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Austerity in ruins?

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crissdee
1239956.  Mon Jun 19, 2017 4:52 am Reply with quote

PDR wrote:
In how many cases do those people need to live in London simply because of the large number of people who live in London?

PDR



If you work in T*sco in Cheapside, or the S*insbury's in Holborn 'fregsample, then living at least inside the North/south Circular will make it far easier to get to work on time than if you live out in the sticks. From where I am (just inside the north Circ), to the aforementioned T*sco, would be a minimum of an hour in the morning, and at least that to get home afterward, both journeys on insanely crowded tube trains. For that you will get maybe 17K a year. Rent round here will be a minimum of 12K a year, before you've bought any food, electricity, travelcard(for which you'll pay upwards of a grand) etc. Move out to Harlow or somewhere, and you might get the rent down to 8K, but you'll double the journey time (and cost!) to get to work.

 
PDR
1239960.  Mon Jun 19, 2017 5:10 am Reply with quote

But are those stores only where they are because all the people live there?

Are the people there because the stores are there or are the stores there because the people are there?

PDR

 
PDR
1239961.  Mon Jun 19, 2017 5:34 am Reply with quote

ConorOberstIsGo wrote:

Economics is an awfully counter-intuitive subject in lots of ways. Having a country run a nationalised industry at a loss for decades may be one of the few ways that countries can join the 'developed' world as it used to be called.


Yes, but for everything that runs at a loss something else has to run at a *greater* profit to fund it. SOmewhere in the system there must be a wealth-creator or two or the books will never balance. Yes, you can run periods of endebtedness to facilitate the wealth-creation (we call that "investment") but it has to be for something that will subsequently provide a benefit and payback the debt. At the moment the debt is in runaway - it is increasing faster than we're repaying it. There is no sign of reduction at the first derivative and basely any sign of it at the second, so it's hard to suggest that we are "investing" to get "convergence" in the debt curve.

Quote:

A steel industry that is run at a loss can have side benefits for car manufacture or infrastructure which use cheap steel and this could more than make up for that loss.


It could, but that only works if the car industry runs at a sufficient profit to cover both. Our indiginous car industries required subsidy even when they used steel that was sold to them at a loss.

Quote:

If a recession hits, having large public sector spending ring-fenced from the market might allow for public sector job security and income security which then results in spending which then brings the country out of recession. Keynesian growth (public spending is a good means growth) in the U.S. used to be a Republican idea, now it's a Democratic idea.


Yes, but Keynsian economics says incur public debtr to invest in infrustructure that will reduce the costbase so that subsequent industry can be more competitive and grow your economay back out of trouble. We're not doing that - we're incuring debt to piss ever-greater sums into public-sector wage packets. The "circulation" argument doesn't really work here because only a proportion of the money pissed into the public sector gets trickled-onwards, so each round of the circulation provides ever less benefit. Somewhere in the system there needs to be the wealth-generator to fund it all, and if your core government pronciple is abject hostility to wealth generation then they will simply go elsewhere (or not bother, cash out and retire to a luxury yacht moored off a tax haven).

Quote:

I think that most people at the bottom are very upset with the visible changes to their quality of life and they might be able to suck it up if they didn't believe those at the top are having a jolly old time.


But is that simply because they have unrealistic expectations over what that quality of life should be? Are they "baselining" their expectations against unusually "good" years when there was never any realistic prospect of sustaining at that level?

Quote:

Because the less wealthy tend to spend more of their income sooner, it actually makes a kind of sense to have a 10 minimum wage to get the country's growth up


Only if the available jobs can afford to employ people at those rates - if they simply price people out of jobs it just adds to the unemployment burden and makes establishing businesses more difficult, especially in a world which doesn't have the same labour costs.

Remember that whilst the actual mechanism of the 2008 crash was stupidity and misdoings in the banking sector ("the big short" refers) the root cause was simply a massive public appetite for debt-fuelled spending. The grate public who maxed-out their credit-cards until they had awesome levels of personal debt. If this money had been spent within the UK's economy that might actually have worked (although I don't believe that myself) , but it wasn't. It was largely spent on goods manufactured in china, korea, tiawan and some parts of eastern europe. So we ran up all that debt and the money didn't circulare back into our economy...

PDR

 
barbados
1239967.  Mon Jun 19, 2017 6:55 am Reply with quote

PDR wrote:
But are those stores only where they are because all the people live there?

Are the people there because the stores are there or are the stores there because the people are there?

PDR

However, these areas are not exclusively rich or poor so the stores that are there because people are would still be there as would the people, just with a different demographic.

Which possibly blows the people being the root cause out of the water. Although I'm not sure that the people would be a symptom, but they are in the mix somewhere :/

I do seem to recall a method of thinking - may have been Ingram or Lamont - that suggests that the people that are affected by measures such as austerity are neither the poor, nor the rich - it's the people in the middle. So perhaps when looking at the OP the target demographic was wrong.

 
PDR
1239971.  Mon Jun 19, 2017 7:05 am Reply with quote

barbados wrote:

However, these areas are not exclusively rich or poor so the stores that are there because people are would still be there as would the people, just with a different demographic.


Yes and no. If the population density in the area was lower the number of stores required would be lower, reducing the number of staff needed to live in the area and thereby reducing housing costs. If the demographic in these areas shifted towards the more affluent then the shops could be more distant as affluent people have fewer qualms about driving 10-15 miles for a weekly shop in the big out-of-town stores.

PDR

 
dr.bob
1239978.  Mon Jun 19, 2017 9:15 am Reply with quote

PDR wrote:
Are the people there because the stores are there or are the stores there because the people are there?


I would imagine the people are there because the jobs are there. Lots of well-paid banking sector jobs around Cheapside. Many other international companies based around Holborn. Then it follows that the stores are there because the people are there.

So what's the solution? Persuade millions of people to move out of London? That'd be great for other areas of the country, but I can't imagine a practical way of doing it unless people are frogmarched at gunpoint.

 
barbados
1239980.  Mon Jun 19, 2017 9:31 am Reply with quote

The answer is to pay more - but the only way for that to happen is through solidarity.

 
PDR
1239986.  Mon Jun 19, 2017 9:49 am Reply with quote

dr.bob wrote:

I would imagine the people are there because the jobs are there. Lots of well-paid banking sector jobs around Cheapside. Many other international companies based around Holborn. Then it follows that the stores are there because the people are there.


Again, there is clearly scope for decentralisation to the regions widescale mutual benefit. Government could easily incentivise the business moves through tax breaks. We're talking about commerce rather than industry, so the moves essentially just need office space and connectivity rather than relocation of plant, equipment and facilities.

Quote:

So what's the solution? Persuade millions of people to move out of London? That'd be great for other areas of the country, but I can't imagine a practical way of doing it unless people are frogmarched at gunpoint.


It has been done before. In the 60s large numbers of people in council accomodation in London were offered moves in what was then called the "London Overspill". They were moved all over the UK - even here. There's a housing estate near here called the "Old Dean" which has hundreds of 2-3 bed semis in roads named for the boroughs the people came from - Surbiton Road, Wimbledon Road, Sutton Road, Mitcham Road etc. In doing this they also kept communities together by putting them in the same roads.

This was originally done partly because of wartime damage creating a housing shortage and partly as a slum-clearence measure to demolish sub-standard housing. Both could be seen to have parallels today.

PDR

 
PDR
1239987.  Mon Jun 19, 2017 9:53 am Reply with quote

barbados wrote:
The answer is to pay more - but the only way for that to happen is through solidarity.


If you are looking at an area where house prices/rents are high due to scarcity then increasing the ambient income will just drive the prices/rents up further. House affordability can only be addressed through supply-side measures.

And where is this additional money to come from? If it is debt-funded it will cause inflation that will nullify the gain (the economy is a dynamic equilibrium, so that's hardly surprising).

PDR

 
barbados
1239989.  Mon Jun 19, 2017 10:09 am Reply with quote

Yes, that would be the case for most things - however, let's assume that you paid 300,000 for your house- would you be willing to sell it for 150,000?
That is my logic for increasing the ability to borrow sufficient funding to buy a home

 
PDR
1239991.  Mon Jun 19, 2017 10:12 am Reply with quote

That doesn't change the detail that in increasing the ability to pay you will simply drive the process up further. That's why the removal of MIRAS had essentially no effect on house affordability.

PDR

 
Jenny
1239998.  Mon Jun 19, 2017 12:10 pm Reply with quote

PDR wrote:


But is that simply because they have unrealistic expectations over what that quality of life should be? Are they "baselining" their expectations against unusually "good" years when there was never any realistic prospect of sustaining at that level?



What would you regard as an 'unrealistic expectation'? Is it unrealistic to expect to sustain a roof over your head? Use transport? Buy food and clothing? I would say all those were about as basic as you can get.

My son with Aspergers - who works as a builders' labourer and gets work through an agency at a little more than the minimum wage - works a 40 hour week. He could be sent to work over a wide area. He has no contract of employment or job security, which is common in his line of work. He gets no sickness or holiday pay (hence the 'more' than minimum wage, which is supposed to compensate for that). I think he's currently on 9.50 an hour, so that's somewhere around 1600 a month. However, he lives in Watford (so that he can get to work on readily-available public transport in case his own fails as his 'new' van is 12 years old and has 152,000 miles on the clock) so he's paying 750 a month rent for a one-bedroom flat. On top of that he has to pay council tax, electricity, gas, TV/internet/phone, buy food and clothing, and pay his car insurance and any transport expenses. All his furniture came from charity shops or pass-ons from a friend. Luckily, he has a mother who has money to bail him out when necessary.

These days, I would even argue that internet access and something to access it with are essential. If you're unemployed, you'll find that most stuff has to be accessed online. If you register for one of the few local authority housing options available (and it will take you years unless you qualify by virtue of extreme need), you'll need internet access to 'bid' on available housing since that can now only be done online, for example. If you are looking for work, most employers expect to be able to contact you online or require you to look online. You can even do this if you're street homeless, if you can rustle up enough money for a PAYG phone.

 
barbados
1240003.  Mon Jun 19, 2017 12:51 pm Reply with quote

Re internet access being anything more than a luxury ........
I'll just leave this here https://www.hertfordshire.gov.uk/services/libraries-and-archives/library-opening-hours/watford-library.aspx

 
dr.bob
1240050.  Tue Jun 20, 2017 4:39 am Reply with quote

PDR wrote:
Again, there is clearly scope for decentralisation to the regions widescale mutual benefit. Government could easily incentivise the business moves through tax breaks. We're talking about commerce rather than industry, so the moves essentially just need office space and connectivity rather than relocation of plant, equipment and facilities.


Surely there's already an incentive for business to move out of London. If they open an office in, say, Northampton, office rentals will be considerably lower then central London. Also housing costs will be lower, so they can get away with paying their staff less.

This makes good economic sense, and yet all major companies still choose to locate their main offices in the most expensive and highly-contested office space in the country. This implies there must be a pretty strong incentive to them doing so which simple money saving doesn't counter.

PDR wrote:
It has been done before. In the 60s large numbers of people in council accomodation in London were offered moves in what was then called the "London Overspill".


But people in council accommodation aren't the problem. I think we've already established that the supermarkets we're discussing are present in the very expensive areas of London because of all those highly paid executives which are cluttering up the place. Moving council house tenants out of the centre won't remove the need for these supermarkets to a) exist and b) access cheap labour. So where is that labour to come from if all the poor people have been frogmarched out to the sticks?

 
PDR
1240054.  Tue Jun 20, 2017 4:58 am Reply with quote

Quote:
if all the poor people have been frogmarched out to the sticks?


You seem to be determined to talk only in judgemental and prejoritive terms, so (again) there is little point in further discussion.

PDR

 

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