GarryP

The caveat is that many of the unemployed and underemployed would like to work, but the shipping overseas of many of the jobs means they no longer can. Cut the 'free' trade meme and they find it easier to find employment, so less benefits.

Thing is, the whole lot is a big system that you can't tinker with just one element of it. To optimise you have to optimise the whole shooting match - which means more brains than most politicians and all economists have.

slapphead_otool

Exactly.

France under Hollande is moving to a "Tax the rich off the planet to pay for it" methodology.
Greece and Spain etc are simply cutting back on payments.

Australia is stopping some welfare payments - eg single mothers with children over 8.

It has to come and it will come.

Zen10

Exactly, any attempt to set this straight is going to cause such big waves - I mean like nothing experienced since WW2 - that no government wants to deal with it.

But deal with it they will, when they are forced to, and I think that time is approaching.

Zen10

It's a matter of relativity, the tax thing. Three or four generations ago, the rich were paying 90% in many Western countries. This funded massive social programmes like motorways and railways, and also it paid for a lot of military kit (Eisenhower 50s etc), and welfare.

In the 80s under Reagan they wound up paying 28%. This had an immediate stimulus effect, which Thatcher copied by slashing top rate from 60% to 40%. A similar stimulus happened in UK, then both US and UK crashed, like when they slashed rates in 20s, as the rich's new money went into bubbles.

You can't have welfare and 28% top rate, or 35% as it currently is in the US. People just don't understand this. Welfare was created in a high-tax environment. They whine about cuts to military in the newspapers - FDR taxed the rich at 94% to pay for the hardware that won WW2. Today we buy our tanks with debt.

slapphead_otool

Agreed, and neatly illustrated here:



But it is also true to say that greater and greater components of the nations finances are being spent on welfare, for two reasons:

1, a greying nation. People are living far longer now then ever before. That means a longer pension period and higher health and care costs.

2. Greater numbers on welfare - often because it is simply an alternative to work.

Amazulu

It depends how you define rich too. I earn quite a high income but am by no means rich, yet our socialist leaders, Gillard and Swann, say I am and want me to pay rich man's tax.

Reduce welfare, reduce tax. Everyone's a winner.

slapphead_otool

There are many complexities in all of this. I was in a meeting with a group of economists the other day and we were discussing national debt.

(We were actually taking about a particular nations debt, but the theory holds true to any nation).

The conclusion we came to was that borrowing is acceptable IF it is used to develop infrastructure or facilitate trade growth - e.g. education. Its not acceptable to borrow to support welfare because welfare is not an investment.

The same logic applies to individuals. Its Ok to borrow to get though university (e.g. HEX) or learn a skill or trade, to buy tools or open a business.

Its crazy to borrow to go on holiday or to throw a party.

the problem with the west now is it is borrowing (or printing money, which is as good as borrowing) to pay its welfare, which is never going to have a return.

Zen10

When I say rich I'm really talking about multi-millionaires. Not people on 350k a year which is roughly where the US rate goes up to.

Zen10

No.1 is a very important point, and it's only just starting to get noticed. Back when top rate tax was high and welfare worked, welfare was relatively small in range and payouts, and people tended to die in their 70s. Now they can expect to live much longer, tax is lower, and welfare is much too big = disaster.

The solution seems obvious to me - raise tax on the super rich, & cut benefits and welfare.

slapphead_otool

The current greying population in Europe is the first one ever that have had good healthcare AND not had a major world war to thin them out. Previously they died of overwork, poor health or warfare.

The other problem is that although the current grey population is manageable, the next one isn't because there are so many of them. We are increasing the population at a staggering rate.

It doesn't help that the social attitudes of third world countries (huge families) are not changing with a move to a first world country.

To be honest I can only see social unrest in the future.

Zen10

Definitely. Nothing else should be expected when the living standard goes down - people won't like it.

BadgeIsBack

I'm in total agreement with all the above.

It's almost like we need another big war, which involves everyone, or event to make people realise that it's all change - and has to change.

People have been cosseted or nannied for so long that they can't see that something else might come along. Well a few generations...

In the West, the people born in the 40s are a case in point - they have lived all their lives during it, in relative peace and prosperity, and can't remember anything else - and are set to benefit from good pensions - (apart from if they are American and went to Vietnam!)

Their parents experienced WW1 and WW2. Their children will have to adapt to a post welfare state model.

GarryP

http://www.guardian.co.uk/business/2...ical-condition

140 retailers in the UK set to go titsup, who the hell would be left?