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90 comments on UK Inflation: the only way is up, baby
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fordprefect,
I hardly know where to start! Are you really sure you actually mean what you've written? I don't mean to sound partronizing. I'm just puzzled. You seem to be describing a kind of liberal, formally correct, simplified, economic utopia, that doesn't exist in the real world. Do you really believe you've accurately described the way the economy works? I'm sure you do, unless you're being satirical and pulling my leg? Are you just pulling my chain for fun as a kind of exercise?
There are so many assumptions in what you say and premises based on liberal ideology and dogma that only partially and narrowly explain and describe how the 'economy' functions. Honestly, I didn't really think people actually believed this kind of stuff anymore. I keep thinking your not really serious and playing Devil's advocate.
I wasn't really concentrating on pure economics, or what's good for the economy, at least I don't think I was?! I think I was attempting to draw an outline of changes and dangers to society of the evolution of a form of capitalism which is anti-democratic and totalitarian in nature. The state and capitalism merging into one all-powerful entity - a veritable Leviathan towering over us. I don't think I'd put the needs of the economy before the requirements of a democractic society.
You seem not only to be arguing that inequality is good for society, but that the the more inequality there is the better it is for society as a whole. That vast disparities of wealth are almost an indication of how economically successful a society is. Are you sure this is what you mean?
You also substantially underestimate the detremental effects of vast differences in wealth and power on society as a whole. In fact you don't deal with the thorny issue of power at all, almost as if it doesn't matter in a democracy. You seem to put great store on the economy and how it functions optimally, yet you don't seem all that interested in how democracy functions, are these two connected? Vast differences in lifestyle and wealth and power distort society on so many different levels, surely this is obvious?
However, you deny this, by bringing up the third world, which I didn't mention. I didn't compare Bill Gates to some farmer in Africa, where did you get that idea from? Isn't that the classic 'strawman' style of argument, where do people learn this stuff? You also then to support you're argument try to contend that the differences between the lives of the super-rich and the average person aren't that great after all. That the rich have lives pretty much the same as most other people in Western countries.
You can not be serious, surely? How do you know so much about the lifestyle of Bill Gates and what he eats and where he lives and his level of medical care, do you know him personally? How many super-rich people do you actually know? I'm not super-rich, and I don't want to be, but my lifestyle is vastly different from the average person. I eat far better and expensive food. I have better clothes. I will probably live ten to fifteen years longer than the average person. I have a secure and very generous pension plan. I have a substantial investment portfolio. I have three homes. I don't have to worry about what things cost. My children go to private school and are receiving a very expensive elite education. You are substantially underestimating the collosal differences between the wealthy and the average working man.
There's a basic contradiction in your argument, probably because it really doesn't have much to do with reality. One the one hand you praise and justify inequality as necessary for the proper functioning of the economy, yet then you put the breaks on for some reason, and argue that even the super-rich are pretty much just like most people in their habits and lifestyle, so the egaliarian principle sneeks in by the backdoor so to speak. So one then wonders why we even aspire to become super-rich if they really live mostly like the rest of us and they don't really exist as a distinct group apart from the rest of us. So what motivates them, why do they bother, if it isn't for the financial reward and the lifestyle wealth brings? So maybe we don't actually need a capitalist class at all then?
:) To some degree I was yanking your chain. Mostly in the phrasing and glib characterization as opposed to the actual point, but still. I don't believe the actual economy functions as I have laid it out, For one thing, the existence and over application of government throughout my lifetime has badly distorted any economic theory.
OH! BTW, it is conservative ideology and dogma, not liberal (at least here int he US, I don't know where you are from) :)
One of the most dangerous misconceptions is that government is an effective tool to reign in corporations. In practice, regulation *always* favors the existing big corporations by erecting barriers to entry for new smaller players. Case in point, the pharmaceutical companies, Pfizer could not be the monolithic corporation it is in the absence of the FDA and the draconian approval process required by it.
You have it backward about the income disparity/health of economy thing. I wasn't saying that a high income disparity means a healthier economy, I was saying that high *technology* ventures require a high income disparity. High technology manufacturing plant is *expensive* and virtually impossible to construct without someone REALLY rich backing it.
As for the lifestyle differences, the advantages of wealth are not unclear. The wealthy get the best that society has. However, they still live in the same society, at generally the same level of technology. The difference in quality of life between joe teamster and for example... Alexander the great is far far greater(vastly favoring joe teamster) than the difference between myself and bill gates.
I never said that you compared gates to zambian farmer. You DID however compare the super-rich to "the great mass of humanity". The bulk of the people on the planet live pretty primitive lives, more comparable to the zambia farmer than to joe teamster. That's where I drew the inference that that was the lower endpoint you were using. However, since the zambian farmer does not engage in any meaningful commerce with any portion of the outside world, the separation is reasonable. If you had something else in mind by "the great mass of humainty" then I stand corrected.
INRE democracy/economy. Wealth in and of itself has very limited impacts on the functioning of a proper democracy if the citizens are being responsible citizens. However, we haven't had one of those in quite a long time. Democracies require several things from the citizens. For example,
a) Education on the issues under discussion... anyone think that's been being practiced?
b) Compromise on issues. YAH. Right, that's been happening.
c) Lead, follow or get out of the way. Democracy requires that the outvoted party STFU. Hasn't been happening.
Only when the requirements of citizenship are met by the bulk of the populace does it even make sense to discuss the impacts of wealth on democracy.
I DO however, certainly agree with you that when the capitalist institutions and the government start playing ball together it's all over. It seems to me that it is the responsibility of "we the people" to prevent that, or failing that, to press reset and get a new government.
Gotta say though that if the options are *either* democracy OR economy, I'd prefer to live in the nation with a functioning economy over the one with the functioning democracy. "we the people" are phenomenally stupid, and will frequently vote for measures that are simply stupid. Democracy is not the holy grail. Nor is a strong economy. The holy grail is "can't we all just get along?" and the answer unfortunately is "NO".
Im slightly concerened that I need to put effort into defending democracy against the obvious anti-democratic tendencies in our own society.
Whilst I can see the logic behind the few defending their position and interests against the many, and therefore they fear democracy, I have difficulty understanding why on earth ordinary folk, with ordinary incomes and wealth, support the rich and inequality. Is it because they really believe, against all the odds, that they too have a realistic chance of becoming rich themselves? But they'ed have more chance of winning the lottery than becoming rich. To accept inequalities for themselves and their families, for their entire lives, in the vane hope that they too one day will strike it rich, is delusional. That apparently significant numbers of ordinary people have internalized and accepted the values and attitudes of the rich and powerful has always puzzled me. That people actually seem to believe in 'trickle down' economics is beyond me.
There's also the 'paradox' that people seem to believe in two contradictory forms of incentives at work in society. Put simply, that the rich perform and contribute to economic growth if one 'pays' them handsomely, whilst at the bottom end, the opposite applies. But surely there is form of sliding scale at work here? That, in reality, the reverse is true. At some point the rich are saited and the benefits of pampering them begin to fall off, whereas directing the same portion of wealth towards the lower end of the scale will have a far more positive overal effect on society, or is that deemed 'socialism' too?
One could examine the current economic crisis in the United States as an example. Vast inequlaities have distorted the economy to almost breaking point. The super-rich, who, after all, are in charge, have run the country into the ground. This pattern seems to repeat itself over and over again. It is a myth that the elite know what they are doing and are more able and competent to steer the economy. What they do is follow their narrow 'class' interests over the cliff and drag everyone else with them. Why do they do this time after time? Simply because they can. The economic system in the United States disproportionally favours the interests of an elite in opposition to the well-being and interests of the majority of Americans. Now, I'm not sure this is a 'Marxist' analysis or not. Is it wrong to use the concept of social class and conflicting interests, is that it?
Surely one can't argue that social classes exist in the United States and people have hugely different lifestyles and access to resources? I can appriciate that one can argue that enormous inequalities in society don't really matter, and even that inequalities are positive and are what makes society dynamic; but to deny that inequalities of wealth and power exist is something else.
How then is the United States going to get out of the slump it's moving into? Well, it isn't, not unless one adopts a whole new set of solutions which are currently not even on the table. What's happened is that the United States has 'chosen' to saw off the branch it sits on. The corporations, what I call the super-rich or aristocracy, have moved American industry overseas to places wheere they can score bigger profits, fine for them, but not exactly beneficial for ordinary Americans who are forced to remain in the US, unlike their disappearing jobs and futures!
Just for starters what one needs is a fundamental tax reform, shifting the burden from ordinary folk and onto the wealthy. Ordinary Americans have seen their share of national income fall, now they are unable to borrow more, in deadly debt and can no longer afford to buy what's on offer. What's required is a type of New Deal. A massive programme of government financed public works to get people back into productive employment and put real and higher wages in their pockets, because otherwise the downward spiral will just go on and on and down and down. The American working-class and middle-class need support, not the rich, they have received more than their fair share over the last thirty odd years. Redistributing wealth to the lower end of society will have a far greater and more positive effect on the economy than pampering the rich even more. This is simply stuff. We need to rebuild the American economy from the bottom up. Unfortunately, this flies in the face of the dogma and interests of the elite minority that owns and controls the United States. The wealthy elite have the system 'sown up' and the democratic majority are disunited, fragmented, brow-beaten, hamstrung and without leadership, or anyone to fight for their corner and interests, the poor sods don't even have a political party to represent them. So implimenting the reforms necessary to get America moving again is going to be real uphill struggle and things are going to get a lot worse before they begin to get better, if they ever do.