by frog
NZPA reports today that:
More than 150 years after a carpenter in Petone famously insisted on working an eight-hour day, one in three full-time workers are clocking up more than 50 hours a week.
Meanwhile the Dominion Post reports:
National Party plans to allow workers to cash in one week of annual leave will effectively result in the abolition of across-the-board four weeks’ annual holidays, according to Council of Trade Unions president Helen Kelly.
I agree with Kelly. It seems like National has come up with the wrong solution to the wrong problem. I’m yet to meet a worker who says they have too much annual leave and would really like to work harder and longer if only they were allowed.
We’ve got a culture of overwork, with many people unable to do their job they need to earn a decent family wage and still have time left over to spend with their friends family and community. Last year Sue Bradford proposed we establish a task force to investigate the economic and social effects of a 35 hour working week. Just this week France’s right wing government has just voted after ten years to repeal its famous 35 hour working week but it seems it will not be a popular move:
The new law maintains the working week at 35 hours but gives businesses the right to negotiate with employees to decide their working hours…
Opinion polls show the French view the 35-hour work week as a progressive measure they do not want to surrender.
It is interesting, given the widespread debate in France of the positives and negative of the policy, that it seems to be widely supported after 10 years of experience.
Published in Economy, Work, & Welfare by frog on Fri, July 25th, 2008
Tags: , 35 hour week, annual leave, employment, France, helen kelly, labour, workers
on the trolls and those who are unable to keep on topic
Wouldn’t cashing in a weeks holiday be inflationary?
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“I’m yet to meet a worker who says they have too much annual leave and would really like to work harder and longer if only they were allowed.
You don’t get out much do you?
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‘Bet you won’t go anywhere near getting to the depths of an issue like this Frog.
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Would seem you want to deny workers a choice though frog? The only argument i’ve seen is that ‘employers are bad and will pressure workers to cash in their one week of holidays’ – is that what you’re saying?
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And presumably(?) you want workers to be paid the same for their 35 hour week as a 40 hour week – they’re employers, they have HEAPS of money right?
How would this change the hours worked? People work 50 hours now with the nominal 40 hour week, why would this cause them to end up working less?
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Sue Bradford is too extreme to be sensible; along with most of the green hierarchy they’ll stuff economic issues up.
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jh,
you are right this is just the posturing.
frog,
I suggest that before you look at what workers should or should not get, have a look at where the money is going to come from.
If you want a 35 hour week at 40 hours pay, where will the money come from?
Hey add another two nought on the back of all workers paypacket. No worries. But just ask WHERE WILL THE MONEY COME FROM.
Without increases in productivity it will come form the emplyers BOTTOM line. Now ask yourself how many employers will be able to affod these increases?
In fact ask yourself, can the state as one of the biggest single employers afford what you are looking for?
What effect will that have on an allready over burdened tax payer and a decreasing tax base and tax take?
Seems like you need to do the economic exercise before sprouting forth on what we should have.
I’m all for a 35 hour week. But heck please explain where the money will come from.
The reason France needs to get back to a 40 hour PRODUCTIVE week is tha the country cant afford to not have employers. With the EU it is cheaper to send a plumber from Poland to fix a toilet in France or Germany then it is to employ a local worker.
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Seems the “average” earner who takes this option will get about $450 after tax for a ‘extra’ week’s work.
If paid as capital off a mortgage with a nominal 8.5% rate of interest, this will save the employee circa $12,500 of direct interest and pay off the mortgage 42 months early (based on a 25 year amortisation). I can think of many people who would find that a very attractive proposition.
If time is money, why would you deny me the opportunity to sell my time for what I consider a fair return?
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Hey, jh and Gerrit, if you read what frog actually posted, it says “Last year Sue Bradford proposed we establish a task force to investigate the economic and social effects of a 35 hour working week.”
That’s actually been in Green Party policy for some time. The issues you raise are not being ignored or dismissed by Sue Bradford and the Party – that’s why she and the policy advocate investigating the economic and social effects of moving to a 35 hour week, rather than just doing it.
I might add that from the French experience, it appears possible to make it work, at least in some national economies. The Greens are simply saying we should look at whether it could work in ours.
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Who says it *did* work in France? (depending on what the stated aims are)
Of *course* workers support it – if the government mandated a minimum wage of $20 an hour, they’d support that, and then be filthy when it was lowered, regardless of how bad a policy it was!
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toad,
Then I look forward to the economic report.
Do you know what economic benchmarks they are working with?
Who will do this investigtive work?
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I am sure that one can negotiate right now with one’s employer to cash in leave. It is just the employer who would not be looked upon favourably if they initiated this sort of bargaining with a worker.
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Just completed a post on this at my blog if anyone’s interested (apologies for the self-promotion, but I figure it’s the only way it’s going to be seen).
http://rogernome.blogspot.com/2008/07/kiwis-are-overworked-and-underpaid-says.html
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Mr Nome has it mostly right.
The reason we have a low wage economy is we have low value businesses. The minimum wage puts an effective floor on how low a value proposition a business can be before its demise. But as long as NZ businespeople are happpy to run low value businesses, then we are stuck.
Only the business community can fix this, and the only tool the government has to influence this (short of wholesale meddling and inequitable means) is adjustment of the minimum wage. And even that is a gamble.
In any realistic economy, people would rather have time off that a little bit of extra money. In the low wage economy of New Zealand, a little extra money is a big deal.
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i didint even know one was not allowed to do so? ive been cashing in my leave for years.
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dbuckley,
>Only the business community can fix this, and the only tool the government has to influence this (short of wholesale meddling and inequitable means) is adjustment of the minimum wage.
Totally disagree as you can add as many 000 behind the minimum wage as you like. May not mean that employers can afford to pay it. And if they cant then the business folds or goes offshore. The resultant strain on the welfare system would see that collapse as well (not enough tax payers vesus tax recipients).
The other tools the government has available are
1. The taxation regime. Reduce the tax take so that TAKE HOME pay is greatly increased by reducing PAYE, the petrol tax, GST, local body rates, etc. Include a readjustment of the tax treshold levels.
2. And as a consequence of the reduce tax take, reduce state servant levels. Get these people in productive work (tax payers instead of tax recipients) through further tax regime measures such as lower company tax, decreasing capital equipement write off time (to increase investment in New Zealands productivity rate), etc.
And a third very contentious one. Reduce the tax payable on company profits if those profits are retained and reinvested in New Zealand to grow the economy. Increase taxation for any company profits that go offshore.
As we are into a recession the next government (Labour or National) will have to implement some of thse changes to get the economy moving again.
Without taxation reform we are heading for another bout of rogernomics where we either have to curtail government spending (and lay off massive numbers of state servants) or sell some more of the family silver. (Air New Zealand, Railways, Transpower, etc.).
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Gerrit:
You appear to be woefully uninformed. Go and read my post, read the links, then maybe I’ll consider debating you.
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Some of these folk seem able to pay higher wages:
http://www.stuff.co.nz/4629778a13.html
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Ah Sam
Penis – NO, Sorry, not that!!!
Wealth envy!
If you do the hard work and take the risks, you get the rewards. If you, like ‘these folk’ or their ancestors, are prepared to put everything on the line and then work like an ant to get it back again with some more, then you too could afford a decent boat, holiday, house, cook, maid, butler, mistress (if that’s your thing) etc., that you are envious of.
Beware Tall Poppy syndrome! When fully rampant it removes ALL productive jobs from an economy and promotes anarchy and rebellion. (See failed USSR experiment for case-study!)
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Well PhillipJohn,RogerNome
Your post is like all the rest.
Cannot say WHERE WILL THE MONEY COME FROM!!!!!!!!!!!!!!
I dont consider your debate open till you answer that question. I have proposed some suggestions.
I will CONSIDER debating those with you when you answer the above question.
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Sam,
And good on him.
Ask yourself, how could I get the rest of New Zealand to earn that sort of money.
Or do I detect a note of envy?
Your challenge, like RogerNome is, how do I get the rest of New Zealanders to earn that amount.
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Gerrit – have you read my post and the links?
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Just the one in your comment above which did not address where the money to pay higher wages was coming from.
Roger, add as many noughts to the workers pay packet as you like.
You still need to answer the question.
Maybe you could give a brief synopsis of where you thinks the money will come from. saves me trolling your web site (cans stand bright yellow on web sites – to hard on this old fellows eyes).
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gerrit,
.
its easy, it comes from the wage/price spiral, lol, they earn more money but due to the inflation it causes get less value
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Gerrit: The background colour is white. What you on about? seriously though, I can’t be bothered repeating myself here, when I already put a good hour into that post this morning.
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Gerrit: disagree on some of yr fine points
The challenge is not how can we all get on the rich list. Obviously, the rich list is always going to be a relative measure. I could get all pious about the shortsighted inhumanity of judging a society by it’s wealth, but I’ll credit you with a prior understanding of that.
The challenge is not to make the nation as rich as John Key.
The challenge IS to let people live the lives they want, with the civic resources they need, sufficient to let them make such choices. Perhaps, if we got that far, we could address your dream of a nation of Key clones.
Although you’re right about one thing: GST should go. Totally unfair. Of course your screaming anxiety “WHERE DOES THE MONEY COME FROM” would require us to tax the rich, but as you’ve already agreed, they can afford it.
Actually, strike that, let’ em keep it. I also agree most income tax should be reduced. But, in accordance with the question of where the money comes from, the answer is: from increased resource taxes.
Send a plastic drink bottle on a one-way trip through the economy: cop a filthy tax hit. Drive the price of the drink up. Tuff. Deploy a more re-usable solution: proceed, here’s your discount.
The Greens are approaching this with their water usage policy, giving benefits to those who use a finite resource well, punishing those who don’t. In it’s current form, it’s fiscally netural. But it needn’t be. If – as you suggest – we nix income tax, why not take resource tax all the way?
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“why not take resource tax all the way?”
James, I’d love to see more ideas in regards to this, and i’m sure the Greens are working furiously on coming up with viable alternatives to income tax to fit their ‘tax bads, not goods’ rhetoric, but all we’ve seen in 9 years or so is the carbon tax (now very unlikely) and very recently the water use tax. May not be much room to manoeuvre in this area as one would ideally like…
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gerrit, summary;
rogernome argues that because of the elimination of overtime rates and the relative weekness of unions busnesses have had relativly cheap labour and little incentives to increase produtivity and profit through means such as technology and efficency and have instead found it more profitable to simpley dole out more hours of work. This relative decrease in produtivity to staff ratio means that the busnesses have less money availible to pay staff and as such pay rates have increased rather slowly, all in all its quite reasonable. the proposed solution to such being increasing the minimum wage or relative wages in an effort to incentivise higher efficency. though of course this would result in a lower marginal profit per staff member and thus less employment. but one ould solve that by dereasing the interest rate so as to stimulate the economy and build jobs, though doing so would inrease inflation and ounter the intended effets in the first place. though if one suplimented it with accesable skill-up opportunities and provided decreased tax rates to higher peying industries than it would result in a higher overall wage. but then there is still inflation… lol
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No problem eliminating GST
Cut the subsidy on politicians ‘offices, etc., to $10,000 per.
Cut out all ‘middle management” in government agencies
Eliminate all quangos
Pass a law that government can only legislate or regulate on things that are included in a general election policy platform – except in the case of war.
Eliminate the right for people to belong to political parties
Eliminate un-elected MPs
Shift the periodicity of elections from three years to ten
That lot should take the waste out of the system, and get us back to tithing rather than taxing.
Comments accepted with amusement.
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James,
My rich coment was more a jibe at Sam. Sounded like envy to me.
No we cant all get on the rich list.
I dont want a nation of Key clones. Just more realistic people who understand economics and taxation.
You and I are on the same wave length. Wages equal to productivity, lower taxation to increase spending power. Less state involvement through lower taxation.
Roger,
Been trying out my own browser. Seems I have a view issues with my software. In Firefox it looks good.
No need to bother explaining yourself if you cannot even comment on taxation reform. it does not matter if we are taxed “lower” then Australia. What matters is the taxation system in New Zealand doing what we need it to do?
How do you suggest we get this economy out of this recession/stagflation mode?
As sapient says higher wages without productivity increases leads to a wage/price spiral.
Thanks for your input anyway.
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Stagflation is cruel, cetainly not somthing I remember fondly, more like the feeling you get when the first girl you work up the nerve to ask out laughs and says no!
There is only one way that I can see out of it. Radicalism.
INflation has to be brought under control by eliminating (somehow) price increases in the domestic market. This may mean that a lot of things we like we won’t be able to get, because we import so much; it will probably also mean that in areas where we like to have as big a range of choice as Australia, the USA and the UK (as examples) we have to limit our choice to maybe two things to get the ‘national’ purchasing power working in our favour. For instance – at a store recently I was asked which of 35 toasters I wanted! I tole the assistant ‘the one that browns bread’, her response? “What type of bread?” I guess we better go back to brown and white bread too. There are 22 types of museli bar in my local supermarket – that can’t be economic! The same goes for so many things the mind boggles. We don’t really need so many choices, and the cost of promoting them, one against the others, is driving prices ever higher irrespective of the basic cost of goods.
That brings the other side of the issue to the fore. Growth.
Economic growth requires growth in demand, and while you may thiunk I’ve already suggested enough to strangle that, how about we do that dastardly thing and open up our immigration gates to people prepared to live in the places, and do the jobs, we don’t want? After all, America said “send us you poor” and built a prety hefty national economy on that request. We can do better than America! We have places that are decent to live (unlike the northern corridor of the eastern seaboard in winter), as well as a more ethnically tollerant society (except for Winston & Co that is). Adding (say) 4 million over 5 years to our population will create vast growth, and help us establish an efficiant, as well as effective, economic base for the future.
Oh heck – I forgot, this is FrogBlog! Sorry. DIfferent solution for here!
Close down or make illegal everything that pollutes anything, wait till there’s only the few true believers left and then declare the country an economy free zone!
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“Close down or make illegal everything that pollutes anything”
And on what planet is the Green party wanting to do this?
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“As sapient says higher wages without productivity increases leads to a wage/price spiral.”
And you still haven’t read my post…
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I thought you had gone, roger. Cant keep away?
Hey, why dont you cut and paste the relevant info from your web site?
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Planet Greentearoa
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groan
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ffs gerrit- increasing capital investment lifts productivity etc. God, you can put the spoon in your own mouth from now on.
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Roger
THAT’s TRUE
wow
I agree with you
Sheesh
The world is a good place right now, with peace love and harmony in my bit of it.
That’s it.
I’m off home and will stay away from keyboards for a few days and bask in the glow
Have a FANTASTIC WEEKEND everyone!
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Now that was not that hard no was it roger?
Well we agree on that point.
What incentive should there be from the government to make this happen?
(Suggest you look at my earlier post for a few clues)
Taxation reform sort of come to mind?
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This is all so pointless….
Productivity (ie outputs per worker-hour) decline rapidly in most white-collar jobs after about 40 hours a week of regular work.
Someone sitting at a desk typing on a computer 60 hours a week will usually not get much more work done than someone doing it 40 hours a week. Oh, you can get high productivity from long hours of work if they’re for a limited period, by people with a clear personal goal with a clear end it sight (classic case: university students). But if people are doing it week after week after week after week then productivity will tend decline to the point where the extra hours are POINTLESS.
The problem with white-collar overtime is that we suffer from a culture of pointless macho managements by idiots who measure how many hours their reports put in because they lack the ability (or are just too lazy) to track how much work their reports are getting done.
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StephenR
“Would seem you want to deny workers a choice though frog?”
I would. So would John Key, as well as Helen Clark, and Jeanette Fitzsimmons. Every NZ political party (except ACT, who are loonie) thinks there should be a mandatory number of weeks of holidays, and that employees should not be able to choose to be bought off from them. No choice.
The current govt changed the number of mandatory weeks from 3 to 4. Key is proposing letting the 4th “mandatory” week be able to be optional if the employee wants it to be. Key claims the employer won’t be able to pressure employees into this so it’s still “mandatory” for the employer to give 4 weeks holiday if they want.
The issue is (of course) that employers tend to wield lots of power over employees – see, for example, how many people are being paid a salary with a contract that says “40 hours/week” but are actually working 50 or 60. It seems under Key’s plan that many employees may find themselves pressured to unwillingly give up on their 4th week of holiday too.
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“increasing capital investment lifts productivity etc. ”
But (and here’s a better question) where’s the capital investment going to come from?
I know that higher productivity is the answer. The hard question is how to get from here to there.
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well it was my running assumption, and i may be wrong, that most companies that last any decent period of time have a thing called a profit margin from which they are able to draw funds and reinvest to increase productivity? of course they may need to tell shareholders to sit back for afew months, lol.
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Where will the capital investment come from to increase productivity? The normal way to raise capital is either to borrow from the bank or issue shares to new investors. An alternative is to abolish company tax and only tax the dividends payed to share holders, ie reward companies that re-invest their profits instead “rewarding” shareholders. Aditionally, allowing energy efficiency improvements to be depreciated at the same rate as computers would be a big step forward.
Remember, workers are only one of the resources companies use to produce a product. To measure only worker productivity while ignoring energy productivity or execute productivity or director productivity is stupid or disingenuous.
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Icehawk,
This is not pointless, it is the nub of the question that lifts wages and productivity.
You cant get significantly extra productivity through longer hours. You only get more stock on shelfs or papers shuffled.
Extra productivity that lift wages and reduce hours can only come about from investing in better processes and new products into new or existing markets where the customers wages are sufficient to buy the product or service.
To raise that investment you either list on the stock exchange, go to the bank or finance comapny, or morgage the shareholders house.
To give companies the incentive to invest should be addressed and Kevyn has provide more tax reform options.
Surely we could be addressing tax reform to enable increased productivity?
Because right now the only investment is going onto dairy farming and not all 4 million of us can be dairy farmers or suppliers to dairy farmers.
Now if the Greens honestly believe that a nill or negative growth economy is the best environmental protection, be prepared to have reduced wages and plenty of time off.
And if you have no job, dont expect welfare as there will be no tax payers base or tax take big enough, meaning that welfare will cease to exist at the level we have now.
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Just to remember. The work week in Oz is 37 hours. Doesn’t seem to have killed them… and for many workers the overwork is not constant. I don’t like it but I like it a lot less that I am not AT LEAST, paid my straight pay for those extra hours.
Sometimes too the company will have to carry workers it doesn’t actually have payables to cover. This is usually time that gets “wasted” while there are a number of internally important (to the company’s productivity) tasks to accomplish… but which never got a project manager or a project number for people to charge.
To answer Gerrit’s issue – the country suffers from mal-investment due to the continued EMPHASIS OBSESSION FAVORITISM shown to the property investment community…. even as purveyors of loans and investments go BK and destroy available capital. People can’t find enough “niche manufacturing” companies to buy shares in, can’t invest in Fonterra and don’t want to put money into banks which don’t pay enough interest back to them and which transfer investment to Oz anyway.
The key to fixing this has to do with some better regulation and rating of the financial sector so people aren’t so scared to put their money into business investments rather than property.. At the same time the built in favoritism given the property sector (which is less now but I think not yet completely squashed, must be completely squashed and publicly so that the public gets the message). The false valuations that have been applied to the random piles of firewood that kiwis optimistically call houses have to drop somewhat (which will discourage speculation in that sector more than anything else) which reduces our mortgages with Australian banks and us shipping our capital to Oz in service of them.
What people perceive and I suspect that there is truth in this, is that it is safe and profitable to invest in property and in dairy, and that it is risky as hell to buy shares in a NZ company. Banks and lenders here are a bit thinner on the ground. Cost of capital here is higher as a result. Companies have a big “step function” to overcome if they want to grow past our shores. There’s some help for them to do that, but it is a big step no matter what help is available.
Lots more to do… but money flows out of this country and big business folks don’t mind it because the big boys receive the money at the other end of their multi-national business. They aren’t evil, it isn’t intended, but that’s just the best way for them to adapt to the rules we have.
The rest of us have the pale look that comes of being drained of blood.
respectfully
BJ
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Balance of payments deficit is the root cause of the workers woes. I spend more than I earn, I have to borrow. As the seven Dwarfs sang “I owe, I owe, so off to work I go”
We owe more= we work more.
Add to that BJ’s correct identification of the massive distortion of our $$ decision making via the absurd property market and it’s ‘golden egg’ tax free status. That makes us owe more still.
Lefties want to blame the evil bosses for this?
Komred Bradford would have us work less to solve it?
Anyway IT’S NOT A GREEN ISSUE.
STICK TO GREEN ISSUES, you never know people with green concerns might vote for you then.
Wouldn’t that be nice?
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I;ve just been reading the dscussion here:
We’re in stage 1 of the 5 stages of real estate grief
http://tinyurl.com/5uneek
you get people arguing against the notion that houses should be affordable and the inference that immigration can and should be used as a tool.
Also (reading between the lines) there has been a subtle redefining of the Kiwi character and way of life. Kiwi’s are now people whose passion is to buy and sell houses………… that’s not how it used to be: people used to do up their houses to live in them, tend their vege gardens, raise white leg-horns and bake cakes for the Country Womens Institute. People who did up and sold houses were considered anti social.
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Why is it that when the All Blacks loose I laugh? Am I a real kiwi. Am I anti social?
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It’s because your not in marketing.
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Sports have replaced religion as the opiate of the masses.
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BJ,
Those “piles of firewood” that are older housing, build without polysterene cladding are sound and will last as long as any house built anywhere.
Agree with you that housing has received the biggest slice of the investment cake for the reasons you have outlined (primarily there are no other reasonable save investment opportunities in New Zealand – especially those of us who remember the rip off merchants like Gold Corp, Chase, etc. during the 1987 crash).
So it went into housing were a 100% return over 10 years has been availalbe vesus a bank rate of 5%. Even though housing may drop back 30%, we are still 70% (on paper) to the good.
With free trade agreements left right and centre you would have to really cautious to place money into manufacturing (mmmmmm — thats were I have invested) plus as you say Fonterra is a closed shop cooperative.
So while we are encouraged to save the question is where to put the money so that it will still be available when we need it.
And housing still remains the best one, of very few options.
SO how do we get investment into business? Surely it starts with taxation reform? Money flow out of New Zealand should be heavilt taxed. Money retained in New Zealand to grow the economy should be tax free.
Would grow local business as they would have a tax free status.
Samian,
“People who did up and sold houses were considered anti social”
Not where I grew up when people who did up houses they were thought to be progressively planning for their retirement, using the best resources available (time and muscle) to them.
Different attititudes for different age groupings?
It is a Green issue as without a strong economy you cannot have progressive Green policies.
You would be back to the caves burning fossil fuel to keep warm, farming at a subsistance level to grow food and be at the mercy of renegade outlaws involved in a bit of pillage.
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“People who did up and sold houses were considered anti social?
Not my quote Gerrit, but anyway… it’s not the ‘do up and keep’ that’s the problem. It’s the speculative non-productive tax-free trading that I don’t like.
“…back to the caves…”
I thought I was talking about addressing the balance of payments deficit to sort out the problem of employees working ever harder. What’s caveman about that? I’d suggest that back then if our hairy ancestor spent more than he earned death was the consequence. These days it’s debt and work ever harder.
I still say working week etc are not green issues. If such issues are someone’s fetish, then go form a workers party. Leave the Green party for green voters please
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Samian,
apologies, it was JH.
You cannot differentiate between green isssues and the economy (which includes how much people earn and how productive they are).
For example if the wages are too low we wont be able to afford electric heating (sourced from renewable resources) and instead will burn coal to keep warm.
Same issue on a bigger scale. If the economy is not large enough we wont be able to decommission the coal burning 1000MW Huntly power station and be able to replace it with a renewable electric power source.
The economy rules in regards what green issues you can implement and ones you cannot afford.
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Working hours isn’t just a workers issue. It’s also a children’s issue, because parents who work long hours have less time to spend with their children (and it’s not just about ‘quality time’ – low-quality time between parents and children is also important in growing up). And then it can become an education issue, because schools end up having to step in to teach kids things that they never got a chance to learn from their parents.
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All of which are social issues and, in my humble opinion, not green issues.
I personally think coal fired power is an issue of energy efficiency rather than total size of the economy. Efficiency is a core green issue. Renewables is core green. 35 hours is not.
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I cant remember I got four weeks annual leave – I got made redundant before the year was up and had to look for work. Or I was forced to take three weeks off at Christmas just after I started a new job. Or my annual leave was taken up by studying as my stingy govt employer wouldnt give me study leave.
But I did get 10 days sick leave…..
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The way to differentiate between economy and ecology is to recognize that economics is a subset of ecological studies.
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As noted by someone else as well, all societies have the morality they can afford. This is true because societies that attempt something more fail to survive. Those that effect something less suffer revolution.
BJ
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!
>>
>societies have the morality they can afford
>>
!
What utter crap! Most of the moral societies I have seen have very low income per capita and view ‘things’ as necessities rather then demonstrations of wealth. There are still countries where young women expect to marry chastely, where theft is viewed as the third most undesirable crime against society (murder and rape being numbers 1 & 2) and many other ‘moral’ values that we have abandoned as our income levels have risen.
Morals DECLINE as average per capita income increases is more likely the societal rule!
Look at what happens in today’s society. Couples have children then drop them off at ‘care’ while they go out and earn money for the baubles of life. The amount of unneeded ‘stuff’ that is purchased in this country every weekend is mind-boggling to a family in Ethiopia. (To me too in some cases, a neighbour of mine recently bought a car to take the dogs to the woods in. He and his wife already have one each, but did;t want to sully them with the smell of wet dog! They bought a BRAND NEW station waggon! I hope your mind also boggles at this example of consumerism gone MAD.)
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to clear up a strange misunderstanding – a 35 hour working week does not mean raising pay rates to pay workers 40 hours pay for working 35 hours.
it means re-introducing penal rates so that an employer is more incentivized to deal with their workload through an adequate workforce rather than long hours.
so you see, the question “where does the money come from” is largely irrelevant, though sometimes employers will be caught short & have to pay some overtime, the whole point of the idea is not to put some extra money in the workers’ pockets, but to reduce the hours they work.
in many businesses workers are all working flat stick, & there is no slack to take up if someone is sick, it just means everyone has to work even longer or business (& customers) suffer.
some businesses will not be at all hurt by the added incentive to take on an extra worker or two.
say, instead of having 3 workers doing 45 hours a week, you might have 3 doing 35 & one doing 30.
the removal of peanal rates a couple of decades ago revolutionized the social/economic life of nz (or completed that revolutionization) with little discussion or awareness of the social changes which would result.
perhaps the issue is whether the government or unions should be handling these issues though. unions became weak because the government gave them everything they wanted for so long. they need to become a lot more militant, but i suppose things will have to get a lot worse for workers before that happens.
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There was a guest on Nine to noon this morning talking about property cycles. He has a theory and taxation based solution.
Isn’t on the website yet.
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so spill the beans then
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I didn’t manage to hear the details, but I wondered if it similar to what the Ontario Greens propose. [if so it would be an issue for the Settler Government under colonialist's Clark/Key and Tangata whenua......... (I'm using terms the Green's will understand)]
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Strings
The morality of a society is not the same as the demonstrable effects of greed when societies have plenty, or lack thereof when societies have little.
You are misunderstanding massively. I am telling you that if a society cannot afford to provide medical care, it won’t provide it or it won’t survive on the one side. Did you pay attention to the other side? If it does not provide them though it clearly can, it is marching towards the rather different but similarly final self-destruction of revolt.
Your example of an individual families moral values and priorities isn’t related to the society overall. It isn’t related to the provision for schooling or medical care or elder care or care for the poorest.
Since it hasn’t happened yet you don’t see it, but Marx wasn’t completely wrong in his critique of capitalism. It provides the seeds of its own destruction and taken to extremes, hastens the day. Society has to provide restraints on Corporate and Individual greed for the society to remain stable.
In ONE generation (mine), the US went from a fairly robust democracy to a plutocracy. I might be tempted to blame Television for the extended wait for people to notice all those fat fingers in their pockets… but it’s getting more noticeable. The bailout of Fannie and Freddy is a grotesque transfer of wealth from taxpayers to financial corporations, and a fair few people have noticed…. not enough I think, but eventually the destruction of the middle class will be complete enough that those who were in it will say fnck the wealth party and vote for libertarians and greens and communists… if they don’t simply decide to check out the alternative balloting system always available at their local firearms dealers.
respectfully
BJ
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Housing Crash Prediction
Fred Harrison has formulated a theory of an eighteen-year boom-and-bust cycle, based on land value fluctuations. (duration: 12′51″)
http://www.radionz.co.nz/audio/national/ntn/2008/07/28/housing_crash_prediction
http://www.cooperativeindividualism.org/dodson-edward_review-of-harrison-boom-bust.html
“Land speculation is the most entrenched form of “rent-seeking” behavior we endure and have been forced to endure since privatization nurtured the first land markets and the ability of land owners to capitalize land rent income into a selling price. Industrialization and the increased productivity of labor and capital merely intensified the economic and political power of land owners because not only was land ownership privatized but land rent as well. Fred’s description of mid-nineteenth century Britain could be used to describe what occurred nearly everywhere and is occurring today in places such as India and China:
“Britain’s burgeoning industrial centers needed investment in infrastructure, to make life tolerable for urban dwellers. An improvement in the quality of life, for which people were willing to work, would have increased their ability to generate even greater income. But that would also have raised the rents of land. This was a two-edged sword. If rental income was public revenue, it would have provided for resources to make communities more habitable. But because rent was privatized, its owners could extract wealth out of the working population and diminish the quality of their lives – for, instead, they had to bear the cost of public services out of taxes on their earned incomes.”[13]“
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“Fred mentions another economist, Lawrence H. Summers, who served as Secretary of the Treasury in the Clinton administration. Although I can find no evidence that Summers has recognized the insufficiency of the two-factor economic model, he has at least acknowledged the serious shortcomings of the policy work performed by economists. A study he co-authored reported that nearly 70 percent of all wealth acquired by individuals in the United States over the first three-quarters of the twentieth century was inherited or transferred from one generation to the next, rather than earned by the recipients. This analysis directly challenges the idea that “America is the land of opportunity.” Increasingly, opportunity in America is opportunity for fewer and fewer people. At the heart of the matter are what Fred describes as destructive “revenue-raising policies of government.”[22]
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BJ said . . . . . . .
>
>>Your example of an individual families moral values and priorities isn’t related to the society overall. It isn’t related to the provision for schooling or medical care or elder care or care for the poorest.
>
Sorry m8, I thought you were talking about morals, not communal service provision! You see, in my view, if a group of families in a society decides it’s OK to put the girls in bed with the men as soon as the girls reach menarche, I regard that as immoral and think it’s wrong. However, if that same group of families decide they want to home school all their children, using the old testament as their basic reference material, then that’s OK with me as it doesn’t offend my morals.
The provision of Health Education & Welfare, as a community effort, was never driven by morals, it was driven by the need for workers after the industrial revolution. The replacement of home based craft manufacturing with factory based mass production (e.g. cotton mills in Lancashire) necessitated a work-force that could understand basic instructions, both written and verbal, which necessitated a basic common standard of education, so the manufacturing companies invested in their future labour. The same basic logic applied to health care provision. Welfare was an invention of the Union movement where those in work were asked to help ‘dole out a subsistence*’ to the destitute families of those who were incapacitated due to work injuries. (My father-in-law was three times elected President of the Railway Workers Union in the UK – he used to lecture my kids on their ‘heritage’.)
Shifting these local community based services to the state happened in the “welfare state revolution” of 1948 (in the UK) and has gone down-hill ever since, in all the old Commonwealth countries it was applied in, due to the concept being “constantly adjusted to encompass the ‘needs’ of the idle and expectations of the average”. (Again, a quote from my father-in-law, who deplored what had happened.)
Let’s examine for a moment this travesty. The basic concept of the Welfare State was that you contributed to, and received at, two levels; now, and future. The now involved Health, Education and basic welfare, the future provided for retirement income. The contributions were separate (I remember my two “stamp books” which were my proof of contribution.) Immediate benefits were available if you had contributed for the two years prior to your need, future benefits were calculated on the basis of how many ‘stamps’ you had purchased.
This exceptional system was abandoned in the late sixties, as the labour government of Harold Wilson plunged the country into debt and decide to absorb the contributions into the ‘general fund’, making it available to spend “today”. I don’t know for sure when NZ did the same, but it probably was about the same time.
Another key aspect of the Welfare State (WS) was that it guaranteed to provide a “basic standard” for everyone. This meant that there was a floor on everything, health treatment, education standards, subsistence and pension. If you wanted more, you provided it yourself – that’s what YOUR earnings were for, not everyone else’s.
Where are we now? Everyone is entitled to EVERYTHING that comes under the general headings of Health, Education and Welfare. For instance, the old WS would provide for nursing care as you dies from heart disease; today we expect all the benefits of science and technology to be brought to bare on the problem very time it occurs; the old approach cost (for discussions sake) 1/10th of a salary to provide, the new approach costs about 10 salaries. Schooling in the old WS was from 5 to 16, now we expect it from 3 to whenever. Subsistence used to be the ‘standard’ rent and enough to buy a standard diet for the family, about one fifth of an average pre-tax income plus rent; today it’s expected to provide furnishings, electronics, Internet connections, etc., and is about half an average income. The costs have reached the point where today’s welfare state costs about a third of EVERY earner’s income (on the basis that other revenue sources, (including 1/9th of EVERYONE’s disposed income in GST) generate the rest of Government spend.
This not about morals, this is about dependency of the not so few on the rest. The Welfare State envisioned in the 1940s was brilliant in concept, it has been bastardised by successive governments buying votes, which means it must, eventually, fail. The USA’s system, which is far less comprehensive, is (with the war costs of the current aggressive dynasty,) the fundamental cause of borrowing billions every year – it is already in crisis, and we are rapidly catching it.
SORRY, this has gone onm a bit – but .. what the heck. . . .
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However, as a bottom line, you finally reach one of the possible denouements I was discussing.
The Welfare State envisioned in the 1940s was brilliant in concept, it has been bastardised by successive governments buying votes, which means it must, eventually, fail.
The situation in the USA is vastly different. They can afford far more, or could if the diversion of wealth from the middle class up to the wealthy class were not so pronounced. In the USA it is going towards a system that is essentially socialism for big business and the wealthy and nothing much left for anyone else. They’ve already eaten their cake and their kid’s cake and the Chinese kid’s cake and ours, but they haven’t (most of them) a clew about what sort of government they have devolved into.
It isn’t the one Franklin and Jefferson had in mind. It’s the one they warned us about.
respectfully
BJ
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http://www.oftwominds.com/blogjuly08/empire-debt7-08.html
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“They can afford far more”
M8
You’re sounding like one of their politicians! The rerality is that, as a country, they can’t afford what they’ve got – any more than we can!
The US declares it governmental books in the old style – cash in and cash out; if they spend more than they receive they have to borrow and call it a deficit. As of right now their their deficit is running at about 1 BILLION DOLLARS per DAY. They are, to use the vernacular – BROKE. They are borrowing to pay the interest on their borrowing, a bit like borrowing from the bank to pay the credit card – in criminal circles it’s called kiting but treasury circles it’s called economics.
New Zealand uses the new style of book keeping, involving balance sheets as well as an income and expenditure statement and cash flows. In this approach the governmnent builds a road, and then books it as an asset, meaning its cost this year is only one 25th of what it cost to build. The difference between ‘cost this year’ and amount paid is “just” a cash flow issue, easily solved by borrowing – which is ‘colateralised’ by the nation’s assets and ‘credit rated’ by the ability to tax the populace. We borrow EVERY YEAR, but declare a surplus of income over expenditure. THis is a bit like having a mortgage, except that you have to add to it every year to pay your bills and in the event of a default the Arabs and Chinese get the country rather than a bank gets the house and you go renting!
I’ve tried to teach my kids to live on their income, take only a mortgage and NEVER one that costs more than one third of their current after tax income the day the execute it. Sadly, the MIchael Cullens of this world don’t heed such advice – they borrow to put money into ‘funds’ named after them (an ego trip if ever there was one) and tell us all how well they’ve done running a ‘surplus’.
Neither the poor Americans nor the poor Kiwis can afford anything right now. It’s time to pay off debts as fast as we can and get back on a solid financial footing, otherwise we will have to adopt that most outstanding characteristic of socialism – the food queue!
Happy Wdnesday!
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The ‘Cullen Fund’ is a term coined by the media.
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Sorry Stephen
I understand, from someone who worked in H1s office, that it was coined there and ‘given’ to the press in a way that would endure it endured (what that was I don’t know, perhaps an off-the-cuff line like ‘what do you think of his Cullen Fund pension thingy then? would have been effective).
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We in NZ have an individual welfare state and the US has a corporate welfare state, just look at the latest round of bailouts for companies that made poor choices.
Neither system is affordable and both will bankrupt each other. NZ is going to have to either raise tax, borrow more or cut services,
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Our “bailout” of Toll Rail looks like superior welfare to me! As for the social type, the number of welfare recipients in the USA exceeds the population of NZ. Mind you, they do try harder there, giving food coupons instead of cash in an attempt to ensure children get6 to eat before adults get ciggies, booze and blow.
PS Is it true that if you’ve had a bed for over 5 years the NZ Government will pay for a new one for you? If it is, please don’t tell my wife, otherwise shell stop working in an attempt to replace our 15 year old model!
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The only congressman in the states(Ron Paul) I like is going to hold his own rally accross town from the republican convention on sep 2nd. Some americans are starting to wake up thank goodness.
Of course I suppose most NZ’rs want Obama to win not realising that their isn’t any difference between a democrat or a republican. I mean look at Christopher Dodd easily the most corrupt senator in the house and the so called champion of big banks most NZ’rs probably think he’s a republican nope wrong he’s a democrat.
As I tell all my American friends the smartest thing you can do on election day in the US is stay at home and not vote.
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One other thing I don’t understand and maybe some left wing person here can explain to me but why do left wing people always point to the US as an example of a free market economy?
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But Clinton created a cash surplus – quickly spent by Bush of course!
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Clinton didn’t create any surpluses the government under clinton was still borrowing money to fund spending.
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Turnip
Go see the figures, eaiest to get them at
http://tumeke.blogspot.com/
under the heading 10 trillion reasons why
(you can follow the graph to the source if you want to but it is VERY slow!)
Also remember that deficits and surplusses in the USA are cash -not balance sheet. The “borrowing” Clinton did was refinancing existing loans – which happens now at the rate of about $19,178,082,192 PER DAY ebvery onew of the 365 days of the year!
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Accounting is a wonderful thing Strings, its great at producing graphs that give an appearence of want ever it is that you want to show your Audience.
Clinton’s surplus was nothing more than an accounting gimmick
Let’s break down Clinton’s second term shall we.
National Debt
1997 – $5,413,146,011,397.34
1998 – $5,526,193,008,897.62
1999 – $5,656,270,901,633.43
2000 – $5,674,178,209,886.86
Hello the national debt is increasing under Clinton how can the national debt increase if you have a supluss?
Here’s how the accounting gimmick works. There’s two types of debt: public debt and intragovernmental holdings. Let’s break those numbers down in Clinton’s second term.
Public Debt
1997 – $3,789,667,546,849.60
1998 – $3,733,864,472,163.53
1999 – $3,636,104,594,501.81
2000 – $3,405,303,490,221.20
Intragovernmental Holdings
1997 – $1,623,478,464,547.74
1998 – $1,792,328,536,734.09
1999 – $2,020,166,307,131.62
2000 – $2,268,874,719,665.66
The public debt is owned by countries like Japan, China etc and yes it did go down under Clinton.
The intragovenment debt increased, this debt comes from the SS tax suplus where the US treats this as revenue when it is not revenue. Instead what happens is that the US government borrows from the social security trust fund and pretends that a loan = revenue, which it doesnt.
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I think the last true suplus in the US was in 1960 since then the US has used a little trick where by they include the SS tax suplus as revenue when it isn’t.
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Ah
You see Turnip
The USA works on a cash basis (their downfall as well as ours) so all revenue goes into the general fund for ‘surplus-deficit’ purposes. On this basis he achieved a surplus.
It’s a little like the days when people behaved like Aussie Robbins. When he was CEO of ACC he kept raving about how well he’d done dropping the rates. What he’s actually done was ignored the fact that a long term injury in this year (say one that caused someone to be a quadriplegic) would incur ACC costs for the whole life expectancy of the injured person (it’s called provisioning). That’s why employers now pay not just the current premium but also a charge for historically incurred future costs; not nice if you are a new employer, you’re paying other peoples’ costs!
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when you take a loan to buy an asset your stock of wealth hasn’t decreased to finance current consumption. it is just as appropriate & accurate for the government’s accounts to reflect the difference as it is for the accounts of a business.
anyway, government debt is not the issue in nz, the foreign debt is what’s killing us.
moving to a regime of national debt reduction instead of expansion is not a scary scenario though, as it is inherent in such an effort that more people are productively employed
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Erm Pardon?
As a country of non-savers, we should all undertstand that the government debt IS foreign debt!
As for “just as appropriate” I have a different perspective on that! I can sell my company (and did) and it’s assets are part of the value I sell. OIn other words I have a means to realise assets to reduce debt. If you know anyone that wants to buy a few roads, or some of the other so-called ‘government assets” (they include things like INCIS I am advised) let me know, I have some well wormed wood in my garden they can have too!
The only reason a government can justify holding things like infrastructure assets is because they can tax the sh1t out of us to pay the debt if they need to.
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you MUST be kidding, there’s sharks out there that would just love to own our roads. what were you thinking when you said that!?
anyway, an asset’s value is not only its sellability, but also its ability to generate revenues (or save expenses)
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except ss suplus isn’t revenue its a loan from the social security trust fund.
It needs to be paid back starting around 2020. The US social security trust fund is full of all these IOU’s which say the US federal government owes it lots and lots of money.
Therein lies the problem with us government accounting it isn’t even cash accounting its “special” government accounting. You can’t include a loan on an income statement the income statement should only include expenses and revenue.
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As long as they take them away they can have them – pot holes and all!
But if you believe an asset’s value is its ability to generate revenues (or save expenses), I suppose that means you endorse tolling the roads! They certainly don’t save the government any expense, they increase it by requiring maintenance!
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tunnel vision. the returns on a government investment don’t necessarily accrue directly to the government from business activities of that asset.
not all government borrowing can be considered overseas borrowing, only the government’s net borrowing goes onto the national debt.
as our government is running surplusses & has assets exceeding liabilities this doesn’t apply.
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EH!
There is no return to the government from road! They take their portion of the “road license” (I’m excluding the ACC portion for simplicity,) put it into the general fund and spend it as they like. The business activities of that asset involve the companies that maintain and build them. Ergo, there is no ability to generate revenues or save expenses with them (I believe you made some reference to this!)
As for borrowing – the government does all its borrowing overseas. If you want to nett-off the payments that’s fine, we still paid that money to foreigners. as for the Government running surpluses, that’s only in the P&L account. In the Balance sheet there’s a cash flow deficit (read the budgets for the last 8 years) so the Government’s borrowings INCREASE the nation’s overseas debt. (Even when they borrow from ‘local’ banks, they are borrowing overseas funds, just moving the currency exchange risk!)
Anyway. Enough – we will not agree, so lets agree to peacefully disagree
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Strings
Again you misinterpret. “They can afford far more” than we can… maybe I should have said that they COULD have afforded far more. Now of course it IS gone, well and truly burned in the biggest party that Wall Street ever hosted for its banking and big business buddies. However, that country… (MY country BTW)… has done most of the stupid things you mention and a few more as well.
As a society it was quite wealthy back in the 60′s… before Johnson’s guns AND butter budgets and the theft of the SS surplus that followed. The boosting of the SS take in order to compensate for the boomers and the theft of that as well. Then the Reagan tax gutting and the ascent of the neo-cons version of reality took over. Reagan got credit for Volker’s save (which really pounded the ponzi scheme flat for a time) and the whole thing went completely off the rails… but up until Nixon we had stayed reasonably close to PAYE models. Dropping off the gold standard was a symptom of the problem we had, and that particular solution was politically expedient and looked smart but was as wrong as Friedman was wrong and Greenspan was wrong and Bernanke was wrong. Volker tried to correct but couldn’t undo what Nixon had wrought and that was the end of it. Except for this… the US currency is regarded as the “reserve currency” and everyone else gets to suffer the inflation that has been generated by the Fed.
However, as a society the US used to do more and better per person than it does now. Now that the “trickle down” is being exposed as the massive suction applied to the middle class that it was we are reaping the whirlwind.
When I look at the division of wealth in the US now, it looks like a third world country. It looks nothing like the society I grew up in. The wealthy own EVERYTHING… and everyone else pays them big money for the privilege of using any of it. It is an “ownership society”… and we are the chattel owned. Don’t wonder for an instant why I am here instead of staying there. This is WAY better.
Bad as you may think it is here, it is WAY better.
respectfully
BJ
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i hope you don’t mean that. i haven’t given up hope we will agree on something… only i imagine the final shape of the point of view we both agree on will more closely resemble my current one than yours!
as far as i am aware, the latest government accounts show cash surplusses, while assets are approximately double liabilities, & even liquid assets are about the same as liquid liabilities, so there is no net debt.
i’m likewise surprised to hear that the government’s direct borrowing is always from overseas, this is new to me & i wouldn’t mind seeing a source. but in any case as net government borrowing is negative, it matters little since the net effect of the government’s net assets is to reduce the net national debt.
you’ve made a mistake in defining an entity’s “business activities”, in the case of a road its business activity is having vehicles travel upon it.
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BJ
I liven in North America for a few decades (mainly Canada) and then for another spent at least half a day a week in Boston. Like you, I have watched the country disintegrate. Probably like you I have watched idiots become multi-millionaires because of their ability to sell snakeoil. One young lady who I sponsored (corporately) through Wharton B School was the creator of a ‘clip the ticket’ banking ‘derivative’ and she now ownes a beautiful mansion on Martha’s Vinyard, as well as a brownstone in NYC and a place in LA. I think her net worth is over $20 mil, but she has never CREATED value (her own statement is she added a lot of it, but with a trillion already written off it clearly didn’t last.
Let me suggest you go see what I’ve said here about the cycle of countries growing out of working class based labour engaged in the creation of goods, into middle class societies that avoid manual labour and generate ‘service’ industries to sustain a growing lifestyle and quality expectation. If you want to see that in action, go look at any of the domestic (NZ) ‘management consultancies’, that charge something like $250 and hour to do things that internal; people should be able to do for themselves (the people doing it usually were ‘internal’ at a competitor); the ‘profession’ of consultant doesn’t exist here like it does in Europe, where most firms are rewarded based on the shareholder wealth they create, rather than the hours they ‘work’.
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Wheeeeeee
some very interesting time lapses on posts here, I just saw turnip 28 July 30th, 2008 at 10:09 am for the first time! Never mind.
Andrew, lets try this:
I accept that you are moral, not amoral
and you accept that I can count not acount!
Cool
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