapore, “But what if you lose your job and you can’t find another?” and she replied, “You can always come down.” In other words, if you were a general manager and you lost your job, you may have to work as a waiter or cleaner while you look around. There is no cushion. (Also, there’s no shame to it. The Chinese traditionally, for thousands of years, have done whatever they had to to survive.

    So S Weasel, I don’t really agree with your posting, because dependency upon and submission to the state is not the goal. They’re determined that people continue to be independent of the government.

  • Rob Read

    I save 50% of my net salary, I’m shit scared of the state printing money and defrauding currency holders like me. My problem is where can I put my money?

    P.S. I work in pensions, it’s the next “best” thing to a local council in terms of efficiency.

    P.P.S. There are lots of rumours our wonderful chancellor wants to get tid of the only thing that makes the pension worthwhile, namely the 25% tax-free lump sum. I’ve deliberately held of tying up my money in any pension scheme becuase of this.

  • Michael M Mason

    Ben wrote:-

    In 2001-2002 the public spent 2.647 billion watching, renting, and buying films and in 2002-2003 spent 3.797 billion in casinos (Annual Abstract of Statistics 2004). If we simply gave this money to each of our 10.8 million pensioners (Census 2001) instead that would make an additional £11.47 per week each

    £11.4744, in fact–except that a large chunk of the £6.444 billion is already being collected as tax, so the nett yield would be considerably less than £11.47 a week. And, by definition, you’d have put every single employee of casinos, the film industry, cinema chains, Blockbuster, and the rest, out of work, so you’d have to pay welfare to all their families, making the yield even lower.

  • toolkien

    toolkien,

    Once gain, your reasoning is too simplistic. If the State coerces you into a scheme, and you decide it is ‘unsafe’, you then have two choices, either pay the State and then make your own provision. Which assumes that you have the funds to do so. For most this was not even an option.

    I don’t know what’s so simplistic about the notion that money invested, either voluntarily or by force (with a promise of payback in cash or in kind), faces that same fate. Both require the maintenance of an economy to produce the principal and return on investment to make good. It simply is the matter of who and why. It also helps, though, that in the case of the State, they have the option of changing what they are actually obliged to you for, on down to 0. But the function is ultimately the same, turning hard resources (money) into a promise, with hopes of a gain. It’s who does the investing and in what.

  • In 2001-2002 the public spent 2.647 billion watching, renting, and buying films and in 2002-2003 spent 3.797 billion in casinos (Annual Abstract of Statistics 2004). If we simply gave this money to each of our 10.8 million pensioners (Census 2001) instead that would make an additional £11.47 per week each

    A perfect illustration of my point courtesy of Ben. The only way to ‘give’ pensioners more money is to exterminate vast swathes of the productive economy.

  • Ben

    Mason and Carr observe that if this money was redirected to pensioners, it would put the employees out of their (original) jobs. 12,000 for casinos; 23,000 for gaming machines (although perhaps many of these actually do other jobs as bar and casino personnel?); 12,500 in the distribution and projection of films (year 2000); and 20,500 in the production of films: makes a total of 68,000 maximum (year 2000). Let’s not exaggerate: that’s not quite ‘vast swathes’. Two key points: (1) these are drawfed by 10,800,000 pensioners, millions of whom are impoverished; (2) employees in the gambling and film industries are of working age and (hopefully) in a buoyant economy like ours can find other jobs, unlike pensioners.

    Sources:
    Annual Abstract of Statistics 2004
    *Report of the Gaming Board for Great Britain 2002-2003
    The Creative Industries Mapping Document 2001

    One purpose of my original post was to puncture the whinging idea that a generally wealthy public is ‘taxed to the bone’. Multipling further examples of luxury consumption would make the point ever clearer. Mason’s correct that ‘a large chunk’ of this expenditure is already being collected as tax; conversely, a large chunk isn’t. But it’s not being taxed directly.

  • Ben

    But the other purpose of my post was to show that we could, if we wanted, do more for pensioners. Mason thinks the profits of the gambling industry wouldn’t benefit pensioners much. This is debatable (especially if the gains would targeted at the poorer pensioners); but the above is only an illustration – there are plenty of other luxury industries that serve largely to amuse and exploit a public with money to burn. But pace Carr, giving the money to the pensioners would not exterminate productive industry. Compare the current flow of money:

    (A) Public –> Luxury industries (siphoning profits) –> Government –> pensioners (impoverished) –> Support industries

    to an alternative flow:

    (B) Public –> Government –> Pensioners (now richer) –> Support industries (more demand)

    In (A) the profits need never get into the hands of the pensioners at all, as they could be spent on luxury goods in turn, but (B) ensures that the money passes through the hands of the pensioners before it gets spent. Impoverished pensioners would spend the money on useful goods first (heating, food, etc.) and luxury goods second. Their increased spending power would raise demand for useful goods, which would mean more jobs in such support industries. With retraining, those once employed in the luxury industries, encouraging parents to waste their children’s inheritance, could now work in socially useful industries, helping impoverished pensioners not to starve or die of cold. This is a crude model, yes, but is there a critical flaw?

  • Ben

    Correction: in my second-to-last post, the second instance of ‘(year 2000)’ belongs with 20,500 in the production of films; the 68,000 total is an agglomerate of year 2000 and 2002-2003 figures.

    In reply to Bender: yes, I am serious. I’m not trying to make a moral point (although I could) as much as an economic one: that there is no reason why we couldn’t put more money into the hands of pensioners, if we cared.

    Someone might note that pensioners gamble too. But that’s why I claimed that the greatest advantages would come from targeting the most impoverished pensioners; it’s also why I omitted Bingo.

  • Verity

    Verity – About Singapore: what happens if you die before you withdraw your funds? Where does the money go?

  • The Real Thing

    gmonforton@hotmail.com posting as Verity: You are required to nominate someone who will receive your CPF in the event of your death. I cannot remember, but I don’t think it has to be a family member, and it may even not have to be a Singaporean. But the money is paid out in full to whomever you have nominated.

    Verity

  • toolkien

    One purpose of my original post was to puncture the whinging idea that a generally wealthy public is ‘taxed to the bone’. Multipling further examples of luxury consumption would make the point ever clearer. Mason’s correct that ‘a large chunk’ of this expenditure is already being collected as tax; conversely, a large chunk isn’t. But it’s not being taxed directly.

    Your assumption that taxing someone is justified because they spend their money on luxuries is ludicrous. Where in your analysis have you given any consideration why one person is impoverished and another wealthy? What decisions did they make in their lives which led them into the fortune or famine they now find themselves? Setting yourself up as the great ‘corrector of wrongs’ for which you had, at best, a disinterest in prior, is more than a bit cheeky. If you wish to address that the allocations of production were unfair, use the power of cultural forces that overlay a free market to make some change. Using force of the State to 1) fix supposed unfair allocations, or 2) provide for Peter by robbing Paul, are both wrong and immoral.

  • Ben,

    I suspect you are too far gone to be reached but I feel obliged to at least try.

    You will not make anyone richer by shutting down the gambling and entertainment industries. People elect to spend their money on these leisure activites (pensioners included).

    You can, if you so choose, prohibit cinemas, DVDs, videos and gambling but that does not mean the money goes to pensioners. It just means the money that people would spend on those things gets spent on other things (such as black market DVDs and illegal gambling).

    The only way to channel that money to pensioners is to impose higher taxes on those evil leisure spenders to stop them spending their money at all.

    However that will not make pensioners better off because the money they already get from the government is raised by taxes levied on profits generated by people spending their money.

    So everyone ends up broke (i.e. where much of Europe is now heading).

    Get it, Ben? No, probably not. Do me a favour though, just think about it for a while.

  • Ben

    Thank you for trying, David, but, with respect, you seem to me to be repeating the points you and Mr Mason made before.

    My answer to you is roughly this. Currently, we always have a stock of money effectively circulating in the luxuries market; never is all of this money withdrawn as taxation. If through direct taxation this was put into the hands of impoverished pensioners, it would be circulating in an expanded necessities market instead. It is these circulating stocks which seem to get ignored in your and Mason’s analysis.

    It might be argued that even an expanded necessities market would not make the same contribution to national production or income. This would be especially true if our luxury industries depended entirely on the home market, but actually they profit from swarms of tourists and the export market as well.

    For toolkien’s benefit, I’ll repeat that I’m not trying to make the moral case for doing this, but to demonstrate its economic plausibility. By no means do I have a problem with luxury consumption per se, though
    I struggle to see how offering vain sacrifices to our insatiable desires, even by the fruits of our own labours, can be morally more significant than old people’s welfare – but that’s a matter of conscience and ethical debate. In any case, if my circulating stocks theory is right, there is so much luxury consumption that in economic terms we really ought to be able to spare enough to ensure that all old people have a decent standard of life without destroying the luxury economy.

  • Ben,

    Thank you for trying, David, but, with respect, you seem to me to be repeating the points you and Mr Mason made before.

    Er..well no actually I think it is you who is doing that.

    Currently, we always have a stock of money effectively circulating in the luxuries market; never is all of this money withdrawn as taxation. If through direct taxation this was put into the hands of impoverished pensioners, it would be circulating in an expanded necessities market instead. It is these circulating stocks which seem to get ignored in your and Mason’s analysis.

    Ben, never mind this gibberish about ‘luxuries’ and ‘necessities’, your proposal amounts to the same old, same old: the government should take more in taxes and give it to pensioners.

    And we are back where we started….

  • Ben

    David,

    Well, I had to repeat myself somewhat because you didn’t seem to take on board what I said the first time, so I tried to put it differently.
    Yes, I am arguing that more direct taxation is economically plausible. And I am not where we started, because (I think) I’ve shown that ordinary citizens are not ‘taxed to the bone’ (at any rate, not directly) but have plenty of money to spare.
    The boundary between luxury and necessity is indeed hazy, but arguably most people have some understanding that pensioners deserve a certain minimum standard of living, and that many of them don’t yet have it.

  • Greg

    Ben – It’s not YOURS (or the government’s) to give and take. Don’t be a looter.

    Verity – Apologies for posting under your name. It was either an error on my part or a bug.

  • ernest young

    Looks as though the Village Idiot is ‘on tour’!

  • ed

    Hmmm.

    1. No offense but a country where people work hard but are unable to enjoy themselves isn’t any kind of place I’d like to live in. Perhaps it’s just me, but a movie or a trip to the craps table is nice change every now and then.

    Frankly this discussion reminds me of the one that happens every year here in America. Only here it’s about the children and their education. Evidently it’s simply not enough to pay $80,000+ per year salary for teachers to work 6 months out of the year along with their meetings, conventions, holidays and benefits. Remember, it’s for the children! Yeah, right.

    2. So what are you European types going to do when America abandons you? Just wondering because the latest plan is to reduce deployments to at most half and quite possibly down to less than a fourth of what they are now. Probably the only American forces remaining in Europe will be those maintaining the airbases and possibly not even those. Some people are pushing for closing all the bases and then using NATO member bases on an as-needed basis.

    It’s a serious question though. The American taxpayer is getting pretty irritated and the whole “let’s defend Europe” thing is getting very old. Right now defense expenditures, excepting Iraq and Afghanistan, is in the $500 billion/year range. So the idea of having to spend any money at all defending a wealthy Europe is getting a bit of rethink.

    So if there is a push to forcing the EU to reverse the current trend of reducing defense spending, how much more pressure will that exert on social spending?

  • ernest young

    Ed,
    Can you imagine the economy of Europe, or as one commentator put it, ‘Eurabia’, if the various entities had to maintain and finance their very own military defence. They are only able to maintain their fragile economies at the present level because the US is picking up most of the tab, via NATO and the UN.

    Instead of using this ‘free pass’ to build a more vital economy, they prefer to fritter it away building ever more grandiose State sponsored social schemes, and paying the bloated bureacracy ever higher salaries. The US, having saved Europe from being ‘communised’ during the Cold War, now has to stand back and see the freedom it preserved, being sacrificed on the altar of statist, socialist bigotry and dogma in the form of a corrupt form of European unity.

    Rumsfield had it right with his ‘old Europe’ jibe, old, smug, self-satisfied doesn’t even begin to describe it….

  • Cobden Bright

    Yes, the pensions time bomb, combined with the Laffer Curve, will destroy democratic socialism.

    The whole crisis may shift Europe significantly further to the right. The younger generation already perceives the bankruptcy of the socialist model – once the pensioners go broke and/or die off en masse, the last dregs of socialist credibility will go down the plug hole.

    For maximum impact, America should time its Euro-zone troop withdrawals to coincide with the impending pensions crisis. That would blow apart the fiscal calculations of the lefties, and result in government after government being ejected from power. The remaining politicians would then be forced to operate on much reduced budget & tax levels, which would be good for everyone.