Sunday, 30 May 2010

Pennies and Pogo sticks.

No smoky-drinky. Still frantically writing. I have an advantage in that the Bank Holiday means nobody's going to want anything until Tuesday (other than a certain American who isn't going to be on holiday).

Even so, I have to take a break once in a while. I'm almost human, you know.

The news is puzzling. In Italy, hordes of public sector workers are rampaging through the streets demanding to keep their jobs. It'll happen more and more in the coming weeks. Meanwhile the staff of British Airways are doing their best to destroy the company that employs them, thereby ensuring that their own jobs cease to exist. The only ones in either group who can be sure of continued employment are the union officials stirring it all up. It's no skin off their nose if their members are all made redundant. I know, from personal experience, that they will try to convince those members to stay members after redundancy. Union members - all they want is your money. Then they'll use you to score political points and if you lose your job as a result, well, that's too bad. Keep paying.

If you had a factory making pogo sticks, there was a time when you'd have done well. Pogo sticks were all the rage once (I didn't have one). They'd sell like hot cakes. You'd make money and take on more staff, maybe buy an extra lorry-load of springs...

Then, suddenly, nobody wants pogo sticks any more. Sales plummet, there's no income, and you have no option but to lay off staff until all you're left with is the guy who sweeps the floor and a big box of springs. You might consider a foray into Zebedee puppets but really, it's over. The money has run out, it's time to sell up and move on.

That's so simple it doesn't even deserve the term 'economics'. The economist answer might be different and more complicated but really, the simple truth is that if you make things nobody wants to buy, you'll go bust.

The socialist answer is to borrow more and more money so you can keep paying staff to do something nobody wants done. There will be no income as a result of their work, there will only be borrowed money to pay their wages. Eventually, those you have been borrowing from will notice that you are spending it all on idiotic products and they'll stop lending. Worse, they will start to demand that borrowed money back. And you don't have any.

That's pretty much where most of Europe seems to be now. Hordes of people paid to do non-productive things, in many cases things that nobody wants done. In some cases, things that everyone would prefer weren't done at all. Nobody wants bin inspectors or duck-feeder vigilantes or diversity outreach multiculti political correctness Newspeak banana-straightening operatives. Nobody wants to be spied on and ordered around.

We need an operating police force, a health service (a proper one, not the New-Labour one), fire service, army, navy, air force and so on. We don't need offices full of people whose only job is to say 'No' to anyone who phones up asking for anything. All those layers of management, all those park keepers with the powers of Judge Dredd, all those form-fillers and petty-rule-enforcers and all the rest, we don't need. We never did.

They were a luxury that a rich country could afford to waste money on. We are not a rich country. Hardly anyone in the West could claim that title now. We are broke and we can't afford the essentials, never mind the frills. When you can't afford to heat your house, are you really going to pay someone to paint it?

Most of what the government is doing, it shouldn't be doing anyway. Consider the NHS. If it all shut down, what would happen? Thousands of unemployed doctors and nurses? Not for long.

Private healthcare companies would soon snap them up, on better pay and conditions. Private healthcare costs would decline because they'd be competing for sixty million customers. The government could set up a much smaller NHS for those who really can't afford any healthcare insurance and that would not include anyone with a job. Anyone working is paying National Insurance and with no NHS, there's no longer a justification for this extra tax. Therefore, everyone working can afford to go private, leaving the new, smaller NHS to do what it was supposed to do - look after those who can't afford private medicine.

There would be few doctors and nurses left on the dole. There would be a hell of a lot of administrators, managers, five-a-day co-ordinators (we still have those even though 'five-a-day' has been proven to be based on nothing) and so on, queuing up with their UB40's. This would not result in the collapse of healthcare. It would result in a massive improvement.

Imagine being able to choose your healthcare provider. Imagine being able to choose the one that won't nag you about smoking, drinking, salt and fat and will instead get to the business of fixing whatever is wrong with you. Just like in the old days.

The fire service could be privatised because its activity is local. I'd pay a subscription to the service and if my house caught fire I could then call them out. Naturally, if I was staying at a hotel somewhere else, I'd check they subscribed to their local fire service before booking in. It's something everyone would pay for so the cost per person would be low. Even with exemptions for those below a set income level, the cost wouldn't be much because again, it would mean taking less tax.

Some things can't be privatised. The military, for example. We can't have a lot of private armies going around. That's dangerous. The police, also. On a local level, a privatised police force could work but what if you were mugged in a different town? Would the local police help if you're not a subscriber to their service?

The police need to be national so you can rely on them wherever you might be. I'd prefer the police were funded from taxation because that means they are (or should be) all following the same laws and aren't pandering to local preferences. Imagine passing through a posh part of town and being arrested and fined for not wearing a properly ironed suit. With privatised police, such absurdities could happen.

The fact remains, much of the infrastructure built up under socialist rule is not only unnecessary, it is completely worthless. So many jobs that achieve or produce nothing at all. If you're in one of those jobs, well, I'm afraid we can't afford you any more. There is no spare cash for fripperies.

Shouting in the street will achieve nothing. The government, your employer, is sitting in a room looking at a big box of springs. They cannot give you any more money because they have none. They cannot borrow more because the lenders have said 'No'. They could try taxing the rich more, but as Michael Caine once said, 'You can't tax anyone who can afford the air fare'. He was right. Crank up the tax on people with loads of money and they will sell up and move abroad.

Socialists will cheer at the exodus, because they are insane. Those rich people are the ones who run businesses. The ones who pay massive amounts into the tax system.

The ones who employ people.

When they leave, the taxes and the jobs go with them. Then there is even less to pay all those public sector jobs. What next? Tax all workers harder? More private sector workers will go because the tax they now pay is crippling.

Eventually all you have is public sector, producing nothing, paying its own wages out of taxation and demanding higher wages while the tax rate rises in a futile attempt to reach parity with the costs, which can never happen.

The public sector will lose a lot of jobs. It has to happen. It was always going to happen because paying out more than you take in is not a sustainable business model. It was all a big Brown illusion.

So parade if you like, shout if it makes you feel better but it is not going to change a thing. There is no more money. None.

Game over.


Chris said...

I know, from personal experience, that they will try to convince those members to stay members after redundancy.

My first thought on reading this was "He's got to be kidding". But then I thought about the Union Rep types I've known in my various jobs.

Q: What exactly is the name for that sinking mixture of rage, despair and nihilistic hilarity that comes from realising that the joke wasn't a joke, but actually horrifying, insane fact?

Leg-iron said...

I was made redundant some years ago. The union were in on all talks and did little. Some months later I had a letter asking why my subscription (deducted from salary) had stopped.

That's when it became clear why they wanted us all to change from salary deduction to direct debit.

So they could carry on charging after we were out.

Redundancy was the best thing that ever happened. I'd been thinking of setting up on my own but never had the cash to do it.

TheFatBigot said...

The rioting/protests in Greece and Italy (add Spain next, then Portugal then Germany because by that time the cost of bailing them out will be too much for the Hun to bear) are an indication of the power of the socialist creed. It embeds the concept of the magic money tree into the psyche of State employees.

This could get very nasty because what must be tackled is not just excessive government spending, it is a belief system every bit as strongly held as religious beliefs.

JuliaM said...

"Naturally, if I was staying at a hotel somewhere else, I'd check they subscribed to their local fire service before booking in."

That's because you believe in personal responsibility and taking care of your own problems.

Expecting that from the vast majority of young adults these says would be like opening the cage door on a raised-from-a-cub zoo tiget and expecting it to live free in the wild...

Gendeau said...

You're onto a loser there LI.

A couple of weeks ago I heard some NEETS (chavs) being interviewed on the Toady show on R4. Something like;

"Do you feel guilty about living off benefits?"

"No, cos like I get paid munny right? but I pay tax on me fags an shit - its like give n take - innit"

Previous generations put these people in uniform and got them to catch spears and charge machine gun posts.

What else could morons of this calibre be taught to do?

We could do with decent cleaners in hospitals, but these people have no ethics, let alone a work ethic.

The UK is fucked, but we're not alone.

Anonymous said...

When you really can't afford your house .. but for reasons of wear and tear have to replace some windows do you additionally want to have to fork out a further £300 to have some building inspector come round and say your replacement windows aren't acceptable .... I really really detest the ever growing "inspection" culture - especially in the building regulations arena - and please, no BI responses peddling BI BS - it isn't about "safety" 99.9% of the time - it is just "Oh look, another way of ripping people off by charging for complely unneccessary inspections" to enforce ridiculous "standards"..

bella gerens said...

You'll be happy to hear that tomorrow is a public holiday in the US too - Memorial Day. :-)

Antisthenes said...

What you have done here is explain economics in a plain understandable language that aught to be bound up and published. However I do believe that your message would arrive too late even if people accepted it and acted upon it straight away. The point at which we were in charge of events has passed and events are now going to be in charge of us. Decades of decadence and poor governance has at last taken it's toll and those of us who have fought against the follies of our fellow humans are going to be engulfed in the same conflagration as economic meltdown destroys Western civilisational and replaces it with something entirely different to what it is now.

Past history tells us that mostly when civilisations decline the end is catastrophic and the aftermath is bleak and impoverishment is long lasting. Let us hope that because of educational and technological advances our end will not prove as devastating as has happened in the past.

Chief_Sceptic said...

My friend, this I rate as ...

Mature, profound, insightfull and deeply bloody depressing ! ...

The latter, because you are so right on the mark ...

Elby the Beserk said...

Your link to the Italian public sector workers on the rampage seems to show (the ghastly) Mick Hucknall at the barricades.

Can this be?

Shaun Pilkington said...

Now imagine you're me. The NHS diagnosed me with Multiple Sclerosis. I still work, freelance, and as much as I physically can.

I'm never going to get insurance to cover my treatment as I have a pre-existing condition. No way on Earth can I afford the direct costs of my medication(s).

So, when we privatise the NHS, are you planning just to leave me to rot?

Anonymous said...

Unions were supposed to be about "people power", but that is far from the truth.

In Russia, they were tools of the autocracy to make employers dependent on the state. The same is true in Britain.

As Carrol Quigley says in Tragedy and Hope:

"Georgi Gapon, a priest secretly in the pay of the government, was encouraged to form labor unions and lead workers' agitations in order to increase the employers' dependence on the autocracy ..."

Leg-iron said...

Shaun - I didn't propose to scrap the NHS but to cut it back to what it is supposed to be doing. Looking after people who can't afford the treatment. What should be scrapped is the NHS insistence on telling us how we should live. That's not their business.

I am happy to contribute to an NHS whose job is to fix people who can't afford private care. I am not happy about being forced to pay for an NHS which then demands I live my life according to their arbitrary rules.

I also wouldn't propose to change things overnight. People with pre-existing conditions won't get insurance at affordable rates but those who have not been diagnosed with any illness will. It would have to be phased in, such that if you don't have a pre-existing condition and can afford insurance, you will be advised to get some and your NI contribution will be cut by that cost.

So no, I do not intend to leave you to rot. However, if someone who is healthy now decides to take the NI cut but not buy insurance, and gets sick later, tough.

People have to live by the choices they make. The alternative is to live life as directed by someone else and that is not something I will do.

Then again, the chances of me getting anywhere near the levers of power are as close to zero as makes no difference. So it really doesn't matter what I think.

Just as well, because nobody in power is going to listen anyway.

Anonymous said...

"However, if someone who is healthy now decides to take the NI cut but not buy insurance, and gets sick later, tough."

So what would then happen if they're too sick to work for months or years? Would this then bring us back to the previous scenario...?

"Looking after people who can't afford the treatment."

Or would we indeed just "let them rot?"

Would they then become the
responsibility / problem for charitys to sort out?

By the way, another great post. Thanks. Keep em coming!

Freewoman of England said...

Shaun the answer to your problems are hemp and decent food, ESCHEW vegetable oils, sugar and grain products and soya and you'll be fine.. oh and take some Vitamin D3

Shaun Pilkington said...

Thanks for the reply, Leg Iron. I had hoped that you'd support a sensible approach as I have had more than enough of the 'take the shit we give you or fuck off' service from the NHS and am keen to see a way to be free of their poor treatment, shoddy performance and high handed attitude.

But I'm not about to start advocating cutting my own throat. So instead, I can only hope to nudge this debate along in sensible and humane directions which you seem pleasantly open to.

And, Freewoman, I'm way ahead of you and can say that while cannabinoids (above and beyond the two or three we hear about in the media) do indeed help with symptoms and may (studies ongoing) have a role in neuroprotection/remyleination, it is vastly overstated by people who just want legal pot. Not that there's anything wrong with that, per se, although by hyping it as a 'fix' it does get people's hopes up unjustifiably!

smokervoter said...

"Hordes of people paid to do non-productive things, in many cases things that nobody wants done. In some cases, things that everyone would prefer weren't done at all."

As a resident of the realm that brings us Glenlivet it must be said that you have an great knack for taking a long-winded tome on Economics 101 and distilling it down to a round and mellow, readily drinkable read that goes down easy. This after you've condensed and boiled off all the academiaspeak mash.

I picture your blog profile avatar down at the bottom right corner of the TV screen with an everyday language subtitle scrolling away, whilst a wordy Schoolman carries on about some oblique aspect of 'Keynesian counter-cyclical cost-benefit analysis' on the main screen. Not unlike how they used instant onscreen sign-language interpreters. In this case you'd be translating for we of the doublespeak deaf variety.

Another great and concise article.

Forn said...

I don't know how I came over this blog but I have and I'm genuinely shocked at how backward people can still be in 2010...or have I slipped back into the victorian age...nah this is worse than the whigs and tories disconnected are you from ordinary people? Do you ever leave your home? Have you ever spoken to a BA worker?

I'm trying to work out where to position your ideas on the spectrum...your like a cross between Ian Duncan Smith, Disraeli and Milton Friedman but much more inhuman?

I would stay out of contact with reality, it might get painful: there is so many things you could say to your lunatic rantings but it is difficult to know where to start, you should maybe have a look at the health service in the US to see what it would be like if your alienated, individualistic, billionare controlled, militarised society came to fruition.

and I will be doing more than going on the streets and shouting to stop that day from coming...

Leg-iron said...

Hello Forn.

It might take a while to disentangle your point, but here goes.

You seem not to have noticed that the Whigs and Tories are now in a coalition running the country and I am a supporter of neither. Nor am I socialist as you have no doubt noticed. I am something else but let's leave the complicated stuff for now.

You say you don't know how you came across this blog. Sitemeter does. Were you clicking random links, perhaps?

Your 'do you leave home' jibe is getting a little tired. Could you come up with a new one? Yes, I am at my computer at the moment. I have two more deadlines to complete by tomorrow and I'll be here pretty late. These are called 'work' which is what you do if you want to avoid being on 'benefits'. That's where the tax money comes from to pay those benefits.

Where do I get the money to pay the taxes? From people much richer than me who commission work. They, in turn, are paid by people much richer than them. Money runs down from those who can afford to spend it to those who work to earn it. Destroy the top layer and you cut off the source.

If they left the country I'd earn nothing and then I'd be paying no taxes, and claiming benefits. So would an awful lot of other people who work for a living. Do you see?

If the unions (not the BA workers, the unions) succeed in bringing BA to bankruptcy, what happens to all those people who work there now? Are their lives improved when the rich guy who runs it is bust? Who will pay their benefits? Where will you get the taxes they have all suddenly stopped paying?

You say there are many things you could say in response, but you offer none. Not one. Instead you pretend I am some immense blob of flesh stuck behind a computer 24 hours a day. Believe it if it makes you happy, I really don't mind at all. Imagine me pallid and drooling if it pleases you. It pleases me not to care.

I am not going to explain my life to you, list my friends, detail my social life or give you any of the details you socialists crave. You have quite enough databases already. If you want to make something up, go ahead with that. It's perfectly fine with me.

You can't find me, or many of those who visit here on your political spectrum because it is one-dimensional. You can go left or right and that is all you have. A line. We're not on the line.

Read 'Flatland' by Edwin Abbott for a good allegorical explanation of what I mean. It's only a little book. It won't take long. Since it's out of copyright you can probably get it for free on the Internet somewhere. See if you can work out why the square is baffled by the sphere.

As for the US health service, I don't think theirs is perfect either. It is not going to be made perfect by adding layers of bureaucracy, quangos, five-a-day- co-ordinators and more.

Try to understand the article and the comments following. I have not advocated dismantling the NHS. Merely paring it down to what it should be doing.

You, however, have advocated... what?

Leg-iron said...

Shaun - I know someone with MS who injects themselves with beta-interferon twice a day. They say it doesn't reverse the effects of previous attacks but it has markedly reduced the frequency of attacks.

They also say they're lucky to get it. It's apparently one of those 'postcode lottery' ones.

There are more of those. So much for the 'national' part of the NHS.

Leg-iron said...

Whoops - they inject once every two days. You'll have to excuse me, even thinking of needles makes me twitchy.

Leg-iron said...

Anon - it's harsh but fair. If you don't want to pay NI and you don't want private insurance either, how can you expect to be covered?

You can't have the NHS if you won't pay for it.

It's like home contents insurance. You don't have to have any but if you don't, and you're burgled, would you expect the government to help you out?

NI is insurance. If you don't pay it, you really can't expect to claim on it.

Long-term illness would be covered by insurance whether private or NI. Sure, some people would cost the insurers dearly but then most people would cost them almost nothing.

Insurance is profitable overall, even when a few cases cost a lot. If it wasn't profitable overall, no private insurers would exist.

Anonymous said...

It’s also true, of course, that some enterprises simply aren’t viable as profit-making companies, as many once-nationalised-now-privatised industries have shown. Train companies, for example. Much-derided though British Rail used to be, the service is certainly no better and the fares infinitely higher since privatisation. This isn’t the fault of the private companies – it’s the fact that, without massive Government subsidies (and as soon as you enter that territory, what’s the point of privatising at all?) train companies simply can’t make a profit. The whole reason why the industry was nationalised in the first place was that the country’s transport infrastructure was in grave danger of collapsing altogether because so many private train companies were on the brink of going bust. And that at a time when private car ownership was considerably lower than today, and train usage much higher.

Same with the Post Office (shortly to be at least partly privatised, though you won’t see it publicised very loudly). For sure, privatisation might well work in urban areas where there are lots of businesses, but it just isn’t worth the time or expense of any company to trawl into Little Piddleton to collect granny’s birthday card to her grandson.

On the NHS - maybe if people who could afford health insurance or private health costs could be allowed to “opt out” of the NHS it would be fairer, but if so, there should then be a clear divide between private and NHS facilities – no private-patient-use-of-NHS-resusc. equipment if their op goes awry; nor shipping off of private patients into “special wards” in NHS hospitals for their recuperation and post-operative care. If a patient is private, then a patient is private and their chosen hospital should provide the lot. And if that makes them more expensive to run, and insurance premiums higher – well, then, surely market forces will decide the outcome?

Pavlov's Dalek said...

LI, I'm not sure whether to take your comments about a military and police force with a pinch of salt or not, can't quite tell whether you're being sarcastic.

But anyhow: Anarchist twopence:

A bunch of private armies running around would be much safer and much better than what we have now, because armies are expensive things. Wars are expensive things. If the iraq war wasn't paid for through taxation, it wouldn't have been paid for at all. Private military and police contractors would - Exactly as you describe a dismantled NHS - provide a much better solution than any tax funded or nationalised service.

The current nationalised police force is frankly a joke, as is the underfunded, underequipped military that soaks up huge sums in administration.

The nationalisation argument carries weight with military and police because they're percieved to be things only government can do well, but the economic reality of coercive monopolies and the socialised incentive problem is still unchanged. Just as the NHS drowns in diversity coordinators and management, so is the police and army.

Pavlov's Dalek said...


As you noted, rail companies compete with private car ownership. And the roads are almost entirely built and maintained by.. The state.

So you want the state to bail out an industry that has been put out of business by competition with.. the state?

No subsidised roads = No coercive monopoly competition to rail = More rail because it's cheaper for mass commutes.

State solutions NEVER work because they are disconnected from the basic reality of the market (supply and demand), as LI rightly observes in his post with his Pogosticks. All states are violent and coercive and ultimately unsustainable.

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