27 Sep 2012

An Economy That Serves The People

By Adam Brereton
Christine Milne outlined her economic vision for the country yesterday. She insists there's more to it than simply GDP. Was anybody listening? Adam Brereton takes a closer look at the Greens’ economic platform
Christine Milne's first major speech as Greens leader, delivered yesterday to the National Press Club, should have been a red rag to her critics. But whereas The Australian and the Coalition have consistently run a "class war" line against even mild proposals by Wayne Swan and Julia Gillard, Milne's economic address seems to have been delivered to an empty room.

Milne's thesis was essentially this: that the economy should serve people and nature rather than be "an end in itself". This boilerplate statement alone should have provided plenty of meat for the attack dogs.

In particular, she criticised the overweening focus of commentators and politicians on GDP as unrealistic:

"GDP measures what we make and consume, not who we are (our human and social capital) or where we live (our natural capital). It ignores work done in the home and volunteer work across society. It disregards the entrenched gap between rich and poor. It loves a catastrophe like a car accident or the Queensland floods because they generate economic activity, regardless of the human cost."

William Nordhaus, the Sterling Professor of Economics at Yale University, has argued that GDP is important as a measurement tool, because in previous decades we had comparatively little information about the health of the economy. "There were people then who said things were fine and others who said things weren't fine. But we had no comprehensive measures," he told the New York Times' Jon Gertner in 2010.

But as an indicator of real progress, GDP still doesn't tell the whole story — the Obama administration is playing politics, not development, when it emphasises increasing GDP, rather than high unemployment figures, Gertner said. Milne ran a similar line yesterday, saying, "... if we're helping unemployed people find worthwhile jobs and we're addressing structural inequities such as illiteracy; surely that is real growth, regardless of what our GDP numbers show". Even the business world is coming around to this kind of thinking. Integrated business reporting that considers social and environmental impacts is beginning to make inroads.

Milne also addressed the "debate" around productivity. "Contrary to what [the Liberal Party and business lobby] say, there is no evidence that allowing workers to be treated more harshly and unfairly does anything to improve society". The Greens, she said, will focus on "education, R&D, better health and better resource efficiencies".

Studies by Ernst and Young and the Society for Knowledge Economics in 2011 found that "human capital" issues — how staff are managed and trained — were the biggest drains on productivity. NM's Ian McAuley wrote on the issue earlier this year:

"Contrary to the notion that productivity stems from hard-driving management, [the studies] found that high-performance organisations were distinguished from low-performance organisations by high scores on procedural and distributive fairness, job satisfaction and well-being. In short, a set of workplace relationships characterised by mutual respect."

Her other positions — that we need to tax more (but not broaden the GST), price carbon, move the political focus off election cycle surpluses and find savings in the removal of subsidies for dirty industries — are accepted by large parts of the Australian and international establishment, including Nobel Prize winners Paul Krugman and Joseph Stiglitz, as Milne was quick to point out. Tax in particular is a no-brainer; the current Labor government taxes less than John Howard. And as we've argued consistently here at NM, the time to invest in public infrastructure is now. 

But despite this, Milne will have trouble convincing anyone that "the Greens are the most economically responsible party in the parliament" on an anti-surplus line. With the risk of a "double dip" recession still a very real one, keeping "dry powder" in the form of budget surpluses is attractive both economically and politically, as Rob Burgess argues today at Business Spectator.

Whether the leader of the Greens will have the chance to realise any of her economic vision is another question. Milne maintains that when it comes to economics, the Greens aren't "anti-growth" — but she'll have to work hard to convince the electorate that this is the case if the party is to survive. Both major parties are gunning for the Greens, and Milne knows it, insisting that the party's electoral priority is to increase their primary vote — in the face of evaporating preference deals, defeats in recent by-elections and ongoing attacks from Sussex Street.

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Posted Thursday, September 27, 2012 - 20:15

Adam Brereton
But despite this, Milne will have trouble convincing anyone that "the Greens are the most economically responsible party in the parliament" on an anti-surplus line. With the risk of a "double dip" recession still a very real one, keeping "dry powder" in the form of budget surpluses is attractive both economically and politically, as Rob Burgess argues today at Business Spectator.

Rob Burgess is a wak job.

What do you think the Gold Standard was, what do you think these Liberal Party half wits did when they sold of so much of our Gold reserves which always depression proofed the country.

We borrowed on that Gold as the value of Gold increased, Costello and that other wak job Howard sold it at 325 and ounce its now worth 1770 or so. So who is bullshitting who.

These people are all wak jobs, we had a surplus in Gold for years Keating built it up and Howard sold it off for a pitance.

Why did we have to borrow so much, we could have just taken Gold as required, no they had to sell it off and turn it into a useles entry on a ledger, in the Budget.

Posted Thursday, September 27, 2012 - 20:17

Having said that, how about this.

77% of all Australians work for the Taxpayer, who ever you think he is.

A Nurse, Teacher gets 100% of their gross income of the Tax Base and gives 33% back, money that wasn’t his to start with. So 67% which is his/her income for services rendered, he/she gets from this mythical person called the Tax payer. A road construction worker or anyone who builds infastructure like roads, rail, the electricity grid, public transport etc also gets 67% from this mythical person after giving back 33% in income tax. The butcher who sells any or all his goods to either the Government or one of its employees makes either all or part of his income from this Mythical Person.

An Unemployed person gets less then all those working because he basically does nothing.

So where does all this money, the 67% that you don’t give back, come from. Exports, the resources of a land that did not belong to us, that we took for exactly that reason. So, we infact only give back a very small percentage of what once belonged to the indiginous people and then we say that we are keeping them rather then their land is keeping us. take away our exports of Uranium, Coal, Gas etc and we would all be bashing each others heads in because there would be no money in the Tax Purse, because we all only take out we do not put in.

Its about time the white fellow stopped bull shitting about what and who actualy supports life and the population of this nation which has transplanted itself from Europe like a cancer a cancer sucking the life out of this continent, until, there is nothing left, like Greece an economy of smoke, mirrors and ego’s. its like breaking into someone elses house and eating everything in the fridge, until their is nothing left, the problem is we can’t leave because there is no other house to break into, to steal food from etc.

Thats why Marbo was so such a shock to the white fellows system of exploitation, a Farmer can’t make an income and pay taxes of Land he does not posses, own, does not belong to him, or has to pay Royalties on.

A lot of white fellows fantacies that they created something out of nothing. Get on a boat and sit in the middle of the Ocean and see what you can create out of nothing or live in the Simpson desert and see what you can create.

White fellow is here because we wore out our welcome over their, we had boats and the price of a ticket and we ended up here and then we took and took and we are still taking because our kids have a need too and so will their kids, but their is only so much of the planet left that we can still steal, we have stolen most of it. Country bumpkins are already moving into the Cities because their lives out their are unsastainable. Cities are the reservations of old, we want the rest of their land because we need it, without it nothing of what we think we are is possible and we know it, admitting it however is the hard bit. Admitting means admitting that our lives and those of our children a built on myths, bull shit and Plunder, even murder.

Civilised or just thieves in fancy stitches??????

This user is a New Matilda supporter. thomasee73
Posted Friday, September 28, 2012 - 22:01

Echo. Echo.

Posted Saturday, September 29, 2012 - 14:01

Jackal 01,

Not to be too pedantic but who pays 33% of their income? clearly you don't follow the concept of "marginal" in tax rates.

Also like any of us don't derive some benefit from infrastructure ...?.
Do you really believe electricity delivery pays for its self or that hospitals schools are paid for by fees levied.

perhaps you can explain to me how if the black man ' belongs' to the mother earth he has the inalienable right to sell her ? Selling land an the ore is white man's culture.

Now before you go incendiary, let's be clear White man did invade this continent and they did and still do gross unfairness' and obscene crimes against the black man. Fortunately those obscenities are far less that they were . Also note all people (you pick the colour) still behave in similar fashion to what we genetically, all are ...animals.

I would remind you of what I said before that you agreed with i.e. that some people on this site want to vent in the guise of a discussion.
I ask you as a person (colour ethnicity aside) isn't that what you are doing now. This topic has nothing to do with Black , white, Brindle or Green as a colour. Identity is a completely separate issue.
BTW my fist political activism was to ensure the Australian aborigines had the right to vote in their land as far back as the 60's so don't runaway with the idea I'm neither aware nor insinuative the the black culture *S*.

This topic is nominally about give what exists how do we best survive as a species.

Posted Saturday, September 29, 2012 - 14:06

Second last sentence should read ......I'm neither unaware or insensitive to the black culture *S* plural.

Posted Saturday, September 29, 2012 - 14:41

The short answer to your question is no nobody save the greens were listening ....simply because she represents the greens a radical MINORITY.
A minority that is unlikely to ever be a senior political force ( barring a real game changer, disaster).... a common perception (about 90% of the population).

NB that doesn't mean that the greens don't have good ideas, policies or they shouldn't be heard/considered. I'd suggest they're playing the wrong political game... revolution V evolution. The Aus Dems made the same mistake.

As to WHAT she said (based on this article) rationally one shouldn't fault the basic thrust. Tragically truth and what needs be done has little hold/ part to play in modern politics.

They need to focus more on the individuals NEEDs than the theoretical moral high ground. But given their core membership's myopic idealism that is unlikely to occur.
That is all another topic al together.

Posted Saturday, September 29, 2012 - 19:53

How do you come to the conclusion that this is what I'm refering to or I am saying, suggesting.

Your comment:
"Not to be too pedantic but who pays 33% of their income? clearly you don’t follow the concept of “marginal” in tax rates.

Also like any of us don’t derive some benefit from infrastructure …?.
Do you really believe electricity delivery pays for its self or that hospitals schools are paid for by fees levied.

perhaps you can explain to me how if the black man ’ belongs’ to the mother earth he has the inalienable right to sell her ? Selling land an the ore is white man’s culture."


33% is a rough estimate, I'm actualy asking a question. Who actualy pays any taxes at all, to provide anything to the country.

77% of all Australians work for the Taxpayer.

A Nurse, Teacher gets 100% of their gross income of the Tax Base and gives 33% back, money that wasn’t his to start with. So 67% which is his/her income for services rendered, he/she gets from this mythical person called the Tax payer.

I'm iliterate and uneducated but i didn't think I was that much of an idiot to have you that far of the mark as to what i was asking and therefore trying to explain and maybe even get an answer, but nobody seems to either know or want to know.

This is and was my point aswell, where did you get the idea that I meant something else.

Your comment:
"Now before you go incendiary, let’s be clear White man did invade this continent and they did and still do gross unfairness’ and obscene crimes against the black man. Fortunately those obscenities are far less that they were . Also note all people (you pick the colour) still behave in similar fashion to what we genetically, all are …animals. "

Your comment:
"I would remind you of what I said before that you agreed with i.e. that some people on this site want to vent in the guise of a discussion.
I ask you as a person (colour ethnicity aside) isn’t that what you are doing now. This topic has nothing to do with Black , white, Brindle or Green as a colour. Identity is a completely separate issue"

My comment:
This comment I originaly used in
indigenous affairs
6 Jul 2012

Why Toomelah Collapsed
By Chris Graham

But felt that some of it was relevant in other articles so I copied and pasted. It was actualy a reply to some white shithead who reckond that he was sick of paying taxes to keep the indiginous bludger alive, i posted the above to show him that he pays for nothing and that he is infact the one bludging.

I'm still waiting to hear from someone to tell me where all this tax money that the Governments spends actualy comes from.

77% of all Australians work for the Taxpayer is a figure I heard on ABC Radio some time back which got me a thinking, hence the curiousity.

i'm stating some thoughts and looking for answers, I wasn't actualy expecting a lecture, but can see where the confussion lays.

I even posted it on Ian McAuley, but no reply, which does not suprise me.

BTW my fist political activism was to ensure the Australian aborigines had the right to vote in their land as far back as the 60’s so don’t runaway with the idea I’m neither aware nor insinuative the the black culture *S*.

My comment
They were discussing this on "The Drum" the other week so I decided it was a good idea to mention it here, so NM would maybe run with the idea of a Referendum and Air the idea a bit more, mention it, create discussion on it.
Your comment:
I would remind you of what I said before that you agreed with i.e. that some people on this site want to vent in the guise of a discussion.

My comment:
I've been testing our own thin skins with a lot of my comments, because some people seem to think that being thin skin is a Muslim problem. so I go to several sights testing the concept of Australians not having much of a sense of humour when we are being picked on, when our history is questioned.

AND, Guess what?, Australians are thin skinned aswell!.

I've also tested if I could maybe get aussiegreg into a heated debate, get him angry, make him hate me. Some people seem to question why Muslims are angry when vilified, so I harp on with Aussie this and Aussie that, blah, blah and guess what. Not so funny when it happens to us when i ridiculed our past.

So our point, "Also note all people (you pick the colour) still behave in similar fashion to what we genetically, all are …animals."

No argument from me. I just try to be annoying to make a point.
We all get angry, maybe different subjects, reasons, but we all do.

Posted Saturday, September 29, 2012 - 20:14

Posted Saturday, 29 September 12 at 2:41PM
agree, but what do you think of the Greens being a permamnent Coalition Partner with Labour same as Nats/Libs. Could the Votes/Voters force it again.

I can't stand the Liberals, they have always crwled up Elitist or our Landed Gentry's backsides.

Go to http://www.abc.net.au/tv/bigideas/

Labor in Vain
17 September 2012
Labor in Vain – Is the fate of the federal Labor Party sealed? Is it in crisis or just experiencing the odd catastrophe?

Posted Saturday, September 29, 2012 - 20:28

The Greens only require a balance-of-power in order to be effective. Recent statements from the Greens suggest that their aim is to divide the Liberals via leadership contentions, and Labor via retro-conventional rather than Kinesian Economics, such as pulled Oz through the depression years.

Question Authority

Posted Sunday, September 30, 2012 - 19:07

This is for anyone who might not understand Marginal Tax Rate.
Examinator is highly educated and you will notice that this was also written by an eductaed person, they tend to talk in strange languages.

Marginal Tax Rate
Man works, and produces wealth from that work. A free man keeps all of his wealth. This does not mean he keeps all of the benefits from his efforts - if he chooses to freely trade, his trading partners also benefit.

The MTR is how much an external force (eg a government) takes away from him when he produced the last unit of work.

In Western social democracies, MTRs are typically greater than 50% for wealthy people. Socialists see this as a desirable thing - ostensibly because it distributes wealth, but actually because it punishes the rich. Regardless, only the very ignorant would deny that it takes away their incentive, and possibly reduces the total tax revenue due to Laffer curve effects.

More importantly perhaps, the way that distribution is done in social democracies means that poorer people have a much higher effective marginal tax rate (EMTR) than the wealthy. Subsidies such as child welfare, travel discounts, electricity usage discounts, government housing, car registration discounts, stamp-duty exemptions, medical subsidies etc are lost as people earn more income, producing an EMTR in themselves. Recent claims put the EMTR as over 75% for low income earners in Australia - a serious poverty trap. Some people have identified individual cases where the EMTR is over 100% - effectively relegating these people to a lifetime of relative poverty.

Taxing the rich at 50% has a serious effect on incentive. However giving the money to the poor in such a way that their EMTR is very high is far more serious. The government, in trying to prevent poverty, actually increases it.

The term 'fairness' is unlikely to have a definition which is universally accepted but, while many define fairness in terms of equality of income, others define it in terms of EMTR - the percentage of his rationality he is permitted to retain.

Laffer curve effect
Naively one might think that doubling the tax-rate would double the taxation revenue, but this is not so. As the tax-rate increases people just choose not to trade, because it is not worth their while. This is called dead-weight loss. As we introduce a tax and increase it (say from 1% to 2%), taxation revenue increases. But if the tax rates are very high, and they are still increased (say from 90% to 91%) the revenue raised actually goes down, because people 'drop out' of the trading system.

'Dropping out' takes a number of forms - people choose to leave their jobs and draw welfare; people choose to not buy the items which are heavily taxed (such as insurance); people emigrate in search of lower-taxing regions; people choose to work less hours and spend more leisure time; people choose to make things at home (tax-free) instead of buying them.

There is a point on the Laffer curve at which the taxation revenue is maximized. At this point the government actually reduces its revenue either by increasing or decreasing tax-rates.

This is the point which wealthy social democratic governments will approach. They will try to maximize revenue for pork barreling, and an ignorant population will allow them to do it.

The dead-weight losses at the Laffer curve maximum are horrendous, but an ignorant population won't know this, or choose to ignore it - particularly if they perceive that the taxes are being used to narrow the gap between rich and poor.

Once a government has hit the Laffer curve maximum, they cannot raise more revenue for pork barreling. They must either get by with what they have, borrow money, or increase the country's income. Extremely ignorant populations (like those in many South American Countries) will stand by and let their governments borrow money to point of bankruptcy. Slightly more intelligent populations will see the danger of that, and make their governments get by with what they have.

This is future of social democracy. It's not an Orwellian boot stamping on a human face forever, but it's not exactly utopian nirvana either.

An interesting question is what the Laffer peak tax-rate is. Many believe that many countries in Europe (including England) are already there (or even slightly beyond it), others think the taxpayer can be squeezed for another few percent.

Posted Sunday, September 30, 2012 - 21:28

Back to the article.
A reasonable summary, and I agree with everything except the concession to the nonsense about a "Growing" economy. That phantasm is the source of our current problems. World economies have been 'growing' by borrowing money and spending it on stuff that has no value, so when the time comes to repay the loan, there's nothing to pay it with. The USA gets over this by printing money. They can get away with this because a few years ago they persuaded the world to go off the gold standard and use the US dollar as the standard.
The planet and its resources are finite. There is no expansion possible. There are too many people already for the planet to sustain. Civilization's only hope is a policy of retrenchment, downsizing, and accepting the idiocy of calculating wealth by the number of worthless bits of paper currency, instead of what has real value. But this idea is anathema to a society indoctrinated with the belief in their right to ever increasing profits and pecuniary wealth. Therefore we are doomed to return to serfdom - the natural state of civilization.

Posted Monday, October 1, 2012 - 07:03

Oh, Elbert wise words indeed.

Go to The Daily Reckoning and read some of the News letters their.

Posted Monday, October 1, 2012 - 07:05

With Gatitude to Bill Bonner from The Daily Reckoning.

Economists cannot know what is 'better.' They can only know what is 'more.' They have numbers. They can count. They can add up 'more'. As for 'better,' they have no idea. So, in their little minds, more is better.

That is the thinking that has driven the profession...and much of the world economy...to absurdity. Throughout the last 50 years, more looked so much like better, no one worried too much about the difference. More cars. More houses. More food. More gadgets. What was not to like?

But the cost was more debt. And by the 21st century the burden of debt had become so great that the system could no longer move forward. Here is how it worked, up until the early spring of 2007:

The Chinese, and others, made more stuff. The Arabs, and others, pumped more oil.

Americans, and others, created more credit and used the money to buy more stuff.

Rather than demand payment - in gold - for their excess dollars, as they would have before 1971, the exporters took the money and lent it back to the Americans.

In this way, the US never really had to settle up. Approximately $8 trillion of purchasing power - the accumulated trade deficits between 1970 and 2007 - was created in this way. There is supposed to be 'no such thing as a free lunch' in economics. But for years Americans ate breakfast, lunch, and many of their dinners too at foreigners' expense.

Not needing to redeem the old credits, new ones were made available to Americans. Cheap credit drove up housing prices...and gave them the collateral to borrow more money and buy more stuff.

But when subprime mortgage market collapsed in '07-'08, suddenly, US real estate prices stopped rising. This left millions of households in a bind. They could no longer borrow against rising house prices because housing was going down.

They had to cut back on spending...which meant less stuff could be sold to them...and it left producers with bulging warehouses with unsold goods.

Economists looked at this situation, after the crash of subprime mortgages in '07 and '08, and came to the same conclusion they had on the occasion of every other slowdown over the previous 60 years. The economy needed more "stimulus" to encourage consumers to buy more stuff.

They did not notice that consumers already had too much stuff...and that they were now paying the price for buying more stuff than they could afford. Nor did they wonder whether consumers' lives might be better if they focused more on quality and less on quantity.

'More' is all they know; it is all they can do. So they called for 'more stimulus,' more debt, more credit, more spending, and more stuff.

But more is not always the right answer. There are times when less is better.


Bill Bonner
for The Daily Reckoning Australia

Posted Monday, October 1, 2012 - 07:11

And so History repeats, you've hopefully read the above now read this its history, notice something.


In the second half of the 1920's the U.S.A. was the most prosperous and confident country in the world. This was at the time when almost every country felt that prospects were good: the dreadful world war had receded in the memory and, of course, could not happen again; post-war disorder and reconstruction occupied the years 1919-23, but from 1924 there were good economic prospects and political stability; standards of living were rising, international trade was swelling. Some mainly agricultural countries, it is true, were having a difficult time because of glutted markets; industrial producers, however, were enjoying a heavy and widespread demand ... bigger and better machinery, miracles in mass production, a stream of inventions, improvements, gadgets. Fittingly, the American Secretary of State, Frank B. Kellogg, in 1928 capped world optimism by initiating a world-wide anti-war pact which the nations signed, solemnly pledging to renounce war as a means of settling international disputes. In the same year the newly elected American President, Herbert Hoover, confidently announced that the United States would soon 'be in sight of the day when poverty will be banished from this nation.'

So great was American mass production that industrialists and retailers fostered the fascinating device of 'instalment buying' or hire-purchase which allowed people to go right on buying and using goods which they could not pay for at the time of purchase. The vast expansion of business was reflected in the buying of shares on the New York and other stock exchanges. Every year brought more eager, adventurous buying until by 1928 there was as much excitement and risk-taking on the exchanges as in the gambling rooms of Reno. Why not? Share values were rising quickly, so Mr. Middle Class American had only to buy now, hold a while, then sell at a handsome profit.

Businessmen, bankers, politicians all gave their approval - it was as much part of the American way of life as radios, aspirin and T -model Fords. Stockkbrokers, imbued with the spirit of get-up-and-go, helped their clients to buy shares on an instalment system. Tales of overnight fortunes made by smart investors became the favoured conversation at social gatherings. In 1928 and 1929 there was a mania of speculation.

In September 1929 share prices stood at an all-time high. Early in October, however, prices declined a little, then in the last week of October there was a panic on the Wall Street Stock Exchange. Wildly frightened investors sold millions of share - on the worst day, the 29th, some 16 million shares changed hands at drastically reduced prices and thousands of investors, small and large, were ruined. By mid-November share prices had been cut to half, so that investors thereby lost $30,000 million, a sum almost equal to the entire cost of U.S. participation in World War I!

President Hoover assured the nation that the crisis would quickly pass; but he was terribly wrong. The bottom fell out of the already shaky agricultural prices so that by 1932 the farmers of America could only attain to half the income of 1929. Nearly 6,000 banks, with holdings of $5,000 million, failed during the four years of crisis. 1932 was the year when the U.S.A. 'hit the bottom of the trough'; share prices were down 83 %, production down 40%, wages down 60%, dividends down 60%; most forms of credit were frozen; and 15 million people were unemployed.


Economists in search of reasons for the Depression, which soon became world-wide, found so many 'factors of instability' in the 1929 economy that their explanations often did more to bewilder than to enlighten the public.

(i) Speculation. At first, speculation in shares was blamed. One million Americans 'had a flutter on the 'change' during the boom period; they had driven share prices to artificial heights and it only took a wave of pessimism to bring prices crashing. This mood engulfed the whole economy - it was a 'crisis of confidence' brought to a head because the business world had become a gambler's paradise devoid of morality, responsibility or faith in honest hard work. But most economists sought a less simple explanation than this: they regarded the speculation mania as no more than the final spark, and they looked for a deeper process.

(ii) Periodic Cycles of Business. Attention was drawn to earlier depresssions. In the 19th century an English economist, W. S. Jevons, had noticed that such crises tended to recur at roughly ten-year intervals. Since 1815 they had occurred in 1827, 1836, 1847, 1857, 1866, 1873, 1882, 1893, 1900, 1907, 1913, 1921 - and now, 1930. Give or take a year for their full impact to reach any particular country, they were essentially a worlddwide phenomenon. J evons thought he found the cause in the periodical recurrrence of sun-spots, which, by reducing the sun's radiance, in turn reduced the world's harvests, and by thus harming agriculture harmed also the general economies of every land. Later economists found less remote reasons than sun-.spots for business cycles. They were ready by 1929 to agree that at least in part this latest crisis could be attributed to cyclical causes which worked as follows (according to a 1921 Government Committee on Unemployment in its report to the U.S. President): as business revives after a previous depresssion there is 'increased volume of manufacturing, rising stock exchange prices followed by rising commodity prices an increased demand for credit .....credit gradually becomes strained stock exchange prices fall ..... public confidence is then shaken, resulting in widespread cancellation of orders ... fall of prices . . . widespread unemployment.' Thus business is continually fluctuating between boom and slump. This explanation, however, did not explain why the 1930's Depression was so much greater in magnitude and severity than all the previous cyclical slumps.

(iii) Overproduction - or Underconsumption. One part of the cyclical theory was given more prominence than the rest - overproduction. More goods had been produced than the market could absorb: as factories, warehouses and shops filled with unsold goods, the machines stopped producing and would not start again until the goods were bought - which may mean months of idleness.

Meanwhile workers were stood-down, and, being unemmployed, they had little or no money to spend; but it was precisely the workers who made up the bulk of the market. Thus, like a snowball, the depression gathered weight, for overproduction led to dismissals which reduced the purchasing power that was the very thing needed to get industry going again. This explanation seemed to account for a great deal; it suggested that as production-power became greater, depressions would grow worse. American production had leapt forward by 20% in the boom years 1924-29 but the number of industrial wage-workers actually declined by 7% in this period owing to mechanisation and rationalisation of production - more goods could now be turned out by fewer workers! And though the incomes of many workers and middle class people rose in these years they nevertheless lagged behind the rise in production. Some economists preferred to use the term Underconsumption to describe the insufficiency of the resources of the industrial wage-earners, farmers and middle class who could not buy up all the goods poured forth by industry. Others spoke of Overcapitalisation, meaning the unbalanced investment of huge sums in better and better machinery while the market - the consumption capacity of the people developed at a snail's pace. Pay the people higher wages and they will be able to consume more, argued the trade union leaders. Issue more money and credit, urged the money-reformers. And many other solutions were offered. But President Hoover went on believing that business, on its own, would solve the problem - prosperity, he liked to say, was 'just around the corner.'

(iv) Economic Nationalism. Economists knew that every country needed exports - partly in order to unburden itself of surpluses, but also to make use of resources with which it happened to be richly endowed or for which it could efficiently tool-up an industry. The interdependence of national economies increased with every passing year; a criss-crossing of international trade was vital to the prosperity of all. But every country wanted to export rather than to import goods, to be a creditor rather than a debtor. This was especially so because during World War I most countries of Europe had become indebted to other countries, particularly to the United States. They carefully limited their imports so that the vfJlume of international trade was much less than it would have been in free conditions. As soon as the Wall Street slump occurred, American bankers, in financial difficulties themselves, began to call in loans they had made abroad, and this induced other countries to restrict as much as possible their imports from the United States. Then in 1930 American manufacturers, demanding protection against cheap goods coming from abroad, secured the passing of the Hawley-Smoot tariff which was so high as to make it practically impossible for other countries to send goods to the U.S.A. This started a terrible tariff-war, with every country trying to raise a tariff wall against foreign goods. By 1932 international trade had slumped to 40% of its 1929 value and to 74% of its physical volume. In a vain bid to look after their individual interests the nations had embroiled themselves in a generally disastrous situation.

(v) Protracted Agricultural Crisis. The prosperity of the 1920's never reached the farmers. It was apparent from 1920 that the world was experienccing overproduction in agriculture. This certainly did not mean that the world's hunger problem had been solved; it meant only that saleable crops did not bring reasonable prices on world markets. Economic nationalism operated here, too, with every government striving to reduce imports of food and raw materials. Countries which had mechanised their agriculture and improved farming methods during the war found that their farmers could produce more than markets could absorb.

This was especially so in the U.S.A. Moreover, before the war America had owed huge sums abroad, particularly to Britain, and had sent surplus agricultural goods in part payment; now America had emerged from the war as a creditor, and nations did not want to increase their debts to her by importing farm goods which they could get more cheaply elsewhere. All through the 1920's American farming was in a depressed state. The farmers, with little purchasing power, were unable to buy many of the goods that manufacturing industry could abundantly produce. This situation was as harmful to the interests of industry as to the interests of the disgruntled farmers.

Posted Monday, October 1, 2012 - 07:18

Echo, Echo, do you know why religion is so successful. Echo, Echo.

Do you know why we make the same mistakes as mentioned above, we don't read or understand the Historic Echo, Echo that comes back to haunt greedy little grubs who Echo, Echo their way through history with their heads up their pimply, arrogant, willfully ignorant asses.

Hopefuly you have read the 4 above comments and are now a bit wiser.

So echo, echo that.

Posted Monday, October 1, 2012 - 13:00


I don't speak in strange ways because I'm 'educated' . I speak in strange ways because I think in strange ways , I'm simply strange to start with or both.
I suspect the last option is the most accurate . ;-)

when I said marginal tax rates it means that for the first say ( actual amounts are different but easier to make the point ) $10000 you you pay nothing . Once you earn over that (i.e. you pay 10% until your earnings make $20000. That 10% is the marginal tax rate)
If you earned say $11000 you would pay tax only on the last $1000. i.e. $100
If you took that $100 as a percentage of your total earnings it would be, 1.1% your effective tax rate. To have an effective tax rate of 33% in our tax code you'd be earning *well over* $100000 !

Some times I speak in strange way because the point I'm trying to make is a subtle one at first look but like shooting a rifle ...if your the barrel of the rifle is out by a tiny amount by the time the bullet reaches the target area say 100meters that difference is enough to miss a giant Red Kangaroo (by a long way).

Likewise, some small overlooked details (facts) can finish up missing the target and doing unanticipated disaster.

You referenced article amongst other things makes the same point.
e.g. France, Britain didn't consider how and what would be the outcome of their policies of reparation and blockade would be....they were negligently myopic (criminally short sighted). They were in fact storing up the desperation of the German people , laying the foundations for WW2 .
That is why after WW2 the allies rebuilt the defeated in order to avoid making the same mistakes.

However, memories are short ...the west has /is doing the same thing with the Islamic world...by supporting horrendous regimes and boycotts that punishing the average person... like the average Iranian has a real choice of their government's foreign policies? Thus entrenching the same problems that gave rise to Hitler.

What a lot of westerners haven't yet learned is that they're doing the same in Asia and Africa. Aussies did that same bad job in PNG (I was there and saw the policies of colonialism). This is ONE of the reasons White people have targets on them in many areas of Port Moresby and have to live in fortified compounds.

Back to the article in your reference...... I'd suggest that what was written wasn't brilliant but what it did was focus on another side of the issue...one that the allies don't WANT acknowledge ......They wan to see themselves on the high moral ground in truth they are at least equally to blame for the war
1 and 2 .
But note this statement does NOT JUSTIFY THE OBSCENITIES OF Hitler's conduct of and in the war.

Interesting side note Japan doesn't teach their atrocities in school either.

Like the saying goes 'if we don't learn from history(s' mistakes ) we are doomed to repeat them" and we are!
No side in any modern war can objectively claim the high moral ground...mind you that doesn't stop them trying.

Posted Monday, October 1, 2012 - 13:34

In context of the article we need to be trying to lessen the tension between the Westernised world and the not.
Among the many many tasks one of the first would be to ditch this fantasy that means we NEED to live under a system that
a. demands the tension between the haves and have nots which result in the have nots being hideously exploited to their detriment.
b. is based on the ultimate insanity that infinite growth is possible/affordable in a closed environment.
i.e. Effectively all the water/ resources that will exist in the future exists now and That's it.... we can't make any more FULL STOP. Science/ technology can't make any more.
Use them up screw them and we as a species are screwed . The difference between us and the dinosaurs and us is Knowing the catastrophe was coming, the inability to do anything about it on the other hand we do know and we have the ability. Nature has the ultimate cure drown/ starve the lot of us and simply wait the million of years or so for the damage to repair it's self. Then wait some more for the next biological experiment to evolve.
It seems enlightened self interest to reduce our consumption /pollution yet we waste waste and waste again on petty political posturing, wars selfishnesses . Clearly we are wantonly ignoring the above lessons of history.

This user is a New Matilda supporter. thomasee73
Posted Monday, October 1, 2012 - 14:59

Not criticising your repetition, Number One Jackal, just pointing out that I have been paying attention to (some of) your posts. Apart from some of the longer ones that I choose not to read because I prefer to spend my time elsewhere, I generally find that what you write is interesting more often than not, usually thoughtful, and rarely mainstream. If you are actually interested (and I'm not suggesting that you ought to be), I agree with probably about as many of your conclusions and beliefs as what I disagree with, but I often find them thought provoking and challenging. Even your beliefs that I do not share I usually find to be not unreasonably held (but I'm also often capable of believing that the opposite belief, perhaps held by others, is also not unreasonably held). I actually quite like your little essay on "the myth of the taxpayer", which I have seen now on at least three different discussion lists of this newspaper. My short response "echo" etc., was intended to acknowledge that I've noticed this and also as a little bit of a friendly tease. (Stir, stir).

Although I was aware that there was a risk that my comments may have caused offense, I was not my intention to do so (on this occasion). I much prefer to cause offense only when I do so intentionally.

Posted Monday, October 1, 2012 - 20:07

no offence taken, I value your comments and criticism. It stirs and motivates me.

Even my carry on with aussiegreg was valuable, in as far it teaches us about how and why people respond the way we do.
I always say their is a silver linning in every cloud, you just got to look.

Nah, I value your comments your a smart operator like aussiegreg, you got to take your hat of the man. Like I said its his racist attitude that he was putting across but it was more of a stir on his part.
He knew I'd bounce of him, so he would stir. But thats not much value for any Muslims reading here, most of those are Australiansd like the rest of us, they came here the same way and as far as I'm concerned their welcome. Most Muslims and Chistians from the Middle East have always been very friendly and welcoming of me when I'm in their enviroment.

I try to be thought provoking and challenging even if it means offending if I have to to make a point.

I enjoy Big Ideas, Q&A, and The Drum and like to share what I've learned and put my own twist on it.

So, nah, your cool.

Posted Monday, October 1, 2012 - 20:29

Christine said it right at the end.

The preferential voting system mathematically favours the two major parties.
When they work together they will maintain the duopoly for ever.
We have watched minor parties crushed time after time.
It is the reason I don't vote.
I want one vote. I don't want my vote passed down to a party I don't want to vote for.

Go well,
The Peoples Debt Collector

Posted Monday, October 1, 2012 - 20:37

We are all strange thats why were in the mess we are in I guess.

Nah, no offence, but some of your big words make me have to pick up the Dictionary a lot.

Especialy when you, Ben and fightmumma were debating, it was all a good read but a struggle to understand fully or completely.

I found over time right here that a lot of conflict between opinion makers is due to the fact that we do not read fully, we quickly browse, speed read, looking for feel good sentences or sntences that we can bounce of, gives us an excuse for a rant. I do, I fully admit, but its actualy because I'm sometimes time poor, most of us are these days and most of us are guilt of not reading fully.
Yeah, the joys of modern living.

Nah, your good, your smart and well balanced.

As far as Bill Bonner
for The Daily Reckoning Australia goes I like how he incorporates history when he actualy taks economics. Not only does it make it interesting but shows us where we stuffed up and why we are still stuffing up. I certainly don't agree or agree fully with all of his Historical points but he spares no one and its about as close to the truth as we will probably ever get and its a version we can all live with. Nothing will ever bring the 57 million people we slaughtered in WW2 back but his comments give a bit of justice to all.

Learn from it is all we need to do otherwise it realy would be/is a waste of life. Let their deaths atleast leave something good behind, a bit of coommon sense and a greater respect for human life.

Their is not much point in getting all googoo eyed over cute and cuddle germ factories when you only send them to war to get slaughtered as soon as their old enough to bleed, because we are too old and/or too cunning to go ourselves.

All Good, carry on, as you were.

Posted Monday, October 1, 2012 - 20:57

Now Guys, I know its a big read, but I posted Bill Bonner and The Student Guide to History so that you/we see the similarities and the fact that history just goes round and round.

And if you go to

This is the 3rd article in the series, its a must read.

You will appriciate the historical content and the economic connect, between the failure of Economies and the resorting to war to balance the imblance between people and the economy or the number of people the economies could carry, sustain.

If you read Bill Bonners article where he talks about Germany's failure to push for efficient farming and the big push towards minning, then look at the big debate on Big Ideas about Farming verses Minning you can see that we might just be making the same mistakes.

Its amazing also that Gough is finaly getting the credit for being the Brainic that made our current economic climate and minning boom possible.

Go to
A Mining Boom Unlike All Other Booms?
By Sarah Burnside
right here on NM.

Posted Wednesday, July 24, 2013 - 18:01

With improved prospects for political stabilization, the development will open up. But success will depend largely on a better understanding of the economy. - Mallory Fleming