You know how economics always looks really dull?

Pretty

All we need are sales and recruitment. If you're good, maybe we'll call you marketing and let you out once in a while

If you want to be a professional artist, move to China.

Pride and Prejudice: Why I no longer believe in trickle down economics (using 'believe' in the sense of 'having faith in')

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 Tuesday, 10 March 2009 at 15:24 | Edit note | Delete

For a long time I have been considered politically right of centre among my peers: to the extent that a hush has descended upon a room as I’ve entered it. However, I’m becoming increasingly left-leaning with age and, perhaps – and I only say perhaps – more tellingly, increase of education.

I have always supported a right of centre economic policy as I believed it led to an increase of wealth for any individual by increasing the overall wealth. I held that this was achieved by the ‘trickle down’ mechanism. To illustrate this mechanism, choose any luxury item, say a television. When the television comes out it will cost a great deal of money, say £1500, and only the very wealthy will buy one. Once everyone who is going to buy one at this price has done so the price is reduced and the product becomes available to the next socio-economic class. This process is repeated until the market is saturated and the product is terminated.

This system is not the result of technological or qualitative production potential. For while this stratification occurs amongst TVs, food and beverage products and so on, it is also prevalent amongst trainers, where the technological and qualitative factors remain essentially unchanged amongst any two instances of a given brand’s flagship output year on year.

I have long defended this system on the argument that the start up cost of production of any item is always a great deal higher than the maintenance of that production. A new product must be researched, designed, tested, marketed and so on; there is also the initial expenditure on fixed costs, such as the equipment used to make the product. Thus, I reasoned, the initial cost reflects the initial investment. Furthermore, it is only through this initial skimming of the market that it becomes possible for the poorer elements of society to have access to the products, for if the companies were only able to sell the products at the reduced price throughout the product’s entire life cycle then they would not be able to generate sufficient starter capital to make a worthwhile return on their initial investment, rendering production either unviable or undesirable.

The point is that none of this is the point. That one person’s wealth allows for another to receive hand-me-down trainer fashion when it is his turn does not equate to an overall raising of wealth. During boom years everyone annually upgrades their phone/trainers/car/TV/computer/iPod and during the busts we all realise that we never really cared anyway and that the job we spent 80 hours a week wishing we weren’t at and whatever remainder we were awake trying to forget we were ever at was not worth the extra £10k we only spent on booze, coke and the latest model iPhone. Consumerism is the new opiate of the masses, or at least the middle classes. The consumer is temporarily placated but their quality of life is not improved.

Just because everyone in this country now has a sky dish and a replica football shirt and branded footwear does not mean that there is no working class. People, if they are lucky enough to be afforded the opportunity, work obscene numbers of hours and destroy themselves with stress to ultimately achieve nothing more than trinkets. Will that be your life’s worth: a house stuffed with old, outdated memorabilia that your grandchildren will puzzle at and your children will continually try to dispose of, just like the cluttered old messes you remember visiting in your youth? If you have children, that is. You might decide you’d rather be a careerist than a parent. Who needs reproduction when you can have the satisfaction of a job well done? Of course you work will be under-appreciated and under-compensated but children are so expensive and they’ll only turn against you in the end. You might as well devote your life’s energy to building a career only to receive enforced redundancy at the point at which it is all you have.

I’ve descended into hyperventilating hyperbole. The mixing of passion and argument can be very dangerous. It can be misleading and obscuring. It is often the case that the more passionate one gets in making one’s argument, the less of an argument one has: the passion often covering up the lack of clarity or rational justification concerning one’s position.

I will endeavour to regain some focus in my conclusion. As I said in my introduction, I have become increasing left-leaning in my outlook as I have experienced more of life and read more of others’ reflections on what they have experienced. I think I can sum up what is becoming increasingly palpable to me in one sentence:

Some values aren’t quantified.

pride and prejudice: a country regressing

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 Saturday, 14 March 2009 at 11:47 | Edit note | Delete

The government must be so scared of these rich guys (see 'bloody immigrants...') leaving and exposing the UK as a regressive, backwards country. I wonder, if they all left would we still have a 'stronger' economy than Poland? Or would we be exposed for what we are - probably the most poorly managed country in Europe? Plus what would Peter Mandleson do for a holiday?

For a long time we have proudly declared ourselves as a developed, or first world, nation. What does that mean? Well you could argue that it's relative wealth. We have more money than Peru or Namibia so we're better than them.

How?

Is it really just how much money we have? What if it was all concentrated on one person, would that count?
No, that would be stupid, because he could easily leave and then we'd all be poor again. Development implies work and progress over a period of time. So what's developed? Is it just our economy? No, that's at best a side effect of other factors of development: increase in education, aspiration and facilities. Admittedly growth feeds growth though - the more money you have the more you can invest...

What we actually mean by claiming that our country is developed is that the lower standards of living in this country are high relative to the countries we describe as developing or underdeveloped. We would include factors such as the relatively low level of homelessness, universal education and healthcare, public transport and so on. But these things are on the slide. Our homes are sh*t, our schools are sh*t, our hospitals are sh*t - and more to the point there aren't enough of them. The money isn't being put in. We are no longer at the forefront and we're fading fast.

What can we do? Not a great deal, we're gonna slump for a while. What we can do, though, is start taxing our rich more and our poor less, invest wisely and seek help. That last one's a big one. We're very proud, the british. We're so f8cking proud that we've made all our money in the last few years as consultants, and before we were making our money telling people how to spend theirs (give it to us!) we were telling other countries how they should live, who they should worship and who to sell their natural assets to (us!). Well noone's listening to us any more. Noone's buying our bullsh*t so it's time we got off our victorian high horses and went to the IMF and the EU and said 'look, guys, we've ballsed up. We're sorry. We followed those crazy American's and it's buggered us up royally. We're sorry we spurned you for so long, moaning about your attempts to try and rescue us. Please help us.' But then we would be hypocrites, since that's what we're all moaning about the bankers for doing. But if we are willing to let go our pride and ask for help it would be there for us. We've invested a great deal in the EU and IMF and barely taken a thing while other countries have used the money available for worthwhile projects, such as Portugal using IMF money to build quality housing for their poor.

We could also pull out of those two wars we can't really afford to pretend are relevant to us anymore.