Thought for the Day

[filghy2]

Interest rates must rise, or the economy is doomed.

I don't understand your logic, but you seem to have it the wrong way around. If you want interest rates to be higher then we need to restore the economy to healthy growth first. We can't restore the economy to healthy growth by raising interest rates.

Interest rates are just the price of money. Like any price, their purpose is to balance demand and supply. It makes no more sense to say the interest rate should be at some arbitrary level than it would to say the price of apples should be kept at some level even if there was a glut of apples. The only 'natural' rate of interest is the one that would balance the economy at non-inflationary full employment. https://en.wikipedia.org/wiki/Natural_rate_of_interest

If you want interest rates to be higher to encourage saving you should actually be in favour of more government borrowing because that is the only feasible alternative. Otherwise we have the problem illustrated by Keynes'. https://en.wikipedia.org/wiki/Paradox_of_thrift If everyone tries to save more at the same time the result will be counterproductive because the impact on the economy causes incomes to fall. Somebody (ie government) needs to spend more to avoid this outcome.

[broncofan]

This is about 10,000 on my list of complaints right now but since the first 9,999 all deal with Trump and the Republican party I figure I can discuss it to avoid being repetitive.

There are people who insist the slogan "defund the police" means something and is useful. Defund literally means that you remove all funding from an institution. When people respond by saying they don't want to live in a society without any police force they are told that the phrase means something else. Invariably if they say, "why not choose a phrase that means what it says?" they are subjected to personal attack.

What does the phrase mean? If the phrase doesn't evoke that meaning in the listener why is it a good slogan?

[Stavros]

I don't understand your logic, but you seem to have it the wrong way around. If you want interest rates to be higher then we need to restore the economy to healthy growth first. We can't restore the economy to healthy growth by raising interest rates.

Interest rates are just the price of money. Like any price, their purpose is to balance demand and supply. It makes no more sense to say the interest rate should be at some arbitrary level than it would to say the price of apples should be kept at some level even if there was a glut of apples. The only 'natural' rate of interest is the one that would balance the economy at non-inflationary full employment. https://en.wikipedia.org/wiki/Natural_rate_of_interest

If you want interest rates to be higher to encourage saving you should actually be in favour of more government borrowing because that is the only feasible alternative. Otherwise we have the problem illustrated by Keynes'. https://en.wikipedia.org/wiki/Paradox_of_thrift If everyone tries to save more at the same time the result will be counterproductive because the impact on the economy causes incomes to fall. Somebody (ie government) needs to spend more to avoid this outcome.

My unsatsfactory reply is to broadly agree with you. I think the dilemma is one of the short-term versus the long-term and the fact that short-termism is politically expedient but merely delays sensible decision making to later and probably someone else. A balanced economy allows for spending and saving, the original point I made being that interest rates are essential for capitalism in the long term.

This article in the FT looks at this current problem with regard to Pension Funds, and illustrates why I think interest rates must rise at some point over the next 12 months.
https://www.ft.com/content/c95deea4-...a-d9e2401fa7ca

An additional oddity is the claim that lockdown's have helped people save rather than spend money, not sure about that. Brexit too will probably lead to a decline in income in the UK over the next five years, so I see a decade of depression looming, and can't see how sub-zero interest rates help anyone, as it would mean low spending plus low levels of saving, and that makes recovery harder to achieve and slower. On the other hand one reads that when we are released from the Covid prison, people are going to spend like crazy, but will they? The future looks as miserable and messy as the present, but I am probably wrong, and in a way I hope I am, as I would also like to go places other than my local high st before I die.

[sukumvit boy]

I was recently reading about how the 'Black Death' in the 16th century revitalized the economy of Europe creating new jobs and significantly improving the lives of the 'middle class' and actually creating the first real 'middle class. Of course they lost as much as half the population so it doesn't really apply to the Covid-19 pandemic in the same way ,but I think we will see some significant changes related to more people working from home , attending meetings and conferences online ets.

[blackchubby38]

This is about 10,000 on my list of complaints right now but since the first 9,999 all deal with Trump and the Republican party I figure I can discuss it to avoid being repetitive.

There are people who insist the slogan "defund the police" means something and is useful. Defund literally means that you remove all funding from an institution. When people respond by saying they don't want to live in a society without any police force they are told that the phrase means something else. Invariably if they say, "why not choose a phrase that means what it says?" they are subjected to personal attack.

What does the phrase mean? If the phrase doesn't evoke that meaning in the listener why is it a good slogan?

Anytime you have to explain what your slogan really means, then its not a good slogan. But that's not even the worse one that I have heard. Here are some other ones:

All Cops Are Bad.
Abolish the Police
Abolish Prisons.

[broncofan]

Anytime you have to explain what your slogan really means, then its not a good slogan. But that's not even the worse one that I have heard. Here are some other ones:

All Cops Are Bad.
Abolish the Police
Abolish Prisons.

Why would anyone ever want to make a policy proposal sound more extreme than it is? Isn't it enough to do justice to the policy? Bernie does that a lot. He will propose a policy that is much more reasonable than he makes it sound.

He'll then say, "billionaires shouldn't exist!!!". I'm not offering an opinion one way or another but I saw his tax proposals and many billionaires would continue to be billionaires while paying a wealth tax. I'm not saying our agenda has to be predicated on not spooking super rich people but if you're proposing that people have to give back so that we can fund healthcare and college tuition then just say that. If you're proposing that we reform the police, don't say defund the police. If you're saying some police officers are racist, don't say all. And then don't dig in when people try to correct your asinine statement.

[blackchubby38]

Why would anyone ever want to make a policy proposal sound more extreme than it is? Isn't it enough to do justice to the policy? Bernie does that a lot. He will propose a policy that is much more reasonable than he makes it sound.

He'll then say, "billionaires shouldn't exist!!!". I'm not offering an opinion one way or another but I saw his tax proposals and many billionaires would continue to be billionaires while paying a wealth tax. I'm not saying our agenda has to be predicated on not spooking super rich people but if you're proposing that people have to give back so that we can fund healthcare and college tuition then just say that. If you're proposing that we reform the police, don't say defund the police. If you're saying some police officers are racist, don't say all. And then don't dig in when people try to correct your asinine statement.

Have you gotten called a racist yet because you disagree with the notion that all cops are bad?

My favorite is when Mayor De Blasio once said, "There is a lot money out there, but its in the wrong hands". So who gets to decide whose hands are wrong and how do you propose making sure it gets in the "right" hands.

[sukumvit boy]

I was recently reading about how the 'Black Death' in the 16th century revitalized the economy of Europe creating new jobs and significantly improving the lives of the 'middle class' and actually creating the first real 'middle class. Of course they lost as much as half the population so it doesn't really apply to the Covid-19 pandemic in the same way ,but I think we will see some significant changes related to more people working from home , attending meetings and conferences online ets.

Sorry , I meant the 14th century ,around 1350.

[Stavros]

I was recently reading about how the 'Black Death' in the 16th century revitalized the economy of Europe creating new jobs and significantly improving the lives of the 'middle class' and actually creating the first real 'middle class. Of course they lost as much as half the population so it doesn't really apply to the Covid-19 pandemic in the same way ,but I think we will see some significant changes related to more people working from home , attending meetings and conferences online ets.

The context is intriguing because of the ways in which Capitalism has adapted since the end of the Industrial Revolution. The Black Death in England took place when the Wool trade had created lucrative markets for English products in Italy and the Low Countries as they were known (Holland, Brabant, Flanders etc), but the depletion of so many people and the natonal income seems to have encouraged the King to raise money through taxes which in turn led to Peasant Revolts, notably that led by Wat Tyler in 1381. There is a theory that English Kings were in fact weak in this era- there were plenty of them through the Plantagenet era, not that any died a natural death, and relied too much on local Barons, who were as weakened by the Black Death as everyone else, with the additional problems that erupted in the Wars of the Roses in the succeeding century. Thus it is argued the Plague and the Wars established land as a commercial rather than a political value, based on its products, and laid the basis for the transition out of Feudalism and into mercantile capitalism which expanded in the Tudor period with Henry VIII and the effective nationalization of the Monasteries and their wealth to the King's benefit, with Henry's creation of market towns offering local people a larger share of the wealth they produced (one by-product being the school in Stratford-upon-Avon that Shakespeare attended, staffed by reasonably well-paid for the time, and well-educted teachers from nearby Oxford). The formation of the Honourable East India Company in 1600 and the previous expeditions to America thus mark the transition from mercantile to industrial capitalism albeit interrupted by the Civil War of the 17th century. Barrington Moore has tried to chart the developments out of Feudalism into Capitalism in England (and other countries) in his ambitious and maddeningly long and often incoherent Social Origins of Dictatorship and Democracy (1966).

The big difference between then and now, is that industrial capitalism required a huge mass of workers, whereas even contemporary industry requires only a fraction of that labour -think of the car plants that employed thousands which now employ hundreds, plus robots; and the services industry which may employ substantial numbers of people in aggregate, but often in small clusters.

I am not sure what will change, but I thik we have talked before about the way Cities might change if the daily commute to an office block changes radically, and suburban areas become more important for people working from home. Interestingy, if companies survive and thrive, but don't have costs relating to the rent and utility bills of large city-based office space, does this mean the workers will receive a larger share of the company profits not spent on rent, water, electricity and gas?

A digital, online economy requires people with computing skills, but does it also mean a more alienated workforce that does not share the same space with other workers and create a sense of common endeavour? Marx's argument that the collective consciousness of the proletariat be a pre-requisite for a worker's led revolution might, as the means of production has evolved, become closer to Durkheim's concept of anomie- in the future there might be no strikes or worker's protests and marches -workers might just not turn on their computer, drop out, work at a slower rate, or give up and commit suicide.

Because I think humans are social animals, I wonder how atomized labour can be before it causes distress and mental illness. Psychologically people need human contact through family, work, friends and neighbours, and if one disappoints then the others can compensate. If none do, there is a problem. We are also living through an era when the gap between rich and poor is vast, and the argument that wealth should be re-disributed more equally written off as 'Communism' or 'socialism' -so at the moment I am not sure that the long term economic growth that followed the Black Death will follow Covid-19. Those lucrative market relations between England and Italy for example, did not survive the decline of the Port Cities or Venice and Genoa in the 16th century -at one time the Mayor of Southampton which had a buoyant trading link to Genoa was an Italian called Cristoforo Ambrosio who married an English woman and changed his name to Christopher Ambrose. The fracture in the English-European trade that resembles Brexit to an extent, also begs the question if China and the 'West' can maintain the momentum of globalization that has characterised the last 30 odd years, and right now it looks like, globally, we may be entering a decade of depression- but that's my glass half empty view.

[broncofan]

Have you gotten called a racist yet because you disagree with the notion that all cops are bad?

I do think that while occasionally you will find someone call someone bigoted in bad faith, often reckless accusations are a good barometer for how many people within a group feel their viewpoint and experience is not well understood. So while I'm not defending someone saying a person is racist for not agreeing all cops are bad, I think it comes from a place of anger and frustration rather than malice. There is also the suspicion that some people are only offering a placating response that defers a solution and that urgency is needed. Urgency may be needed but the response still needs to be calibrated.

If all cops are bad, then one is bad by virtue of becoming a cop rather than because they've abused their authority. Yet I know there is a legitimate way for police to use their authority and protect vulnerable people. It's therefore also possible to recruit more people who are motivated by that mission than who seek to abuse their authority.

Yes I agree that De Blasio's statement is typically useless. I'm more interested in solutions that are based on ensuring ethical conduct, fairness which can be promoted through regulations, and opportunities for mobility. The last concern is promoted by education, healthcare, and a good social safety net.