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Stephanie Flanders | 11:55 UK time, Monday, 23 February 2009

For those who missed it, there was some good news from the statistical trenches in Saturday's FT from the Undercover Economist, Tim Harford.

Crowds on busy streetWe are used to thinking that nearly everyone suffers financially from a recession. But he asked an economist at Bristol University to check.

Using data from the regular survey of British households that began in 1991, Lindsey MacMillan found that at the end of the last recession in 1993, more than half of households were earning more than they did in 1991.

Amazingly, one in six had seen their income rise by more than 50%, despite meagre growth in the economy as a whole. And the results during the latter recovery were much the same.

"In other words," says Harford, "the variability in individual experience completely drowned out the distinction between growth and stagnation in the underlying economy."

We all know that some industries do better in recessions - after last week's flurry of new jobs announcements from KFC and others, the fast food industry comes to mind. The same goes for Poundland and discount supermarkets.

But this new finding goes a lot deeper than that. It reminds us that even in parts of the economy that are adversely affected by recession, most people will not suffer a big decline in income as a result of this recession.

The National Institute of Economic and Social Research expects British households' real disposable income to grow by 3.3% in 2009. That would be the fastest growth in years. In 2007, the peak of the boom, real incomes didn't grow at all.

It's a paradox we're getting used to. In a year of rising real living standards, households are going to save more because they are understandably fearful about the future. But back in 2007, when their income was flat, they saved less - 2.2% of their income compared to 4.2% in 2006.

But, as our undercover friend would remind me, those, too, are simply macroeconomic aggregates, far removed from the actual experience of real families and households.

People still get promoted in recessions. They still retire - not necessarily earlier than planned. And I can personally attest that they still have babies.

All of those changes can have a bigger impact on a given family's finances than the fact that the UK is in recession. That's not much consolation to households where one or both earners have recently been laid off. But it is true.

Comments

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  • Comment number 1.

    I take the point but it all depends where you were when the recession started.

    During the Depression one of my grandfathers got promoted a couple of times; so he did well. My other grandfather who owned a shop had to revert to petty crime in order to get by.

    In 1976 I was out out on the cobbles as the business had been doing badly for two years. I was young enough to bounce back.

    I changed my job in both 1979 and 1988 because I could see the way the wind was blowing and both companies I left at those times had bad experiences in the ensuing recessions.

    I am too old to be bothered now but I am concerned about the younger folk who work with me. What have they to look forward to in the medium term? I am encouraging them to polish their skills and get the relevant bits of paper.

    I agree that recessions need not be a personal disaster but my experience of being put out of work that one time certainly changed my outlook and behaviour. Once you become aware that nothing is certain, life takes on a very different hue.

    Survival becomes more important than ambition.

  • Comment number 2.

    Exactly Streph. Life goes on.

    Back in January 2008 I started funding the recording of new music by some of Britiain's most brilliant young musicians including current undergraduates at the Royal Academy in London and the Royal College of Music.

    Just because the economic climate has changed so drastically for the worse in the past year doesn't mean to say that I am now going to act any differently. Quite the opposite. More great recorded music in the pipeline and cash going into the economy.

    Dreary property obsessives weren't so clever after all. Just poor spear carriers in Alan Greenspan's tragic farce. Life is so much sweeter now that those bores on every continent have been comprehensively silenced.

    You can hear some of this music at www.anyoldfun.com

    Like life (and babies - many congratulations I have two of my own and it is what life is all about) good music is there for the enjoying irrespective of passing economic woes.

    Hope you enjoy!

  • Comment number 3.

    Is it reasonable to make comparisons / assertions purely based on the early 1990s UK recession? The current crisis seems very different, and therefore most commentators appear to be making comparisons with either the 1930s or Japan in the 1990s.

  • Comment number 4.

    If your competitors are financially weak, they may go bust in the recession, meaning you can pick up their customers and grow your business as a result.

    This recession is very worrying though, as the level of debt in the economy is very high. The high level of debt may serve to "lever" the negative affects of the recession to higher levels than before. As a rule of thumb, because banks are so highly geared, for every GBP1 a bank makes in losses to bad debts, it will have to reduce lending by GBP10 to cover the write off.

  • Comment number 5.

    I came out of university in the UK, in 1972 when the economy wasn't too good - Miners Strike, Oil Shock, IMF and so on. Add to those shocks the challenges of contending with life in Belfast. It wasn't easy, but I managed to get a job in a good company, thanks to my degree - I believe. I moved to Canada in 1975 and went through a number of economic crises, that, in Quebec, where I live, proved more severe than the Canadian national average. I lost jobs, found others, and over 25 years I changed careers from manufacturing to services to software. I am convinced that I was able to keep going because I always kept my skills, including learning to speak and write in French, up to date. When I was 50 I completed a masters in education that I think that kept me in the game all through the 90s. Now I will soon be 60, and I have made my application to a local university to join a program of research leading to a PhD.
    All I know is that if I keep working away at learning new competencies, and keeping myself up to speed, things will come right in the end.

  • Comment number 6.

    Now we have numbers: The Government and the BoE are planning to start the QE injecting some 150 billion. There.

    Now an economist good in econometrics and monetary policy (I am not) will be able now to estimate the future inflationary impact of this (M1,or M2, M3 or M4? etc.), for when the speed of circulation comes back up to normal. (In, say, 5 Years?).

    Please please please interview someone about it!

    Cheers

  • Comment number 7.

    Why should it be anyone?

    Again, why have a system that only produces for profit and not need and will always cause such misery periodically?

  • Comment number 8.

    My job will be moved abroad by the end of this year.

    However, I know that with some cutbacks (things like Sat. TV, mobile phone contracts etc.) and as long as I can find work somewhere - even earning half of my current salary - the family will be better off.

    This is largely due to the fact that I'll be paying off a large chunk of expensive debt with my redundancy money.

    Despite unknown path ahead, I am actually quite looking forward to it.

  • Comment number 9.

    For some time, I have had discussions that there appear to be significantly different experiences

    For example

    a friend spent last week in Florida with friends. The concerts they wnet to were full, the restaurants they went to were full and she saw only one foreclosure sign in her travels about Fort Lauderdale and Miami

    another friend couldn't get a booking on a trip she and her husband were interested in on any of the dates they could travel - fully booked

    another friend said that there wasn't an empty seat in either of the two shows she went to see (tickets weren't cheap)

    a local estate agent says property sales are much as they ever were and very dependant on location, as has historically been the case

    my plumber tells me he has lots of demand for new boilers (they are very efficient and cut running costs) and new bathrooms (people aren't moving so have decided to get on with it)

    the British Museum was heaving with people when I visited two weeks ago

    Selfridges was heaving

    The electrical department of my local John Lewis was running a queueing system for purchasers to be seen by an assistant

    The shopping centre has been full every time I've been out and its been impossible to get a parking space

    The small specialist suppliers I have spoken to are busy. In fact some have said they have benefited from the demise of some of the chain stores

    My parents and in-laws have seen there small savings incomes reduced but are looking at changing their small investments and say although food and utility bills and council tax have gone up life hasn't really changed - they can still pay for their daily necessities and very small pleasures as they ever did.

    I'm not saying that everything in the garden is rosy or that there isn't a potato effect - that is buying potatoes rather than bok choi - trading down - but what we read, daily, doesn't seem to paint the entire picture. So, thank you

    I am truly sorry for those that have lost their livelihoods or homes and I expect that there will be more but thank you Stephanie for your comments because my observations are that the outcomes for individuals, right now, are very patchy.

    Nevertheless, you covered the potential effects of quantitive easing in an earlier blog, so perhaps you could ask Tim Harford about his view of the effects of raging inflation or tax increases.

  • Comment number 10.

    Any objective analysis of the most famous, or infamous, period of British economic depression, the 1930s, will conclude that it was localised. Jarrow and Merthry Tydfil, in particular, got clobbered (heavy industry - in the case of Jarrow a huge dependence on one shipyard); but areas of the English south and midlands, for example, were very prosperous. A four-bedroomed semi in rural Kent could be bought for not much more than a thousand quid, the mortgage was less than 50p a week, and disposable income went further because prices were falling.

    Clearly one can make the case for there being winners and losers in the current recession. The problem lies in seeing how we ALL get out of it.

    Heavy industrial areas remained largely immune from government intiatives in the 1930s. What hastened recovery there was massive military and naval spending in the second half of the 1930s. The circumstances were not good. Keynesian tactics were employed, almost by default, in the build-up towards the war.

    What happens this time?

  • Comment number 11.

    The jobs in fast-food restaurants and pound shops are nothing to celebrate. Jobs are being lost in primary industry such as manufacturing. These industries generate the wealth to support the service industries like shops. Loosing well paid manufacturing jobs for minimum wage fast-food jobs is a big step in the wrong direction.

    Soon people will not be able to afford a bucket of chicken so the fast-food restaurants will shut. No doubt then people will be lauding the new jobs created in sweat shops!

  • Comment number 12.

    If this is the case, why is it that we think recessions are so bad? I have analysed some of the reasons in the following article:
    http://www.knowingandmaking.com/2009/02/why-are-recessions-bad.html

  • Comment number 13.

    FALSE ASSUMPTIONS: LUFTGEBAUDE

    "People still get promoted in recessions. They still retire - not necessarily earlier than planned. And I can personally attest that they still have babies."

    Much that we read these days is akin to this. I'm sure it means well, but what does it mean? Logically speaking, some people means not(all(people) which means at least one person.

    Put that way (and much that we read in the media these days is exactly like that), it says very little.

    The harsh fact remains that so long as females in Liberal-Democracies (West and East) are encouraged to go into higher education and the work-place they will delay having as many children as those who do not. That will keep our birth rate below replacement level, as well as tilting it towards those who have less skills/educability, which in turn will gradually (yes maybe with the occasional hysteresis) make our economies worse given the relationship between skills and GDP.

    Education and equality is the answer, whichever way one looks at it, as this insidiously exacerbates the root problem. Neither is conventional economics, which still makes all the wrong assumptions about human behaviour.

    Alas, that's why there's so much fruitless argument.

    Whilst true, this will, no doubt, just be ignored.

  • Comment number 14.

    As I recently had to point out to my daughter who runs her own business during all of the recessions we have had a large percentage of the population remain completely unaffected by the threat of being jobless

    They are the large numbers of people who are employed in the public sector.

    These are the people who have been able to have jobs for life and many of them are now retired on very nice index linked pensions.

    Whether this can continue after the present depression remains to be seen for after all they rely on sufficient people in the private sector and enough businesses able to pay taxes that will decide whether this time they have a job or not.

    Some balancing act for the next government in power to rectify so we do not permently become a two tier society with everyone wanting to work in the public sector.

  • Comment number 15.

    Stephanie,

    "1993, more than half of households were earning more than they did in 1991"

    This just shows that the income disparity between rich and poor grew in the period - recession or no recession.

    I can't think why you find this at all remarkable (or even a newly discovered or indeed remarkable result of analysing the historic data.)

    You, or I, might win the premium bonds or the lottery, or get run down by a bus or hit by a meteorite.

    The 'facts' we need to concentrate upon here are the present recession and how it is likely to develop given the impact of policy - don't we?

  • Comment number 16.

    These sort of comparisons tend to be somewhat bogus. Firstly, earnings do not in themselves reflect costs of living. You may indeed earn more, but if the costs of living snowball then your standard of living may actually fall. And what about inflation?

    But, be that as it may, the bigger problem with this analysis is the failure to comprehend that this is not a typical recession, but a systemic collapse of the whole world economy, which will lead to a depression. As such the rule book has been thrown out of the window and the economists and their theories will soon be consigned to history.

    It is abundantly clear to those of us who have stood outside the fray that the whole economic system was nothing more than a giant Ponzi scheme and as a result everything will collapse. Globalisation, technological advances and demographics mean that Capitalism is no longer able to provide anywhere near full employment, and support the lifestyles we have come to expect. Sorry, but it is the end of the road for economic solutions to the world's problems. What comes next is a shift in human consciousness and awareness towards how we can all work together to support one another.

  • Comment number 17.

    Deflation. Those with debts suffer, those with cash don't.

  • Comment number 18.

    Interesting counter-intuitive insights. It is a shame that only one sixth of the population benefit in this way. The implication being that five sixths do not and that their experience, personal and economic is more in line with the generality of media reporting currently taking place.

    My own experience is that my income has fallen off the proverbial cliff - I am one of the band fast approaching a 1 in 10.

    I too was very surprised by a counter-intuitive insight of my own of this nature today. According to a financial information website that I consulted this morning the value of houses in my area of the same type as my own has apparently increased by 10% over the last year; completely bucking the national trend.

    Unfortunately, I still need cash to pay the bills and the mortgage, of course. So the pleasant surprise is scant consolation.

    I suspect that this is because the house price change is a lagging indicator and that as unemployment continues to increase (assuming that it does over the next year), this 10% increase will be lost again.

    Like others in my position, if I may find the financial means to pay the mortgage again relatively soon, then any future fall in real estate asset prices will matter not.

    What happens to us if the labour market does remain sluggish for a protracted period does not bear thinking about.

  • Comment number 19.

    This is the most sensible comment I have heard for a long time. It verifies the concept the setting up a business in a recession is not a bad idea. It also scotches the argument that businesses in trouble must be supported - Their problem is what they offer is not attractive enough, ie demand, not that sufficient money is missing from the system and compromising consumers ability to pay. Please could you do all taxpayers a favour and forward these facts to Lrd Mandelson so he can disperse the crowd of big indebted businesses asking for handouts.

  • Comment number 20.

    "Two pawnbroker chains report higher profits, as the business continues to benefit from the recession."

    That message has just appeared along the top of the BBC News Front Page.

    You're blog is clearly bang-on, Stephanie!

  • Comment number 21.

    When this UK recession officially started (two quarters of negative growth and all that), Bob Peston appeared on News at Ten and informed us that detailed studies had been carried out of all the recessions since WWII which had been caused by a banking crisis. The studies found that on average the recessions lasted 2 years, but unemployment increased for 5 years and house prices fell for 6 years.

    How this one differs from these post war recessions will remain to be seen.

  • Comment number 22.

    This might come as a surprise to No.14 above..

    'As I recently had to point out to my daughter who runs her own business during all of the recessions we have had a large percentage of the population remain completely unaffected by the threat of being jobless

    They are the large numbers of people who are employed in the public sector.

    These are the people who have been able to have jobs for life and many of them are now retired on very nice index linked pensions.'

    ...but people who work in the public sector do actually pay taxes as well...don't always have jobs for life (far from it)...and have to work solidly for 40 yrs to retire (in some cases ) on annual pensions below the official UK poverty line.

    Some people need to stop spouting uniformed rubbish...

  • Comment number 23.

    i like your style flanders, but since when did regurgitating someone else's work pass as journalism please? baby or no baby... [congratulations b-t-w ;-) ]

  • Comment number 24.

    As others have said, this is not a recession it is a depression. This is a totally different beast than the recessions that we have experienced over the last 20 years.

    Having said that. unless there is a complete monetry collapse, children will still be educated, the lights will still come on, trains will run and the mail will still be delivered. There will still be jobs for people to do. However, it is likely that those people will have to accept a lower salary than they presently do. If you stay in a job, it is likely that you will be better off when things finally start to recover.

    The major problem will be that, having been made unemplyoed it is likely that you will remain in that state for a long time. If the skills and qualifications that you have gained are not required then somehow you will have to re-train whilst still looking for a job.

    Unlike the 1930s where industry tended to be localised eg cotton in Lancashire, wool and steel in Yorkshire, most industries are now spread across the country. Therefore a decline in one industry sector will be felt everywhere (perhaps London is an exception with finance related jobs).

    Some firms and individuals will have a good Depression - that's life. But don't get carried away by the spending and activity that presently going on in this 'phoney war' period as it won't last.

  • Comment number 25.

    Let us not get too hung up on the micro level measures. Perhaps the ideal outcome is actually more about a broader process of "creative destruction":

    http://en.wikipedia.org/wiki/Creative_destruction

    Rather than prop up ailing, bloated businesses, a new breed of fresher, leaner companies should be encouraged to emerge (regrettably, KFC and Poundland is not quite the calibre I was imagining).

    Alas to endorse this, the world leaders need to acknowledge that we could be staring into the face of a major Krondratieff wave, with no real sense of what type of lifeboat will save us:

    http://www.southerndomains.com/SouthernBanks/p2.htm#12

    Scientific progress saved us three times (manufacturing, railways and oil), whereas war & debt have been our saviour in the 20th Century. Globalisation is not innovation: it actually pushes wages down, when we should be looking to push wages up.

  • Comment number 26.

    22 Anthonygh

    No surprise to me

    I worked in the public sector for five years.

    Nice when you can retire on full pension at 60 instead of 68 like everyone else.

  • Comment number 27.

    Agree - if there are no losers there can be no winners.
    Wish the government would stop banging on about the lack of credit being the problem - it's the lack of credit-worthiness (too much debt already) that is the log-jam.
    If lending is increased now, many borrowers are going to be even more trapped by rising interest rates (if quantitative easing works) or falling income (if it doesn't work)
    Either way pushing the UK economy to bear even more debt seems a tad unsound and imprudent ...

  • Comment number 28.

    It is not for nothing that each culture has its own version of the saying "In crisis there is opportunity." Those quick to adapt can seize a better niche, those slow to adapt, fail (and then demand for themselves tribute - sigh).

    More specifically to these times, a deflationary credit collapse forces prices to fall faster than incomes as credit-sensitive sources of demand are removed from the market. Cash bidders see their purchasing power rocket. This is to be expected.

    Yet the government labours under the delusion it can change something so fundamental that there is a cross-cultural concept that decribes it.

  • Comment number 29.

    Reports like these really hack me off. We should be please that some people are better off when the ones who are worse off are MUCH worse off. If I hear another report about ASDA creating 5000 new jobs I will scream. These jobs are offered at near to minimum wage and bring no new skill to the economy.

    Britain's unemployment is structural and the recession will be harder here because we have shed most of our skilled industries in favour of service jobs. Who are they serving?

    The folks with money will keep money, the others, like me, will look at this report and gently go mad. This recession isn't the same as the last one. Get a new information source.

  • Comment number 30.

    #22 anthonygh who says Some people need to stop spouting uniformed rubbish...

    is missing the point. The too frequently oxymoronic term public sector worker is generic. Its distinction lies in the fact that those so engaged are protected by the coercive power of the state applied under threat of imprisonment on the rest of the population. Whether these government protectees pay tax or not is irrelevant since it is merely recycling of other peoples legitimate earnings. If their work is of any value at all such value can only be accurately determined through exposure to true unfettered market forces.

    Protecting one group of the population at the expense of the rest creates a very dangerous situation, as evidenced by the anger over bankers bonuses, and it is little wonder that in times of hardship genuine wealth producers turn on the featherbedded. As for the bleat about the level of pension for these pampered retirees, they are the types that have made up the useless official poverty line. There are many genuine producers in this country, let alone world, that would be only too pleased to accept a free-for-life income of 60% of the UK median wage to pay their living costs exclusive of housing and, ironically, council tax.

    One of the key decisions that will eventually be forced upon us as a result of this government inspired economic catastrophe will be the reduction of the bloated state. Those that have lived high off the back of real producers would do well to keep a low profile, especially when many of them appear in the 1 in 6 group that, according to Stephanies article, are expected to do well out of recession.

  • Comment number 31.

    Werrington, can you tell me what a "cross-cultural concept" is please? Not having a go ; just want to understand.

  • Comment number 32.

    Consumers are nervous - they're not buying big or moving house.

    They need something to restore their confidence ~ might I suggest an election ?

    Even successful businesses are cutting back ~ jobs are being exported to Europe, The Far East, and emerging democracies. The depth of this recession has yet to come, I forcast the Summer of Discontent.

  • Comment number 33.

    Yes Steph life goes on, as it always does. It is horrrible if you lose your job and can't meet your debts. But they say that the next boom is always built on the bones of those crushed in the previous bust. Sad but true. But even in the worst possible economic circumstances life is for the living and the enjoying. Personally I couldn't be happier that I no longer have to listen to house price bores or be expected to give ridiculous amounts of respect to bankers at dinner parties just because they work at an investment bank. I make music with talented young musicians. It gives me a lot of pleasure. I may even make some money out of it one day. Economic life goes on and the best things in life are free. Like babies. Congratulations on that. It is what life is all about, for me at least anyway not economic growth and needless consumption in a world where so many people have so very little. If recessions teach us to count our blessings then I am all in favour of them

  • Comment number 34.

    An interesting piece, and to my mind containing much truth.

    In the last recession I was out of work and struggled to find a job due to being young and inexperienced. When I did get one, I worked hard and over the next ten years or so developed my skills to the point where I knew I could get a job no matter what the economic climate.

    Maybe this recession will, like the last one, be hardest on the young who have had no experience of this before, took on excessive debt and believed that the good times would continue indefinitely.

    I saw the end approaching, left my job and bought a tiny business in a different industry where I could see a great opportunity.

    After just over a year, the business is profitable, increasingly so. As some of my competitors (very large businesses) cut back on stock or terms as they feel the pinch, I am increasingly picking up business from them. I don't have any bank loans to pay, no creditors knocking at the door and am better placed than most of my competitors. Sadly for the businesses who fail this year, I will pick up their trade as they go, as I did last year.

    So for me, as long as I keep my focus on good service and low overheads, the recession will grow my business, as it will for many other small businesses who are in a similar position to me.

    I made a conscious decision to fund my business without the help of a bank - I will grow more slowly as a result but it was the right decision.

  • Comment number 35.

    #29 - you will appreciate the humour of the headline I read recently in a spoof online "newspaper". It was something to the effect "Tesco to open a shop in eveyone's home". It made me smile!

    Like you, it frustrates me that today's new jobs are predominantly in the service industry - fastfood outlets, supermarkets, call centres. Where is the wealth creation to enable people to buy these services?

  • Comment number 36.

    It's good to see that Stephanie has her Happy Button pushed all the way in this morning.

    Obviously the Beeb doesn't pay her enough for her to have any investments, a pension or own a house or even have outstanding debt, or friends in the city without a home or any future, poor girl.

    It must also be comforting to know that - God forbid - should the Beeb decide to re-structure it's economics desk, another job of almost equal value could be found so easily at KFC.

    Excellent propaganda though - please keep up it up!

  • Comment number 37.

    #30 rwolff,

    "There are many genuine producers in this country, let alone world, that would be only too pleased to accept a free-for-life income of 60% of the UK median wage to pay their living costs exclusive of housing and, ironically, council tax."


    The I suggest that you go and live there. Your post is merely myopic capitalism. I feel sure that you had your greatest moments mooning over Thatcher!

    If you thought for a while, you would find that the majority of civil and local government workers are busy doing jobs that you will not do and for wages that you would not get out of bed for.

    So what do you suggest? Do we put the police, army and customs out to tender? THINK BEFORE YOU SPOUT!

  • Comment number 38.

    #31 foredeckdave:

    It is a concept found in the language and storytelling heritage (eg legends, folk tales) of numerous cultures. From where did the crisis/opportunity meme arise? I think seeking advantage is the natural human response to distress. A fairly high proportion of people seems to favour high-risk survival strategies. Perhaps there was an evolutionary advantage in it for us a long time ago.

    So in each recession entrepreneurs arise, fill the gaps vacated by the bankrupt (eg by buying tooling on the cheap from liquidators), and use the competitive advantage that artificially low cost base offers to make their fortune and give rise to the data Stephanie cites. How many quick fortunes are made in staid times? How high are the barriers to entry to any enterprise when there is a shortage of free resources, compared to a glut, and asset prices are high, compared to low?

    But in these politically correct times, it seems so awfully improper to some people that others should profit in a time of distress.

    Nevertheless, it is nature's way. One man's loss is the only way a more astute man could afford to buy a factory. I say hurrah, and plan to join them in my own way when the time is right. For some to succeed is the only way there will be a tomorrow for any of us.

  • Comment number 39.

    To add to my previous post (#38):

    And Labour stands in the way.

  • Comment number 40.

    Well, I was surprised that the BBC economics correspondent was surprised at the findings. There are always gainers when economic fortunes change, apparently for the worse in this case. Even if we take forecasts of 4m unemployed by the end of this recession/depression, that still leaves 90 per cent in work, many of whom are in gold plated public service jobs. Many have benefitted from the reductions in mortgages rates to betweeb 3-5 per cent. [I was paying 15 per cent from 1979-82 and my mortgage took between 50-60 per cent of income. I doubt if anyone today will be in that position.]

    What we are talking about is NOT a collapse of the entire economy, but a collapse at the margins - and most people will be relatively unaffected by it all, or will even be better off from price discounting, job opportunities from emerging businesses etc. This is not a collapse of capitalism as some of the posters seem to think (or would like). And the world will not be so very different when this phase is over. However there will have been another redistribution of wealth, from savers to borrowers, and from most pensioners to earners, and no doubt from workers to those who depend on the huge range of benefits that governments provide to bribe the electorate.

    Higher taxes? Maybe. But it seems the government has found the solution - inflate the problem away - which will be the main body blow to savers.

    I would it were not so. Like many posters here, I would like a revolution, but I doubt that my revolutionary ideas are shared by many others. Revolutionaries are always minorities, who need to be able to excite and mobilise large parts of the population. But modern democracies have developed the means to keep the majority pacified. So no revolution on its way, no fundamental change, lots of people better off or no worse off, and a minority stuffed. It was ever thus.

  • Comment number 41.

    Stephanie
    Of 29.36 million employed, one in five work for the "public sector" industry. They lead the average earnings table at 3.9% excluding bonuses or 4.0% including bonuses.

    1.97 million are unemployed and 7.86 million are of working age but economically inactive. 11.8 million are of pensionable age, just over half on state pension. 11.5 million are under 16.

    So, 29.164 million people (employed and taxed private pensioners) plus ? corporates generating wealth to support 33.338 million people ( economically inactive, public sector,unemployed, children,state pensioners) plus repay / service government debt/fund Tony's wars etc. etc. ?

    I dont know who are going to be the winners in the recession but this just aint sustainable without rebooting the model.

  • Comment number 42.

    #40 bonzerpeach

    "And the world will not be so very different when this phase is over. "

    I wouldn't be so sure about that.

    I do agree with you that this depression is not the end of capitalism. It may be the end of unfettered capitalism but I see nobody coming forward with a viable alternative. There have however been some interesting ideas regarding the division of wealth from money.

    However, the world could look very different if civil unrest heralds a pusch by the far right or left or if Obama's rescue plan fails spectacularly.

  • Comment number 43.

    I enjoy Tim Harford's writings and acknowledge that he is one of the more switched on economist's in town.

    However, your article is somewhat behind the curve; along with quite a lot of macroeconomists.

    As I know Stephanie is very well aware, macroeconomics generally deals in aggregates for the whole economy; whether that be the UK, Europe or Global.

    However, anyone with even a limited knowledge of marketing is familiar with the concept of market segmentation, where one looks at the market in terms of the pattern of different sets of customers' needs. This of course takes place at a microeconomic level of a specific product/service market. The general tendency is for market structures to evolve over time and to become more segmented, at least until the later stages.

    Hence I am not sure Stephanie why one should be so surprised that upon analysis there should exist a pattern of segmentation in the way that the Bristol economist suggested. The problem surely lies in the fact that here is somebody "reinventing the wheel" in terms of the concept, although I acknowledge the actual statistics may be a new set of observations.

    Perhaps a few more economists should take some Marketing 101 courses during their studies, and so gain a better understanding of how real companies view the way in which markets work.

    I say this having observed at a few business schools, there exists a "silo" type of learning which pervades the knowledge base of the various disciplines. Hence even economists who have taught inside a business school environment are often sadly lacking in the broader base of business knowledge, unless they have actually taken an MBA as part of their studies. There is no question that such people are professional very good "economists", in the traditional use of the word, but usually, they are poorly equipped to view the world from the perspective of a business person.

  • Comment number 44.

    #37 foredeckdave

    I believe myopic means nearsighted: unable to see distant objects clearly. I do not recall using the word capitalism in either fore or background. I did refer to an unfettered free market. Would you have us live in a totalitarian state I wonder?

    Your suggestion that I (and presumably others who are concerned about this countrys state employed freeloaders) go elsewhere is unexplicated and appears potentially irrelevant. As background I made a small fortune out of advising HMG and now live quite happily in the Royal Borough on about 100 GBP per week. Such investment as I hold has been safely moved into gold and silver offshore where it will stay for so long as I can make 50% pa return in real terms.

    I know first hand the level of waste and incompetence in the public sector. It is staggering. The overwhelming majority of civil and local government employees that I have observed are performing pointless tasks, many of which entail monitoring each others non-performance. Too much of their activity is counter-productive; none is productive in any meaningful sense.

    To directly answer your question about police, army and customs, I would put them all out to grass (sans pension). They are unnecessary, non-productive and supremely wasteful; all are agents for the maintenance of government.

    For the myopic, I will repeat the essential point I was making: Those who live off the back of the people of this country should beware as hard times focuses attention on them. We the people can no longer afford these freeloading non-productive drains on our economy. The root of our problem is systemic. Government of whatever shade is responsible for the shambolic, manipulated system. The agents of government must ultimately shoulder the blame and bear the consequences of their action or lack of same.

  • Comment number 45.

    #43 Straighttalk

    I do understand the point that you are trying to make. However, in the interests of accuracy you are trying to describe Marketing Segmentation (using all of the elements of the mix) whereas market segmentation is usually limited to the Channels of Distribution.

    Sorry to be pedantic :)

  • Comment number 46.

    What would concern me is if reporters and economics experts didn't take this into account when making their predictions

    Hopefully these are already factored into the Treasury models,

  • Comment number 47.

    At 9:46pm on 23 Feb 2009, foredeckdave wrote:
    #43 Straighttalk

    "I do understand the point that you are trying to make. However, in the interests of accuracy you are trying to describe Marketing Segmentation (using all of the elements of the mix) whereas market segmentation is usually limited to the Channels of Distribution.

    Sorry to be pedantic :)"

    Thanks for the feedback. However, without wanting to be pedantic myself, I would point you to page 39 of the 9th edition of Consumer Behaviour by Roger Blackwell, Paul Miniard and James Engel where they define market segmentation where their definition is consistent with my use of the phrase. Even Wikipedia uses it this way.

    In practice of course I have seen some companies use the phrase as you suggest, although this seems a little narrow for my own taste. Anyhow, I hope my original point was not lost by this difference of usage.

  • Comment number 48.

    44. rwolff

    I believe my terminology was correct your reply proves the point

  • Comment number 49.

    Straightalk,

    It would be fun to bandy about the illustrious works of marketing theorists but probably a little boring for the rest of the bloggers.

    The majority of us will survive this depression though how many do so without experiencing bouts of depression will depend on just how deep and how long it will last. So, the survivors can all be said to be winners in the end. so on that comfortable thought I'm off to bed. Sleep Well

  • Comment number 50.

    Whenever the argument is put forward to cut back on the public sector, the cry is always certain to be that the action would be "deflationary" and why remove the "purchasing power" of these workers? Surely it would injure the businesses that are reliant on that purchasing power, and all that one would achieve is a reduction in the "national income" and intensify the depression?

    Once again the fallacy emerges from looking at the effects of this action only on the dismissed public sector workers and those businesses that depend on them. Once again it is conveniently forgotten that, if these workers/bureaucrats are not retained, the taxpayers will be permitted to keep the money that was forcibly taken from them for the support of these workers/bureaucrats.

    Once again it is overlooked that the taxpayers' income and purchasing power go up by at least as much as the income and purchasing power of the former public sector employees. If the particular shopkeepers and traders who formerly got the business of these public service bureaucrats lose trade, other trades people elsewhere will gain as least as much.

    Once again, however, the matter does not end there. The country is not merely as well off without the superfluous, unproductive (see rwolff # 44 para 3) bureaucrats as it would have been had it retained them; it is much better off. For these workers/bureaucrats must now seek private sector jobs or set up private businesses. And the added purchasing power of the now unburdened taxpayers will encourage this. But the workers/bureaucrats can take private jobs only by supplying equivalent services to those who provide the jobs - or, rather, to the customers of the employers who provide the jobs. Instead of being parasites, they become productive men and women.

    The "purchasing power" argument is, when one considers it seriously, fantastic. It could just as well apply to a racketeer or a thief who robs you. After he takes your money he has more purchasing power. He supports with it bars, restaurants, nightclubs, carmakers, mobile phone companies. But for every job his spending provides, your own spending must provide one less, because you have that much less to spend. Just so the taxpayers provide one less job for every job supplied by the spending of the public sector employees. When your money is taken by a thief, you get nothing in return. When your money is taken through taxes to support needless public sector jobs, precisely the same situation exists.

    When we can find no better argument for the retention of any group of public employees than that of retaining their purchasing power, it is a sign that the time has come to get rid of them.

  • Comment number 51.

    #50 libertariankant

    Pure Hazlitt and a delight. It is beyond me to comprehend why apparently intelligent literate folk cant get it. Are you also able to offer these poor misguided souls a brief paper on the meaning of value and wealth?

  • Comment number 52.

    rwolff # 51

    I keep trying, but it is very difficult. As you say, it is truly amazing that the majority of them just don't get it!

    Kurt

  • Comment number 53.

    I get it. I look at my P60 and then I look at the job listings in the Guardian Society issue. April will soon be upon us and I recommend the exercise to anyone willing to risk an epiphany. Take a look at what your money buys. While it still exists to be taken, that is.

  • Comment number 54.

    #52

    Because it makes as much sense as trying to mate a Clanger with the Flowerpot men

  • Comment number 55.

    Rwolff - nice work; did you move that money out of the UK into "offshore gold and silver" to avoid paying taxes on your 50% increases? If so, do drop your local HMRC office a line, won't you?

    Parasite.

  • Comment number 56.

    But one of the things that is happening in this recession is a cultural shift in which pensioners and those about to become pensioners are being disadvantaged in a way that has never happen during the three or four other recessions of my adult lifetime. Their savings income has fallen by 80%. The pension schemes on which they are supposed to depend cannot possibly deliver what was expected. Millions of middle class people who did the sensible thing and saved for their retirement find it was not sensible at all. Of course I notice this , this time around because I'm now one of them whereas previously I sailed through in a job and a company that seemed forever recession proof (interesting that same company - now ITV - is now technically bankrupt ) What surprises me is that my generation, who once took to the streets in protest at the drop of a hat, do nothing nowadays but whine about their plight on BBC websites. Is it age? Or is it another cultural change?

  • Comment number 57.

    Economists are fast becoming historians rather than forward thinking theorists. We are probably in now the first truly global recession. However we keep looking back for the answers where as we should be now trying to think outside the box.

    And to answer the question about affecting the majority, unfortunately it does if only in the way our taxes are being spent and the way our national debt is spiralling out of control. Even those of us who are lucky to evade direct impact will still suffer the consequences of what now appears to be a government who lurch from one quick fix to the next. And they keep saddling us with even more bad / toxic debt, £10 billion here £480 million there.

    I recall a quote saying “will the last person leaving please turn the lights off” it would appear that the government are about to do that for us………..

  • Comment number 58.

    This I can atest too.

    Having been in continuous employment for 33 years and at least two recessions I have hardly noticed them.

    Made redundant at the end of 2006 with an early pension and cash I feel that this recession may pass me by again.

    Investments are bad but I don't rely on them, thats a future pension and I'm patient enough to wait another ten years or more.

    Cash will produce less income and that probably means less discretionary spending. That will hurt the economy rather than me.

    Deflation means no rising pension, but should be balanced by lower bills and a competitive environment.

    I know I have been lucky, but I agree that anyone maintaining employment during these times will come out better.

  • Comment number 59.

    Whenever the argument is put forward to cut back on the public sector, the cry is always certain to be that the action would be "deflationary" and why remove the "purchasing power" of these workers?

    No, it's because it's anarchistic.

    That's fundamentally what Hayek was, in terms of outcome, peddling, which is why the Neocons and Chicago Boys took to it so readily (Trotskyites that they basically are). The statism which they abhor is the statism which they lost to Stalin and Mao as it was nationalised.

    With erosion of the group/state comes erosion of the family and demographic dysgenesis.

  • Comment number 60.

    When my grandchildren ask me what I did in the Great Depression II, I'll proudly tell them I sacrificed the little wealth I had to pay for:

    (i) Private sector externalities and gross excesses;

    and

    (ii) Public sector inefficiencies and unfunded pension liabilities.


    Our grandchildren will wonder how we let it happen, and vow not to let it happen to them.....

  • Comment number 61.

    big_ted # 55

    Why should he? It belongs to him not you. He worked for it, therefore it is his property not yours or the state's.

  • Comment number 62.

    #59 JadedJean

    Please can you expand on your point that Hayek and the Chicago School are basically the same as the Trotskyists.

  • Comment number 63.

    MrTweedy # 60


    "I had to pay for...Private sector externalities and gross excesses."

    No, you had to pay for government and banking monopoly fraud.

    Think about it.

  • Comment number 64.

    JadedJean # 59

    "With erosion of the group/state comes erosion of the family and demographic dysgenesis."

    Wrong! It is the individual and the family that is the basic building block of all economic activity and therefore wealth, not the state.

  • Comment number 65.

    Is LibertarianKurt Dick Cheyney in disguise?

  • Comment number 66.

    GOVERNANCE=REGULATION

    duvinrouge (#62) You'll need to follow the Newsnight blog archive links (click name, skip=10 increments), but for the gist see this, consider this, remember that Trotskyism is bottom up, grass-roots, 'Workers Democracy' movement which is well versed in the art of makeover not Democratic-Centralism (cf the still Stalinist PRC, or pre 1953 USSR which was much like Old Labour's Welfare State with a strong Civil Service/Public Sector) and is aggressively/subversively anti-statist. Look at who the Neocons/Chicago Boys had in their sights. They appeal to youthful, adolescent, narcissists - hence our neo-liberal, sub-clinically self-centred, celebrity obsessed culture.

  • Comment number 67.

    The continuing strong retail sales figures (even on a distorted like for like basis) confirm that individual disposable income is still growing.

    The Monetary Policy Committee seem to be ignoring the strong growth in retail sales when reducing interest rates. Time for them to stop reducing interest rates and start thinking when they are going to start increasing them again.

  • Comment number 68.

    Winning strategies in Recession in Retails

    Develop profitable industry:
    Some industry is in dismal situations in this recession. Some industry and companies can still make profit. The recession gives us a chance to transfer the focus of industry. Will the Chinese-called third industry (services, food production and processing, recreation, health product, tourism, catering, retails) get more in flashlight now? Comparing to China, Britain’s food lacks variety in supermarket, which is due to the fewer vegetable, meat, and fish product are developed and produced, as well as less developed food processing industry, which has great potential to be explored.

    Expand internal consumption and demand on commercials:
    After work, Chinese can have more fun: go shopping in department stores and supermarkets, which opens till or after 10pm, go to small and big restaurants, buy raw or ready made food in markets or shops, playing bowling, singing karaoke, strolling in the street window shopping or enjoy the light of city night.

    Chinese business men put great energy into promotion of commercial product to the residents. For example, all the year along, the department stores have discounts more than 20%. Men and women are usually attracted to shops for more than 40% great discounted clothes, and buy unnecessary clothes home. Another example, electrical retailers give discounted price to farmers to buy microwave cookers, and pushes open the market of microwave cooker in the vast countryside. In comparison, many English families still have no hob over cooker and do not use microwave cookers, although they can spend hundreds of pounds on cutting hairs, trim nails, go to pop star music performance, go to pubs. This is not only culture difference here, but also a less attempted for comfort at home, which should be allured by the commercials.

    There are much more categories and species of vegetables, fish, meat on residents’ dining tables in China than in Britain. Chinese farmers are great to work hard to bring the rich basket of food to the city residents. In this recession, English companies in food industries can still earn profits. This shows the both the strength of the industry and the deficiency in the exploration of this market. In China, even the low income family would buy ready made food from shops for supper or go to canteen for a meal. There are many Chinese major in the services of food preparation, house work, training, retails.

    Much of the consumption in China is made by Chinese. The great internal demand on consumption gives the economy the great buffer from the contracted demand from foreign trade.

    Changing the traditional time schedule of retailers:
    It is necessary in the cities of Britain to prolong the opening time of shops and department stores. Years ago, when I moved to the present medium sized midland cites, some shops did not open on Sunday. Now they are open on Sunday, but they open late and close very early, and in the weekdays, the shops keep the same time schedule of office staffs. Then who can go shopping in the day time? Are the shops only open for housewives? The great potential of retails is lost in prime time of consumption in the evening. The reason found by the shops is that they tried the night opening of shop before and people had not got used to go shopping at night. But actually, if people do get the habit of coming out for shopping in the evening, it will bring up the bus services, retails, entertainment, restaurant, canteen industries.

    Regard customers as god:
    In China, when a resident wants to buy a property, the staffs from estate agencies can provide free lift, very patient, friendly services. It is common for a resident to view up to hundred properties before buying one finally. I just feel some English agencies staffs are too shrewd to categorize customers to bad customers by their picking in houses or changing mind when choosing a property before contract. In retails, the real pride of service man should be the achievement in sales and customers’ satisfaction, as well as good fame of the company. Customers are god should prevail in the success of commercial world.

    Promote training and education industry:
    In China, even a monthly low income of RMB2000 Yuan city resident family would save money for their child’s relative expansive university education. The consumption in education and adult further education are one of the great internal demands in promoting the economy and upgrade the quality of people. I just find it strange that the family of employees in Britain even find university fees are too much at present level. In China, people will rush to evening schools after work for better job opportunities. Here, people are more likely to seek fun in the evening.

    The good point of paying less attention to education is that British are stronger in body than Chinese, have better eye sights, and more fit in size when being young.

    Set up research group or organisation to help the job transfer:
    Many people lose jobs recently. I wonder whether we can learn from China to set up some government functions to help transfer the focus of industries, expand new areas for jobs, transfer the views of people and business toward the potential area of working opportunities, and making practical policies toward the business, job, and markets. Has social science in economy got sufficient attention in horizontal and vertical comparison, learning, criticising the experience from successful business pattern?

    There are many ways to work out of the recession. It just needs the accumulation of the wisdom, flexibility, experience, in-depth research, modest, open-minded from the people, which will work for them.

  • Comment number 69.

    #61

    "His property" implies some authority able to guarantee the property right. If not, then we have a law of the jungle. Think about it.

    Back to the original topic.

    Calling this a recession is a bit like like the BBC's description of Guantanamo inmates as "Detainees". Perhaps the BBC is complicit in the orchestration of both.



  • Comment number 70.

    duvinrouge (#62) In brief, it's much easier to lie to, and to exploit, others when there are less rules/laws or enforcers to stop one.

    Libertarians gloss over/ignore/censor the true nature of diversity domestically and globally as an inconvenience.

    Human genetic diversity demands duty of care (as towards children), i.e. statism not 'freedom'/anarchism.

  • Comment number 71.

    #66

    Sorry, still can't grasp where you are coming from.

    That they are both anti-State but in practice support the State?

  • Comment number 72.

  • Comment number 73.

    64.LibertarianKurt (#64) "It is the individual and the family that is the basic building block of all economic activity and therefore wealth, not the state."

    Individual needs vs family/relationship needs are not the same at all.

    We have seen the erosion of the family with Neo-Liberalism. You need to look at the data. Your 'freedom' is literally wiping us out demographically. See East European TFRs since the end of the USSR epecially. The price of Neo-Liberalism/Liberal-Democracy utimately is extinction.

  • Comment number 74.

    #61 LibiteranianKurt

    The reason is simple. He lives and has worked with the UK. Therefore he is subject to the laws of the UK which require him to declare income for tax purposes.

    So you are saying that because of your economic thoughts (and they are nothing more than that) you are exempt from the law of the land. Seems to say a lot about the morality of those who propose these thoughts!

  • Comment number 75.

    duvinrouge (#71 At 12:39pm)

    "Sorry, still can't grasp where you are coming from."

    You'll need more than 27 minutes on this.

  • Comment number 76.

    #54 foredeckdave

    Are you familiar with the works of Robert Nozick? He famously made the point that taxation is slavery. Indeed this is clearly the case if one only considers the unpaid labour that is required to drop a line to HMRC.

    Similarly inflation is theft by the government and the banks. If there are to be any gainers (perhaps non-loosers is a more accurate term) from this state induced depression they will need to protect their own wealth; gold and silver are the historically proven means of achieving this. Or would you follow Roosevelt, the mastermind of depression, in confiscating privately held gold?

    I am not swayed by the contractarian claims for legitimacy of government but any notion of a contract between the governed and the government has been broken by the non-performance of the government and its parasitic servants.

  • Comment number 77.

    #73

    Correct. Aquifer depletion will be the next most important topic in the next ten years.

    http://www.earth-policy.org/Books/PB/PBch2_ss2.htm

    Teenagers born today will already be suffering food and water shortages.

  • Comment number 78.

    #50. It's not just a question of purchasing power.
    You're essentially saying the private sector is better than public sector. Services provided according to demand.
    The problem is that with either system, a few will do rather well and the many who do much of the actual work get squeezed.
    Privatised services still need regulators and eyeryone still has to pay one way or another.

  • Comment number 79.

    Gail Trimble for PM.

    That would restore confidence in the country and benefit the lot of us.

  • Comment number 80.

    #70 jadedjean

    On the contrary, it would appear to be much easier to lie to and exploit others when one can shelter behind laws, the authority of the state and coerce compliance using state enforcers. The age-old excuse of I did nothing illegal supports my contention.
    By the way, the term anarchistic is not pejorative to those who understand it. Statist, by contrast, is because it entails coercion.

    It is an ironic fact that those of a statist mind seem always to require the coercion of individualists in support of their schemes. The result is ultimately to destroy motivation. For example, I for one will pay less tax this year. Not through some devious avoidance scheme (Mr Foredeckdave) but simply by declining to do any work.

    #69 Franksz

    You make a very interesting point in questioning property rights and the means by which they are guaranteed. It is my considered view that much of the economic chaos we see now has roots in the Lockean concept of ownership rights, which never really worked and failed to consider generational claims. Ownership can ultimately only be guaranteed in rem. This however does not require a coercive state nor does it grant such a state rights over property.

    #74 Foredeckdave

    I think you are confusing obedience with morality.

    Meanwhile, inspired by Stephanies article, I shall sit back and look for opportunities amongst this government generated mess.

  • Comment number 81.

    #76

    I have heard all these arguments before. Taxation is theft, etc etc., until you ask the same people what they think of the military and how it should be funded. Then they usually declare that the military is a good and necessary thing. This Libertarianism is just the mindset of unthinking right wingers who like the idea of guns and "freedom" but are not bright enough to understand that it is an impossibility.

    So, you have a minimised government, hardly any taxes, and the Russians turn up on your doorstep with a hundred thousand tanks. What you gonna do?

  • Comment number 82.

    No. 77. FrankSz wrote:
    "Teenagers born today will already be suffering food and water shortages."

    Not in Britain, they won't.

    British amateurs have been working on new methods of farming, which will easily harness the power of nature to provide food, with minimal intervention from humans. Britain will utilise the power of "natural woodland" to be self-sufficient in food production in the future. It requires no fertilisers, and no machinery. Natural wildlife will keep pests under control; so no pesticides. We won't grow much in the way of cereals, but we won't moan about that in the circumstances. Low growing vegetables, fruit bushes, with fruit trees and nut trees will be used to form a food producing woodland. No ploughing is needed. We'll eat less meat, but there'll be enough sheep and cows. Pigs can live on recycled waste. The British natural woodland eco-system will provide our food.
    I'm assuming we have enough rain in Britain to provide the water....

  • Comment number 83.

    #82

    I'd be interested in the research if you can send a link.

    I think techniques that deal with Britain specifically are not particularly helpful because Britain is dependent on foreign nations for a great deal of other things. Food shortages elsewhere in the current system would just raise the price of commodities and put a price strain on everyone.

  • Comment number 84.

    #81 FrankSz

    We all know the value of the military. They are useful for scaring foreigners and in times of crisis they can be relied upon to shoot their own people should the people misguidedly rise up against the government. Not forgetting of course their usefulness in ending depressions through warfare.

    Sadly they are not much use otherwise. Perhaps you could remind us all of the last time any country actually declared war on us, rather than the other way around. If the might of the USA abetted by the puny UK efforts fail to subdue Afghanistan or Iraq for that matter what army in the world poses a threat to us? Our military consistently complain that they are overstretched despite wasting 35.6 billion a year. What exactly have they achieved; please try to give a positive example rather than the usual inane Russia didn’t invade nor did it rain last Tuesday type.

    To be clear, a standing army is a waste of valuable resources and overtly aggressive. Those that are particularly concerned about attacks might wish to form a part time militia using their own resources.

    Doubtless there will be a few arms dealers and opportunistic arms manufacturers amongst Stephanies 1 in 6.

  • Comment number 85.

    No. 83. FrankSz wrote:
    "I'd be interested in the research if you can send a link."

    You can watch it on the BBC website. It was a programme on BBC2 on Friday 24 February. The series is called "Natural World" - the episode was "A Farm of the Future."

    Here's the link:

    http://www.bbc.co.uk/programmes/b00hs8zp


    "Britain is dependent on foreign nations for a great deal of other things."
    Yes, but if we have cheap food which is not dependent on oil for fertilizers and farm machinery, and not dependent on labour, it will help offset the cost of our imports. Self-sufficiency will be more important in the future, as the economic depression causes globalisation to get stuck in first gear or even go into reverse.

  • Comment number 86.

    #80 rwolff.

    No i an not confusing obedience with morality?

    In post #44 you state "As background I made a small fortune out of advising HMG and now live quite happily in the Royal Borough on about 100 GBP per week." If as you state taxation is theft then it is immoral to make a small fortune from the body that 'imposes' those taxes.

    From a purely academic stance then there is some delight to be had in discussing Liberterian Theory. However, as a practical policy making measure it is about as much use as the Theory of Perfect Competition.

    Stand back for a moment and just look at the terminology that you have to employ to justify the theory and then look at the terminology used to explain communism. Both are extreem ideas and both ultimately seek absolute power.

  • Comment number 87.

    Of course it's right that in a recession most people aren't adversely affected.

    However, this isn't really a normal recession. We currently have ludicrously low interest rates so people who rely on interest on their savings for income are badly hit. Furthermore, because of these low rates, the banks aren't lending. And what they are lending, is being lent to the government (who have a massive structural budget deficit as well as a deliberate "stimulus" deficit on top). So individuals and companies are finding it hard to borrow.

    The government's response is now to collar the mortgage market for itself (via its nationalised Northern Rock) and print money to inflate away the government debt.

    In a year's time, expect roaring inflation, a Sterling crisis, and a sudden jump in interest rates.

    All normal for a Socialist government. The only puzzle is why the US government is basically going down the same road.

  • Comment number 88.

    MANUFACTURING DISSENT

    rwolff (#80) "The age-old excuse of I did nothing illegal supports my contention.
    By the way, the term anarchistic is not pejorative to those who understand it. Statist, by contrast, is because it entails coercion."


    'Pigs' and 'Bricks In The Walls'? Time to grow up and look at how New Labour and the Conservatives before legislated to break up Britain in the name of anti-Nationalism. Whose puppets?

    You need to look at the crime figures since the war. They just go up (despite recent tinkering with the counting). That is because the state has been rolled back. That is because of Thatcher and Blair's anarchism/deregulation/Balkanisation of the UK.

    You believe that 'anarchism' is not a perjorative term because you've been conditioned by post-war anti-statist propaganda/education just as Germany was [Unsuitable/Broken URL removed by Moderator]after the war.

    Keep it up:- the indigenous birth rate is way below replacement level, the nation is dumbing down and it's facing economic disaster because of false beliefs like yours.

    Who will benefit? Who has done this in the past?

  • Comment number 89.

    #86 foredeckdave

    I appreciate your reply and would be interested to know whether you do or do not believe that obedience to the law to be a moral act?

    I completely agree with you that it is hypocritical to take the governments shilling when one believes it to be derived from slavery. In my defence, I was brainwashed by the education system of this country into believing the myth that government was both necessary and well intentioned. I have since taken the time to educate myself, something that I was motivated to do having seen both the political and executive elements of government in close-up. To reassure you, I am a reformed character and now will to nothing further, unless coerced, to aid or abet these charlatans whether they be politicians or civil servants.

    I would not classify myself as a Libertarian, though I find much of the Libertarian argument to be sound. I start from the fundamental position that coercion is wrong. Do we differ in this belief?

    It is difficult to conceive of a more fundamentalist belief than statism. For starters it is not a natural state, it relies upon coercion and it is elitist. Do you have any argument in favour of it? By contrast, communism has some merit in its fundamental appeal to equality and Libertarianism in its appeal to freedom. Sadly the system we live under offers neither.

    In attempting to emerge as one of the 1 in 6 I will try hard not to exploit the coercive powers of the state, tempting though it is to apply for a bailout or, similarly, to obtain a featherbedded position as a state employee complete with pension rights enforceable against the rest of the people.

  • Comment number 90.

    Is it possible that after a certain point money ceases to be "real"?

    With all the massive amounts that have been bandied about recently I feel left with an impression that it isn't really "real" money.

    Is it "intellectual" money that needs to be mentioned in order to make everything else work?

    Please could someone explain this to me.

    Thanks

  • Comment number 91.

    rwolff,

    You pose me 2 questions:

    Is obedience to a law a moral act? and

    Is coercion wrong?

    I can only respond to your first question from my own standpoint. I in no way present myself as an expert on morals or ethics. However, as a Christian I believe that laws are to be obeyed unless they conflict with my faith - "give unto Ceaser". That may not be satisfactory for you but it is the best that I can do.

    With coercion we also have a difficult question. On face value, it is easy to say that coercion is essentially wrong. However, any law that regulates social life must be inherently coercive.

    These answers may be too generalised for you but there it is!

  • Comment number 92.

    fordeckdave # 74

    If we assume that the individual has an indisputable right to life, we must concede that he has a similar right to the enjoyment of the products of his labour. This we call a property right. The absolute right to property follows from the original right to life itself because one without the other is meaningless; the means to life must be identified with life itself. If the state has a prior right to the products of one's labour, his right to existence is qualified.

    Aside from the fact that no such prior right can be established, except by declaring the state the author of all rights, our inclination (as shown in the effort to avoid paying taxes) is to reject this concept of priority. Our instinct is against it. We object to the taking of our property by organised society just as we do when a single unit of society commits the act. In the latter case, we unhesitatingly call the act robbery, a malum in se.

    It is not the law, which in the first instance defines robbery, it is an ethical principle, and this, the law may violate but not supersede. If by the necessity of living, we acquiesce to the force of law and if by long custom, we lose sight of the immorality, has the principle been obliterated?

    Robbery is robbery, and no amount of words can make it anything else.

  • Comment number 93.

    #88 Jadedjean

    I must admit to failing to comprehend any meaning from your first paragraph. Would you be kind enough to expand, please?

    Prompted by your second paragraph I have just read the latest BCS report. It would appear that crime is going down. This, of course, may be meaningless since it depends on the definition of crime. I suspect crime figures are influenced by government action and policy if only because more laws presumably translate into more laws broken. This is clearly the case where drugs are concerned though it is beyond me to understand what business of anyone else it is to determine what drugs an individual is permitted to consume. Similarly, if the government decides that carrying a knife is a crime then expect knife crime to appear in the crime statistics. Indeed as far as I can see the majority of crime is self-induced by the government. On this we appear to agree, differing on the reason. Mine being the simplistic case of government creating the crime through fiat, yours being some failing by the state to police the people.

    I do tend to agree with you that government is somewhat anarchic, but only for the few at the top; the rest are coerced into compliance with the wishes of these few. It seems to me that the solution is to extend personal freedom to the masses rather than continue with the myth that the man in Whitehall knows best.

    As far as I can tell, although again I accept that government statistics are frequently manipulated, the population of this country is expanding albeit at a low rate. Quite what this has to do with false beliefs I do not know but I must agree with you about the dumbing down of the nation, which is entirely due to state interference in education. That aside, I am not sure what your point is here either.

    As to who will benefit, I am optimistic that the entire state mechanism will collapse under the weight of its poor decisions and particularly its misplaced faith in the faux-capitalism of their fiat monetary system. In which case we all benefit, apart from those who are milking the people under the current system.

  • Comment number 94.

    #92 LibierianKurt

    You are sitting on a donkey and trying to win the Derby!

    The right to life and the enjoyment of property are not the only 'givens' to be considered.

    If man is to benefit from his/her labour then he/she has to undertake that labour within a societal base (even a family can be considered as a societal base in this instance). For a society to function then it needs a mechanism for agreeing, implementing and adjudicating rules (laws if you like). There also needs to be a commitment to protect the society. Therefore some form of administration (government) is a necessary. The resources needed to run this administration have to be provided by the society - this is not theft.

    Man is a sinful creature ( i really do not wish to start a debate upon the meaning of sin!) and an environment that relies totally upon individualism will only give free reign for the sinful nature of man to run riot.

    rwolff, was very careful when he attacked the military. Do either you or he condemn those that laid down their life during WW2 in defense of your freedoms?

  • Comment number 95.

    No. 90. ResolvingPower wrote:
    "Is it possible that after a certain point money ceases to be "real"? Pease could someone explain this to me."

    A government, a business and a household are all subject to the same simple law - you cannot spend more than your income without eventually going bankrupt.

    Government gets its income from tax recepits, from taxes levied on businesses and individuals.

    Businesses get their income from selling products for more than it costs to produce them.

    Households get their income from their employment. They are mainly employed by private sector businesses, or public sector bodies which are paid for by the government from its tax receipts.

    Clearly, underpinning all this are the profits earned by private sector businesses. The public sector then provides infrastructure which supports the private sector's ability to earn profits. The bigger the private sector's profits, the bigger the government's tax receipts, the better the public services.

    The government is bailing-out specific private sector businesses which cannot be left to fail - ie banks. The government does not have enough money held in reserve from past tax receipts. Therefore, to pay for the cost of the bail-outs, it is trying to borrow huge sums of money now, which will be repaid from future tax receipts, from future tax increases.

    If the British government spends more than the combined sum of its current tax receipts plus its borrowing (by simply printing money, say) it will serve to devalue our currency, as those people who lent money to the government will quickly work out that our government is spending more than its income and won't be able to repay its borrowings. International investors will then stop lending to the British government and will sell all their UK assets, in an attempt to get out of sterling before the currency loses more value against the dollar, yen, euro or yuan. The result of investors selling sterling en masse is a fall in the price of sterling, which will panic yet more investors, causing them to sell more UK assets, causing sterling to fall.....Also, when sterling falls, any British businesses who repay debts deonominated in a foreign currency will have to sell more sterling to buy the necessary amount of foreign currency to pay their creditors. This then creates more downward pressure on sterling.

    Unfortunately, it really is that simple.

    At present, the British government hasn't borrowed more than it can pay back. However, it will not be able to afford to bail-out all loss making businesses; it will have to turn some away and let them fail.

  • Comment number 96.

    rwolff (#93) The first paragaraph:- since the late 70s there's been a systematic effort by Conservatives and New Labour to roll back the state, privatising the Public Sector and reducing regulation on banking and the free-market. The end result being fragmentation of the UK into statelets about the size of Scotland (6 million, i.,e the size of an EU administative unit, a NUT). They have been breaking up the state and a generation of two have been helping, often unwittingly. This is good for those who want to make money out of consumers/debtors.

    Crime has increased (our prison population has doubled since the late 80s, and this is largely because of an increase in long term offenders, i.e. serious crime). Our schools now have to contain levels of criminal behaviour in our inner cities which were unheard of forty years ago, and there is an ethnic dimension to this.

    Policy is now focused on community containment to keep prison numbers down (partly costs), and also because nothing works in offender management.

    Our population is only growing because of S Asian birth rates. Otherwise our population, like that of Europeans elsewhere is going into decline. 99.9% of London's population growth in the next 30 years will be in BME groups.

    The disconnect between what the data really shows and what most people are led to believe is truly alarming.

    "I must agree with you about the dumbing down of the nation, which is entirely due to state interference in education. That aside, I am not sure what your point is here either."

    Our population is getting genetically dumber through a combination of dysgenic differential fertility (excessive education of our brighter females), too high levels of extra EU low-skilled immigration and their high birth rates.

    As I say, most people don't see the problem. That does not mean there isn't one. Post war neo-Liberal thinking has done this.

    We have a problem and it's one of omission.

  • Comment number 97.

    #94 foredeckdave

    I will continue to be careful; criticism of the military is stepping into an emotive minefield.

    I do not condemn those who died in WWII, on either side. I would condemn certain actions, again on either side and I certainly condemn the leaders on all sides. Similarly, I cannot condemn those who died amongst the ranks of the IRA, UVF, Tamil Tigers, Al Qaeda (if it exists) or any other foot soldiers around the world.

    I do question their intelligence and their principles and I do question your assertion that WWII victims actually defended my freedom (such as it is), though not the notion that many believed that they were fighting for freedom.

    I appreciate that being religious entails subjugation of the self to an intangible higher authority, but I cannot see how you might, as a Christian, condone coercion. In your reply to libertariankant you correctly identify a societal context to all human existence. It does not follow from this that there must necessarily be laws enforced by coercion. Indeed, laws do not govern most social interaction, as I would suspect the workings of your local Christian community confirms. If, as you assert, man(kind) is sinful then deferring to a government (of (wo)men) makes no difference to how much sin might reign.

    You do make a valid point with regard to protection of the individual; the coercion to prevent coercion issue. If we accept that coercion is wrong then its prevention must be right. This leaves the mechanics. Robert Nozick builds a case for the minimal state to perform this function. He asserts that it would develop into a natural monopoly. I disagree, believing that there is ample empirical evidence that overlapping mutually consenting groups can and do exist. There is no need for an overarching government. If you like, I am conceding a need to protect societies (note the plural) but assert, again on empirical evidence, that such societies may consist of as many or as few individuals as each individual chooses.

    In the context of the current collapse of the existing system, we have an opportunity to reinvent the way we co-exist. On the one hand we can continue with coercive government complete with the risk (empirical evidence says certainty) that the levers of power fall into sinful hands or we can extol and exploit the virtues of individual self-determination. As a Christian, how can you accept that one man should have power over another?

  • Comment number 98.

    #90 - ResolvingPower
    "Is it possible that after a certain point money ceases to be "real"?"
    It's quite philosophical. I tried to explore it a little in the last discussion: what do we mean by "value"?

    The totally useless but more accurate answer is that insofar as our perceived world is the result of expectations used in a process of recognition, the value we attach to money is as real as everything else. You push a doorbell and expect to hear a sound, you give a five pound note and expect a beer. That is the extent of value for most people I think.

    When money ceases to be 'real', it is called hyperinflation. Hyperinflation is the rapid loss of faith in a currency - the expectation that the value attached to money is vapourising quickly. Then the money turns into pretty coloured paper and nothing more.

    The value of money is a kind of circular mutually reinforcing thing. If people's ideas of value attached to money gets too strong this is disinflation or deflation, which carries its own sets of risks and rewards. If people's idea of value associated with money weakens then this is inflation. Careful regulation is needed to keep this mental attitude to money at a level that is good for society and individuals. In a sense the value of money is a large rumour that goes round society, and the rumour must be encouraged or discredited depending on how much people believe it. If there is a shortage of money, it will be sought after, which would increase its value - people would expect others to seek after it, so they could buy more. This is why one factor under regulation is the quantity of money, amongst others. In a credit money economy, the level of belief in money can also affect the quantities of money, so it is a tug of war between the authorities and the people.

    The overall system can be treated as a large dynamic system, such as a flow of electricity or water through circuits. It can be analysed to understand if it is 'stable'.

    If you could visualise a huge electric circuit on a map of england, viewed aerially at night, where components were the myriad individual people and companies, and the level of belief in money (the expectation that money could be exchanged for x or y) was represented as a degree of illumination of each person or company, then you might see natural flows of light circulating around this system.

    Stable would mean that despite the variations the system continued to oscillate around different attractors. Unstable would mean that under certain circumstances there could be a FZZZ, the lights would flash, or dim, and then go out.


    WHen the lights go out, then money is not real anymore.





  • Comment number 99.

    #96 Jadedjean

    Thank you for expanding on your points. You have an interesting and informed perspective.

    I would argue that neither conservatives nor nu-labour have rolled back the state, they have merely shuffled the deck chairs. The share of national expenditure overtly consumed by the state is increasing, bail-outs notwithstanding. Behind the scenes, mock-privatisation through Serco, PFI and the like is growing but remains effectively state expenditure and control. I agree that balkanisation is dangerous because it creates a plethora of governmental units that shuffle responsibility faster than the bunco booth. This is not an argument in favour of big government, rather one for scrapping it.

    I accept your claim about prison population but reiterate my argument that this is self-induced by government; too many crimes rather than too many criminals. Offender management smacks of Pol Pot style re-education attempting to instil neo-liberal values. If there is an increase in problems in schools, why coerce attendance? Again it is a self-induced problem, this time resulting from state interference in an area beyond its legitimate jurisdiction.

    I am not sure why the ethnic origin of new parents is relevant to anything. However, your claims regarding genetic dumbing down is of interest. The work of James Flynn appears to be a contrary indicator but there does seem to be support for your dysgenic differential fertility claim. How, though, is this a problem? And for whom?

  • Comment number 100.

    This comment was removed because the moderators found it broke the house rules. Explain.

 

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