To get economic growth there must be saving and investment. Who will save if interest rates are lowered to 1% (effectively zero, liquidity preference cuts in). Do we really want to emulate Japan for another miserable decade? Hasn't a decade of Brown's economic and financial incompetence and lack of foresight been enough? What is this - the plagues of Egypt?
Frogs now.
Our system rewards conformity and subservience rather than creativity because financial betting is protected by the state, while entrepreneurial risk-taking is not.
Our animal spirits have been caged. Indiscriminate protection of employment regardless of merit heightens entrepreneurial risk - there are 2100 too many Alitalia workers who face the sack ('so they effing should', says a frequent flier passing through); are they worth protecting? No. Workfare not welfare is essential or a 'rights' mentality develops.
A fair day's work for a fair day's pay is a more profound statement about our current economic and financial predicament than its status as an inverted 19th century slogan suggests.
Either we release our entrepreneurial spirits or we shall be nothing but a nation of corner shopkeepers.
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'I saw the angel in the marble and carved until I set him free'
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5 comments:
The savings and assets are very unequally distributed. The over-50s have nearly everything, the young and young middle aged are struggling like the man at the bottom of the Five Alls. I believe there is a lot of cash around, but it's in the hands of people reluctant to invest - one tends to get more cautious as one gets older.
From the other side: the over-regulation! But only for the small business, it seems.
Everything, is a great deal to lose for over-50s. Under the present regime in the UK many have lost their pensions, so of course they are not going to release their currently unused wealth - they will need it to escape their planned future.
Restoring confidence demands the removal of this malign, Labour suffocation of entrepreneurship. Bu for Labour to survive there can be no capitalist or even co-operative opposition.
They really are the corrupt fag end of the once ideal of justice for labour.
As a class the over 50s have much, you are right S, but considered in social groups you know that there is a huge transfer going on inter generationally between family members and affines. Why else would the Conservatives have stopped an election defeat in its tracks by ending inheritance tax for the middle class and skilled workers?
The anachronistic socialist practices indulged by Brown for 11 years have resulted in the impoverishment of the poorest in terms of life chances and the possibility of building up family wealth; and resulted, too, in the massive export of the most able people and of capital and investment to less inimical environments.
Effectively and inforgiveably Brown's regime has said to the poor 'here's a hundred pounds a week; now go away into your horrible holes in the northeast or wherever, and don't ask for more till next year.'
Nomad said I should use bullets, not semicolons, to make my points.
Right. Yes.
I think - and I've said this to many clients - that we're heading back to Two Nations. The over-50s with the cash are generally those who retired from the larger firms and the better end of the public sector, and by passing on wealth they will enhance the advantages of their descendants - paying for university courses, first houses etc.
Society will re-stratify as our shrinking industrial base cuts average wages for labour, and the growing dominance of mega-retailers shrivels the opportunity to advance through small business.
It's all being papered over by pseudo-education and training for the over-16s, and penny-ante public sector makework, until the budget crashes.
That's what it looks like in my darker moments; it'd be lovely to think that I was comprehensively wrong.
From nanny states point of view cutting interest rates is just the ticket to stop saving and force consumption to keep the scam running a little longer. I suppose I could accept this if it was a short term measure to prevent a depression, but listening to politicians and economists in the media, few look further ahead than the next couple of rate cuts.
As for the generational thing, I remember despairing in my twenties of ever getting a house, but working and saving delivered the goods for me. This might argue that the existence of wealthy old/poor young was ever thus, and ever will be, but I suspect that the loss of a savings ethic and the loss of productive mass employment will lead us to a new societal model - poor old/poor young.
Houses will become more affordable, I believe. From what I learned reading Karl Denninger, I now expect house price deflation from 6x income to 3x, over time. But I also expect median incomes to fall in real terms, because of the shift from industry to services. So where possible, the property assets of the older generation need to be turned into cash, then invested in whatever will maintain value against inflation.
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