Later on Mr Cable returns to the subject of “fair taxes”, when asked what he would consider a success after five years as business secretary. He even goes much further than Labour ministers ever dared by using the “R” word (redistribution) and spelling out exactly what he means – “a tax system that means people at the bottom end of the scale pay less and at the top end of the scale pay more.”
Given that our current tax system does this then I assume we can say that the current tax system is fair then?
Please note that he doesn’t say “pay more as a percentage of their incomes”, just “more”.
Red Pepper magazine has a guide to why the spending cuts aren’t in fact necessary.
Sadly, they fail to make the obvious and killer point. It’s all ideological.
There really are people who want a smaller State and there really are people who think that the pain in getting from here to there will be worth it.
These views are generally associated with the Conservative Party and a certain section, the free market liberals, of the Liberal Democrats.
And who is in power, who makes up the Government? The Conservative Party propped up by the free market wing of the Liberal Democrats. These are who the People, in their infinite wisdom, voted for in the recent general election, meaning that under our present, agreed not particularly perfect, electoral system this is the voice of the Demos.
So, err, perhaps we don’t all have to ride busses to save the planet?
Meanwhile, Porsche has signaled it will go ahead with the development of the 918 Spyder supercar, which is—get this—a midengine, gas-electric, plug-in hybrid with a combined output of around 718 horsepower (500 hp gas and 218 hp electric). A successor to the Carrera GT, the 918 Spyder promises unfathomable performance—0-60 mph in about 3 seconds and a top speed of 198 mph—as well ridiculous fuel economy, around 78 mpg, depending on the test cycle. The power pack on board is a liquid-cooled lithium-ion battery.
Although I suspect that there are those slightly deeper greens out there who would only be outraged by the idea that Gaia can be saved without the crushing of crass consumerism.
Coalition rhetoric denounces Labour for its big state takeover of voluntarism: it’s a straight lie. Blair and Brown channelled more money and effort than ever into the voluntary sector, which doubled in value on their watch. Was that due to a sudden spasm of generosity from the burgeoning wealthy? No. Stephen Bubb, head of the Association of Chief Executives of Voluntary Organisations, points out that 70% of their extra funds came from the state.
Err, that Labour took over the voluntary sector by funding it is proof that Labour didn’t take over the voluntary sector by funding it?
Following on from yesterday on this virtual EU Parliament game, they’re letting us plebs in to take part in the Beta test.
Sounds like something for UKIPMan really…..start to ask awkward questions. Has anyone ever done a cost benefit analysis? What does the UK get for £7 billion a year? What are the parliamentary procedures for leaving the EU?
What are the procedures for amending extant law? For example, how is it possible to add plumpots to the list of allowable ingredients of jam?
Several thousand ‘ornery types could really have quite a lot of fun with that…..
Very good piece at The G about the Soviet economy, where it all went wrong. A couple of great little points:
It had been a reasonable assumption, for nervous western onlookers in the early 60s, that a society which launched satellites must also have solved simple everyday problems such as supplying lettuces and children’s shoes. When it turned out that it wasn’t so, that the Hemel Hempstead branch of Start-Rite would have represented unimaginable luxury in a Soviet city, the space rockets stopped signifying a general, enviable “high technology”. They started looking like some pharaoh’s pet project, a pyramid scraped together on the back of poverty, cruel and a bit ridiculous.
It was still true decades later….take the average Russian circa 1989/1990 into a standard western supermarket and they quite simply would not believe that this was reality. This was all Potemkin, wasn’t it? There are stories of various aid and economic training missions doing exactly this with various bureaucrats in the early 1990s, taking them from Russia and parading them through some suburban Sainsbury’s and they absolutely not believing that this was just how things were.
It even happened to me….I was living there from 91 onwards and in 93 made a quick trip to the US. Jet lag had me wandering through a supermarket at 4 am, wondering over the cornucopia. There simply wasn’t anything like this at all back in Russia: this one food hall in a suburb of Boulder (it was, I think, a King Super) had more variety than every shop in the entirety of Moscow, a city of 10 million plus, put together.
All of the perversities in the Soviet economy that I’ve described above are the classic consequences of running a system without the flow of information provided by market exchange;
That was, indeed, the problem. No, not the absence of capitalism, capitalists or entrepreneurs. But the absence of markets.
However, having praised this piece so far the underlying thesis has its flaws. That thesis being that the Soviets tried to get around this problem through cybernetics:
And so follows the oddest implication of the Soviet moment. It may not be over. It may yet turn out to be unfinished business. For, from the point of view of “economic cybernetics”, the market is only an algorithm. It is only one possible means of sharing out and co-ordinating economic activity: a means with very considerable advantages, in terms of all the autonomous activity and exploration of economic possibilities it allows, but not the only one, and not necessarily the best either, even at allowing autonomy and decentralisation. In the 20th century, devising the actual apparatus for a red plenty was an afterthought to the ideology. In the 21st century, it may be the algorithm that appears ahead of a politics to advocate it. In which case, the contest of plenties will be on again. And every year our processing power increases.
It didn’t work and yet, with our more advanced technology, perhaps it can? Which is to ignore something from before the computer age, from Mises and Hayek. Even if you had the processing power you simply cannot know enough, cannot collect enough information centrally, to be able to calculate the economy. The only thing which can calculate the economy is the economy itself.
To be trivial for a moment: how can you set up a model of the economy that allows for the emergence of virtual red roses on Facebook? To be not trivial for a moment: imagine wheat prices rise and therefore bread prices do as a result of, say drought (as is happening now). We know that we’re going to see some associated changes in demand for barley, oats, rice, rye, potatoes, millet and maize….as people substitute away from wheat to these other grains and carbohydrates. But we cannot, in advance, calculate what those changes in demand are going to be without knowing what are everyone’s (yes, everyone’s) second preferences to wheat….and possibly even their third preferences given the potential price rises in their second preferences.
This is information that we cannot possibly collect in advance: at least in part because people themselves don’t know in advance. Your reaction to higher bread prices will in part depend upon changing fashions, has Julia just released a book on potato bread, Jamie told us all to eat polenta not pasta? this is information that we can collect, yes, in agggregate as well, but only after the fact, only by observation, only after the economy as a whole, through those markets, has done the processing for us. And while what happens this time can be used as a guide to the future, given the underlying changes in technology, tastes and desires (maybe the Atkins Diet will get another run? Who in hell knows?) it isn’t an absolute guide to the future.
We might even, in the way that WalMart already does, be able to use cybernetics to gain a near real time picture of what is actually happening: but that still doesn’t allow us to predict with certainty and it is prediction with certainty that we need in order to be able to plan. And even then planning doesn’t enable us to deal with changing technology.
So while the story (it’s the basis of a book which comes well recommended) is both great and well told, the author’s hopeful thesis comes up against a brick wall constructed by reality. No, advances in computers are not going to be able to make planning work for we cannot, in logic let alone reality, ever have enough information to put into the planning system. For it is the workings of the economy as a whole that provide that information to us and so we can never get ahead of the game.
In short, only the economy itself can do the information processing required to plan the economy. Which means that all dreams of detailed modelling, in the detail required to plan the economy in detail, die for we simply cannot construct any other method of information processing than the economy itself.
Of course, another way of putting it is why on earth should we bother to model the economy so as to plan it, when we’ve already got an excellent information processing and planning system: the economy?
Judge sends in the actual paper that everyone’s talking about in the papers this morning.
That one telling us that all of the tropical forests are going to disappear because of climate change a land use changes.
And Judge also notes something quite interesting. Look at the table on pg 7, Table 2.
It tells us how much is going to disappear because of climate change and how much because of land use. And it’s mostly, in that table, claimate change that makes it all disappear.
Then on page 9 we’ve got table S1. Which “parallels” Table 2 as they tell us. The difference is that here it’s by country and in the first it was by major region.
But the effects are reversed. In S1 the effects are almost all from land use, not climate change.
So, err, which is it going to be folks? Poor people cutting down trees to grow runty corn? Or rich bastards burning coal?
And yes, it does matter. For their models all run one particular scenario:
World Climate Research Programme’s CMIP3 data driven
by the moderate-high SRES A2 greenhouse gas emission
scenario.
Oh….that’s the capitalist but non-globalised one isn’t it? The one where we get 16 billion not very rich people all living in localised and regionalised economies?
What else do we know about forests? Ah, yes, poor people cut them down and rich people plant them. So if we had an A1 world, one which gives us 7 billion much richer people (4 times richer each in fact) in a globalised economy we’d, umm, have fewer poor people trying to cut down forests, wouldn’t we?
Which makes it really rather important to understand what you’re saying about whether it’s climate change or land use changes which destroy the forests. If it’s land use then the IPCC can already tell us the answer: save the forests through globalisation.
Sounds good to me.
BTW, if anyone can unscramble that bit about land use and climate change effects both Judge and I would be very grateful.
No, I’m not, sorry. Some things are done just for the pure joy of it all.
Utility maximisation as the economists call it.
Update….lovely comment over there:
This is absolutely fascinating Richard – if the attacks by right-wing “libertarians” (I’m putting that in inverted commas because if their objective is to eliminate dissent from anyone who doesn’t share their POV then they’re anything BUT libertarian) on your blog are part of the same pattern, it explains a lot.
There really is a certain logic fail here.
The original complaint is about a group voting down stories on Digg so that they never see the front page and thus never get any publicity or traction.
Apparently this is now the same as my drawing attention to Ritchie’s views so that more people see them and are able to discuss them and consider them.
Giving something publicity is now the same as denying something publicity?
Even as their work has propelled China towards being a super-power, these workers got less and less. Wages as a proportion of GDP fell in China every single year from 1983 to 2005.
Getting a smaller portion of something that is growing does not mean that you are getting less. It might, but it doesn’t mean you are.
So, taking real numbers (ie, accounting for inflation) let us say that Chinese GDP is growing by 10% a year. Let us also say that all Chinese wages are growing by 5% a year. Just to make the math easier, we’ll also say that wages in year 0 are 50% of Chinese GDP.
So in year 0 wages are 50 (units, $, £, whatever) and GDP is 100. In year 1 GDP is 110 and wages are 52.5.
Sure, the percentage of GDP going in wages has fallen but wages have not fallen: workers are not getting less and less, they are getting more.
Now. Let us step outside of examples and ask ourselves, what has actually been happening to Chinese wages (we’ll take manufacturing ones as those are what Hari is talking about)?
Last year salaries surged 40%, to an average of $160 a month, and Yongjin still can’t find enough workers…..Some 1,500 miles northeast, in the city of Suzhou, Emerson Climate Technologies Co. is facing similar woes. The maker of air conditioner compressors has seen turnover for some jobs hit 20% annually, and Emerson General Manager David Warth says it’s all he can do to keep his 800 employees from jumping ship to Samsung, Siemens (SI ), Nokia (NOK ), and other multinationals that are now operating in the tech manufacturing hub. “It has gotten to the point that we are just swapping folks and raising salaries,” says Warth……Reports of labor shortages first cropped up in late 2004, but companies thought the phenomenon was temporary. Now a surge in both turnover and wage costs is convincing multinationals and their suppliers that the China game is changing permanently……Michael Barbalas, general manager at the Suzhou plant of Andrew Corp. (ANDW ), a Westchester (Ill.) maker of wireless networking gear. At his factory, he says, wages have been rising by 10% annually…..
Indeed one estimate I recall from a couple of years back (the above is from 2006, just to show that rising wages is not a new thing) was that Chinese manufacturing wages had been rising at 14% per year for a decade….and with compounding that means that they’re near 4 times higher than they were at the start of that decade.
And if Hari had actually bothered to pay attention during his introduction to Marxism classes he’d know why too: as Marx pointed out, once the reserve army of the unemployed is brought into use competing capitalists will compete with each other for access to the profits to be made by employing labour and wages will thus rise. Which is why, in Marx’s view, capitalists would combine in order to increase the reserve army of the unemployed and thus stop wages rising.
So Hari’s not just wrong in empirical fact, not just wrong in his logic (that a falling share of GDP to wages means falling wages) but even he’s wrong in Marxist theory let alone any sensible system of economics.
Pretty good going that really, don’t you think?
After slavery was abolished in 1833, Britain’s GDP fell by 10 percent
Now of course I really shouldn’t impute motives to this sort of silliness but it’s clear enough to me what he’s doing.
There is indeed industrial unrest in China at the moment, there really are strikes for higher pay and better conditions. And good luck to all who sail in her and yes, freedom of association is a basic human right and one of the two great signifiers of a free society (freedom of speech being the other).
But Hari’s aim, at least I think Hari’s aim, for whatever little my opinion is worth, is to show that without the struggle, without the unions, the strikes, the solidarity, then nothing can get better. That the free market, unadorned, cannot improve the lot of the workers. And to do so he has to invent cackhanded statistics, invalid ones, to show that things were not improving before these strikes, this solidarity.
I really cannot think of any other reason why he would not note that Chinese wages were rising before “the struggle”.
Citzalia is democracy in action. It is role playing game and social networking forum wrapped in a virtual 3D world that captures the essence of the European Parliament. You may even recognise parts of the building [...] Current Members of the European Parliament (MEPs) and European officials will be on hand to guide you through the procedures and provide background information.
Let us consider a simple market, one for bread, the staff of life.
We vote for the price of bread to be 50p ….but that doesn’t mean that the price of bread will be 50p. If the market clearing price is in fact £1 then voting for the price to be 50p means that there will be no (or little perhaps) officially and legally available bread and on the black market the price of a loaf of bread will be…..£1.
If the market clearing price is 25p then huge amounts will be produced at 50p and we’ll have bread mountains, just as we’ve had butter mountains, wine lakes and sheds full of frozen cows.
The only way this works is if we democratically decide that the price of bread is in fact the same as the market clearing price. At which point, why not simply use the market to determine that?
Which, given that the market clearing price continually changes, in response to changing tastes, wheat harvests, inflation in general and whether Julia has brought out a book on how to make sandwiches seems like a pretty sensible idea really.
Or, to adapt a favourite phrase, you can ignore markets but that doesn’t mean that markets are going to ignore you…..or your democratic votes.