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Default risks, war, banks and education.....

7/29/2011

3 Comments

 
Default risks, war, banks  and education.....

I have returned to ranting, Don Quixote style, about the economy.  A very interesting couple of articles in today’s Guardian caught my eye (and distracted me from moving office and the associated politics).    The first, which I am having a bit of trouble linking to the article on-line but it is called White House plans emergency cuts as debt deadline looms and that link may work now. 

We have all heard about the US and their need to raise the debt ceiling – in other words to extend their credit limit in order to pay their bills.  I am going to stay away from the politics of this – ni have my own suspicions as to why there are delays – and look instead at what sort of debt we are talking about.  I have seen lots of on-line posts about the need to cut senators’ pay etc as a way of cutting the debt and that always interests me.  Not so much the relative pay merits of politicians but peoples’ trouble with big numbers.  I had great fun disusing with Beth the meaning of infinity – I’m pretty sure she gets the concept despite my attempts to help – do not use the idea that it is “more than the number of atoms in the universe” with an eight year old – an analogy too far!

The present debt ceiling stands at $14.3 trillion – what on earth does that actually mean?  Well it is a million millions (confusingly not a billion which is a thousand million in the short scale system).  That’s a big number.    Amazingly and quite coincidentally it is almost exactly what the US produces in a year – in other words its turnover matches its debt.   But that also means it is a debt of about $47,000 per person or about $1.5million per square km – dear real estate!  Ok enough numbers – but the scale thing is important – a trillion is a big number.

The debt is blamed on a few things and in truth all are responsible.  Your debt and mine is linked to every single piece of expenditure we do – and every choice we make not to earn more – it is not caused by one single bit of expenditure, those bits simple tip us further.  So let’s have a look at the US.  Of that debt a tenth is the wars fought since 2001, which is half the Bush tax cuts themselves more than expenditure on education, welfare, and medicine.  Put another way the wars and social security, education and medicine do not amount to the total cut in taxes by Bush – and I’m pretty sure the US wan’t a high tax country to begin with.  Of course the recession has dented tax income to the Government – about a quarter of the debt is explained by this.  So a fall in tax revenues and cut in taxes together amount to almost half of the US debt. 

Let’s go back to our senators and representatives pay and see if we can solve some of this problem.  There are 100 senators and 441 representatives (hmm strangely less than in UK....).  Ok so what can we do to save money here?  Well there are 551 ‘overpiad bums ’.  if each cost a million apiece in pay and expenses (they don’t cost anything like that I’m just rounding up because if I rounded down it would be 0 and a number divided by 0 is infinite and, well atoms and such nonsense again...).  Right so 551 times a million is $551 million – about one forty thousandth of what it pays to farmers in subsidies – 10 days worth if you prefer.  Given my crazy rounding up we are probably over twice what is needed here.  So farmers cost more in 5 days than Government representation.  Why am I picking on farmers you may ask? No reason other than I spotted the word subsidy  and did a  bit of math (sorry).   But I am interested that the States rounds on ‘fat cat congressmen’, ‘the war’ and ‘welfare’.  We have seen already that these are significantly smaller added together than previous tax cuts.  I am not advocating war by the way, not arguing for it, what concerns me is that this trans-Atlantic narrative about democracy being too dear, about tax cuts for the wealthy being the best option and about spend thrift hospitals and schools disturbs me –for its attack on democracy, its fuelling of greed and its under investment in our future – as simple as that.

So what am I suggesting?  Well strangely nothing relating to tax and spend.  I don’t have a political agenda here.  I am more interested in the way language is used to distract us from the real numbers towards ones that shock – probably for political motive.  I am also interested in our lack of connection.  As I sit in a cafe and type I am amazed by the number of people who leave the door open on cooler days (I don’t notice on warm ones).  The cold that comes in cools the room, the thermostats kick in and it warms the room, the cost of this impacts on the business expenses, these expenses impact on price.    Do the people who leave the door open appreciate they are adding to the cost of their food and drink?  I appreciate it is a stretched analogy – but the same happens in society.  We seldom fully appreciate the linked behaviours that return to impact on us.  Tax payers are happy to get a lower price for cash and then sneer at benefit cheats.  We are part of society; we are protected by the police and by welfare and health payments to others.     

War is a tragedy because it costs lives, not because it costs money.  Tax cuts mean service cuts.      Underfunded education and over-testing means a lack of progression (I better return to that in another blog).  Oh and you didn’t think I had forgot, did you?  Government debt has grown as a direct result of the banking collapse.  The excesses of finance have cost the US at least two trillion dollars.  Not their national debt but more than war, more than education and, bizarrely, less than the tax cuts.  I guess the incompetent need a bit of a prop......

3 Comments
Lucy
7/29/2011 05:39:21 am

Really good point; I think we lose sight of our role in the economy through a combination of genuine disconnection with the responsibilities of being members of a larger society and even a local community (apathy if you like)and, what is even less palatable, through a conscious or unconscious decision to put self, and satisfaction of our needs above all else. It's also the case that the numbers are so big, and seemingly so separate from our everyday experience, that we feel we cannot have an impact. Environmental issues are a classic example of how this can be tackled, however, as, through education, we now have a generation of children growing up who are fully aware of the role they can play in reducing carbon consumption etc. What I don't see, is a generation being educated to see their ability to impact the economic problems we face. If we built this into the curriculum from an early age, maybe it would make a difference?

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Jason
7/29/2011 07:54:16 pm

I have to concur with the point you both purport too that as individuals 'we' don't see how or why our impact would make any difference to the whole scheme of things.

Take recycling, I remember 15 years ago when I started 'recycling' (long before the measures emphasised today) that the general attitude was
"how does my recycling make any difference if no-one else doesn't do it".
Now its " When China stops building a Coal fired power station every week, I'll consider saving energy". Apathy is killing society. Is it because these people are 'All right Jacks' and have a decent income and don't care or ' it won't happen in their lifetime' or just bravado and arrogance?

A classic example is the solar panels and Feed in Tarriffs(FIT). There are so many arguements that FIT's are pushing up the price of energy as well as greedy Energy companies adding their bit and I read how people are measuring the installation against an investment of money return over time in comparison to say stocks etc. Fools!! they forget the whole purpose is to offset what they use in energy (off the grid) and ultimately save themselves money in terms of KWh's and do their bit for the planet- with an added incentive FIT's. I am already loking into the possibility of having solar on my roof. The company pay and maintain and collect the FIT and I reap the enery benefits, so why not!. I think this same analogy could be expanded to all forms of Renewable energy generation ( even the economy) but again this short sightedness and apathy rears its head!!.
It appears the problems are blindingly obvious and reactive measures are imposed when clearly a proactive stance should be.

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Bryan link
7/30/2011 09:33:14 pm

Thanks both – I like the way we have moved sideways and outwards. Yes environmental impact is analogous to my argument and I wish I had spotted that. We seem to forget that we are a billion Chaos butterflies. Certainly someone paying cash to a contractor doesn’t see how the Government and public will suffer with his saving of £50 forgetting that when that is multiplied many times it amounts to a hospital or a school.
The education debate is also very interesting. We keep hearing about enterprise and entrepreneurism being taught in schools but I’m not sure business, ministers or schools actually know what they mean by that. Will we give children the biographies of some of our ‘finest’ that are oh so proud of their academic failings? Will we actually explain the difference between a successful business person and a “successful business person who makes a fair chunk of their money by appearing on TV as a successful business person”. But some way we do need to work with young people to re-establish the idea of pride in your own work and creations and respect for others creations and work. Perhaps we should open the budget up a little and let children see the income and expenses involved in running a school – let them see the budget for the classroom and get them involved in some of the decision making? I really think it is at that early stage that a lot of good work can be done – and I really regret not having the knowledge or aptitude to do work in that area. Perhaps an area I should research more fully.

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    Dr Bryan Mills

    "There he goes. One of God's own prototypes. Some kind of high powered mutant never even considered for mass production. Too weird to live, and too rare to die" Hunter S Thompson describing the author in 1971.

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