Probably the most sensible post I've read on all of this in a long, long time.
So, these Tories and Lib Dems, eh? Baby-eating bastards or careful correctors of a drunken sailor's spending spree? The most painful cuts since Abraham's circumcision or a mild trimming of the fiscal sails? You can read it all either way and depending upon your pre-existent political prejudices you probably have done. …
The issue with council houses is that there aren't any -- they were all sold.
This is precisely the reason housing benefit is out of control -- the governement is "contractually obligated" to make sure kids aren't sleeping rough, and the commercial landlords have milked that for all they can get, ratcheting up rents continually as the market has passed the costs to the public purse. That's basic supply and demand, and it's infuriating that it's continually swept under the carpet.
The social rents going up to 80% is part of the same system -- a 50% rent isn't just subsidy in terms of "opportunity cost", it's again a skew in the market, because a 50% rent is so much more affordable that people can afford houses of higher value than otherwise. The value of that 50% increases to absorb the funds available, and it the 50% value increases, the 100% value increases -- market averages rise yet again.
The government needs to own property in order to supply the social housing need without affecting the market. I am predisposed to saying this (I'm mostly socialist in outlook), but the economics support it even in terms of free-market capitalism. All social housing within the market is interference in the market, but social housing is a necessity for humane, civilised society. The only answer is to make social housing external and additional to the private market.
I'm in an on-going conversation with a left-leaning colleague over the cuts. This is a house-owning, left-leaning colleague that lets out his flat, but specifically avoids DSS tenants: onward comrades, etc.
Hypocrisy aside, he insists that the cuts are too deep and too hasty. Having been a liberal centrist myself, the last Labour government have steadily helped to push my opinion further and further to the right. I believe that the cuts have to be implemented.
One cut I do disagree with is in education: we have to maintain funding in science and engineering to keep our academia near the top of the table. Education is a major export for the country and to devalue it now is foolish beyond belief. France and Germany are both increasing their spending. We will be left behind if someone doesn't have some long-term vision now.
I'd like the state to provide the infrastructure for aspiration (I'd be happy with a safe environment and a well-educated & informed populace) and to otherwise just leave the population the hell alone. Of course, it's all a pipe dream so I've chosen the beer icon.
..if you don't get your act in order. The most dangerous enemy of the British state is it's own financial community. If the British Armed Forces were of any value, they would start with some extralegal bullying of the banksters. Fsck the law, there won't be one with Oliver Cromwell II, so a little bending is totally in order.
Ideological, yes. Take higher education funding. Fees will be introduced in 2012. They will be funded by the taxpayer. Revenue from repayment will "flood" in at the rate of £7 per week per capita in 2015 at the earliest, if the graduates can find a job which pays them more than £21K. The is economy is supposed to be back on track by then. They almost imposed cuts, but realised that the HEFCE teaching fund was being cut by nearer £8K than £6K, so the upper band for fees went to £9K. My best guess will be £7,950 for most places.
The devil of the proposal on housing benefit isn't the cap; it's that the rate at which it is going to be paid is dropping from 50% of the local median rate to 30%. And let's not fool ourselves that everyone on HB is a scrounger, there are plenty of sick and retirees that claim it as well. It's going to make lives very difficult - especially in big cities. Mind you I'd love to know how big City corporations are going to get their places cleaned when their cleaners are located outside the M25.
The problem is made worse by the insane price of renting properties in the UK. Rent control is common in Scandinavia and Germany and from my experience doesn't mean every rental property is a Rigsbyesque nightmare. Why not do it here? It might also finally kill off the parasitic buy-to-let market which has completely distorted the market for small homes and apartments.
1. they will pay their cleaners more
2. they will hire (illegal) immigrants willing to live x-to-a-room
3. they will get their offices cleaned every week instead of every day (that might be an effect of 1.)
2. and 3. are unlikely for a big finance corporation, so what will probably happen is 1. (but indirectly, as the subcontractor puts up its fees).
It has every chance of being an entirely unremarkable situation.
1. Cleaners - they simply outsource cleaning to someone that employs illegal immigrants or people that will live x-to-a-room (as has been stated).
2. Rent Control - rents have been rising because so have house prices and hence the mortgages required to pay for them. As a rough guide work out the repayment for the LTV percentage of the property price that does not attract an indemnity/insurance fee at the prevailing market lending rate. i.e. repayment on 80% of 300,000 at market rate of x% is Y. This (Y) is pretty much what you'll be looking at rents being. Obviously deviations occur in areas of high or low supply but it should approximate. Rent control is also state interference in markets and that level of meddling doesn't tend to go too well. You could of course not sell off all of the public housing in the first place and then you don't have to pay market related rents because you own the things.
That's a nice, well balanced opinion piece there. Highly unusual these days. No propaganda, fearmongering etc, just your interpretation of the facts. Thank you.
My own personal opinion is that there is a good chance the govt's plans will work. It will be shit for a few years, but we will come out of it stronger. My opinion of the Labour plan is that it would also have a good chance of working, and the conditions would be slightly better for those few years, but the shit would last for longer. I would prefer the former, and I hope it does work...
I know it makes no difference to what we do now, but when it comes to blame, I lay the majority at the door of the previous govt. They treated the boom they were living in as normal conditions, didn't save the extra money they were bringing in, and left us in the situation where, once the recession kicked in, we didn't have the money to continue. Pure good sense says you save in the good times so you have money for a rainy day, but the storm's came, and the piggy bank was empty.
Just my opinion. I can't name sources (cause I can't remember where it all came from), but I have read enough info about this (from both sides as well as "impartial" sources) to be relatively informed.
"when it comes to blame, I lay the majority at the door of the previous govt. They treated the boom they were living in as normal conditions, didn't save the extra money they were bringing in, and left us in the situation where, once the recession kicked in, we didn't have the money to continue. "
That's a perfectly reasonable argument. But, didn't we all behave like that? Borrowed like there was no tomorrow, and then whined when tomorrow came? And we demanded those new hospitals/clinics/schools etc. - that were paid for out of the boom money? And agitated for the retention of every special interest we benefitted from?
We have a representative government. It seems to me that the last government represented us only too well.
I saved constantley over the last 10 years and even started a penson at the age of 18
some of KNEW what you can not borrow what you can not repay and did not and now have a slitley self satisfied grin when our friends who maxed out there credit cards to buy new computers and go on nights out have troubles.. not that I am bitter about missing out on all the drunken partying I am just saying
A healthy economy requires three simple things:
1) Cheap energy. We need to stop mucking around with greenwashing scams. Show me a wind turbine that's been created with 100% 'renewable' energy, from mining to refining to construction to installation to maintenance, plus keeping the people who do all of the above fed, clothed, heated and entertained. Coal, fission, fusion, or freeze in the dark: choose one.
2) A healthy workforce. Note "work" force, not dole force, and note "healthy" as distinct from "not quite dead". The NHS works well for scroungers who have nothing better to do than sit in waiting rooms hooting at the celebrity snaps in MONGER! magazine, but try booking an appointment outside working hours or getting pre-emptive checks or early action. You have to hork up a lung on the desk before you get referred to a 6 month waiting list. Either quit taxing me for the NHS - so I can buy decent health care instead - or start prioritising access by the amount of tax paid.
3) Make it more profitable to work than to slack. Seems like a no brainer, but once you give the vote to mongers, and pay them to breed, you're on a very slippery slope. I reckon we've got one more sink-estate generation (about 14 years) to turn this around, before we revert to literal rather than just economic cannibalism.
Energy - Yup agreed..... We need decisive action, now, rather than when the last option occurs.Problem we have is that pols don't like making difficult decisions. Fission seems like a winner but look at the build time and clean up costs when the statiions go EOL.
Health - Sorry, but bollocks. I had a substantial road accident whilst working for a now defunct parcel company. They informed me they had no work for anybody with any physical disabilities and fired me. After ten years variously spent in wheelchairs, doing voluntary work that was genuine work and voluntary, on incapacity etc, etc, I now do pretty much my old job for a charitable organisation, but on a scheme that pays minimum wage for 30 hours a week that are a physical and mental struggle....... Do I deserve worse or less prompt treatment than a merchant banker bearing in mind my previous history as a well paid IT professional ? Come to think of it, do bear in mind that nobody in the world gets less treatment for more money than Americans who pay dearly for insurance then find themselves shafted when they need treatment. Answers on a post card please.
Work - Yup, it does sound like a no brainer, but of course your bosses views may differ as he eyes that outsourcing brochure almost as shiny as his suit. Under this government expect as old Winnie Churchill said, "the worse employers to drive out the bad".
Summary - demonising a chunk of the population is easier than pursuing evasive corporations or the ultra rich hiding their money away in Turks and Caicos for the tax they should be paying, and the problem would never have arisen without the "Free Money for Merchant Bankers" initiative..... HMRC reckon they'll get 10 billion quid, but are avoiding tackling so many tax havens it's embarassing, not least the favourites of the Tory chairman and chancellor.
Then again if the banks hadn't been propped up at all, the financial meltdown would have been even more epic. More to the point ask your MP how it is that the banking sector is going to be paying an estimated 28 billion in bonuses this year, have recorded further record profits even in the face of apocalyptic forecasts, and will pay back a miniscule proportion of the bail out money..... The author of the story is correct, these cuts are idealogical, but are everything to do with protecting and filling the pockets of the rich whilst scapegoating vulnerable members of the society.
I have no doubt you will get slated for the comment but it is completely realistic. Everyone can work - doesn't matter what condition you are in - even if it selling items on eBay to make £50 a week. Unless you are spending 8 hours a day looking for work you cannot say there are no jobs.
"Productivity hasn't been driven by markets, it has been driven by technology and investment i.e. better tools."
But the other half of William Baumol's work has been to show how markets increase innovation (which he defines as the use of new inventions/technology, rather than their creations, so exactly what you're saying about best practice) vastly better than planned systems.
His example is that the Soviets produced some pretty spiffy stuff: it's just that very few ever got to use it.
One of the major flaws we've had in this country for best part of the last century is the constant to-ing and fro-ing in economic politics. I'll start in 40 years ago for no particular reason:
70s: Labour bankrupt the country and we go begging to the IMF.
80-90s: Tories cut the heart and soul out of the country.
90-00s: Labour spend us into submission again.
10s: Coalition start heavy cuts (though whether the Lib Dems would allow it into a theoretical second term is highly debatable).
We need a slightly longer term thinking, and that's why I reckon the voting reform is totally necessary. Of course, the Lib Dems are cutting now ... but only a militant socialist with no economic nouse really believes our national debt isn't an issue (Bob Crow?).
If you start from a 'normal' point (whatever that is) I reckon having a coalition with the Lib Dems as a junior partner would help dampen this constant belief from one side that they must spend all their time doing something ... anything so long as it's as ideologically opposed to the other side as possible (because we know that as soon as Party B gets into power, they'll do the same to us, right?).
Unfortunately, this logic will fall on deaf ears for all those people who don't look further than the time since the last election. Shame, 'cos it might mean we're doomed to be stuck on this merry-go-round forever.
"Unfortunately, this logic will fall on deaf ears for all those people who don't look further than the time since the last election. Shame, 'cos it might mean we're doomed to be stuck on this merry-go-round forever."
This is one of the strongest arguments for Proportional Representation (and NO, the AV system is NOT PR).
It slows the swings in power, stopping the radical shifts in policy seen under a FPTP system.
No, it doesn't produce "strong governments" in the way this country is used to. The majority of the time it results in coalition governments, as this one, where parties are forced to compromise and work together.
But it stops the horrible Labour-Tory swings that happen in this country, which end up with Labour overspending but helping the country to grow, and then the Tories cleaning up the mess they left behind but stifling growth. It presents more stable governments, as shifts from one ideology to another happen gradually, and this allows the government to take a longer-term view of the situation.
Of course, it also lets the public feel they have more influence, as their votes all count, unlike the current system where many feel there is no point voting for their chosen candidate, as one or two parties have such strong support in their area that a vote for anyone different will make no difference.
Classic misdirection - or perhaps classic economist misunderstanding of cause and effect - on housing benefit.
Housing benefit is only high because rents are high. Rents are high because they were left to a free market - i.e. a bunch of sharks with no impulse control, no planning ability, and no understanding of strategy and consequences.
So deregulation, which was sold as a way to cut government spending, actually exploded real benefit costs.
This is not unusual, as any of the UK's dynamic privatised go-ahead non-subsidised industries will confirm - like, say, the UK's rail system, which costs far more as a deregulated privatised free-enterprise showcase than it ever did in BR's day.
Coincidentally, in economics wage rises are always described as inflationary, while a house price bubble is just one of those things that happens which we don't understand, but is probably a good thing on the whole.
Economics is politics for ugly people. It's a non-science making non-predictions using non-data. But unfortunately it has the real side effects, which include making real people really unemployed and really homeless, while the idiots in suits who are allowed to set policy increases their profits by another 25%.
Why do we take economists and bankers seriously, when the stupid ones have no clue, and the smart ones are so obviously spivs, thieves and liars?
Wouldn't we better off putting them on a stage in a clown costume and laughing at them until they cry and go away?
No, the ConDem cuts will not fix the economy. Reading a little bit of economic history shows that cutting spending is the worst possible thing to do.
Not that it matters, because the UK economy is in no way independent. Like most economies it's owned by Wall St and the IMF, and is supposed to perform on cue for them like a dancing bear with piles.
Let us know when we can stop using non-measures like 'GDP growth' and start using useful measures like nominal estimates of wasted human capacity in the workforce, and median disposable income - both of which will tell you far more about the real state of the real economy than the Bank of England or the Treasury will.
"Housing benefit is only high because rents are high."
Oh please. You're saying that the "demand" side of "supply and demand" has no effect on the price of housing? That rents would still be just as high even if there wasn't twenty billion quid of taxpayer money propping up the market?
Take off the ideological blinkers. It was the New Labour fiasco that got us into this mess, and the gov't is making an effort to fix it. Are they doing everything right? Of course not. But anyone who held *any* kind of office or influence under Gordon Brown should not be criticising at this point, they should be too busy flagellating themselves for their own, graphically proven, stupidity.
I have to confess I found some of that rather hard to follow, being the odd jargon word.
I have to main commnets:
1."and perhaps realise that while the Green Belt is a lovely and wondrous idea, here's the cost: income tax kicks in £10k lower than it has to." - Piss off and die, its one of the most locally contentious issues, and I am all for re-developing brown field, but get the hell off our green.
2. Yes, I quite agree on the social housing, or council housing as its known. I know many people who because they at one point needed it, who now earn significantly more than me pay half the rent and can buy there house significantly below market value because I and others like me are 'giving it away'. The change to the subside coming out of Housing Benefit makes sense to me. I do not subscribe to the idea that this will cause people to move out of the area, as it will still cost more to live else were, and the damm houses are for the people who NEED them not people who quite like living there for very little. I do not believe having the social housing at 100% market would be a good idea mind, where as I think there should be no right to buy, or at the very very least no right to buy below market value.
the "right to buy" was ended some time ago for [then] new tenants.
For those who still retain said right-to-buy the maximum "subsidy" (AKA discount-for-years-of-tenancy) was set at a maximum of about 38K (by Mr Prescott when he wasn't busy bashing people).
Further, because much of the social housing was in a state of disrepair (private landlords have ongoing repairs, social landlords have "if it's still liveable ignore it") its market value was much lower than other housing (and still is despite the government requiring social landlords to maintain and upgrade their premises)
The current social housing rent V private rent is something like three quarters that of private rent.
And if the house has one wage earner on more than about 12-14 K then it will not receive any housing benefit, although they may well qualify for council tax benefit (currently council tax here is about 1400 quid per year) and council tax benefit is ALSO being chopped, although not many people seem to mention that.
The greenbelt is a lovely *idea*, but the reality falls short, and, frankly, building on it would often be an improvement. Greenbelt land round London often offers little in the way of amenity benefits, unless you count the golf courses and equestrian centres - hardly mass pursuits for the urban poor. And I'd be surprised if the portions put to agricultural use contain as much biodiversity than the average back garden. Granted, some stretches are genuinely worth preserving (e.g. the North Downs, Surrey's heathland, etc) but preserving the rest appears an expensive luxury, particularly when inner city school playing fields are built on instead. Preserving this mythical arcadia has led to London's poorest paying through the nose for housing that could be so much cheaper if planning in South East was relaxed.
How many times do you hear a minister say they are saving x million because that is the budget cut being made? Oh yes? Joe Bloggs earns £30K. It cost £42K to employ her. Of that, 35% goes to the government. She pays tax on her income, drinks and buys consumer goods. 15% of her income goes on non-VAT goods and services, the rest on high tax and VAT rated. She runs a car. After the government takes a hit on her redundacy pay, the on costs cease to flow to the treasury, she doesn't pay tax, she stops running a car, does not drink much and the bulk of her income (unemployment pay and benefits from the treasury) goes on non VAT items like food. Total saving from the budget cut? You will be very lucky if it is 40%.
They could not add up the score in a game of dominoes.
Reads vaguely reasonable but strong reaction of government cuts is well deserved.
The middle class gets the cuts while government was there creating money out of thin air and emptying coffers of funds real and imaginary into the banks. This helped wealthy insiders got their money out or took advantage of investments unheard of and the bankers involved were able to score record bonuses.
They really need to bring back the guillotine!
Giving the examples of France and Germany to try and prove the efficiencies of markets in health care is somewhat odd considering that both spend about 20% more per capita on health, and a considerably larger portion of GDP, to achieve roughly the same outcomes as the UK.
Perhaps the clearest example of the results of markets in health care can be seen in the USA. There per capita spending on health is about twice that of the UK but with far worse outcomes.
There is little evidence of markets increasing total factor productivity in health care and much to suggest the opposite. It's also worth remembering that increasing either productivity or TFP is not necessarily the same as providing the best health care as there is a tendency for private providers to focus on the most profitable procedures.
Can't say I agree with all of it but it is certainly more worth reading than a lot of the so called commentary in the press. Even the daily wail/gruniard/red top knuckle dragging commentators haven't spoiled it yet, there's even some sense in here too.
Oh well, give it time I'm sure the signal to noise ratio will dip soon enough.
Maybe there should be a politics section?
Anyway, it is part of Tory DNA to make cuts. They love it and thrive upon it and know not how to grow an economy for the betterment of all.
On the other hand the people have spoken and ConDems arose from that so is and are worthy of respect merely for the form of the process that made it so.
Truth of the matter is that UK predator-prey ratio is so out of sync that people paid through public funds probably outweighs the ability of public funds to pay their wages.
Why there is one newly formed organisation that used to be part of local government provisioning that has five employees on income greater than the Prime Minister (!?!) and within spitting distance of where I post this.
Labour fault: permitting such a feeding frenzy on public funds (Mineworker claims: 2 billion GBP; Legal costs by one company processing those claims: 6 billion GBP)
I could go on ...
"Giving the examples of France and Germany to try and prove the efficiencies of markets in health care is somewhat odd considering that both spend about 20% more per capita on health, and a considerably larger portion of GDP, to achieve roughly the same outcomes as the UK."
It does depend upon how you're measuring outcomes.
We could measure equality of access, progressiveness of funding, lifespan, lifespan with QUALY (including quality of life years) and so on. Indeed, that's exactly what the WHO rankings do measure. France comes number 1 on that measurement BTW.
The problem with those WHO rankings is that there's an awful lot of implicit decisions about what is a "good" health service buried in the method of calculation. Some 60% of the points comes from the financing side, the equality of access, tax funding etc. Only (if I remember correctly) 12.5% is the actual quality of treatment and another 12.5% is the responsiveness (ie, waiting times). The US system is number 1 on that last: one of the reasons it's so expensive (only one mind). Think about teh sparecapacity you need in order to be able to offer and MRI scan within 24 hours? As, for those with insurance, the US system does.
I was under the impression that the WHO last published rankings for the year 2000.
If that is the case then that would mean that those figures are rather old and predate most of the increase in NHS spending under the last government so refer to a period of even greater difference in spending between the UK and France.
I assume you chose those particular rankings because you felt they reinforced your point but both Germany and the US come behind the UK in those rankings (25th, 37th and 18th places respectively).
That Labour eventually run out of everyone else's money & some one has to clear up the mess.
Mess being a bit of an understatement on the scale that Grand Canyon is a small crack to plaster over.
Thankfully, I'm not staying much longer,
coat, beret & a string of onions
au revoir en Mars 2011
UK social housing rents: defined by John Prescott in capacity as deputy PM and minister of the never-lands and so forth (although to be honest, I think he never read them and merely signed them to get the bl**dy paperweight off his desk. It is a complex and complicated document writ by hand knowing full well how to obfuscate via complexity and confusion).
Look up any registered social landlord, try to find a (full) copy of annual report. Somewhere in the middle you may find a teeny-weeny paragraph about income of senior appointees. It makes the prime minister's income look eye-wateringly minimalist. For example, at the Hyde group:
and those are in thousands as in 183,000
Yes, some people really are doing quite well out of it?
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