There *is* a magic money tree though isn't there?

[Rollindownriviera]

And we've been living off it these last twenty years.

When Labour brought in tax credits it was "to make work pay for hard-working families". But actually all it meant was that employers could pay less in wages while there was still plenty of money swilling around to put towards buying things. No matter that this is money not generated by any activity other than collecting tax and giving it out to folks every year: it's there and you can spend it. Then things semi collapsed in 2008 so the Tories' answer was just to print more. As well as keeping on recycling tax take to prop up poor earnings.

So we've all been living off the magic money tree a long time. Not just the people claiming the £38bn of in work benefits every year, but also everyone who sells anything to them ie every person involved in economic activity.

Looks like it's set to stop now, maybe, but it's been a magic money tree. Hasn't it?

@TheReluctantPhoenix respectfully you're talking absolute rot.

If you thinking increased business closures and loss of jobs is good news, there's no response I can be bothered to give but

@rrhuth’

‘With respect’, a total lack of insight in what is actually happening is not an argument.

And, yes, business failure is an essential part of the capitalist model.

I think you are a major fan of crony capitalism, as, I am guessing, you have done very nicely out of it.

@TheReluctantPhoenix well, you guess very wrongly about that! I would not be so rude as to assume anything about your financial position.

@rrhuth,

Well you have effectively called me an idiot, which is far ruder!

So, why so touchy?

But I am interested know why more businesses failing due to inflationary pressures in wages and energy, but no increased productivity or customers to off set that, will be good news for individuals, communities and the treasury.

I personally want sustainable jobs and thriving town centres. Brexit will make both less common.

@TheReluctantPhoenix I did not say anything about you I said something about ypur comment.

@rrhuth

Seems to be a forest of money trees for Tory party donors certainly.

Poverty for an increasing number to come.

The 4% hit from Brexit will make covid look like a small blip. Brexit has made us all a lot poorer, thanks to all who lied about it and all who fell for it.

Couldn't have said it better myself

I think it would be good to introduce courses in basic economics in our schools.

[quote TheReluctantPhoenix]@rrhuth,

‘Some businesses going bust’ is kind of the point of capitalism!

The idea is that people risk capital in order to make more, but sometimes it goes wrong. The economic cycle was an opportunity for new and young people to get rich out of the ashes of the previous crisis.

Those who invested in the late 70s in houses or properties are now doing very nicely, ditto the early 90s recession (that was me amongst others).

The abolition of the economic cycle by continually pumping money in to keep assets high, and importing cheap labour to support the wealthy, has led to crony capitalism, where the same people and families continue to get richer, and, for those without, or in ‘normal’ jobs, they can never aspire to own a decent house even.[/quote]
I don’t know why you’re being argued with, these are the core tenets of what Milton Friedman and the neoliberals wanted!

@Teenstress11

There certainly seems to have been one during covid, with all the grants and furlough schemes!

I work for an airline, we had no flights ex-UK for 17 months. Without the furlough scheme I wouldn't have been able to pay my mortgage. I would jave lost.my flat and been homeless. Claiming benefits for that would have been more costly in the long run.

“But I am interested know why more businesses failing due to inflationary pressures in wages and energy, but no increased productivity or customers to off set that, will be good news for individuals, communities and the treasury.”

It’s not good news, but it is happening.

@rrhuth,

Business failures create space for other better run and more efficient businesses to take their place. And the asset deflation of people losing their jobs and downsizing allow those just coming up in their careers to get on the housing ladder.

How could I start a restaurant if all the existing restaurants never failed? There is only a finite demand for eating out.

If you look at Japan, it has stagnated for about 50 years now, as they have business relationships with banks which prop up businesses that will never repay their debts.

[quote rrhuth]@TheReluctantPhoenix

No one is denying staff shortages in hospitality are causing wage inflation. We're just aware it is unsustainable and will lead to some businesses going bust.[/quote]
Not just in hospitality, either.

A friend works in social care. They have had 4 or 5 pay rises since August because the company are finding it so hard to recruit and retain staff. They are one of the highest paying homes in the area, and treat their staff relatively well, so I don't know how hard the others must be finding it.

It's not in a high-wage area, either, but a market town in rural East Anglia.

I dread to think how residential care is managing in my area, where we're only an hour from London and in an area of relatively high employment, with lots of big employers.

@TheMarzipanDildo

“But I am interested know why more businesses failing due to inflationary pressures in wages and energy, but no increased productivity or customers to off set that, will be good news for individuals, communities and the treasury.”

It’s not good news, but it is happening.

I don't deny it is happening, but as I am not a neoliberal myself, I'm not happy about it!

The idea we can crash a load of businesses, and new ones will rise from the flames, without awful consequences for people, is nonsense. It is only ok if you don't care about people.

@LakieLady care homes are closing in my area too now as they can't afford the staff bill.

No one thinks social care was working, or adequately paid for the importance of the work - but what's the plan to cover higher costs? There is none.

@rrhuth,

Well, we will just have to disagree.

The only way the massive wage inequalities will be addressed is via the lower paid being paid considerably more.

This will cause business failure. But others will be able to put prices up or run more efficiently.

I just don’t know how you expect business creation without business destruction?! Demand (at least in the short term) is finite.

Preserving the status quo ad infinitum has never been what capitalism is about.

Wait, I got a bit confused. For my own benefit:

Keynesian economics: mitigating the effects of economic cycles with regular adjustment to economic policy.

Friedman’s economics: ignoring economic cycles and injecting the economy with money at a constant rate.

“I don't deny it is happening, but as I am not a neoliberal myself, I'm not happy about it!”

Oh, neither, I misread a couple of posts.

Indeed working tax credit just subsidise poor wages. They should be removed and an appropriate minimum wage set as they also act as a disincentive to earn more. Our non contributory benefits system needs an overhaul and I would rather a German style one.

The truth is - and i know as i helped write it - there was a fully designed Furlough scheme devised around 2000 when the Civil Contingencies Act was being implemented - just as there were full infectious disease plans.

At that time the UK was known to have best emergency response to a national crisis anywhere in the world - you can thank the IRA for that but our plans for a longer term issue were shown to be not as good by the foot and mouth outbreak and fuel blockade - so a huge amount of money was invested to ensure our long term strategies were as good as our emergency ones.

What happened to all that work? Not all of it disappeared as the Nightingale Hospitals were set up so quickly and COBRA has been further developed and built on - they still had kept the plans for those updated but what happened to the millions of pounds worth of work that happened to keep the economy going in a time of infectious disease.

Because we were not well prepared and decisions were made on the hoof - and they did not need to be. Every country has huge amounts of preparations in place for any kind of crisis - so why did we seem to be making it up as we went along? I know each actual event would mean the plans needed tweaking but the whole response made me think the in depth plans we made in the 2000's had not be updated/trailed/built upon and that is the failure of the Government short and simple.

[quote TheReluctantPhoenix]@rrhuth,

Well, we will just have to disagree.

The only way the massive wage inequalities will be addressed is via the lower paid being paid considerably more.

This will cause business failure. But others will be able to put prices up or run more efficiently.

I just don’t know how you expect business creation without business destruction?! Demand (at least in the short term) is finite.

Preserving the status quo ad infinitum has never been what capitalism is about.[/quote]
Business failure is what allows more successful and efficient businesses to grow. Failures of individuals and recessions are vital for pruning the weak businesses that need prevent the new businesses growing in an era of finite demand.

The only way the massive wage inequalities will be addressed is via the lower paid being paid considerably more. No, it is not about being paid 'more' but being paid more in relation to a) those at the top and b) your national cost of living. This will not improve in the UK without political change. Brexit won't change this, Brexit will make it worse.

If products cost more due to increased wage costs etc., those at the bottom are hit hardest. Salary can't be looked at separately from living costs. Wage inflation doesn't equal improved standard of living. Brexit is going to create greater poverty, and as always, those at the bottom are the ones affected.

Brexit won't deliver the change we need. Because Brexit was a big heap of lies.

Business failure is what allows more successful and efficient businesses to grow. Failures of individuals and recessions are vital for pruning the weak businesses that need prevent the new businesses growing in an era of finite demand. Wow, didn't know Jacob Rees-Mogg posted on here

@rrhuth,

How do you expect new restaurants to start up if none ever fail!

How can anyone get on the ‘housing ladder’ unless there are periods of decline in the housing market.

What you seemingly want is what we have now, crony capitalism, where wealth always stays in the same hands, and inheritance is the only route to get a decent house.

I built my own money tree