This is not normally something that fits the purpose of this blog, except that there is an economics side that I would like to explore. Apple has lost its case against Samsung’s Galaxy in the UK. To the outside world, this case looks like any other challenge based upon patent and trademark law, but in reality the case itself goes to the very heart of economic competition.
When I studied economics the main textbook was written by Paul Samuelson and this text was based upon the work of J.M. Keynes. Samuelson was indeed a real student of Keynes, the rest of them, such as Krugman are not real Keynesians, because they are Marxist. It was the text that every student used at that time. Keynes in his treatise on “Employment and Money” (not the correct name I know)taught the concepts on perfect competition etc. I write this to explain where I am coming from in regard to this subject and why I am so delighted that Apple has lost this case.
The comment from the Samsung representative I think sums up the issue that I want to raise:
Samsung said the judgment affirms its position that the Galaxy Tab doesn’t infringe Apple’s registered design rights.
“Should Apple continue to make excessive legal claims in other countries based on such generic designs, innovation in the industry could be harmed and consumer choice unduly limited,” South Korea-based Samsung said in an emailed statement
This is exactly right. Apple has been filing these lawsuits around the world with the intention of shutting down its competition and limiting consumer choice. That is not very healthy for the consumer as a whole.
The reason that it is not healthy is that without competition Apple is free to charge whatever it wants for its products, keeping prices artificially high. In the energy market, we see that the oil industry is based upon an oligopoly situation. Those OPEC nations are in fact an oligopoly. What this means to consumers as a whole is that we end up paying higher prices for oil and oil based products because the means of production is limited by OPEC and the price per barrel is also controlled by OPEC. The consumer is not able to influence the market. This means that the market exists in the situation of imperfect competition.
If we want to see an example of perfect competition then the manufacture of a non-Apple based PC is a very good example. There are many players in that market. The components come from a few select factories in Asia including China, Japan, Korea and Malaysia. Some of the computers are made on the spot, but many are made up to the specifications of the customer. This means that the customer has greater control over the price of the product that they purchase. It also means that within the market for PCs there is almost perfect competition. Other examples of this form of competition in the electronics field include items such as televisions, refrigerators and washing machines.
Perfect competition does not truly exist because of government interference in the market place which in turn keeps some prices artificially high because that interference impacts upon both supply and demand. An example is the market for agricultural products such as wheat, where in the USA the production is controlled by a government act. This kind of thing infringes upon the players being able to make their own decisions regarding the quantities that they will produce for personal and public consumption.
Whilst my explaination here is simplistic, based upon trying to remember what I was taught in economics, I hope that my point is not being lost upon my readers. What I am saying is that the attitude of Apple is one that I personally find to be disgusting because of their attempts to manipulate the market in their favour. (This does not mean that I have never used an Apple product or that I would not use one in the future). Also, I abhor the idea that they are attempting to manipulate the market so that prices will not fall to a rate where even more people would actually purchase the products on offer. Therefore it is good news that this British court has stated that there was no infringement of patents due to the difference and feel of the two products…. and that the Samsung Galaxy is not a “cool” as the Ipad.
At the beginning of May I moved to a new location within Australia. This was a move from the immature region of Canberra, to somewhere on the Central Coast of NSW. Besides the fact that is warmer in my new location there are some other interesting features. For the first time since I lived in South Windsor NSW I am living in a flood zone. Whilst I will not have access cut off because of floods, there are roads nearby that get covered in water whenever we have heavy rains. I note here that the rains have continued through May, June and now into July. This rain comes despite the nonsense that we hear about Climate Change and all of its consequences.
The 1st July 2012 marked the beginning of a tax on the air that we breathe, otherwise known as the carbon tax. The first thing to note here is that since no one has been asked to pay a tax in advance there is no justification for increasing prices. However, one, two or even three months down the track there will be plenty of justification for those rising prices. This is because amongst those named as “top polluders” are the utility companies, and it means that these utilities will raise their already high rates to cater for the new tax. This will have a flow-on effect within the economy, and that flow-on will be bad for business.
Since this monstrosity was passed there has been a fallout of sorts, but that is picking up momentum right now. From the point of view of politics, the fun is just beginning. At the weekend we saw several individuals attacking the ALP-Green Alliance, in particular the attacks come from the NSW right. They are really scared that there will be another massacre at the polls, and there is good reason to feel that way – the latest of the opinion polls have shown the ALP primary vote as low as 22% in the State of Queensland. If this was translated to polling day then the ALP would have no Federal representatives. Kevin Rudd would be one of the politicians who would lose his seat!! Oh Happy Day if that was to happen.
The real fun is the backlash from the Green Party because they do fear having any light shining upon their lunatic policies. These lunatics are applauding because a power station that is close to where I am living is to be de-commissioned, sooner rather than later. They are so nutty that they want all of the power stations to close down. The problem is that their beloved wind turbine blights upon the landscape bird smashers cannot possibly take up the slack for the electricity needs around the country. We do in fact need efficient power stations based upon coal and gas to keep up with the needs of the community. If the nut case Greens had their way though, NSW would not have any industry – no exports of Australian goods and services. I guess they think that we can exist on imports alone. Yes they really are that economically deficient in their way of thinking.
The facts remain that there is no justification for this climate change crap. This does not mean that the climate is not changing, after all we have been coming out of a Little Ice Age which means that temperatures will go up. What this boils down to, though, is the fact that those Climate Change enthusiasts seem to have no clue at all about the fact that there is such a thing as cycles. From ancient times it has been known that there are periods of drought and periods of rains. Nothing has changed over thousands of years. The difference right now is that a group of people are trying to scam the rest of the world so that they can milk billions of dollars to be wasted on their garbage projects.
Incredibly, it is at government level that we see most of this wastage of money. Billions are being thrown at these people who use computer models to come up with their predictions. My objection to the use of these models is based upon the fact that the statistics can be so easily manipulated. Here in Australia at local council level there are things being implemented that has caused some people see the value of their properties decrease rapidly based upon a mythical sea rise that is not happening and is not going to happen in the future. We have not even begun to measure the impact of such absurdities!!
First of all, I apologize for the lack of posts. This year is an election year in the USA, and there is not much there that I wish to discuss at this point in time. The US economy as far as I am aware remains weak and it continues to have a problem with burgeoning government debt, with no end in sight because the US Senate will not pass a budget!! There are some new developments in Europe and especially with a renewed Greek crisis. However, I do need to spend some time on the Australian economy.
For a long time, I have pointed out that much of what we have been experiencing is similar to the situation in the 1970s when Gough Whitlam came to power, and nothing has changed in the past year to change my mind on that subject, except of course we are now seeing the nastiness and ugliness of an attempt at class warfare that has been started by the Gillard government. I am not addressing the topic of the class warfare, rather I want to address the stupidity of the Gillard government and its introduction of a tax on the air that we breathe.
The US is already aware of what happens when some bright spark (read that rather stupid Nancy Pelosi) says that you have to pass the the legislation to know what is in it. Well, here in Australia something similar happened when the tax on the air that we breathe was introduced. Insuficient time was spent on vetting the legislation. It was introduced and passed at some haste. Needless to say the whole thing is a lemon, a white elephant and it will do nothing to save the world from the predicted doom and gloom of the green (really sick) doomsayers who claim that the world will end if average temperatures are raised by 1/2 of 1/4 per cent… or something like that, over the next century. The climate debate is also not the subject of this particular post. What is relevant is the impact of this tax upon the Australian economy.
It needs to be pointed out that a price on carbon of $23 per tonne is absolutely ridiculous, especially when those silly contracts in Europe are worth no more than about $5 per tonne. It is also worth pointing out that it is really ridiculous that some people seem to be self-satisfied and smug by letting the world know that they either drive a Prius or have purchased a timber plantation (or whatever the sign on the back of their car proclaimed that allowed them to claim that they were emission neutral – what a load of tosh!!). What is more significant is that the tax itself is going to have a very negative impact upon the Australian economy over the next 15 years.
Whilst in my view I continue to see indicators pointing to stagflation, not all of the indicators have pointed in the same direction so it would seem that my thoughts on the subject might still be a little bit premature…. or are they? Let’s take unemployment as an example here. In the 1970s unemployment was very high. By the time that I graduated from university even graduates were not guaranteed finding employment in their chosen field. In fact the positions available to accounting and economics graduates were extremely tight because the big accounting firms were not hiring new staff in any great numbers. The level of unemployment for graduates by 1976 was at an all time high. The lack of jobs for graduates was indeed a signal that something was very wrong within the economy. Whilst I am not up with the current situation for graduates I can comment upon a slightly different aspect – the hidden unemployed. It has remained pretty much the same, and the percentage right now is probably as high as it was in 1975-1976. The hidden unemployed is usually defined as those who have given up looking for work. It should include all those who are not eligible for unemployment benefits but who want to work. These are people who are enrolled with employment agencies. The discrepancy in unemployment numbers as determined by say Roy Morgan research and the official figures from the ABS is something like 5%, and this actually takes in some of the hidden unemployed (those enrolled with the employment agencies). Australia has other structural employment problems as more and more people find themselves in part time work rather than full time employment. In other words, the number of under-employed has been rising.
Another indicator for stagflation is rising inflation. Surprisingly inflation remains a non-problem, or does it? What I would look at here is the basket of goods. The basket of goods since the 1970s have changed. What the government has done, to disguise the inflation rate has been to remove items from the basket of goods and add others. This is not the whole story because in the electronics side of the equation there have been decrease in the prices of goods. Normally, this takes a few cycles after a product has been introduced. As an example take the price of HDTVs which are imported from Japan, South Korea, Malaysia and other Asian nations. When they are introduced the price is normally high, but leave the purchase for a year or two after introduction and the prices have dropped dramatically. This can be explained by at least 2 factors: a change in the exchange rate that has made imports cheaper, and an increase in competition for the goods. So perhaps this is a reason that the level of inflation has not been so dramatic, but then again I have my doubts because items such as doctor fees and prescriptions have continued to rise, as have increases in the price of petrol, the cost of our utilities such as gas and electricity as well as rates. The Reserve Bank continues to moniter inflation, adjusting the interest rates as required. All the same at this point in time there is no measurement available relating to the impact of the tax on the air that we breathe.
The remaining indicators are related to any increase in industrial disputes as well as increases in wages that is not justified by a rise in the cost of living. There has been an increase in the number of industrial disputes after industrial laws were changed to once again favour the unions. Of anything we will see a greater impact from this industrial down the track because of lags in the economy. I would think that within the next 12 months we will have a better idea about what effect, if any industrial disputes have had on the economy. One thing is certain, and that is we do not have right now the kind of disruption that we had during the 1970s when it was a union free-for-all.
Despite the fact that the indicators do not totally suggest stagflation, I continue to believe that if Australia does not reverse some of its policies then we will have stagflation and the effects this time around will be even more prolonged because of the impact of the rise in government debt for our nation. This is probably what David Murray, the former Future Fund Chairman and CEO of the Commonwealth Bank means when he warns about the difficult economic times ahead in Australia.
As a result of these developments I will be keeping a sharper eye on the Australian economy than I have done in the past 12 months, because I forsee that Australia could be heading for a downward spiral and it is not in a strong enough position for a fast recovery. This is not 2008 when we had the GFC in full swing and Australia was relatively insulated because of the budget surpluses of the Howard Government – these surpluses were wasted by the Rudd Government and in particular by that goose, Wayne Swan. There are other problems such as the fact that the expenditure on the NBN white elephant remains off balance, and then there is the over-estimation for taxation reciepts by billions of dollars.
This year Japan suffered the devastating effects of the earthquake an tsunami. The economic impact of those natural disasters was worth billions of dollars to the Japanese economy. Now it seems that Japan is facing a new crisis in regards to exports to other nations. The BBC News reports that Japan’s exports have been hit by a slowdown of demand. You can probably pin this slow down on the current conditions in Europe.
I think it might be fair to blame this situation on the push to go Green in Europe. Watermelons have no regard for economic prosperity. It seems that in some European countries there has been an increased push towards technologies that are in fact an utter failure. As a result of this push, Japan is one of many countries beginning to suffer the consequences of Watermelon foolishness.
For several months the LSM has been pre-occupied with the astroturf movement known as Occupy Wall Street. What the LSM is not telling is that the movement is grounded in Marxism. What the LSM is also not explaining is that those behind the Occubaggers are the usual suspects that have been known since the 1960s: William Ayers and Bernadine Dorhn of the terrorist organization the Weather Underground, Van Jones (a well known watermelon and Marxist) as well as the incarnation of ACORN. The question that should be uppermost is: Who is sponsoring this astroturf movement? One name springs forth – George Soros.
The purpose of OWS is one that is extremely conflicted, but it is that way in order to get approval from those who were for example opposed to Wall Street merchant banks getting bail outs. The aims sounded so noble, and their notions seemed to be quite catchy, especially the meme “we are the 99%”. However, such memes are in themselves a lie. The movement is one that is based upon envy, which is as bad as any greed that one might see amongst traders at the New York Stock Exchange, or amongst those who spend money with hedge funds.
At the same time the whole OWS movement is nothing more than a diversionary tactic that is meant to drag people into their way of thinking as a result of some of their populist arguments. For example, they rage about economic inequality. Wait a minute, who says that we should have economic equality?
The arguments regarding income inequality are extremely false. It is all about supply and demand stupid!! The latest meme has been that the wealthy do not supply jobs, and again this is a false meme. It is all about savings and investment, stupid!!
For a moment, let’s go back in time in order to illustrate why these are false memes. In this case I will travel to 1491-92 to the court of Queen Isabella of Spain. In this scenario a young Italian sailor came to Queen Isabella to get her patronage for a voyage. The purpose of the voyage was to discover a new route for the supply of Indian spices. The sailor’s name was Christopher Columbus. As a result of obtaining that patronage Christopher Columbus set off with 3 ships and crew and despite thinking that he had reached India, he ended up discovering a new continent – the Americas. This is an illustration of how a wealthy individual invested in a sea voyage, and that investment gave employment to those who went on that voyage with Christopher Columbus. There are many examples of the wealthy and their patronage of various business and other ventures in the past.
This illustration could be repeated when looking at things like the invention of the steam engine, the invention of the cotton gin, and a whole variety of goods and services. In order to invent such things and bring them to the “market”, there was a need for investors. You could say that was a first step in supply and demand. My illustration is not that great but it serves to point out that the economic illiterates who are a part of the OWS occubagger movement do not understand how markets work.
However, let me move on to the issue of income inequality, whatever that means. These days there is talk of “wage justice” and it is normal to hear the bleatings about how women are paid less than men. The problem is that you need to have a look at occupations which involves also looking at the qualifications or otherwise required for those occupations. First off, there are unskilled jobs such as street sweeper, taxi driver, building janitor, shop assistant, farm labourer, where there are no formal requirements to do the job. It is because there are no formal education requirements that such jobs normally do not pay all that well. At the same time there is usually an oversupply of job market entrants willing to do these jobs for the lower pay. Second, there are the professional jobs such as accountant, lawyer, doctor, dentist etc that require formal qualifications attained from an institution of higher learning. It should be pointed out that for some of these positions there are restrictions upon entry into the field and that these restrictions actually affect the level of supply for those professions. These are extreme examples.
One example that is usually pointed when the subject of income inequality is raised is that of a doctor versus that of a nurse. In some ways it is comparing apples and oranges. However, this comparison is changing since nurses have begun to gain further educational qualifications. I could use a more absurd example of my engineer husband who has the capacity to earn at least 3 times what I have earned when I was working. We are both degree qualified, yet I earned a fraction of his income. It boiled down to the type of work where I was directed, and had nothing to do with my degree qualification. In other words a comparison of our earning potential is false.
On the other hand, I can point out that supply and demand in the labour market does in fact affect employment opportunities. What usually happens is the following:
1. there is a demand for aeronautical engineers that suddenly increases but there is a shortage of these engineers in the labour market place. Since demand outstrips supply the price for that labour is high.
2. The increased demand for these engineers causes two things to happen: (a) immigration of skilled workers who can meet the demand (2) students choose to undertake undergraduate courses in order to obtain jobs within that industry.
3. As a result of these two factors, the number of entrants in the market increases which leads gradually to an oversupply for aeronautical engineers, which in turn leads to decreases in salaries offered for the available jobs in the market.
This can be applied more appropriately to professions such as law and accountancy where there is presently an oversupply, thus lawyers and accountants are a dime a dozen. It can also be applied to watermelon science. In other words, what can happen is that students will often graduate only to discover that there are either no available jobs, or that the incomes that they thought that they would get once they hit the job market have been reduced.
Basically, the pay for a given job is determined by market factors, including skill levels required, as well as education required, and experience required. The CEO of a big business is expected to have a high level of expertise which is one reason why CEOs are often paid at a salary level which we tend to think is bloated. Sometimes, thanks to the interference of unions, the pay levels for occupations that are at the bottom to mid-range are inflated, but the expectations of the employer are over-inflated. A good example of this is the salary levels of teachers. Most of them get really good pay considering the hours that they work and the amount of leave that they get during the year, yet they are greedy with their constant demands for higher pay.
The BBC is reporting that Moody’s has downgraded Hungary to junk status. The reasons given by Moody’s are the following:
1. high levels of debt;
2. weak prospects;
3. uncertainty as to whether the government can achieve its goals.
Hungary is the latest country to suffer from a downgrade. This is not good news because what it means that there are extra pressures because of higher interest rates required for any new investment bonds.
The Hungarian government obviously disagrees with Moody’s and on top of that Standard and Poors have taken an opposite approach, leaving Hungry to communicate with the IMF and the EU.
Since I know very little about what is happening in Hungary I cannot comment too much on the situation at present. However, I am noticing a particular trend relating to the European Union. It seems that the Eurozone is getting closer and closer to collapse with each of these downgradings.
What I do not know about Hungary are things like :
1. the welfare state
2. the level of investment in wasteful “green” projects
3. the level of unemployment
4. the rate of inflation
The only thing that I picked up from the article is that Moody’s considers the Hungarian economy to be weak and therefore they should be downgraded.
I live in Australia where we have a socialist part-government funded healthcare. This is slightly different from the debacle in the UK but we are not far behind when it comes to ending up with a total disaster.
The current system is known as Medicare. The way that this is funded is through a levy on income tax. Everyone who is earning any income pays the medicare levy. The reality of the system depends upon the State where one is living, and my own experiences are within Victoria, Queensland, New South Wales and the ACT. In the UK the doctors are employed by an area health service called a Trust. You do not have a choice of doctor, or at least that is my understanding. On top of that, in the UK you can end up being banned from a practice for no particular reason. That kind of thing does not apply in Australia, but if Gough Whitlam had his way when he introduced this debacle in the first place, then yes it could have ended up that bad. In recent years I have read a lot of stories regarding the problems with the UK Health System, and there are many problems, especially associated with the care of the elderly. This is also outside of my experience.
In the current Australian system I can go to my GP of choice. However, what I cannot do is choose to opt for direct payment via Medicare. My current GP charges $60 per 10 minutes in a visit. Go over that 10 minutes and it is even more expensive. At least in Sydney my GP accepted just the Medicare only payment, which suited my particular circumstances. The real problem as far as I am concerned is the scheduled fee which is determined by public servant who has no real experience of what it costs to run a private practice. The scheduled fee is something like $34.90. If I was attending a specialist, where the fees range from $110 to more than $240 I am expected to pay that money and then claim from Medicare. In my latest example, the fee is $240 for the initial visit, and the scheduled fee is $70. I will get back 85% of the scheduled fee. Something does not compute!!
On top of this, even with private health insurance, these costs are not covered, and the reason that it is not covered is in fact due to the government and its legislation. Private health funds are not allowed to insure for the difference between what the doctor charges and the scheduled fee. This leaves a patient with chronic illness very much out of pocket. Until the legislation is changed there is nothing that can be done about the situation.
There are other costs not covered by the government – physiotherapy is a prime example of something that is not covered under Medicare. To this you can add the cost of seeing a podiatrist and purchasing orthotics, the cost of visiting a dentist, and other associated costs, dietician, pyschologist etc. (although I think psychology now gets some cover). People with weight problems and who are Diabetic need to see a dietician but the cost is not covered. The health funds will only cover up to about 50% of the fee in some of these cases.
Prior to the interference by Gough Whitlam our system was not that bad, and it was not broken. People from the lower income brackets could still afford to see a doctor, and they were not turned away from the public hospitals. Here in Australia we have State run public hospitals such as the Victorian Women’s Hospital, or a more recent example of the Monash Medical Centre, and then there are the private hospitals. No one gets turned away from these hospitals. However, if one goes in as a private patient to a hospital, the bills will stack up!!! Over time government payments to the hospitals have been reduced leaving them quite often in crisis and unable to pay their bills on time. Some hospitals are good with their payments but others have a really bad history when it comes to paying suppliers. The situation has been getting worse and worse.
Why is this the case? First of all, when it comes to the hospital system, accident and emergency is overused for non-urgent cases. Yes, it is true, I have gone to the local hospital, on the weekends when my doctor is not available!! I have had legitimate reasons to seek that help when I have gone to the accident and emergency department of the local hospital. So yes, I plead guilty. However, this is not the case for people who turn up when they have colds or similar minor complaints. These people need to be seen in a different context – they need to be removed from the Accident and Emergency Departments of the hospital system. Perhaps they also need to pay a small fee for the visit, I do not know the right answer for this problem. Second, we have an ageing population requiring more in the way of what is considered “non urgent” operations and procedures. Third, we have an increasing number of women seeking expensive IVF treatments.
Let me address this last point: I do not believe that women should be entitled to receive IVF at public expense. It is not because I do not have sympathy for someone who has difficulty in getting pregnant, it is because in a number of cases, the women think that they have some right to this procedure even though they are: single, Lesbians, or mature-aged. Yet, this is so very wrong. A woman is only fertile for a certain length of time and then the ovaries and the eggs start to disintegrate or putting it another way, our hormone levels change over time so that we are no longer as fertile as we were when we are in the prime age (between 16 and 30) for giving birth. Over time we start producing fewer eggs. As women mature there is a greater propensity to have a baby with birth defects, especially Down’s Syndrome. However, more than that, giving birth at an age when most women have gone through menopause, means that any children who are born under such circumstances are less likely to have a mother as they mature into adulthood. Given these reasons, I certainly think that the public purse should not be used for such indulgences. IVF is an expensive procedure, and since the Medical budget is finite, not infinite, then this is taking money away from other areas, including taking away resources for cancer treatments.
The Socialist response, that is universal healthcare is not the panacea as claimed by its proponents. In fact it is a very flawed system, and it means that in the long run choices have to be made about rationing resources. Inevitably, this means that when rationing is applied, older people will miss out on necessary treatment for their ailments.
The Occubagger movement has spread throughout the world. These anarchist left-wing communist, watermelon individuals are to be found in lots of cities around the world, and the USA has more than its fair share of violence associated with the movement. There are plenty of blogs dealing with the filthy things that these individuals have been doing and there is no need to repeat the disgusting habits of occubaggers.
Instead, I want to look at some other aspects of the movement, including some of their motivations, as well as in the way that they have been hijacking the Scriptures to try and give themselves legitimacy. Specifically, I want to look at the nonsense being claimed by members of the hierarchy of the Church of England in London, but they most definitely have lost the plot.
First of all, I want to explode any myth about “my brother’s keeper”. Since I am a person who is Bible literate, I can say with some certainty that I know of no Scripture passage that states that anyone must be “my brother’s keeper”. The only time that this phrase is used is in Genesis, after Cain has murdered Abel, and is challenged by God. It is Cain who exclaims: “Am I my brother’s keeper”. The Beattitudes that are found in Matthew’s Gospel do not expound upon the theme of being “my brother’s keeper”. This is mythology from the left wing of politics. It is an attempt to hijack the Scripture and to dish up what is not written for those who are quite frankly, illiterate.
Second, Jesus did not condemn the use of money as some who are trying to bring down capitalism are claiming. On the contrary, Jesus was railing against the “love of money” which is simply not the same thing. Jesus spoke of choosing between God and mammon (money and wealth) but it must be remembered that Jesus had some very wealthy benefactors who helped him during his three year public ministry.
Third, much of what is written in the Scripture is about individual responsibility. Isaiah for instance spoke out against those who neglected the widows and orphans. It has to be remembered that in those ancient Biblical times, there was a family hierarchy and it was the responsibility of the family to care for family members who were less well off; the fact is that nothing changes in the human condition except of course that families have tried to shift their responsibility to government, or putting it another government has taken over the role of “charity” for the widows and orphans. The problem is that government has not performed well in such a role.
Fourth, let me talk for a moment about ENVY. Yes, it is quite a nasty word, but the truth is that the Occubagger movement is one that is based upon envy, rather than any true altruistic notions of doing what is right for all people. The underlying themes of the movement is Selfishness, Greed, Sloth, and a whole lot more. It is true, that ENVY, not some sense of charity has been the motivation behind the movement. This is despite the fact that there are good reasons to be uptight about some of the bonuses etc. received by CEOs of various companies. There is that illusion of rich vs. poor, and the agitators try to make out like the “rich” are getting richer at the expense of the poor.
This last point is one that can have merit depending upon how we interpret these matters. Take for example the situation at QANTAS airlines in Australia. Last weekend the CEO announced that he was locking out staff and he grounded the fleet. The travelling public were extremely inconvenienced. The CEO, an arrogant Irishman by the name of Alan Joyce, had just received a 71% increase in his salary package. Since he has been CEO of QANTAS several thousand employees have been tapped on the shoulder and have been made redundant. No one has been saved from the horrible policy that was implemented after this particular weasel took up the job of CEO. The man who was overlooked though, is laughing because Virgin Airlines now have the advantage with the travelling public (and he maintains a good relationship with airline staff). The facts here are that the contracts for union employees are up for negotiation. The unions decided to “screw” QANTAS or at least that is what we are being told. There are several issues to be resolved including the fact that Joyce, this Irish upstart, wants to establish QANTAS in Asia and take the airline offshore – he cannot do that. What is not being told by some members of the press is that the amount of disruption due to the “negotiations” had been quite minimal when the lockout was pulled, but the Irish weasel insists that QANTAS had no other choice. It is BS. The fact remains that QANTAS management has been refusing to negotiate with the unions. The issue of stability is a very real one. What looks bad, however, is that Joyce is doing a song and dance about what the unions wanted, yet he asks for and receives a 71% increase in his salary package which is at the expense of QANTAS employees. This type of story in fact bolsters the arguments of the Occubaggers, and yes there is some GREED involved.
However, can one judge the actions of individuals and then blame everyone? In the UK the CofE has decided to take on the bankers, calling them greedy. However, if people are not paying their mortgage payments on time, then they have to bear the consequences. They, after all took out those mortgages in order to purchase their homes.
None of this accounts for the present crisis in Europe, let alone address what could be a new round of businesses in the banking sector going broke. (Think Jon Corzine). What we are seeing is the fallout from what Greece did several years ago, with the help of Goldman Sachs. People take risks, and Jon Corzine took unnecessary risks. There are others just like him who took risks and they lost… big time. It does not mean that they are greedy. With regard to Corzine, though I see him being found guilty of various crimes and ending up in prison. His risks did not pay off, but he had a duty of care with regard to client money and he breached that duty. Bank of America is not evil, neither are any of the banks. The troubles stem from having to give loans to people who were never able to pay them back.
Greed and Envy, these are the things that are causing the most angst in our society today. The Occubaggers, as well as emitting large doses of noxious gas, really do have a problem when it comes to envy. The bankers and other professionals have a problem with greed.
When I have a moment I will do an update on this subject. Greece has learned nothing and the saga continues. Now there is a report that says Japan will join in the bail out efforts. This sounds rather weird to me considering that Japan has its own financial woes. A quick check of the news report indicates that the Nikkei index seems to be in a bit of a free fall.
The Australian Prime Minister, who is an economic illiterate, seems to think that Australia will be shielded from any new global crisis. The problem is that the woman, being an economic illiterate is dreaming. In 2008 when the last crisis took place, Australia was well placed because of the work done by the former Australian Treasurer Peter Costello. The Coalition left the budget in surplus. It look Wayne the goose, Swan 12 months to fritter away that large surplus which did nothing to stimulate the economy.
Australia is starting to go through the death throes of an economy in trouble from the stagflation that is on the way. The comparison to the 1970s when Gough Whitlam was in charge is at this stage even more obvious than what it was 12 months ago. The government spending has been accelerating at a very fast pace. There has been an increase in demands for higher wages. On top of this we find that the rise in the cost of groceries over the past 10 years has been phenomenal (I suspect that the increase has been more phenomenal over the past 2-3 years than the previous 7 years). Utility costs such as water, gas and electricity have sky-rocketed thanks to the dumb climate policies that have been adopted because of watermelon stupidity. These are indicators that do not suggest good fundamentals as claimed by the economic illiterate Juliar Dullard.
The BBC reports that there has been a very big drop in Government borrowings in the present year. The financial position is being helped by two things: (1) the levy on bank balance sheets and (2) a significant drop in public sector borrowings.
It is my contention (and yes it is just theory not necessarily fact), that when the Public Sector have the lion’s share of the investment dollar, that the private sector suffers. This is because the Investment pie is limited, which means any increase in Public Sector borrowings reduces the amount of investment dollars available for the private sector. When the private sector is not able to borrow money to expand this leads to a contraction of the economy as the private sector will not be able to employ more people, or it has to let staff go in order to meet other debt requirements.
In other words, what I am contending is that Government Stimulus action does not work because it takes investment money out of the private sector, which means that the economy is disrputed. What I am arguing here is that the “stimulus” money does not come from tax receipts but from further public sector borrowing. In other words, Government action does not impact in a favourable way within the economy and it actually makes matters worse, not better.
My theory is not based upon the current experience, but upon the experience of the late 1960s, early to mid 1970s when there was global stagflation. Most economists address the stagflation by referring to the oil price shocks, however, I see this as a miniscule reason for the stagflation. There were two price shocks, one around or prior to 1972 and other during the Iran Revolution. In recent years we have experienced more oil shocks for a variety of reasons, but Saudi Arabia has actually pumped out more oil to keep the market smooth. The price of oil is really not as important as some believe, because we do not have any real control over the prices that the cartel (an oligopoly) agree to charge for their output.
One thing that was common in that period, in Australia, the USA and in the UK was that each country had a government that was into prolifigate spending. In the USA it started under LBJ, and Nixon had to try and rein in the spending, followed by Carter, another profligate spendder. In Australia it started at the end of the 1960s when McMahon was Prime Minister, followed by the prolifigate spending of the Whitlam era. In the UK it was the Wilson years of profligate spending. It is my view that the stagflation arose because of the difficulty of providing investment dollars to the private sector because the money available for investment was being swallowed up by the public sector.
During that same period, especially here in Australia, we had rising inflation, strikes and demands for higher wages which were granted because the ALP were in charge, followed by a further rise in inflation. Even though this looks simplistic, by 1974 the stagflation was actually quite evident, and these factors explain why it was a wage-price inflation which was fuelling the problems within the economy. By the end of 1975, and beginning of 1976, here in Australia most jobs had dried up, especially with regard to the requirement for newcomers in the field of accountancy (there were no jobs available for the majority of graduates). This was the point where we had the beginning of the Fraser government which also led to a wages freeze being implemented. (Nixon also imposed a wages freeze).
The turnaround in Australia occurred only when public sector borrowings began to drop and the budget was balanced or was turned into a surplus. Here in Australia this was a gradual process because we went from the Fraser government to the Hawke-Keating government when public sector borrowing got out of hand once again. Note: under Keating as Treasurer there were extremely high interest rates which were very, very painful for mortgagees. We got through those extremely high interest rates, which were greater than 17% before they began to fall again. Credit card borrowing interest rates were above 20%. Under the Howard government the Federal Budget went from deficit to surplus, but that has been frittered away by the KRUDD-Dullard governments.
So long as the rise in wages is kept under control, that is, it is related to a shortage of skills and not from some annual or bi-annual increases, then inflation itself is more or less kept under control. The way in which the Reserve Bank has been handling any inflation has been to increase interest rates, but in the present conditions the policy of the Reserve Bank which is to operate through interest rates alone can be quite harmful. The uncertainty that exists today has led to consumers holding off their major and minor purchases as long as possible.
We are yet to see the impact of the proposed carbon-dioxide tax. I have no doubt that the imposition of such a tax will have devastating consequences upon the economy. It will not bring about prosperity. It will cause massive increases in some commodities (which the government model has not predicted), and this is because a number of unknown factors have not been included in any modelling. Take for example the cost of refrigerant for supermarkets. This is something that will be taxed. Can you see how the price of frozen items will rise? Can you see how that will impact upon the cost of meat and dairy products?
As we continue to head towards stagflation, the last thing we need is this particular tax which will cause a massive downturn in the economy. (again this is theory, but so is any model that claims an opposite scenario).
Public sector borrowing eats into the investment dollars, which in turn leads to a decrease in private sector borrowing and expansion within the private sector. The end result of this cycle is that business is not in a postion to continue to hire. At the same time taxes on employment also hold back businesses from permanent hiring. Most businesses have to keep below a certain staff level in order to avoid the higher taxation costs. A reduction or the dropping of such taxes would increase the levels of employment.