orys:
ste87:
orys:
- How will that help us rid of the market forces you are not happy with, I mean with that everyone is looking for the cheapest product?
Neither taxation nor public services are governed by market forces. These things both help redress inequalities created by market forces.
You haven’t answered my question… People will still be looking for the cheapest product, buying in places where workers are earning the lowest wages and, therefore, paying lowest taxes.
You asked me how do we get rid of market forces, and my simple answer is to constrain or abolish free markets. For a start, you can ensure that workers in say China, if they sell here, get paid the same wages as if they produce here. Or you can simply tax imports.
And bear in mind, the issue is not that people are buying cheaper foreign products in the market - because sharing the available work helps develop those foreign countries. The issue is that the rich are using the availability of a foreign labour force to increase their bargaining strength at home. If we decide as a society that we want to help other countries develop (and that has a cost), then the rich should pay their fair share of the cost - not expect to take advantage of market forces to rake the money in for themselves whilst shafting those at the bottom.
After all, what has happened in many cases is not that work has been sent to China. It is that the bosses have threatened to send it to China, if people don’t accept a hatchet being taken to their pay and conditions. Of course, the bosses never take a step down - they have been taking an inexorable step up for decades, and are even continuing to do so under these supposedly austere times, because austerity is something else that is being used to threaten people, that they either forfeit their public services to ensure that debts to the rich continue to repaid, or else they will shut this operation down (and it apparently never enters people’s heads to challenge this tyrannical rule of the rich and realise that, actually, it is the people who have the real power).
As for the jubilee, that will wipe out the inequalities created by decades of deregulated financial markets - and hopefully we’d go forward on a different basis, now that everybody has realised why we had financial regulations in the first place.
You haven’t answered my question: how do you ensure, that people will not learn that “there can be always a debt jubilee” and won’t believe that it is just the one-off option?
My answer was that the real lesson that needs to be learned, is for the rich to learn that their private claims will always be written off. We do not want them to lend, because that is how they reinforce their power and capture an increasingly large slice of the pie. If we need to pay for investment, then that should be raised through taxation, not through interest-bearing obligations to those who are privately wealthy.
Taxation cuts out the personal choice of the rich entirely. He pays his taxes because he has to, and that taxation money goes wherever the electorate say it will - usually on public services that benefit workers moreso than bosses.
But I doubt that taxing few richest higher will sort the problems of milion of poorest ones.
Not in isolation it won’t, although it’s worth pointing out that the sums involved are still significant (consider the increasing discrepancy between economic productivity and median household incomes). Higher taxes are one instrument of redress. The debt jubilee is another.
A third, that we haven’t discussed yet, is a more equitable distribution of work. With more equality, higher pay rates, and fewer debt obligations, individuals could afford to work far fewer hours to sustain their current standard of living, and in turn that would get more people into work and reduce the burden on welfare, education, and criminal justice budgets. And the very fact of reducing hours and rebalancing the demand for labour, would naturally lead to an increase in bargaining power (and therefore wages).
First question, why did anybody lend to these farmers at all? The point of a jubilee is not to return to another round of irresponsible lending.
Well, it does not really matter why they lend it to these farmers in a first place. If you don’t like Polish examples, take Spain building industry, or credit crunch in USA.
My question was exactly how you ensure that the jubilee riches that point of it, that is, that it will not lead to another round of irresponsible lending.
More regulation, for a start. We used to have these financial regulations in Britain, until the mid-80s.
And of course, the threat of write-offs discourages irresponsible lending - by tearing apart the social fabric to ensure the repayment of reckless lenders, as we are currently doing (and even more extremely so in places like Greece), you only encourage them to carry on doing it.
I don’t know any background details about a jubilee in Poland, but in 1989 onwards the Polish economy became a free market economy. I suspect what happened is that some (probably foreign) owner of a tractor factory had the bright idea that, if he lent money to the farmers to buy tractors (which they could not afford to buy otherwise), then he would have a profitable claim on those farms for many years to come, without lifting a finger to grow a crop. For good measure, he will have secured those debts not just on the tractors, but also on every other asset that the farmer owned. If those debts have not been written off, then the real outcome is that lots of people have lost their tractors, their farms, and their family homes. The real winner has been the creditor after all.
Interesting model, but not the case for Poland. If you want, I can tell you more on PM, but for the sake of that discussion we don’t need to dig to deep into Polish economy and politics of 90’s, I just wanted to use it as a model and picked Poland, as it’s the closest to me for obvious reason 
For the farmers’ part, the first round of borrowers would probably have got away with the deal - their farm’s productivity would have increased, and they’d have been better off. But because of the way markets work, eventually the market price of food would simply have dropped further, so that the first round of borrowers were back to where they started financially (even though their productivity had increased), meanwhile those farms who had not yet invested in new technology were now obligated to borrow just to maintain their old basic standard of living in the face of falling food prices.
Very good observation. In other words: there is no free money: if someone benefits from jubilee, other have to loose. And it just happens that, as in my example, usually there is more of these who loose than these who benefit.
But the average Polish didn’t lose because of the jubilee. He lost because of the lack of one. Inequality in all the old Soviet states is far higher than when their economies were under central control. And of course, the free market has not purged overbearing power or political corruption from these countries - on the contrary, it has given power and corruption even more room to exert itself on the lives of ordinary people.
None of this would have happened in the old planned economy, because neither the profits nor losses of the ‘new tractor loan scheme’ would have been enjoyed by/borne by individuals.
I feel you are a bit socialist by heart, but believe me, this is NOT how planned economy works And Poland was not one big kolhkoz, there was plenty of private enterprises in 1980s… I would say 1980s Poland was a bit like China nowadays.
I am socialist by heart. I’m not trying to misrepresent or romanticise 1980s Poland, and bear in mind I know nothing about the background of your farming anecdote, and very little about the Polish economy.
What I am essentially saying though, is that allowing individuals to pursue their self-interest in a competitive and uncoordinated way, often leads to misery for everybody.
Market reforms, and the availability of credit, gave ‘enterprising’ Polish farmers the opportunity to buy tractors and increase productivity. But in the market, the gains of that productivity increase are privatised. Meanwhile, the eventual drop in the market price of food (due to increased farm labour productivity) is socialised. That forces all other farmers to try and keep up, and increase their productivity by borrowing to purchase tractors - and if they don’t borrow, then they suffer increasingly aggressive poverty anyway, due to the falling price of their crops. In many cases, even the first ‘enterprising’ borrowers end up losing out, as their crops become worthless due to surplus, as their children face an increasingly harsh economic environment, and as their communities fall apart.
There is no way out of this logic, within the terms of individual choice and action. The market model is designed to enrich creditors (who by definition are already wealthy and powerful enough to lend), as well as (to a lesser extent) a minority of early adopters who get ahead by cutting others’ throats.
That is what has happened to the entire economy throughout the former Soviet states, and it is exactly what has happened with our own housing boom. People didn’t get mortgages for 10 times their income because they were reckless. They did so because they needed somewhere for they and their families to live, and the only way of doing so was to accept that level of debt, or else live on the street. The borrowers were not reckless. The lenders were reckless for creating these dilemmas for people in the first place.
And in the long-term, if austerity succeeds, the real winners will have been the rich irresponsible lenders (who will get their money back from the taxpayer), whereas the losers will be the majority of people who can no longer afford to purchase housing out of their earnings, and who will no longer be able to enjoy public services (despite continuing to work and pay tax).
True. So in my view: there should be no debt bail-outs for anybody. Then the banks, who struggle, would have to work closer with the poor ones to ensure that they can get some money to survive - offering them a longer terms, calcelling some late fees and just, in simple words, work together so the most of the lend money will be paid back to them.
The other alternative is bankruptcy. I agree there should be no bail-outs for the rich. I suspect you are still viewing these debts as being obligations that have to be repaid. They do not have to be repaid, and they should not be.
The situation today is that the richest are paid out from taxpayers pockets and then they don’t bother about the poorest, who struggle even more to pay their debts due to extra weitght put on them by the goverment.
What you propose is “free for all” - a big debt jubilee that means that nobody needs to pay anything (because, if you grant debt jubilee to the poorest, you cannot expect the rich to pay their debts, because if someone is rich because he runs a mortage company, and suddenly he has no income due to debt jubilee, you have also to grant him that privillege.
In net terms, the rich don’t have debts - only credits.
But it does not have to happen like that. If you reject austerity, you can ensure that rich capitalists lose as a result of their scheme which was designed to enrich themselves at the expense of workers. But if you do not reject austerity, or the free market, then the rich will win at your expense.
For me what you say is a very good idea, but it lacks answers how to do something in practice.
Bear with me then. I don’t promise a master plan, but I think the solutions are really a great deal more simple than people suppose.
has to have the right amount of balance. maybe they do need to pay more, maybe loopholes need to be tightened, maybe some sort of turnover tax is needed along the lines of the vat flat rates