I don't think Conservatives or Progressives correctly understand economics

Actually we can! We know that, without water privatisation, we'd have over £50 billion 'more'. We can go further in highlighting these gains; e.g. how national rail was found to have much greater investment effectiveness.

Privatisation has been an ideological-led disaster. The mass media have finally managed to cotton onto it recently, with headlines like "Britain's public finances worse than Gambia, Uganda and Kenya, because of privatisation, IMF finds".

 

Nationalised utilities creates a lower cost for the product (say, electric bills), are plagued by unions and strikes, inefficiency on an epic scale and poor profits. This means investment is poor and tax payers money injected.

Privatisation increases the cost to the public (again electric bills), frees up money to reinvest, no tax payer money injected, increases efficiency, increased profits and anyone can be a share holder to receive dividends.

Pros and cons to both.

I would say British Rail worked better then the way it works now but was still plagued by many strikes. The reason why fares increase is because the government are injecting less and less money.

 

Ok good. But "nationalized and privatized utility companies" are not examples of socialism, and that is what I asked for, to which you replied.... just so we're clear.

 

Nationalisation is a part of socialism.

 

Maybe. But nationalization of an industry like, . . . uh, . . . . well, . . . military, veterans medical services, the post office, banking, and/or healthcare doesn't make that nation "socialist".

 

[Keep in mind the title of this thread, see below].

"Nationalised utilities .... are plagued by unions and strikes"?

So why can't the state afford to pay a living wage to the workers in these essential industries (who would not strike, if wages covered the cost of living)? Obviously this points to a systemic problem in neoliberal market economies, since in the first world (without excess population pressures) the state certainly has sufficient resources to institute above poverty-level participation in the economy for all its citizens.

Obviously there needs to be an oversight mechanism to manage the competition, both internal and external, on which neoliberal economies are based.

Keynes proposed just such a mechanism, for avoiding trade and currency wars, in 1944, namely his "clearing union" concept, as part of his vision for a new world order post WW2, but that idea was crushed by the politics of the emerging cold-war between two economic systems (closely related to the title of this thread: I don't-think-conservatives-or-progressives-correctly-understand-economics).

Obviously money could be printed, as required, by a central (global) authority, to facilitate continuous economic development across all nations (since money has no intrinsic or fixed value) without implications for devaluation, because all currencies would be "devalued" by the same amount relative to each other, hence no "devaluation", bearing in mind the resources in the world that are available for sustainable development remain the same regardless of said money printing; the problem is really one of sustainable development and sustainable population in relation to available resources.

In this scenario, private sector neoliberal competitive markets will still facilitate efficient resource allocation, but only in the context of continuous sustainable development across all nations.

 

Correct.

 

It's not exclusive to socialism. Or intrinsic to socialism.
But it is a core part of it's practical application.

 

UG.
Here we go again.

Money has a fixed value.
It is not an absolute value, but it is fixed.
Value of money = number of £ / number of available goods and services to buy.
Supply/demand.

There is no magic wand accountancy trick to create wealth. Sorry.
So it's a sliding scale.
The more you print the less it is worth.

So when you print money you don't create any available resources.
It doesn't create "continuous economic development". It is a zero sum gain.
It adds zero economic development. It simply transfers existing economic development from one person to another.


You are using a lot of very big words to say absolutely nothing.
Try and keep it as simple as you can.

 

Why can't the state afford to pay a living wage in nationalised industries?

The answer is: it could and it did and it does.
Along with very good worker perks, work conditions and incredible pensions.
And government pay settlements are far better rewarded than private enterprises are.

So much so, that these industries are non profitable. Not commercially viable. Loss making.

Typically no/low reinvestment is made into infrastructure as the politics of buying votes and the susceptibility to union action means all possible money is ploughed into worker satisfaction.
Without competition in the marketplace the drive to self improve is almost completely eliminated.

Nationalised industries have a very poor track record for efficiency and innovation.

 

That's straight from the Thatcherism 101 hymn-sheet. Only problem, the evidence isn't in support. Investment was superior under nationalisation, as illustrated by my rail example: "...an aggressive outsourcing strategy which raised the real-terms costs of new investment projects to 2–3 times the levels paid by British Rail" (Bowman, 2015). The impacts of unions is not straightforward. Lower strike activity was demonstrated by the use of the 'social contract'. Legitimate strikes, however, did occur when public sector pay was used as part of an incomes policy. Lesson? Don't use incomes policies.

The water example already demonstrated that isn't the case. Bills (which increased 40%) could have paid for reinvestment. We just wouldn't be left with '£50 billion plus' debts (£52 of our bills now goes to just servicing that debt).

The economic rationale for privatisation of utilities just didn't exist. It was an ideological power grab. We can widen the net: from crisis in the prison service to NHS losing its efficiency advantages, privatisation is indeed a curse.

 

Take the recent privatisation, the Royal Mail. It is a monopoly, had sales over a billion and made a loss some years!! Other years, little profit.

Have a read -

https://www.economist.com/the-economist-explains/2013/10/10/why-is-the-royal-mail-being-privatised

I'm 50 and took advantage of buying shares when the utilities were floated. Sorry, but my experience differs from your opinion.

The NHS is a different kettle of fish. Privatisation should be kept out but the NHS needs to change. It was designed to treat the British population, not the EU population and millions of immigrants. Blair implemented PFI, which was a Tory idea. The tax payer can't afford to pay for the NHS unless the NHS starts excluding immigrants and EU citizens. Until then, it's attracting calls for privatisation and they will only get louder if it doesn't sort this problem out.

The population increase is a slightly greater % than the increase in GDP, so immigration is not paying it's way. By all means pump billions into the NHS, but I don't think many can afford more tax. Hopefully, after Brexit, we can channel the cancelled EU direct debit membership fee and foreign aid money towards the NHS. I'm a conservative but I more than support the NHS being free from privatisation and using EU savings to fund it whilst withdrawing treatment from non British nationals, unless they pay upfront.

 

Happy to see the NHS privatised.
Don't expect to, but it would help.


Want to see the BBC privatised more.
Think that is more likely,

These are two big and powerful monopoly's I'd like to see broken up.

 

Completely wrong! There was no monopoly prior to privatisation, as illustrated by the numerous other private delivery services. Indeed, the argument for privatisation was that the problem was the competition (with privatisation allowing it to more easily acquire private capital). It was codswallop of two fronts. First, we know that it was grossly undervalued. Nice language for theft! It was made an even sweeter deal by leaving liability of pensions with the taxman! Second, as I've already mentioned, the scholarly research actually shows more effective investment when part of the public sector. Royal Mail, for example, have fallen trap of the usual poor management methods (such as overcompensation towards poor management, with productivity gains used to try and pay for the economic inefficient practices).

I've gone way further than opinion. For example, the theft from the Royal Mail sale is documented in Parker (2014) Selling the Royal Mail, Public Money & Management, 34:4, 251-258

Privatisation continues under the current shower in Government. Rambling about immigrants and EU citizens is a complete nonsense. The real problem is deliberate underfunding and destruction of service through privatisation (e.g. child services have been replaced by profiteering call centres)

EU savings? You believed that feckin bus did you? There aren't any. There is no dividend from leaving the EU. There will only be economic costs.

 

You say:

"So when you print money you don't create any available resources".

Agreed.

However, put simply:

Step 1.

The quantity of real resources, ie, labour and raw materials and technology - that exists in the world, is independent of the amount of money in the world.

Ie, you could double or halve the amount of money in the world, yet the quantity of real resources (as defined). available for development, remains the same.

Can we proceed to a new understanding of economics on the basis of this simple proposition?

​

 

Correct.
But tradeable the value of your money would be doubled.

Money is not dependent on resources.
It's tradeable value however is.

You know, the part about money that actually makes it a useful commodity.

So without money you can still have resources and without resources you can still have money.

But in such a circumstance it is useless.
Because money is a medium for trade.
A trade good.

It's purpose is to facilitate the exchange of resources.
And it's value is the amount of resources you are able to exchange it for .


So when you make more resources, you cause deflation.The value of money rises.
When you make more money, you cause inflation. The value of money falls.

The value of money = Supply/demand.


You still seem to think that printing money creates value. Tradeable wealth.
It doesn't.
Printing money adds nothing to the economy.
So if your solution to not having enough in the economy is to print more money, your solution is fail.

It won't work. Sorry.
It's been tried. Weimar Republic, Zimbabwe. Venezuela.
We know this doesn't work mate. It's the oldest stupid in the book. The one we all laugh at.
Talking bollocks won't change that.

 

they are perfect examples of how you built a socialist society. First the libcommie govt runs the basics utilities then it extends its control further and further until you have a nazi/commie govt running everything and then millions and million dying of starvation.

Sanders:
"You don’t necessarily need a choice of 23 underarm spray deodorants when children are hungry in this country," Sanders told John Harwood
exactly that is a key NaziMarxist economic idea. Avoid wasteful duplication in marketing manufacturing distribution advertising etc by having one state deodorant and one state car.

 

its hard to imagine that there are still liberals who cant understand what inflation is. Modern liberals for the most part seem to have learned that printing money is not printing wealth!
​

 

Shhh, don't mention that Friedman reckoned a shortage of money was behind the Great Depression...

 

if you have any idea what your point is why not let us know, unless of course you are here to waste your time and ours.

 

me too but its already delivering good cheap health care to the Brits so there would not be much to gain I'm afraid. As long as they can merely focus on delivering the heath care invented in the USA they will match or copy our standard of care.

 

Bit obvious really. Printing money can create wealth. Friedman refers to how insufficient money actually destroyed economic opportunity.

The problem with you fellows is that you don't even understand right wing economics! Shocking.

 

Friedman said printing money would create inflation, not wealth. See what happens when you stop being so cute?

 

Chortle, chortle, you never cease to amuse. Friedman used neo Keynesianism to indicate that macro focus should be on monetary policy, rather than fiscal policy. That necessarily includes using monetary policy as a reaction to the business cycle.

That you think it's just a "printing money is bad" corruption of MV=PT describes an "innocence" of right wing economics.

 

The "tradeable value of money"?
Shouldn't that be the tradeable value of resources? One trades goods and services, (including one's labour); money which changes hands is as you know merely a facilitator of said trade in desired goods and services , in a complex society where barter is impossible in practice.

Again you have it back to front; the money doesn't have any intrinsic value, it's the goods and services and labour that have the value. The exchange value of these goods and services is a political. not an economic problem, since in theory such exchange can occur without money (via barter).

You can't "make more resources", you can only develop existing resources.

Who cares about the 'value' of money? The issue is the value of desirable goods and services, including the value of the labour employed in the creation of those goods and services.

Of course money by itself doesn't create wealth, but I propose it can be printed by government to facilitate utilisation of labour not required, or unable to compete in neoliberal "free" markets (as evidenced by typical un+underemployment rates of c.10% or more).

Are you saying there is no solution to the problem of involuntary underemployment and below poverty level wages?