Is the West is signing its own death sentence

[Super Nova]

This article is interesting. A Uk article.

Something has to give but I am not sure what. We cannot keep paying for those that don't add real ecconomic value to our ecconomies but the wellfare state is needed to provide some balance between those that have and those that have not.

I fear we are moving more and more towards a soclialist model while pretenting we are not. The weat is now in deep shit and doesn't know where to go next.

Capitalism is, by its nature, dynamic: it creates transitory disparities of wealth constantly as it reinvents itself. Fortunes are made and lost and, as old industries are replaced by new, the earnings that they create rise and fall. Punishing those who exceed some momentary average income and artificially subsidising those who fall below it – as well as providing for a universal standard of living which bears no relation to merit or even to need – has now reached the unavoidable, unaffordable end of the line.


The West is signing its own death sentence
Capitalism is, by its nature, dynamic. George Osborne's attempt to engineer the 'perfect society’ undermines the logic of the free market.

Article.....

http://www.telegraph.co.uk/news/politic ... tence.html
When the Edward Gibbon of the 22nd century comes to write his History of the Decline and Fall of the West, who will feature in his monumental study of the collapse of the most successful economic experiment in human history? In this saga of the mass suicide of the richest nations on earth, there may be particular reference to those national leaders who chose to deny the reality that was, from the vantage point of our future chronicler, so obviously looming. Or maybe the leadership of our day in Washington, London and Brussels will appear to have been swept helplessly along by irresistible forces that originated before their time.

But for us, right here, right now, it matters that Barack Obama and George Osborne are playing small-time strategic games with their toy-town enemies while the unutterable economic truth stares them in the face. (The political leadership of the EU seems to have passed through the looking glass into a world where the rules of economics do not apply, so their statements and actions are beyond analysis.) Mr Obama is locked in an eye-balling contest with a Republican Congress to see who can end up with more ignominy when the United States goes over the fiscal cliff. It is clear now that the president will be quite happy to bring about this apocalypse – which would pull most of the developed world into interminable recession – if he could be sure that it would result in long-term electoral damage to his opponents.

Meanwhile, Mr Osborne takes teeny-tiny steps in the direction which is the only plausible one: little bitty reductions in the welfare programme to “make work pay” which are barely enough to push those who are actually working in the black economy off the unemployment rolls, and fiddly adjustments (almost too small to notice in day-to-day life) to lessen the burden of tax that bears down on people who are scarcely self-sustaining, let alone prosperous. Supposedly from opposite sides of the political divide, the US president and the British Chancellor come to a surprisingly similar conclusion: it is not feasible to speak the truth, let alone act on it. The truth being, as this column has often said, that present levels of public spending and government intervention in the US, Britain and Europe are unsustainable. The proportion of GDP which is now being spent by the governments of what used to be called the “free world” vastly exceeds what it is possible to raise through taxation without destroying any possibility of creating wealth, and therefore requires either an intolerable degree of national debt or the endless printing of progressively more meaningless money – or both.

How on earth did we get here? As every sane political leader knows by now, this is not just a temporary emergency created by a bizarre fit of reckless lending: the crash of 2008 simply blew the lid off the real scandal of western economic governance. Having won the Cold War and succeeded in settling the great ideological argument of the 20th century in favour of free-market economics, the nations of the West managed to bankrupt themselves by insisting that they could fund a lukewarm form of socialism with the proceeds of capitalism.

What the West took from its defeat of the East was that it must accept the model of the state as social engineer in order to avert any future threat to freedom. Capitalism would only be tolerated if government distributed its wealth evenly across society. The original concept of social security and welfare provision – that no one should be allowed to sink into destitution or real want – had to be revisited. The new ideal was that there should not be inequalities of wealth. The roaring success of the free market created such unprecedented levels of mass prosperity that absolute poverty became virtually extinct in western democracies, so it had to be replaced as a social evil by “relative poverty”. It was not enough that no one should be genuinely poor (hungry and without basic necessities): what was demanded now was that no one should be much worse (or better) off than anyone else. The job of government was to create a society in which there were no significant disparities in earnings or standards of living. So it was not just the unemployed who were given assistance: the low paid had their wages supplemented by working tax credits and in-work benefits so that their earnings could be brought up to the arbitrary level which the state had decided constituted not-poverty.

The paradoxical effect of this is that the only politically acceptable condition is to be earning just enough to maintain independent life – and not a penny more. Everybody is steered by the penalties of the tax system or the gradual withdrawal of benefits into that small space in the middle between being “rich” (earning over about £40,000 a year) and being (relatively) poor. As detailed analysis has made clear, the only group spared by Mr Osborne’s tinkering last week were standard rate tax payers. Neither rich nor unemployed, these paragons are perfect exemplars of “fairness”: surviving on an income which makes life just about bearable but remaining careful always not to allow their aspirations to propel them beyond their station and its acceptable earnings level.

This picture of the perfect society – in which disparities of wealth are eradicated and economic equality is maintained through a vastly complex and expensive system of state intervention – has been the explicit goal of the EU virtually since its inception. It had an on-again, off-again history in Britain until it was locked firmly into the political infrastructure by Gordon Brown. More unexpectedly, it has now taken root in the American political culture, where Mr Obama seems determined to exploit it in his blood-curdling contest with the Republicans. Once ensconced, this concept undermines the logic of the free-market economy which funds it.

Capitalism is, by its nature, dynamic: it creates transitory disparities of wealth constantly as it reinvents itself. Fortunes are made and lost and, as old industries are replaced by new, the earnings that they create rise and fall. Punishing those who exceed some momentary average income and artificially subsidising those who fall below it – as well as providing for a universal standard of living which bears no relation to merit or even to need – has now reached the unavoidable, unaffordable end of the line.

So who will tell the truth – and then act on it? Who will say not just that welfare must be cut, but that in future the NHS will need to rely on a system of co-payments? That people will have to provide for their own retirement because the state pension will be frozen? That without a radical reduction in government intervention, the free and prosperous West will have been a brief historical aberration?

[Rorschach]

Communism of course has failed absolutely... so lets not go there.

[Super Nova]

Communism of course has failed absolutely... so lets not go there.

Totally agree. It is against what drives innovation, human endevour and has been shown to fail.

The problem is, I don't see a solution.

[Rorschach]

Of course there is a solution... there are always solutions.

The will and means are the hurdles we must accommodate.

I disagree with the article's premise and definitions.

[Super Nova]

I disagree with the article's premise and definitions.

Can you point them out.

I think this is clear and the premise is something I agree with.

How on earth did we get here? As every sane political leader knows by now, this is not just a temporary emergency created by a bizarre fit of reckless lending: the crash of 2008 simply blew the lid off the real scandal of western economic governance. Having won the Cold War and succeeded in settling the great ideological argument of the 20th century in favour of free-market economics, the nations of the West managed to bankrupt themselves by insisting that they could fund a lukewarm form of socialism with the proceeds of capitalism.

[Rorschach]

I'm going to address the body of the article when I get a chance. But I think that it must be recognised that differences in the political approach and policy by governments of "opposing" values tends to lead to problems within societies, not capitalism itself per se. Personally I think "pure" Capitalism or "rampant" Capitalism like all extremes is not a good thing, so I will address this as well and call the differences "Soft" and "Hard" Capitalism.

[Rorschach]

The West is signing its own death sentence…
Janet Daley.

As I always say, you must know about the person you are reading, where are they coming from, what is their story. Having read the article I have to admit I had a pretty good idea where she was coming from if not the why. So having read her bio and various items by and about her, we find; Janet Daley was born in America and began her political life on the Left as an undergraduate at Berkeley. (Don’t they all). In 1965, she moved to Britain where she has spent nearly twenty years in academic life before becoming a political commentator (having moved to the Right politically. As a journalist for The Telegraph in the UK she has had a foot in both sides of the political divide and both sides of the Atlantic. As a point of interest I post the following, which may have been a precursor to this article.

http://www.telegraph.co.uk/news/worldne ... untry.html" onclick="window.open(this.href);return false;

NB; I’ve posted the article as a topic.

Capitalism is, by its nature, dynamic. George Osborne's attempt to engineer the 'perfect society’ undermines the logic of the free market.

Who is George Osborne? He is the current Chancellor of the Exchequer. (UK). Why he is singled out for an article about the downfall of the West when he is most probably unknown in most of the WEST is probably due to the authors particular focus, which tends to be a tad limited.

Article.....

http://www.telegraph.co.uk/news/politic ... tence.html" onclick="window.open(this.href);return false;
When the Edward Gibbon of the 22nd century comes to write his History of the Decline and Fall of the West, who will feature in his monumental study of the collapse of the most successful economic experiment in human history? In this saga of the mass suicide of the richest nations on earth, there may be particular reference to those national leaders who chose to deny the reality that was, from the vantage point of our future chronicler, so obviously looming. Or maybe the leadership of our day in Washington, London and Brussels will appear to have been swept helplessly along by irresistible forces that originated before their time.

So who is Edward Gibbon? (27 April 1737[notes 1] – 16 January 1794) was an English historian and Member of Parliament. His most important work, The History of the Decline and Fall of the Roman Empire, was published between 1776 and 1788. Does he play a big part in this article? No… so let’s forget him.

Personally I don’t consider global economics an experiment any more than I consider a tree an experiment. Are nations committing economic suicide? I doubt it, even though some may be badly governed and poor decisions have been made. Let us not forget what the author stated… “Capitalism is, by its nature, dynamic.”

I also note that the WEST is much broader than Washington, London and Brussels. The “East/West” divide in today’s world is also probably rapidly becoming a moot point. The “West” has its hooks in the EAST and the “East” in the “West”.

[Rorschach]

But for us, right here, right now, it matters that Barack Obama and George Osborne are playing small-time strategic games with their toy-town enemies while the unutterable economic truth stares them in the face. (The political leadership of the EU seems to have passed through the looking glass into a world where the rules of economics do not apply, so their statements and actions are beyond analysis.) Mr Obama is locked in an eye-balling contest with a Republican Congress to see who can end up with more ignominy when the United States goes over the fiscal cliff. It is clear now that the president will be quite happy to bring about this apocalypse – which would pull most of the developed world into interminable recession – if he could be sure that it would result in long-term electoral damage to his opponents.

Of course most isn’t all. Then as I have stated East and West are engaged. If the US fall off the fiscal cliff, it may find that it is attached to a bungy cord. Capitalism is not to blame for the state of politics as such. The economy may suffer due to poor economic decisions or due to good ones – “Capitalism is, by its nature, dynamic” Today’s world is much more intermingled than it has ever been before.

Meanwhile, Mr Osborne takes teeny-tiny steps in the direction which is the only plausible one: little bitty reductions in the welfare programme to “make work pay” which are barely enough to push those who are actually working in the black economy off the unemployment rolls, and fiddly adjustments (almost too small to notice in day-to-day life) to lessen the burden of tax that bears down on people who are scarcely self-sustaining, let alone prosperous. Supposedly from opposite sides of the political divide, the US president and the British Chancellor come to a surprisingly similar conclusion: it is not feasible to speak the truth, let alone act on it. The truth being, as this column has often said, that present levels of public spending and government intervention in the US, Britain and Europe are unsustainable. The proportion of GDP which is now being spent by the governments of what used to be called the “free world” vastly exceeds what it is possible to raise through taxation without destroying any possibility of creating wealth, and therefore requires either an intolerable degree of national debt or the endless printing of progressively more meaningless money – or both.

Australia also has similar problems of sustainability and welfare. Labor grows welfare dependence, it has always done so and it does so to grow their support base. This is again not a problem with Capitalism per se… but with bad governance

How on earth did we get here? As every sane political leader knows by now, this is not just a temporary emergency created by a bizarre fit of reckless lending: the crash of 2008 simply blew the lid off the real scandal of western economic governance. Having won the Cold War and succeeded in settling the great ideological argument of the 20th century in favour of free-market economics, the nations of the West managed to bankrupt themselves by insisting that they could fund a lukewarm form of socialism with the proceeds of capitalism.

And here we see the situation I already identified earlier. Where 2 ideologies diverge… and the longer the Left Wing Progressives hold sway the further down the path of insolvency we go. That is not to say everything they say and do is wrong, but… they cannot bring into being, every wish and aspiration they have, wrong or right, without having a realistic/pragmatic plan to follow. They must live within their means as we all must do or fail. there is no bottomless pit of money or a tree on which it grows. Here we see the difference between those mentioned in the quote… where "Not to be a socialist at twenty is proof of want of heart; to be one at thirty is proof of want of head."

As we have a Left and a Right we also have Progressives and Conservatives. This is the political spectrum not the economic one.

[Rorschach]

What the West took from its defeat of the East was that it must accept the model of the state as social engineer in order to avert any future threat to freedom. Capitalism would only be tolerated if government distributed its wealth evenly across society. The original concept of social security and welfare provision – that no one should be allowed to sink into destitution or real want – had to be revisited. The new ideal was that there should not be inequalities of wealth. The roaring success of the free market created such unprecedented levels of mass prosperity that absolute poverty became virtually extinct in western democracies, so it had to be replaced as a social evil by “relative poverty”. It was not enough that no one should be genuinely poor (hungry and without basic necessities): what was demanded now was that no one should be much worse (or better) off than anyone else. The job of government was to create a society in which there were no significant disparities in earnings or standards of living. So it was not just the unemployed who were given assistance: the low paid had their wages supplemented by working tax credits and in-work benefits so that their earnings could be brought up to the arbitrary level which the state had decided constituted not-poverty.

Sorry but “The West” hasn’t decided any such things. Governments decide policies and governments come in a variety of flavours. Governments have long ago accepted responsibility for various set duties and responsibilities. They succeed and fail in providing them. The West has not accepted Communism or equality of wealth at all. We still have rich and poor. The majority sit somewhere in between. Free markets are not a roaring success at all and those that do well from free-markets do not necessarily spread their wealth to all an sundry. Clearly in the USA there is no such thing as everyone being well off or at least not badly off. They do not even have a well structured health system. Obviously what Daley is talking about is not a commonality in every Western Nation.

The paradoxical effect of this is that the only politically acceptable condition is to be earning just enough to maintain independent life – and not a penny more. Everybody is steered by the penalties of the tax system or the gradual withdrawal of benefits into that small space in the middle between being “rich” (earning over about £40,000 a year) and being (relatively) poor. As detailed analysis has made clear, the only group spared by Mr Osborne’s tinkering last week were standard rate tax payers. Neither rich nor unemployed, these paragons are perfect exemplars of “fairness”: surviving on an income which makes life just about bearable but remaining careful always not to allow their aspirations to propel them beyond their station and its acceptable earnings level.

A “fair” tax system will always have dissenters. But these systems are not Capitalism per se they are government policies that vary nation to nation and even state to state. Wages on the whole are determined by what companies can afford to pay.

[Rorschach]

This picture of the perfect society – in which disparities of wealth are eradicated and economic equality is maintained through a vastly complex and expensive system of state intervention – has been the explicit goal of the EU virtually since its inception. It had an on-again, off-again history in Britain until it was locked firmly into the political infrastructure by Gordon Brown. More unexpectedly, it has now taken root in the American political culture, where Mr Obama seems determined to exploit it in his blood-curdling contest with the Republicans. Once ensconced, this concept undermines the logic of the free-market economy which funds it.

Capitalism is not about everyone being the same or disparities of wealth, it is an economic system based on individual freedoms, private ownership and of the means of production or wealth through resources or money and the production of goods or services for profit, amongst other things.

Capitalism is, by its nature, dynamic: it creates transitory disparities of wealth constantly as it reinvents itself. Fortunes are made and lost and, as old industries are replaced by new, the earnings that they create rise and fall. Punishing those who exceed some momentary average income and artificially subsidising those who fall below it – as well as providing for a universal standard of living which bears no relation to merit or even to need – has now reached the unavoidable, unaffordable end of the line.

Ok… Capitalism is dynamic. It doesn’t keep reinventing itself though. Technologies drive change in industries not Capitalism per se. Capitalism is not about punishment and reward it doesn’t care who is rich or poor or if there even exists rich people and poor people. Governments create policies which in turn create the societies we live in and the rules we live by. Capitalism provides the system by which our finances are managed. Government welfare policies create and maintain a safety net (or not) for those less financially or physically or mentally well off in our societies.

So who will tell the truth – and then act on it? Who will say not just that welfare must be cut, but that in future the NHS will need to rely on a system of co-payments? That people will have to provide for their own retirement because the state pension will be frozen? That without a radical reduction in government intervention, the free and prosperous West will have been a brief historical aberration?

Ah so now we actually find the crux of her argument… devoid of all the rhetoric and wrong-headedness. She wants to cut welfare and lessen the nanny state. She wants health co-payments and people to self-fund retirement. Exaggerating that these things will bring down the West does her argument no good. Obviously she is talking just about the UK, which we all know is not the entire Western World… just a part of it. Australia and other Western nations obviously do not have the same policies in place, so even if one western nation has a problem we all won’t be having the same ones. You can't blame Capitalism for all the ills of the Western World, but you can blame bad governments for bad policies and decisions.

Personally I am in favour of a "Soft" Capitalism which through governments and taxation look after their people, not "Hard" capitalism where governments completely eschew welfare and run a survival of the fittest mentality with no compassion of safety net.