Why Excessive Socialism Doesn't Work

a reply to: oldcarpy

No, they didn't bring the country to its knees, the refusal of the government to DO AS IT IS DAMNED WELL TOLD is what bought the nation to its knees, and as for underground drivers, let me make something perfectly clear. Having as many passengers as they do, as many responsibilities as they do, and being exposed to suicides, people bursting up the front of their trains, or ground to paste beneath its wheels, as well as being exposed by a lack of proper policing to abuse and risk of injury by passengers, is WELL worth the money they get, and a better pension package than they have access to as well. You can argue till you are blue in the face, but here is the real rub.

When you see an underground driver doing "well" for themselves, your obligation is not to think "Screw that guy for getting what he is owed". It is instead to think "Good, thats one group of people sorted, now, lets clobber the government and the corporations, until EVERYONE gets treated right for the work they do, until NO ONE goes hungry just because the government and businesses have not provided enough opportunity, or because they happen to be too sick or disabled to perform a job role."

Stand WITH the people, not against them, for crying out loud.

a reply to: ChaoticOrder

Hong Kong has massive problems with poverty. The life span in Asia is generally much longer than the est of the world, that is not based on economic factors. Low official levels of homelessness hides the fact that a latge number of people live in tiny single room residences. About 20% of the population lives below the poverty line.

It might be possible to reach a level of welfare sending that discourages innovation, however I can't think of any country in the world that has anywhere near that level of welfare.

There are many different ways of assessing economic performance and taken in isolation they are all insufficient. However based on the level of satisfaction with quality of life the best countries in the world to live in have relatively high levels of government spending. That obviously doesn't mean high levels of governing spending alone give a good standard of living, it just shows that combined with a healthy economy and other factors it seems to generate the best overall outcomes.

a reply to: TrueBrit

Having as many passengers as they do, as many responsibilities as they do, and being exposed to suicides, people bursting up the front of their trains, or ground to paste beneath its wheels, as well as being exposed by a lack of proper policing to abuse and risk of injury by passengers, is WELL worth the money they get, and a better pension package than they have access to as well.

So because they may potentially witness something that should mean a higher pay? And don't they have doors that lock the drivers cabin? And aren't there other people on the train who are supposed to manage the passengers?

now, lets clobber the government and the corporations, until EVERYONE gets treated right for the work they do, until NO ONE goes hungry just because the government and businesses have not provided enough opportunity

This is precisely the type of flawed thinking I discuss in my opening post. Forcing the government to redistribute wealth doesn't magically solve all our problem and usually only makes them worse over the long run. Food doesn't just come from thin air, it comes from the success of businesses, and whenever the government tries to control food production it fails spectacularly. Money doesn't come from thin air either, unless you choose to print more of it endlessly, which is exactly what they do and what leads to price inflation, it's a hidden tax and it harms everyone over the long run unless wages are able to keep up. There's only so much money they can take from businesses and individuals before the entire system collapses, and the more you try to undermine natural market forces and infringe upon the liberty of people, the more likely you are to pave a path to hell.

a reply to: ChaoticOrder

Money is exactly created out of thin air. Its a token that is useful to facilitate economic activity. There is no limit to how much money exists and the amount changes continually both by actions by goverment and the private sector.

There is also no such thing as natural market forces. Markets operate in a social, institutional and regulatory framework. Markets allocation is no me natural that allocation by the state. Generally one will better than the other depending on circumstance but there is no magic wand of free markets that guarantees a better outcome.

a reply to: ScepticScot

Low official levels of homelessness hides the fact that a latge number of people live in tiny single room residences. About 20% of the population lives below the poverty line.

The articles reporting that 20% figure are very misleading:

Last year, everyone we defined poor as those living on under £250 per week. This year, everyone on under £500 is poor (made up numbers, obviously). What do you expect that change in definition to do to the number of poor people? Increase it would seem to be the obvious answer, wouldn’t it?

But giggles aside, there’s an important underlying point: inequality – not poverty – is being measured here. The international definition of poverty is less than $1.90 a day. There’s no one in Hong Kong on this at all, therefore there’s no poverty. There are, however, people in Hong Kong who have much less than others. And it’s entirely true that Hong Kong is more unequal than most of the developed world. But it’s still not true that relative poverty and poverty are the same thing.

For example, we’re told that the poverty line in Hong Kong is HK $4,000 per month (roughly £380) for an individual which certainly doesn’t seem like much. Yet when we plug that into a comparison of global incomes we find that, accounting for price differences across geography, it’s firmly in the top fifth of all global incomes. In other words, the poorest 20 percent in Hong Kong still find themselves in the richest 20 percent of all humans.

Which leads us to the important underlying point. That Guardian story quotes a spokesman for the Society for Community Organisation, an NGO that works with the poor, who says “economic growth can not help the lower classes share in the economic achievements.” As Hong Kong so vividly demonstrates, the opposite is true. An economy in which the poverty line is defined as being rather rich by global standards must have something going for it.

There Is No Such Thing as Poverty in Hong Kong

It might be possible to reach a level of welfare sending that discourages innovation, however I can't think of any country in the world that has anywhere near that level of welfare.

Oh I can certainly think of several, the most obvious being Venezuela. As of 2018 it has been reported almost 90% of their population lives in poverty.

Venezuela has a national universal health care system. The current government has created a program to expand access to health care known as Misión Barrio Adentro,[330][331] although its efficiency and work conditions have been criticized.[332][333][334] It has reported that many of the clinics were closed and as of December 2014, it was estimated that 80% of Barrio Adentro establishments were abandoned in Venezuela.[335][336]

Venezuela - Health

After the Bolivarian Revolution, extensive inoculation programs and the availability of low- or no-cost health care provided by the Venezuelan Institute of Social Security made Venezuela's health care infrastructure one of the more advanced in Latin America. However, by 2015, the Venezuelan health care system had collapsed.[1][2]

Health care in Venezuela

a reply to: ScepticScot

Money is exactly created out of thin air. Its a token that is useful to facilitate economic activity. There is no limit to how much money exists and the amount changes continually both by actions by goverment and the private sector.

There can easily be a limit if they choose to stop printing more money. Or you can just use cryptocurrency which has a built in limit and a predictable mining rate, that's why I love it, it's the most pure form of free market currency we have and it's mathematically secure against manipulation.

There is also no such thing as natural market forces. Markets operate in a social, institutional and regulatory framework.

And within those frameworks there are market forces which arise to direct the course of the market, some natural others maybe not so much. You can argue the virtues of authoritarian control over the market all day long but I wont buy it.

a reply to: ChaoticOrder

Not misleading as we are talking about the % of poverty in population, not the change. Claiming that as the poverty line is in top % world wide clearly is misleading as it ignores that many are below that line, not on it.

The idea that there is no such thing as relative poverty is nonsense as it completely ignores cost of living. Do you think living in a tiny 1 room dwelling on one of the richest cities in the world isn't poverty?

There are a number of reasons for the situation in venezuela. Collapse of oil price combined with incredible economic mismanagement. I haven't heard any serious suggestion that it was welfare payments stifling innovation however which was you claim.

originally posted by: ChaoticOrder
a reply to: ScepticScot

Money is exactly created out of thin air. Its a token that is useful to facilitate economic activity. There is no limit to how much money exists and the amount changes continually both by actions by goverment and the private sector.

There can easily be a limit if they choose to stop printing more money. Or you can just use cryptocurrency which has a built in limit and a predictable mining rate, that's why I love it, it's the most pure form of free market currency we have and it's mathematically secure against manipulation.

There is also no such thing as natural market forces. Markets operate in a social, institutional and regulatory framework.

And within those frameworks there are market forces which arise to direct the course of the market, some natural others maybe not so much. You can argue the virtues of authoritarian control over the market all day long but I wont buy it.

About 95% of money in circulation is created by the free market, not government. You already have your wish.

Not arguing for authoritarian control of markets (again this isn't a boolean choice). Pointing out that free markets aren't a naturally occuring phenomena
and aren't always the best solution.

a reply to: ScepticScot

Not misleading as we are talking about the % of poverty from population not the change. Claiming that as the poverty line is in top % world wide clearly is misleading as it ignores that many are below that line, not on it.

The fact is that saying 20% of people in Hong Kong are in poverty is very misleading, because they define the poverty line as having a considerable income, and the article clearly states even the poorest 20% is in the richest 20% of all humans, so in terms of the amount of money they make it's absurd to say poverty is a large issue.

Do you think living in a tiny 1 room dwelling on one of the richest cities in the world isn't poverty?

It's called having a lot of people in a small space, you cannot argue they live in such small spaces because they don't have enough money to afford it.

There are a number of reasons for the situation on venezuela. Collapse of oil price combined with incredible economic mismanagement.

Seems many other oil dependent nations survived the dip in oil prices, but it probably played some role. Definitely agree with economic mismanagement though, they spent money on the wrong things.

a reply to: ScepticScot

About 95% of money in circulation is created by the free market, not government. You already have your wish.

All legal currency in circulation is created by the federal reserve or a member bank of the federal reserve, if you mean "money" in the sense of wealth, then sure the free market does generate the wealth which backs the value of the currency. If you mean money is created via fractional reserve banking with loans, well the banks can still only loan out a certain amount more than that actually have in reserves, anything beyond that and they'd need to ask the federal reserve to create more money for them. The real money supply only ever expands when the federal reserve decides it will.

originally posted by: ChaoticOrder
a reply to: ScepticScot

Not misleading as we are talking about the % of poverty from population not the change. Claiming that as the poverty line is in top % world wide clearly is misleading as it ignores that many are below that line, not on it.

The fact is that saying 20% of people in Hong Kong are in poverty is very misleading, because they define the poverty line as having a considerable income, and the article clearly states even the poorest 20% is in the richest 20% of all humans, so in terms of the amount of money they make it's absurd to say poverty is a large issue.

Do you think living in a tiny 1 room dwelling on one of the richest cities in the world isn't poverty?

It's called having a lot of people in a small space, you cannot argue they live in such small spaces because they don't have enough money to afford it.

There are a number of reasons for the situation on venezuela. Collapse of oil price combined with incredible economic mismanagement.

Seems many other oil dependent nations survived the dip in oil prices, but it probably played some role. Definitely agree with economic mismanagement though, they spent money on the wrong things.

It's not a considerable income based on cost of living in Hong Kong so yes it absolutely is poverty. Comparing to worldwide income levels is completely meaningless. You think with £380 a month wouldn't be poor in the UK or dollar equivalent in the US or Australia?

originally posted by: ChaoticOrder
a reply to: ScepticScot

About 95% of money in circulation is created by the free market, not government. You already have your wish.

All legal currency in circulation is created by the federal reserve or a member bank of the federal reserve, if you mean "money" in the sense of wealth, then sure the free market does generate the wealth which backs the value of the currency. If you mean money is created via fractional reserve banking with loans, well the banks can still only loan out a certain amount more than that actually have in reserves, anything beyond that and they'd need to ask the federal reserve to create more money for them. The real money supply only ever expands when the federal reserve decides it will.

Many countries (including Australia) operate with no reserve requirement. Yet the expansion of money isn't endless. The US post 08 increased the monetary base far faster than the money supply.

What drives money creation is predominantly demand for new loans (and willingness of banks to lend) . Not the government increasing the monetary base.

originally posted by: ScepticScot
It's not a considerable income based on cost of living in Hong Kong so yes it absolutely is poverty.

Hong Kong has a similar cost of living to the U.S. according to this comparison of worldwide cost of living and others I looked at. The list also shows that Denmark, Iceland, Switzerland, Norway, and Australia are all ranked in the top #10 most expensive nations to live. Hong Kong and the U.S. are around rank #20. Seems pretty coincidental that all these nations with excessive taxes are also some of the most expensive places to live. Obviously a place will have a higher cost of living if it's more developed and more desirable to live there, but that cannot fully justify why they have such high costs of living. Living in Australia and being fully aware of the increasing prices and the fall of our dollar relative to the U.S. dollar, I can easily see that a lot of it comes down to economic mismanagement and a stagnating economy which is lacking innovation.

a reply to: ScepticScot

Many countries (including Australia) operate with no reserve requirement.

And I view such a money system as one of the worst possible ways you could design a money system. Not only does it create a debt based money system, it removes the checks and balances in place to control the risks of fractional reserve banking and the toxic levels of debt it can lead to. However there is some sort of reserve limit that Australian banks must obey:

Specifically, the bank’s “Tier 1” capital assets (assets which the bank can liquidate if required) have to be above a set fraction, currently 8%, of its risk-weighted credit exposures (ie. loan assets which might not be repaid). There are additional requirements for other “Tier 2” assets (aka junk bonds which, while they might not be readily convertible, can at least absorb the bank’s losses ahead of depositors in the case of a liquidity crisis.

Does Australia have a fractional reserve banking system?

originally posted by: ChaoticOrder

originally posted by: ScepticScot
It's not a considerable income based on cost of living in Hong Kong so yes it absolutely is poverty.

Hong Kong has a similar cost of living to the U.S. according to this comparison of worldwide cost of living and others I looked at. The list also shows that Denmark, Iceland, Switzerland, Norway, and Australia are all ranked in the top #10 most expensive nations to live. Hong Kong and the U.S. are around rank #20. Seems pretty coincidental that all these nations with excessive taxes are also some of the most expensive places to live. Obviously a place will have a higher cost of living if it's more developed and more desirable to live there, but that cannot fully justify why they have such high costs of living. Living in Australia and being fully aware of the increasing prices and the fall of our dollar relative to the U.S. dollar, I can easily see that a lot of it comes down to economic mismanagement and a stagnating economy which is lacking innovation.

Taxation, especially indirect taxation, does have an impact on cost of living however its certainly not a direct correlation. Unless you think Bermuda is a high tax regime. Earlier in this thread you gave Switzerland as an example of a low tax country.

It also ignores the benefits that comes from the government spending such as access to health and greater economic security.

If true that Hong Kong and US have similar cost of living do you really think less than 500 dollars a month isn't poverty level?

a reply to: ChaoticOrder

Capital adequacy rules aren't really the same thing as reserve requirements (there are arguments for and against both).

The broader point being that most countries use a fairly free market approach to money creation.

originally posted by: ScepticScot
Earlier in this thread you gave Switzerland as an example of a low tax country.

Someone else mentioned Switzerland has high tax rates but from what I could see it has rather low tax rates, and if that's the case it would be interesting to know exactly why their cost of living is so high.

It also ignores the benefits that comes from the government spending such as access to health and greater economic security.

When all the costs outweigh the benefits it's not worth it, one again some social security is fine, but in excess can and will harm an economy. Even more interesting, it looks like Switzerland is a very good example of how well privatized health care can work.

Healthcare in Switzerland is universal[3] and is regulated by the Swiss Federal Law on Health Insurance. There are no free state-provided health services, but private health insurance is compulsory for all persons residing in Switzerland (within three months of taking up residence or being born in the country).[4][5][6]

The whole healthcare system is geared toward the general goals of keeping the system competitive across cantonal lines, promoting general public health and reducing costs while encouraging individual responsibility.
...
Insurers are required to offer this basic insurance to everyone, regardless of age or medical condition. They are not allowed to make a profit off this basic insurance, but can on supplemental plans.[3]

Healthcare in Switzerland

Government spending on health care in Switzerland is only 2.7 percent of GDP, by far the lowest in the developed world. By contrast, in 2008, U.S. government spending on health care was 7.4 percent of GDP. If the U.S. could move its state health spending to Swiss levels, it would save more than $700 billion a year.

Despite this apparent stinginess, the Swiss have achieved universal coverage for all its citizens. The Swiss have access to the latest technology, just as Americans do, and with comparably low wait times for appointments and procedures. And the Swiss are among the healthiest people on earth: while life expectancy is not the ideal proxy for overall health, nor of a health care system’s performance, life expectancy for a Swiss citizen on his 65th birthday is second only to that of Japan’s.

Why Switzerland Has the World's Best Health Care System

If true that Hong Kong and US have similar cost of living do you really think less than 500 dollars a month isn't poverty level?

I never said it wasn't, that's why it's considered a poverty line. The point is that the poorest fraction of people in Hong Kong are still earning more than the poorest groups in most other nations. It's possible to have high levels of inequality while still having a reasonably well off poor class, if everyone were to get a 10% raise at the same time it wouldn't change the level of inequality at all because the gap would be the same, but everyone would be better off.

originally posted by: ScepticScot
a reply to: ChaoticOrder
Capital adequacy rules aren't really the same thing as reserve requirements (there are arguments for and against both).

Capital rules are probably worse because they usually allow the bank to count assets acquired against loans. The second answer to the question about fractional reserve banking in Australia explains why it's very dangerous rather well:

So if the bank lends against a house, the house counts as capital.

Which in an ideal world would be fine.

But in a world where asset & property bubbles exist then this is a major problem.

Using the market to price an asset in a bubble leads you to lend into the bubble and doing so sets up a feedback loop that further inflates the bubble.

Spotting a bubble isn’t that hard and it has mathematically defined parameters that can be checked. Banks know when they’re in a bubble but they really don’t care because a bubble is where the big money is made and no one wants to miss out on that.

The broader point being that most countries use a fairly free market approach to money creation.

Banks being able to generate money on demand with little or no reserve requirements doesn't exactly strike me as the most free market system, it lets the market freely create debt but I don't think that really fits the definition. A currency should not be something that can be created out of thin air at a whim as if it were sand on a beach.

a reply to: ChaoticOrder

The Swiss system is a good example of how a public/private balance can work. Its largely (but not exclusively) private provision but within a highly regulated framework with subsidies to keep affordable.

It's also worth noting that while it has an effective system they also spend more on it than almost any other European country. (still a fraction of cost of the more free market US System).

Some of the poor in Hong Kong may have earning that seem high relative to other parts of the world but cost of living is also higher. They a still fairly obviously living in poverty.

A 10% across the board increase actually increases inequality (%s on bigger number). Which is why there needs to be measures to reduce income inequality.

originally posted by: ChaoticOrder

originally posted by: ScepticScot
a reply to: ChaoticOrder
Capital adequacy rules aren't really the same thing as reserve requirements (there are arguments for and against both).

Capital rules are probably worse because they usually allow the bank to count assets acquired against loans. The second answer to the question about fractional reserve banking in Australia explains why it's very dangerous rather well:

So if the bank lends against a house, the house counts as capital.

Which in an ideal world would be fine.

But in a world where asset & property bubbles exist then this is a major problem.

Using the market to price an asset in a bubble leads you to lend into the bubble and doing so sets up a feedback loop that further inflates the bubble.

Spotting a bubble isn’t that hard and it has mathematically defined parameters that can be checked. Banks know when they’re in a bubble but they really don’t care because a bubble is where the big money is made and no one wants to miss out on that.

The broader point being that most countries use a fairly free market approach to money creation.

Banks being able to generate money on demand with little or no reserve requirements doesn't exactly strike me as the most free market system, it lets the market freely create debt but I don't think that really fits the definition. A currency should not be something that can be created out of thin air at a whim as if it were sand on a beach.

I don't completely disagree about the issues with fractional reserve banking(all be it what we have isn't reserve banking on the text book sense).

However if you want a set or even more regulated system of money creation then that is a pro goverment intervention argument. What we have now is a highly market driven system of money creation which has both advantages and disadvantages.