merman wrote:There are more serious issues in education that need funding and sorting before spending a huge chunk of the national budget on free university tuition. Indeed, the whole issue of university funding needs an overhaul, not least because Brexit and the toxic culture around immigration means they have lost huge amounts of revenue from overseas students.
Indeed. You're not wrong.
But this also highlights the false economy I'm talking about.
Folks voted for Brexit because of things like the-side-of-the-bus lie about £350 million a year for the NHS, and racist stuff about immigrants coming to steal your job and sleep with all the white women - rushing to the immediate short-term "windfall" option - and not thinking about the overall economic situation that we'd be exiting the world's largest trading bloc, in an increasingly globalised world.
The voting public failed the "instant gratification" test.
You know the one. They put a marshmallow on a plate in front of a kid, and the deal is "if the marshmallow is still there in 15 minutes, we'll double the amount. And keep doing this every 15 minutes for an hour". So, you know, if you can resist the instant gratification of eating that one marshmallow, it doubles to 2 then to 4 then to 8 then to 16 in an hour. But if you eat that first marshmallow, as you can't hold your nerve, then you only get one.
Everybody grabbed the first marshmallow and that's it. One marshmallow only. But if we'd followed our brains, not our stomachs, we'd hold off for an hour and have a 16 marshmallow feast in front of us.
These famous experiments also showed, longer term, that those who could do "delayed gratification" and resist, would generally do better in life overall.
The thing is, what I'm talking about really shouldn't be in the slightest bit controversial, as it's all been researched and proven in experiment.
If you actually read Adam Smith - because free market capitalists like to name check him - then he absolutely never advocated for "greed is good".
Rather the way I'd characterise what he was really talking about was more "a rising tide raises all ships". And you can see this in what many of the early industrialists did, following his philosophy.
Around the UK, you'll find public libraries and parks that have plaques to the local industrialist on them, and this was the "rising tide" concept that Smith actually advocated for.
The idea being that, as the factory owner, you got rich, sure. But then take some of that wealth and invest it back into the local community. Into your workforce. And some industrialists did that, by paying for the community library or a local community park.
And the idea is that, through the library, your workforce get smarter. Through the local park, they are less stressed - and they can engage in local community events there, to help social cohesion.
This is an investment in your workforce. They get smarter, they get more productive, they have less sick days as they have better health, they are less distracted as their families are doing well.
So, being better workers, with higher productivity, you - the factory owner - get richer. And then, again, take a chunk of that profit and re-invest it back into the local workforce and community.
And this was really what Smith was talking about, that self-interest could serve the public good. But it needs the guy at the top to philanthropically started pumping wealth in at the bottom, to create that "rising tide that raises all ships".
Somewhere along the way, some arsehole invented "trickle down economics". In this false theory - because we can look all around us to simply see, in reality, that it just doesn't work, as the gap between rich and poor increases at an ever-faster rate, which is in direct contradiction of what "trickle down" is supposed to fix - then you're excused direct and explicit philanthropy, as the notion is that, ah, when you buy a mansion, you're implicitly giving some of your wealth to the builders. When you buy a Ferrari, some of the money you spend goes to the workers building the cars. And so forth.
So "trickle down" was the idea that you don't need to explicitly pump that "water" in at the bottom to create the rising tide that'll raise all ships, because the water would just naturally "trickle down" from the top.
Although, it's actually correctly named, as the grand problem is that it is only a trickle. That's why it doesn't work. Because, logically, it is true that the rich spending money does put some of their wealth into the economy. And businesses buying materials from suppliers is also distributing that wealth.
But it's shit. It's only "a trickle", as the name suggests, and it's just nowhere near up to the task of single-handedly re-balancing equality and closing the gap between the rich and poor.
It just doesn't work. We can see that pragmatically in the fact that, since it's come to rule the roost, it hasn't worked. Inequality and the gap between rich and poor have continually gotten worse.
To actually address the problem, you can't address it with only a "trickle". You need, as Smith originally advocated, for significant chunks of wealth, coming from the top, to be pumped in at the bottom of the pyramid. We're trying to create a "rising tide" here, so a mere "trickle" from the top simply isn't good enough.
(A fundamental problem with this wealth-based model is that folks sit on money. If Elon or Bezos were perpetually spending billions, over and over, then money would flow around the system. But, obsessed with having the highest "high score" in the money high score table, rich folks make a billion. Then sit on it. Because if you spend £500 million of that billion, you're no longer technically a billionaire. They horde it up. And what that's doing to the economy is trapping money - value - outside of the active economy.
Such dormant money is just not useful. Money only actually acquires its value - its use, its function - in the act of spending it.)
Honestly, none of this is actually controversial. There are studies that show that it's trade - not wealth - that bolsters economies.
And this makes sense. Let's imagine we've got 5 people in a circle. One of them has a £20 note. Now, they buy something from the person to the left of them. The £20 note moves counter-clockwise. That person then buys something from the person to the left of them. And so on, around the circle, folks are exchanging the £20 note for products and services from each other. And it eventually gets back to the first person again. This is our super-simplified model of the economy.
Now, there's the notion that if, upon receiving that £20 note, someone just sits on it and doesn't spend it with the person to their left, then that's it. They've blocked the whole "economy" here. The £20 note has stopped circulating and the money isn't doing anything.
But there's also the idea that we could speed this up. The second anyone gets the £20 note, they spend it immediately. And it goes around the circle faster. Now, let's speed this up. Faster and faster and faster. It's doing the full circle faster and faster. It's going so fast, it's a blur. And, in that blur, it's almost as if there's not one £20 note, but actually a "phantom" £20 note in everyone's hand at the same time.
There's the notion that everyone can become effectively richer, just by passing that £20 note around faster and faster. Because that means there's a shorter and shorter period between when you have the £20 note and the next time you have that £20 note. Faster and faster and faster, we can, in effect, create a "virtual" or "phantom" £20 note that's sort of in everyone's hands at the same time.
It's trade - the movement of the £20 note around the circle - that creates prosperity for all. It's not useful to have wealth - as that's equivalent to the £20 note reaching one of the people and they just pocket it, and cease passing it around the circle, and they just stop the economic activity completely.
The money only does stuff when it's changing hands, because it gets exchanged for products and services and favours with every exchange.
What we want is more and more exchange. More trade. For the rich to start pumping more cash into the system, and to stop just hording it and sitting on it, uselessly.
And it's in their interests to do so. It's a circular system. The money comes back to them again. In creating that "rising tide", your workers have better wages... and what are they going to spend that on? Well, in part, they're buying your useful products. You get the money back.
And what's going horribly wrong in the modern age is that the rich get richer, then sit on their money. They are hording it. They are taking it out of the wider economy.
Every pound of your wage, you're spending, more or less. On food, on rent, on entertainment. It's going back into the wider economy to benefit someone else. But not every dollar that lands in Bezos's hands is going back into the economy. He's hording it, in order to glorify himself as being the richest man on the planet. Indeed, you can't have the "high score" if you're always spending your cash, as it's not accumulating up into the mega-billions, if you keep passing it on the instant you get it.
(Yes, this is simplified. Money in a savings account is, in fact, active in the background. Banks loan it out behind the scenes, make some profit and can give you interest - your tiny share of that profit - and so money that's seemingly "not moving" can actually be doing stuff. So, yes, I am simplifying this model to make the point that unspent money is economically useless. But, in reality, even money that looks like it's standing still is actually moving. But understand the £20 note circle thing first, to appreciate the overall principle of "trade over wealth", and then we can bring in the complications and fine details of how the money system is really a bit more actually sophisticated than the simple £20 note circle model.)
Like, all the experiments, all the literature, come to this same conclusion.
More trade benefits all. Including, yes, the rich. They do get richer. And it does not need to be at expense of anyone else.
With economic prosperity for all, the outcomes improve
for everyone. It is not, in fact, a "zero sum game".
Imagine that £20 note going around the circle faster and faster. So fast that it's a blur. So fast that it's almost as if everyone is holding the £20 note simultaneously, even though there's only one note in the circle.
Kind of like multitasking on a CPU. This process gets 10 milliseconds, then this process gets 10 milliseconds, then this process gets 10 milliseconds, in a round robin. And though technically only one process is ever running on this illustrative single core CPU, it's as if all the processes are running at the same time. They're all making some progress.
Trade, trade, trade. Remember that every time that £20 note exchanges hands, someone's buying something. Some product or service is being rendered in the exchange. So the faster and faster we do this, the more shit is getting done.
The entire fucking problem is that the rich are obsessed with wealth, not trade, and that's actually blocking their money being useful in the wider economy. They're hording it, and only a tiny "trickle down" is leaking out. Which is nowhere near enough to rectify the imbalance, of course. So the gap between rich and poor increases, at an ever-increasing rate.
Basically, we should scorn and boo "the richest man in the world". That title means you're a twat blocking the economy. But we should praise and cheer on whoever's doing the most trade. Whoever's circulating the most money around the system. We need to socially "carrot" the good behaviour, and "stick" the bad behaviours. Don't praise or admire the rich for wealth, as they're just clogging up the system. Praise and admire the folks who're moving money around in large amounts.
That's who should be reported in the newspapers. Not "the rich list", but "the trade list". Heap praise and admiration on the folks who're doing the most to keep the economy moving.
The "rich list" is actually a problem - to be rich and possess that "high score", you have to be accumulating that cash. Sitting on it. Hording it. Aspiring to get the biggest number of all the numbers. Rich is a problem because it's an economic block. Trade is not a problem because it's keeping this shit moving, and therefore that £20 note eventually makes it to EVERYONE'S hand at some point. The more the shit keeps moving, the faster and faster it is until that £20 note is back in your possession (though don't hang onto it, spend it! Because only in the exchange is it worth whatever your're trading it for - like food or rent or a fast car or whatever).
The rising tide really does raise all ships.
When the money circulates, everyone does better. Across the board. The rich included. They should, in their own self-interest, not be clinging onto that money. It remains true, even for them, that the money isn't actually doing anything useful until it's spent. £3 million in a bank account is just a number. In a database somewhere. But a £3 million mansion is an actual thing you can live in. It's actually wealth. You're now living it large, in your fancy swimming pool.
This is just arithmetic. There really is no disputing it.
But, unfortunately, human instinct too often defeats us. In these bad economic times, you're probably - like me - being more reticent in your spending. You're worried about the future, so you are tempted to sit on your money. To save, not spend. To reduce the workforce. To cut spending.
But this is like when there were no toilet rolls in the supermarkets during the pandemic. There actually was no underlying problem. Toilet roll is a light and bulky item, that only makes pennies profit per roll. It's generally not imported, as that really doesn't make much economic sense. Toilet roll is almost always manufactured locally.
Ironically, it's one of the last items to ever face supply problems. There was no underlying issue there.
But because everyone was in a panic that they wouldn't be able to wipe their arses in lockdown, folks stocked up. Bought 10 multi-packs at a time. And then, seeing a run on the bog roll, others felt that, oh, I'd better grab a few multi-packs myself before it all runs out. And the shelves emptied. Then, with empty shelves, folks panicked even more - "oh my god, it's true!! Buy every last roll you can find!!". Making the problem worse and worse.
There were no supply problems. There was only a ridiculous demand problem, and they could not fill up the shelves fast enough to match the speed and quantity that people were freaking out, buying up all the toilet roll.
Notice that the second folks stopped panic buying, the shelves were back to full, pretty much instantly.
So a big problem here is that, when times get tough, we make the problem worse by going into "panic austerity mode". Spend less, pull back, call in debts. Horde cash. We're actually helping to create the problem in a self-fulfilling way. It's like the opposite of "panic buying", it's "panic saving".
It's a false economy. And we keep on doing it.
You've no doubt seen it. A company is in financial trouble, so it decides to "improve efficiency" and fires 5,000 of its staff. Or the government cuts NHS doctors and nurses.
Here's the problem. If this worked, then they'd be back to "fighting fit" again, right? If this actually fixes the problem, then the problem should go away.
But, 2 years later, we're back to the same position. Oh, shit, things aren't looking good. Sack another 1,000 staff. Then, 2 years later, we're doing it once more: Things aren't too hot, so we're sacking another 1,000 staff.
This is "definition of madness" stuff. That definition being that you insist on repeating the same action, over and over, expecting different results.
When did a company, firing half its employees, suddenly become the world's richest company 3 months later? Name it. When did that ever happen in all of human history?
But we can all name - as they're reported on in the newspapers - companies that, in dire straits, are forced to fire half their workforce. They don't, in fact, magically recover by doing so. And they're too often back in the headlines, firing yet more people a year or two later.
But the real problem is that this has happened everywhere. We have less hospitals, less nurses, less doctors, less shops on the high street, less police stations, less ambulance stations, less firefighter stations, less trains and buses, etc. - everything is being cut. And then, 2 years later, it's being cut again. Then cut again. Then cut again.
As I say, "the definition of madness". We keep doing this - effectively shutting down society - and it's just not getting us out of this doom spiral at all, is it?
We're repeating the same action over and over - because "theory" suggests this is what you're supposed to do - but the pragmatic results are not actually fixing the problem. We're back, once again, to yet more cuts and austerity.
In the larger view, we're constantly contracting the economy further and further... then wondering where all the money has gone?
Britain is just contracting society, the state and the economy into a smaller and smaller ball. Meanwhile, Biden has been doing some "Keynesian" things, in investing in infrastructure... want to place money on which country pulls out of its slump first? In fact, no need, as it's already clearly America, for being more expansively "Keynesian" in its response.
Unfortunately, conservatives are, by nature, paranoid pessimists. They assume everyone is trying to steal their money. They live in gated communities, protected from the riff-raff that they are convinced is going to, one day, rightfully get their revenge. And, yes, the word "rightfully" is in there because part of what motivates their paranoia is that they know, deep down, that they've done wrong by others and any such "revenge" would, in fact, be deserved.
Indeed, I'm convinced that left / right really isn't the "freewill" choice people assume it to be. Otherwise, you know, you wouldn't see, on election maps, islands of socialism in urban areas, amongst a sea of conservative blue in the rural areas (and you can see that pattern on UK election maps, US election maps, Australian election maps, etc. - so it's not country-specific, but something more underlyingly "human" and universal).
If it were freewill, then the distribution would be random. But it absolutely isn't that at all, is it? Rich and living in a nice rural area? Guaranteed conservative. Poor and living in the inner city? Guaranteed Labour voter right there. I've actually said before - when Labour wins power again, then it should go absolutely ham in creating more urban areas. Build more houses, create new towns and villages. Urbanise, urbanise, urbanise. And then they'll ensure they stay in power for a very long while.
"Words ought to be a little wild - for they are assaults of thought on the unthinking."
- John Maynard Keynes
