Wealth creators

passout

nolf wrote:

The whole line of questioning is socialist.

It presupposes that "Someone" controls whats made in the economy, and that "Someone" should choose something else to do.

Thats rubbish. We have a free, individualistic, capitalist, market economy, with individual economic agents who allocate resources wherever they want (I shop in Tescos because I choose to...).

When you do a business start up you don't ask, "what does 'someone/the economy' wantme to do?", but "What will make me money?".
It's the ultimate pragmatism, and not driven by theory, but what is an efficient and productive allocation of resources. So whether its industry or hair cuts, who cares? They both create wealth.

In a free market wealth and resources get allocated to those who use them efficiently. If you can come up with something that people will buy, you get paid for it. Statistics that illustrate the majority of GDP is rooted in Services (approx. 75% GDP), are merely an illustration that we seem to be good at that.

The problem with any debate discussing the future of the economy, and trying to decide that future, is an arrogant assumption that the state has the right to dictate the decisions of economic agents (everyone from ordinary shoppers, to those on the doll, to investment bankers). To take away that inherent and important freedom to choose what we do with our wealth, or what our companies make/sell, destroys the basis of our modern liberal democracy.
I think it is both morally (and clearly economically) wrong to prevent individuals acting in the way that they feel is right.

When you have free economic agents, they determine what gets made/created, by choosing with their wallets. In a way the free market is the ultimate democracy in action, in that which industries/sectors of the economy will prosper is determined by YOU, whenever you buy anything.

Economics is merely an attempt to determine/estimate the way in which the majority of these free economic agents will act, and its effect on the economic structure as a whole. The future of the economy is determined by economic agents (consumers/businesses) not economists or government departments.

So to answer the original question, what do I think will be the principal wealth creators?
I would guess we will move even more towards a knowlege economy, using this as the basis for the services we provide. But if that turns out to be innefficient, free economic agents will move the capital and resources to where it turns out to be most profitable.

Nice post.

passout

Surely this is a money in, money out thing? How much money leaves the UK versus how much comes in? It doesn't matter if the money coming in is from a Kiwi Tourist booking a hotel room in London or an American buying a Hope hub. This is where buying British and staycations come in of course - don't send your (weak) pounds to Spanish resorts of Japanese manufacturing companies if you can help it!

I would obviously agree that 'making things' is good but we already do this more than many of you seem to suggest, and don't dismiss the service industry (including banking, tourism etc) as a means of bringing in overseas capital.

rake

nolf wrote:

The whole line of questioning is socialist.

It presupposes that "Someone" controls whats made in the economy, and that "Someone" should choose something else to do.

Thats rubbish. We have a free, individualistic, capitalist, market economy, with individual economic agents who allocate resources wherever they want (I shop in Tescos because I choose to...).

When you do a business start up you don't ask, "what does 'someone/the economy' wantme to do?", but "What will make me money?".
It's the ultimate pragmatism, and not driven by theory, but what is an efficient and productive allocation of resources. So whether its industry or hair cuts, who cares? They both create wealth.

In a free market wealth and resources get allocated to those who use them efficiently. If you can come up with something that people will buy, you get paid for it. Statistics that illustrate the majority of GDP is rooted in Services (approx. 75% GDP), are merely an illustration that we seem to be good at that.

The problem with any debate discussing the future of the economy, and trying to decide that future, is an arrogant assumption that the state has the right to dictate the decisions of economic agents (everyone from ordinary shoppers, to those on the doll, to investment bankers). To take away that inherent and important freedom to choose what we do with our wealth, or what our companies make/sell, destroys the basis of our modern liberal democracy.
I think it is both morally (and clearly economically) wrong to prevent individuals acting in the way that they feel is right.

When you have free economic agents, they determine what gets made/created, by choosing with their wallets. In a way the free market is the ultimate democracy in action, in that which industries/sectors of the economy will prosper is determined by YOU, whenever you buy anything.

Economics is merely an attempt to determine/estimate the way in which the majority of these free economic agents will act, and its effect on the economic structure as a whole. The future of the economy is determined by economic agents (consumers/businesses) not economists or government departments.

So to answer the original question, what do I think will be the principal wealth creators?
I would guess we will move even more towards a knowlege economy, using this as the basis for the services we provide. But if that turns out to be innefficient, free economic agents will move the capital and resources to where it turns out to be most profitable.

so does the individual agent who is only selfishly concerned about his own pocket do whats best for the country as a whole. no thats why it needs government regulation.thats the main problem i have with capitalism. i think your argument holds water if we stop having such large demand for the goods that the free agent chooses not to produce (very often essential to our way of life). if the demand for something goes down then it is time to do something else and the money is there that isnt being spent on the unwanted goods. the problem is the free agent is choosing not to produce the things which we all live by and the demand is still there so there is a huge leak on the economy from getting it else where. this happens because the capitalist agent strangles industries with cheap labour and substandard conditions which to me is hypocritical and arrogant. if you want britain to sink to a low wage economy were going the right way about it. europe is leveling everything off, trouble is we sink while others rise off of it.

BikingBernie

nolf wrote:

The whole line of questioning is socialist.... It presupposes that "Someone" controls whats made in the economy, and that "Someone" should choose something else to do. Thats rubbish. We have a free, individualistic, capitalist, market economy, with individual economic agents who allocate resources wherever they want

What a load of ROT.

The reality is that there is no such thing as 'the free market'. Rather, powerful vested interests manipulate the markets in order to further their own interests. For a good illustration of this look at the banking fiasco, where the financial institutions kept the profits when the going was good, but then expected 'socialist' intervention when their gambles went bad.

Again, consider transport policy where vast hidden subsidies distort the 'market', ensuring that the private car user does not have to meet the full costs that their choice of transport imposes on everyone else in society. (For example, those relating to road deaths and injuries, pollution, congestion, the degradation in the quality of peoples lives who live near to roads etc.) In turn this plays into the hands of the oil companies and car manufacturers who have frequently manipulated the so-called 'free market' to their own advantage and to the detriment of other transport choices from railways to cycling.

The reality is that the whole existing system operates a perverted form of 'socialism'. However this is 'socialism for the rich', rather than socialism that is designed to give all in society a fairer reward for the work they do.

The Passion for Free Markets
Noam Chomsky

http://www.chomsky.info/articles/199705--.htm

Socialism for the Rich, Naked Capitalism for Everyone Else

http://www.huffingtonpost.com/joseph-a- ... 27121.html

Socialism for the rich

http://www.guardian.co.uk/commentisfree ... .useconomy

'Free enterprise for the poor, socialism for the rich': Vidal's claim gains leverage

http://www.irishtimes.com/newspaper/opi ... 26413.html

BikingBernie

nolf wrote:

I think it is both morally (and clearly economically) wrong to prevent individuals acting in the way that they feel is right.

Except that the capitalist system is based not on the idea of doing what is morally 'right', but selfishly doing whatever will maximise profits for minority interests, such as shareholders.

BikingBernie

rake wrote:

so does the individual agent who is only selfishly concerned about his own pocket do whats best for the country as a whole. no thats why it needs government regulation.

Exactly so. This is the point ignored by 'free-market' radicals, such as those 'libertarian' nuts that are all the rage in the USA. These people want to abolish 'the state' (which flawed as it is, is at least democratically accountable) and leave everything to the so-called 'free market' to sort out. The net result of this would be the loss of workers rights, the end of legislation designed to protect the individual and the environment from exploitation and so on. This process could even lead to a form of 'corporate fascism' with unaccountable, unregulated corporate institutions controlling almost every aspect of peoples lives. In fact this process is already well under way...

soy_sauce

my new part-time wealth making plan is football trading. 8)

nolf

BikingBernie wrote:

nolf wrote:

I think it is both morally (and clearly economically) wrong to prevent individuals acting in the way that they feel is right.

Except that the capitalist system is based not on the idea of doing what is morally 'right', but selfishly doing whatever will maximise profits for minority interests, such as shareholders.

That's not addressing my point.
My broad point was that I want to do what I like (within reason! A fundamental basis of liberal democracy), and why should where I spend my money be any different?

You seem to think economic agents are these far away people who control our lives.

You're an economic agent (sorry). If you want the majority of the economy to be geared towards producing things, then get rid of your bank account, all imported goods you've bought, and spend the majority of your income on british agricultural produce.

I was not saying capitalism was doing what was morally right, as that requires an arbitrator to determine what "morally right" consists of.
I am suggesting that it is the job of the individual to determine their own morality, and spending choices. If the majority of people act in a selfish way, I think thats more a reflection of their inherent nature, than a flaw in the system where they have absolute power.

The only possible argument is that the government cannot "trust" individuals to make these choices, and therefore should make them for them. As someone who studies History, not a big fan of that idea.

nolf

BikingBernie wrote:

nolf wrote:

The whole line of questioning is socialist.... It presupposes that "Someone" controls whats made in the economy, and that "Someone" should choose something else to do. Thats rubbish. We have a free, individualistic, capitalist, market economy, with individual economic agents who allocate resources wherever they want

What a load of ROT.

The reality is that there is no such thing as 'the free market'. Rather, powerful vested interests manipulate the markets in order to further their own interests. For a good illustration of this look at the banking fiasco, where the financial institutions kept the profits when the going was good, but then expected 'socialist' intervention when their gambles went bad.

Again, consider transport policy where vast hidden subsidies distort the 'market', ensuring that the private car user does not have to meet the full costs that their choice of transport imposes on everyone else in society. (For example, those relating to road deaths and injuries, pollution, congestion, the degradation in the quality of peoples lives who live near to roads etc.) In turn this plays into the hands of the oil companies and car manufacturers who have frequently manipulated the so-called 'free market' to their own advantage and to the detriment of other transport choices from railways to cycling.

The reality is that the whole existing system operates a perverted form of 'socialism'. However this is 'socialism for the rich', rather than socialism that is designed to give all in society a fairer reward for the work they do.

The Passion for Free Markets
Noam Chomsky

http://www.chomsky.info/articles/199705--.htm

Socialism for the Rich, Naked Capitalism for Everyone Else

http://www.huffingtonpost.com/joseph-a- ... 27121.html

Socialism for the rich

http://www.guardian.co.uk/commentisfree ... .useconomy

'Free enterprise for the poor, socialism for the rich': Vidal's claim gains leverage

http://www.irishtimes.com/newspaper/opi ... 26413.html

You've just quoted Chomsky.

I don't think any further comment is necessary to win the debate.

EKIMIKE

You gotta laugh at this pile of pre-recession w@nk:

http://www.voxeu.org/index.php?q=node/420

"It will mean figuring out how to deploy information technology to raise productivity in retailing, finance and other service sectors where Germany remains leagues behind the United States."

Well that proved a great idea :roll: .

I think you'll find Germany is doing just fine. In fact alot better than the US and UK right now .

What's more incredible is that there are plenty out there who cling to this hollow economic approach. In my experience they tend to be arrogant greying middle aged blokes with dodgy facial hair driving BMW's/Merc's/Audi's. F*ck the C*nts. I hope David Cameron and schoolboy Osbourne get their way into downing street and cock it right up whilst the said c*nts marvel at the PR smoothness.

pneumatic

Well, I've worked my way through all of this, looking for an answer to the OP that I could understand and then decide whether or not to agree with.

Nope! Not happening.


The way I see it is this:

The world IS finite (nothing gets added except the heat of the sun)

Over history, Britain has helped itself to resources that were lying around the planet unprotected by the people living there, made stuff out of them and sold them back at a profit.

Now China has taken over doing that instead.

We got used to living off the profits (and shared them around between us by providing services like haircuts, therapies, entertainent and advice)

Now the profits have gone and been replaced by huge debts, but we still like to pretend that the sharing process still works, even though really we've got nothing to share.

EKIMIKE

pneumatic wrote:

Well, I've worked my way through all of this, looking for an answer to the OP that I could understand and then decide whether or not to agree with.

Nope! Not happening.


The way I see it is this:

The world IS finite (nothing gets added except the heat of the sun)

Over history, Britain has helped itself to resources that were lying around the planet unprotected by the people living there, made stuff out of them and sold them back at a profit.

Now China has taken over doing that instead.

We got used to living off the profits (and shared them around between us by providing services like haircuts, therapies, entertainent and advice)

Now the profits have gone and been replaced by huge debts, but we still like to pretend that the sharing process still works, even though really we've got nothing to share.

100% agree.

rhext

rake wrote:

+100000000000000. do people not look at history and see what created the developed countries, it wasnt 'IT' or investment banking or telesales. it was hardcore manufacturing and engineering, raw materials. were now fupped in that respect.

....to be fair, at the time that the developed countries were developing, IT wasn't invented. And I don't think that the developed countries would have developed very far if they weren't underpinned by a strong banking system. There's a limit to how much development you're going to get with a barter economy: if you want to build a company to make steam engines, you're going to struggle to find people who are prepared to accept steam engines as payment for their labour.

Seems to me that people create wealth by doing or producing stuff that other people want. Banks process it into money for us and enable us easily to match product/service to consumer no matter how convoluted the chain between the two. And shifting product/service/money around is a service in its own right so there's no reason why that can't create wealth as well, as long as you don't let it get out of hand (as it has done recently).

A couple of hundred years ago, you start a factory to make stuff. Someone else in the next town says 'I can do that cheaper' and sets up another factory: you either compete, contemplate your failure in misery or move on and do something more lucrative. The only difference now is that the next town is further away. So we stop building cars and start building computer games: as long as people are prepared to pay for them that's generating wealth.

As for what the 'next big thing' is, if I knew that I'd be rich. But I'm fairly sure we'll think of something: we always have!

nolf

EKIMIKE wrote:

You gotta laugh at this pile of pre-recession w@nk:

http://www.voxeu.org/index.php?q=node/420

"It will mean figuring out how to deploy information technology to raise productivity in retailing, finance and other service sectors where Germany remains leagues behind the United States."

Well that proved a great idea :roll: .

I think you'll find Germany is doing just fine. In fact alot better than the US and UK right now .

What's more incredible is that there are plenty out there who cling to this hollow economic approach. In my experience they tend to be arrogant greying middle aged blokes with dodgy facial hair driving BMW's/Merc's/Audi's. F*ck the C*nts. I hope David Cameron and schoolboy Osbourne get their way into downing street and fool it right up whilst the said c*nts marvel at the PR smoothness.

Technically Germany has more structural problems than us, particularly the inflexibility of the labour market, as a barrier to increased employment.

What figures show that Germany is doing better than us?

I "cling" to the "hollow" approach of free market capitalism (as does Germany), and I am but a youthful 21, with very little facial hair, and hardly any BMW's at all.

secretsqizz

pneumatic wrote:

Well, I've worked my way through all of this, looking for an answer to the OP that I could understand and then decide whether or not to agree with.

Nope! Not happening.


The way I see it is this:

The world IS finite (nothing gets added except the heat of the sun)

Over history, Britain has helped itself to resources that were lying around the planet unprotected by the people living there, made stuff out of them and sold them back at a profit.

Now China has taken over doing that instead.

We got used to living off the profits (and shared them around between us by providing services like haircuts, therapies, entertainent and advice)

Now the profits have gone and been replaced by huge debts, but we still like to pretend that the sharing process still works, even though really we've got nothing to share.

Yup.
I hear that China has summat called 'precious earths' that has us all in hock forever,apparently,
unless
can we all go out and start digging our back gardens please

pneumatic

It's ok, though, because, when we get properly poor and hungry, Chinese celebrities will come and visit us with camera crews and shed tears on our behalf for their version of comic relief.

All we have to do is to smile and look grateful.

EKIMIKE

Nolf-

‘Technically’, the financial markets should have regulated themselves. In the real world they failed. No-one can argue with a fact like that.

Are you saying that ‘inflexibility in the labour market’ is worse than having one of the world’s largest budget deficits?

Why would I use statistics to prove Germany are doing better than us? Economic statistics rarely tell the whole story. Also they only provide a snapshot of data which is pretty useless in my argument that: retaining a manufacturing foundation in an economy is important. I.e. a long term commitment to manufacturing industry.

Statistics say that approx. 13% of GDP is made up of manufacturing industries. But does that tell you that many of the large manufacturers in this country are foreign owned? EG Honda, Toyota, Corus, Cadbury

Contrast that with Germany who in the Car industry alone have Daimler Chrysler, BMW, Volkswagen and Porsche.

On top of that where’s the British equivalent of Siemans? Continental? Adidas? All German owned companies making money for the German economy.

rake

rhext wrote:

rake wrote:

+100000000000000. do people not look at history and see what created the developed countries, it wasnt 'IT' or investment banking or telesales. it was hardcore manufacturing and engineering, raw materials. were now fupped in that respect.

....to be fair, at the time that the developed countries were developing, IT wasn't invented. And I don't think that the developed countries would have developed very far if they weren't underpinned by a strong banking system. There's a limit to how much development you're going to get with a barter economy: if you want to build a company to make steam engines, you're going to struggle to find people who are prepared to accept steam engines as payment for their labour.

Seems to me that people create wealth by doing or producing stuff that other people want. Banks process it into money for us and enable us easily to match product/service to consumer no matter how convoluted the chain between the two. And shifting product/service/money around is a service in its own right so there's no reason why that can't create wealth as well, as long as you don't let it get out of hand (as it has done recently).

A couple of hundred years ago, you start a factory to make stuff. Someone else in the next town says 'I can do that cheaper' and sets up another factory: you either compete, contemplate your failure in misery or move on and do something more lucrative. The only difference now is that the next town is further away. So we stop building cars and start building computer games: as long as people are prepared to pay for them that's generating wealth.

As for what the 'next big thing' is, if I knew that I'd be rich. But I'm fairly sure we'll think of something: we always have!

i know that. but would banking have anything to bank or administer without the fullfilled need of a steam engine. you could print money but it would have no value untill there were desirable things to make life easier, better more comfortable. it spans further than just labourers producing things. my sister is an accountant who works for a company who produce plastic goods, due to the current rise in materials etc to make the produce its looking more unsteady by the day. so if it collapses or downsizes or relocates it will put people from all sectors of employment out of work. she produces nothing tangible but will still become unemployed if the manufacturing company collapses. Q the recievers to thieve what they can from it and write off the rest of the debts, how usefull.

EKIMIKE

Also, why is a labour in-flexibility such a problem for Germany? It's not like they're making any huge structural shifts in the make-up of their economy.

The truth is that we see it as a problem for them because we advocate an economy with a large tertiary sector of Retail and Financial Services. They don't want that! So it's not a problem.

The article i linked shows the sheer arrogance of our free market economics leaders by saying that Germany is lagging behind us because they aren't embracing the practice of having a huge Retail and Financial Services sector.

We put all our eggs in one basket and we're suffering because of it. Germany, whilst not setting the world alight, aren't in the sort of mess we are. And if you need proof that they are strong, look at our reliance on them to bail out the Greeks.

rake

EKIMIKE wrote:

You gotta laugh at this pile of pre-recession w@nk:

http://www.voxeu.org/index.php?q=node/420

"It will mean figuring out how to deploy information technology to raise productivity in retailing, finance and other service sectors where Germany remains leagues behind the United States."

Well that proved a great idea :roll: .

I think you'll find Germany is doing just fine. In fact alot better than the US and UK right now .

What's more incredible is that there are plenty out there who cling to this hollow economic approach. In my experience they tend to be arrogant greying middle aged blokes with dodgy facial hair driving BMW's/Merc's/Audi's. F*ck the C*nts. I hope David Cameron and schoolboy Osbourne get their way into downing street and fool it right up whilst the said c*nts marvel at the PR smoothness.

the biggest joke in there is his observation that china having now developed the skills to produce more technologically advanced produce its time for everyone else to get out and move into IT based design and export that to them instead.
problem
1. given the high price they will incur for such services they will seek to do it themselves to increase profits. its a sticking plaster on a severed artery.
2. there are usually more 'workers' than designers to bring a product into fruition, thats why the designers can be paid more for their skills. thus of the people who relocate into design there will be a surplus of workers with no role to play. Q unemloyment.
3. as their technology increases to new levels our designers will be left in their wake and become less and less usefull to them.

larfingravy

Wish I had time to structure a good reply, so you're stuck with this....

I don't believe the increase of venture capitalist funds investing in businesses (like pubs I ask you!) when looking for a quick profit return with no long term interest in the business they have invested in.

There is no longer an existence of philanthropic investors like Cadbury, Rowntree etc or companies that would invest in their workforce from apprentice through to retirement such as British Rail.

BikingBernie

nolf wrote:

I want to do what I like (within reason! A fundamental basis of liberal democracy), and why should where I spend my money be any different?

You overlook the fact that, in world where you have to live with others, accepting you cannot do as you like is the bedrock on which the whole of society is based. This general principle applies to most everything in life from paying taxes to the benefit of the common good to paying due regard to traffic laws when driving.

nolf wrote:

I am suggesting that it is the job of the individual to determine their own morality, and spending choices.

Moral relativism, in fact relativism of any type, is a non-starter. If 'my' morality decrees that rape and murder are acceptable, this does not make them so. You talk about acting 'within reason', but how is what is 'reasonable' to be determined, other than by reference to external 'arbitrators'?

nolf wrote:

If the majority of people act in a selfish way, I think thats more a reflection of their inherent nature, than a flaw in the system where they have absolute power.

Again the 'inherent nature' of people is why things such as the law exist. A system that fails to pay due regard to human nature is a flawed system. You might as well try to argue that a legal system that did not penalise murder, rape and robbery was nonetheless perfectly sound.

nolf

EKIMIKE wrote:

‘Technically’, the financial markets should have regulated themselves. In the real world they failed. No-one can argue with a fact like that.

Are you saying that ‘inflexibility in the labour market’ is worse than having one of the world’s largest budget deficits?

Why would I use statistics to prove Germany are doing better than us? Economic statistics rarely tell the whole story. Also they only provide a snapshot of data which is pretty useless in my argument that: retaining a manufacturing foundation in an economy is important. I.e. a long term commitment to manufacturing industry.

Here are some figures.
Germany's GDP is about as dependant on industry as we are.

% of GDP by sector:
Agriculture: 0.9%
Industry: 27.1%
Services: 72% (2009 est.)

So when you say that they have triumphed due to their basis in industry, thats not true.

They are a prime example of a post industrial service based economy. When looking for differences in the 2, to explain the differing situation by reference to GDP is clearly wrong.

EKIMIKE wrote:

Contrast that with Germany who in the Car industry alone have Daimler Chrysler, BMW, Volkswagen and Porsche.

The car industry. A great example of an industry reliant on consistent and very significant government protection. Both in the form of direct subisidies ($bn's in cash), and in protectionist measures such as import tariffs to prevent foreign competition.

If a car industry is profitable, whole heartedly encourage it, but for example in the US, the car industry has had more money than all of the US banks that have been bailed out (see Martin Wolf FT analysis piece several weeks back). And the US govt. is making a profit on bailing out the banks!


If indeed you are right, what is the solution?

Should the government pay £bn's to prop up failing industries?
Become a protectionist economy and stifle international trade to shelter innefficient competitors?
Make UK industry magically profitable and efficient somehow?
Nationlisation (always a great way of encouraging efficient working practices, and a drive for continual improvement).

nolf

BikingBernie wrote:

nolf wrote:

I want to do what I like (within reason! A fundamental basis of liberal democracy), and why should where I spend my money be any different?

You overlook the fact that, in world where you have to live with others, accepting you cannot do as you like is the bedrock on which the whole of society is based. This general principle applies to most everything in life from paying taxes to the benefit of the common good to paying due regard to traffic laws when driving.

nolf wrote:

I am suggesting that it is the job of the individual to determine their own morality, and spending choices.

Moral relativism, in fact relativism of any type, is a non-starter. If 'my' morality decrees that rape and murder are acceptable, this does not make them so. You talk about acting 'within reason', but how is what is 'reasonable' to be determined, other than by reference to external 'arbitrators'?

nolf wrote:

If the majority of people act in a selfish way, I think thats more a reflection of their inherent nature, than a flaw in the system where they have absolute power.

Again the 'inherent nature' of people is why things such as the law exist. A system that fails to pay due regard to human nature is a flawed system. You might as well try to argue that a legal system that did not penalise murder, rape and robbery was nonetheless perfectly sound.

1. The caveat of within reason, is a very important addition there, and was deliberate. obviously you cannot do what you want if it impinges on others and I was clearly not advocating that.

I believe the basis of modern liberal democracy is that you can do whatever you want, so long as that does not impinge on the freedom of others to do what they want. (crime etc prevents this).


2. Moral relativism, again, to a point, so long as it complies with the basic of rule of not impinging on others. The basic and universal rules of accepted criminal behaviour are a good example of external determinants that I would trust.
I do not trust MP's to dictate morality to me or anyone else!!!

3. I think capitalism is founded on an acceptance of the failures of humanity. thats the point. Adam Smith makes note of that in his "wealth of nations", and has formed a basis of business. I prefer an economic system that works in conjunction with peoples inherent nature, rather than attempt to change it (universally unsuccesfully!).


Capitalism needs to be regulated obviously. I don't believe in free market anarchy. I'm not talking about regulation though. Laws should set boundaries, and limitations on what businesses/individuals can do, not shape the way in which an economy develops.

I don't think loads of new legislation would be a good outcome of the financial crisis.

nolf

EKIMIKE wrote:

The article i linked shows the sheer arrogance of our free market economics leaders by saying that Germany is lagging behind us because they aren't embracing the practice of having a huge Retail and Financial Services sector.

We put all our eggs in one basket and we're suffering because of it. Germany, whilst not setting the world alight, aren't in the sort of mess we are. And if you need proof that they are strong, look at our reliance on them to bail out the Greeks.

2 points there.

He's not an economic leader but observer. I would contend the owners of businesses are far more the econmic leaders, as they're the guys who employ people, and generate growth.

2. You keep saying they aren't in the sort of mess we are. Whats that based on?
Saying "they're not" has to be based on something, and the suggestion they must be in less of a mess because they have a founding in industry, and are therefore in less of a mess is a circular argument.

As I see it the German budget deficit is not much smaller than the EU avg and still exceeds the Mastricht rules on govt deficit.
http://www.ft.com/cms/s/0/2e879dda-2139 ... ab49a.html

While Germans remain optimistic, the markets are optimistic about the UK as well. We have low unemployment, a return to growth, and greater liquidity for a whole load of businesses, while most banks have shored up their capital reserves so are better placed or future challenges.

The only immediate big question is one of shrinking the govt. deficit, and thats a question Germany shares. So in terms of significant differences...

pneumatic

Also . . .

The thing about trying to rely on a knowledge economy is that knowledge is a borderless and basically open source resource. You can try and make laws to stop people using "your" knowledge, but frankly, that is a bit silly (and anyway very temporary).

So, while we are busy "exporting" our knowledge to tens of thousands of Asian students, they are busy taking it home, matching it up with all the resources they already have and doing even better for themselves.

Quite soon, it will no longer be necessary for these students to come to the UK at all, as they will have developed the wherewithal to create knowledge at home. Trust me, I have seen the Chinese university building programme with my own eyes (and had dinner with the President of Shanghai University). They know what they are up to.

I have no quarrel with this process; any wealthy nation should educate its people. It just means that our universities, which are currently propped up by overseas student fees and about to get a massive kick in the mortar board from our impoverished State, are in for a very troubling time.

EKIMIKE

Nolf - whilst you make some fair points, i still disagree with your thinking. Maybe i'm wrong, maybe you're wrong. I'll agree to disagree. I clearly don't have the same knowledge of economies as you but again, i'm not going to be bowled over by statistics which barely scrath the sufice.

I think there's still a long way to go before we and many other countries can believe we're out of the woods. I'm cynical in my thought that we've not been told the whole story over the last few months as Labour try to save face in the run up to the election. I'm a firm believer that we'll struggle unless some fundamental changes occur. I don't know what these changes should be, i'm not an economist, and i certainly won't try and recycle a media/journalists opinion as they are just as un-qualified as me. Afterall i have no doubt that we're not being told the full grim truth about the situation.

Clearly my favouring of the German economy isn't well founded in statistical knowledge. Again, i believe in this situation, and many others, statistics are cosmetic. My admiration is of the German economic culture. I may be entirely wrong but my perception is that they're not dragged along by fashionable phenomena or obsessed with their world standing in the same way that we are.

They seems content to back their own policies no matter how un-fashionable they may be. They have stuck to what they're good at: engineering cars, making tires for example. For me that is a much wiser approach than jumping onto boom trends in the way we did with the finacial markets.

So by all means, give me statistics which prove me wrong by 'technicalities' But i don't believe anyone can contest that a successful culture can defy even the most damning of statistics. I may sound un-patriotic but i certainly think that there are countries with far superior economic cultures at present.

EKIMIKE

Cheers for the insight pneumatic.

I'm certainly of the opinion that in the next decade, we British will realise that we are no longer one of the superior forces in this world. We are slipping into mediocrity. Mediocrity is a logical symptom of complacency and for sure, i think we've become terribly complacent.

Arguably the other logical symptom of complacency would reliance on others. As the economic crisis has shown, we are the mercy of the worlds big players. It's not an unkown that we have relied heavily on Chinese investment over that past few years. Unfortunately we have no get out clause. We have nothing to fall back on as far as i can see. Or am i missing something?

Le Commentateur

http://www.bbc.co.uk/programmes/p0073kxs

Stone Glider

In a book first published in !946, entitled The Mediterranean and the Mediterranean World in the Age of Phillip II, Fernand Braudel describes the Spanish merchants who had risked all to enrich themselves in the "New World". As time passed, the next generation contented themselves with providing the finance and contacts to effect that wealth creation. The following generation, with little relevant skills nor appetite for risk faded away and were overtaken by more dynamic entities. And all the time Spain pursued expensive, vainglorious wars it could not afford.

Draw your own conclusions.