The welfare state

[rainman]

You failed to address the effect of initial cheaper product / services.

Indeed, because it would be dwarfed by the massive increase in taxes required to retain something even vaguely looking like today's society. Also when business costs decrease, prices often don't at quite the same rate.

And why there should be “equality” in tax harvested from commercial entities vs. individuals.

Not saying there should be, just highlighting the existing (maybe necessary) imbalance, and calling into question the popular "oh noes, businesses are so overtaxed and they are the atlases upon whose shoulders our very existence is based" bullshit. It's a partnership - you need both business and labour for a good society. And both need a fair deal.

If you tax business beyond a certain point they simply go away

To a degree, but it isn't quite so cartoonish. I formed a business in a place where company tax was 50%, as did many, and did very nicely thank you. This was higher than the highest personal tax rate at the time, too. And faced with the same circumstances I'd do it again today - tax is not the only consideration a grown-up should take into consideration when making life decisions.

neither can we afford to support too many for too long

Agree entirely. The bugger is that in reality there is very little that can be done to fix this easily. I suspect we're at least a generation away from starting to fix this, or that future hard times will just fix it for us, one way or another. We can't afford today, tomorrow - the game is not "who pays?", but "who pays first?".

Let's just completely reverse the complete national current policy set affecting local investment markets, eh?... let's tax it less here than it would be off shore eh?

Not sure what policy set you mean specifically, but it's a bit off topic anyway. Punitive tax for profits shipped offshore could be good - but difficult to do, and quite possibly illegal by WTO rules or similar - although would kill any benefits to the suggested zero tax rates of course. The reason overseas people would invest here is low costs (labour, taxes, etc) for decent skills and resources, so that they can get a return. Since they are overseas businesses, that means they want to export said return, not leave it here because they like us, FFS.

I think a finance minister that understood Stranger’s maxim would be a vast improvement on one that fails even to understand the necessity of spending less than one earns.

I agree we shouldn't have a deficit, long term. But gummint debt is pretty low, so maybe it's not the Finance Minister that should be spending less. Anyway, back to social welfare.... how to create jobs? Here's my 2c: we can't, in any meaningful sense. We foreclosed that option (and much more) when we sold everything not nailed down and completely opened our markets. One of the greatest ironies is that an arch-libertarian like Roger D actually implemented policy that reduced our freedom and increased our dependence. Which only confirms my prejudice that many righties are a bit fick when it comes to money...

[The Stranger:Me]

Umm OK, you really can't see what will happen there? That will drive wages down. Employment stats will improve but your plan will simply accelerate NZ's downward spiral into a cheap source of skilled labour.

Not sure of the mechanism you expect to see here Jim. Would you care to elucidate please?
By and large when say a big foreign national goes into a country and sets up sweat shops it is because cheap labour already exists there. They utilise third world rates to their advantage, they don't create them. In fact they often raise the standard of living considerably, going form say $1.00 a day to $2.00 a day.

Supply and demand is the key driver of wages. Come back to this thread in 2 years and tell me what's going on in Christchurch for tradesmen.
Skills are secondary to supply and demand. Good skills will only net you better income than the guy without skills. Look at India. High supply of labour and America outsource their progamming to India. Indian programmers get a pittance (at least did not so long ago). Not because they are unskilled, but simply because the supply is so high.

What I an talking about is increasing demand.

I must admit, I had started selling widgets, but changed it to KFC and threw in the foreign company issue hoping someone would raise another obvious issue here. Perhaps that is what you are driving at, but I would appreciate your take on how this scenario would spiral into a cheap source of skilled labour.

[The Stranger:Me]

Didnt the numpty say "leave it to the experts?"

Yes indeed you did say that, but why you insist on referring to yourself in the third person is beyond me.

I (initially) declined to answer a question which you placed your interpretation on you may recall. But somehow I doubt you really can actually recall much at all.

[jrandom]

Indian programmers get a pittance (at least did not so long ago). Not because they are unskilled...

Trust me. They're unskilled.

Obviously the occasional exceptions (usually those who've gapped it ASAP to work in Western countries) prove the rule, but, yeah.

[The Stranger:Me]

OK let's see. I'm basing this off 2009 numbers as that's what's easily available, so some reality distortion may occur, but:
- you want to take the roughly $9b company tax and pass it to consumers instead
- you would compensate for this by raising GST 5% (which ceteris paribus would only raise about half of the $9b, btw, so you'd have to up personal tax or cut $4b spending somehow - about the same size as the secondary and tertiary ed sectors, or the total of DPB+UB+ accommodation allowances, just to give you an idea)

Now (in 2009), companies made $569b in revenue, claimed $533b in expenses, and paid $9.8b in tax on the resulting $36b EBIT. (6.3% return on revenue on average?) Meaning they paid, on average, tax at 27%. I'm excluding GST as it just washes through.
Households, on the other hand, paid 36.5% on income only, and 49% if you include their share of GST, which doesn't wash anywhere but back to government.

Who're the bludgers, here, really?

Ah, I think you are missing something here.
YOU (the poor of this fine land) paid ALL of the tax in 2009 anyway.
Come on, do you think the companies printed the money?
NO, they collected it from you.

Now sure that is not entirely true (what about exporters, they eraned money that you didn't pay AND if their tax rate was actually zero they would then face arbitrary tarrifs on the other end) and to be honest part of the reason for my reluctance to answer in the first place as there are many exceptions at every twist and turn, but look at it in broad principals and it works. Yes the devil is in the detail, and I'm fucked if I'm writing a book to cover it all off. So again, look at it in broad principals.

Besides, as noted a straight reduction to zero would be silly.
In reality it would never reach zero. It need only reach a level where there is very low unemployment and may well be 20 or 25%.

Yes it does sound like ACT doesn't it. In my defence I put this to a young budding political candidate one evening over dinner at a resturant in Epson (no not Rodney) well prior to ACT's inception. He liked the idea, but favoured a tax break for additional employment. Interesting chap too, had a great way of looking at things - he was soo far outside the square it wasn't even a geometrical shape any more. But regardless of that - I'm absolutely positive I'm neither the first nor the only one to ever arrive at these conclusions on their own and I'm sure ACT aren't either.

[The Stranger:Me]

Trust me. They're unskilled.

Obviously the occasional exceptions (usually those who've gapped it ASAP to work in Western countries) prove the rule, but, yeah.

Well, given the crap that comes out of America that has been written in India I guess you are onto something there. Yet, I have had very satisfactory results with software purchased direct from India.

[jrandom]

Yet, I have had very satisfactory results with software purchased direct from India.

Well, given that the size of my personal-experience sample is very much not statistically significant, for all I know, India could well be 99.93% populated with coding geniuses.

Either way, to be honest, let's face it - regardless of how many of us witter on about our socioeconomic theories on the internet, New Zealand is going to stay a woodchip-and-milk-powder based economy, and India is going to stay a...

... what is India's economy based on, anyway?

Has it ever had one, as such? Or does it just sort of generally muddle along?

Quite frankly, most of my impressions of India were formed reading Rudyard Kipling's Kim and W. Somerset Maugham's The Razor's Edge, and subsequently modified by maddeningly dense Indian programmers. I'm not sure whether any of that has much bearing on the general reality of the place.

[Ocean1]

Indeed, because it would be dwarfed by the massive increase in taxes required to retain something even vaguely looking like today's society. Also when business costs decrease, prices often don't at quite the same rate.

Knocking a third off the purchase price of everything isn't beneficial to the economy? Adding the difference to wages and then taxing accordingly is a bad idea?

Not saying there should be, just highlighting the existing (maybe necessary) imbalance, and calling into question the popular "oh noes, businesses are so overtaxed and they are the atlases upon whose shoulders our very existence is based" bullshit. It's a partnership - you need both business and labour for a good society. And both need a fair deal.

Fair? How's fair relevant? My point was in reference to that maxim, make good shit easy to do, make negative return behaviour difficult. When (and if) business is easier to do here then results will improve and we can better afford occasional discrepencies in the work output / return continium. In the meantime consider lowering the minimum wage, so, y'know there's work for those who otherwise aren't worth employing. That's fair.

To a degree, but it isn't quite so cartoonish. I formed a business in a place where company tax was 50%, as did many, and did very nicely thank you. This was higher than the highest personal tax rate at the time, too. And faced with the same circumstances I'd do it again today - tax is not the only consideration a grown-up should take into consideration when making life decisions.

I'm an engineer. I like cartoons. And I don't do "grown up". I do know about cause / effect, though. My current business IS my labour. If I have a bad month I don't get paid. That's fair innit? The various mechanisms we put in place to allow non-productive entities to survive and in some cases thrive are exactly those that cause the distortions in that income / tax / support ratio you like to bang on about

Agree entirely. The bugger is that in reality there is very little that can be done to fix this easily. I suspect we're at least a generation away from starting to fix this, or that future hard times will just fix it for us, one way or another. We can't afford today, tomorrow - the game is not "who pays?", but "who pays first?".

A generation? fuck off, if you think there's trouble at t'mill now wait until they attempt to suggest to me that I have to work another few years before I can have some of my tax back to live in my dotage, (and then only if I can supply proof that I'm utterly destitute, in triplicate). There'll be absolute hell to pay I do assure you, so they'd fucking well better get it sorted pretty much right fucking now. As for the various forms of support required by those who have never contributed anything from which to draw in adversity... Every single generation before this one did it better, let's check how they did it eh?

Not sure what policy set you mean specifically, but it's a bit off topic anyway.

Policies that punish our own citizens,(corperate and individual) for saving. They're what cost us our familly silver in the first place, not dem selfish right wing pricks you like to blame for the final and inevitable act of selling it.

The reason overseas people would invest here is low costs (labour, taxes, etc) for decent skills and resources, so that they can get a return. Since they are overseas businesses, that means they want to export said return, not leave it here because they like us, FFS.

Not so long ago I closed the doors on a NZ$20M manufacturing operation. Literally. It closed not because it failed to make an adequate return but because another of the multi-national's enteprises needed our product range to help justify a capital upgrade. The productivity of that plant was lower than the one here, but the country in which it was based had a more favourable tax regime. The premium commercial tax rate was actually slightly higher than NZ's, but there were signficant differences in how capital plant was depreciated. We'd have had to be almost twice as efficient as them to force head office to reconsider shutting us down.

200 jobs.

Gorne.

More recently a similar excercise demonstrated that a particular NZ manufacturer needed to make product 4% cheaper than it's Au counterpart to prevent it's orders being filled from Aus. The wagebill was 18% less, every other cost was higher. We'd have lost that one too but for the ChCh earthquake.

I have no idea, (and neither does anyone else) if NZ business is getting good value for their tax dollar. I do know, from bitter personal experience that the various individual policies are savagely detrimental to both start-up businesses and (re)-investment in existing ones.

Again, (engineer, remember?) make the good shit easy to do, eh?

I agree we shouldn't have a deficit, long term. But gummint debt is pretty low, so maybe it's not the Finance Minister that should be spending less. Anyway, back to social welfare.... how to create jobs? Here's my 2c: we can't, in any meaningful sense. We foreclosed that option (and much more) when we sold everything not nailed down and completely opened our markets. One of the greatest ironies is that an arch-libertarian like Roger D actually implemented policy that reduced our freedom and increased our dependence. Which only confirms my prejudice that many righties are a bit fick when it comes to money...

By righties I assume you mean those dudes that traditionally have money? The ones with some idea what it is and how it eventuates? The ones usually responsible, (outside of government in all it's widely diverse forms) for it's existance in any given area / industry?

[FJRider]

Well, given that the size of my personal-experience sample is very much not statistically significant, for all I know, India could well be 99.93% populated with coding geniuses.

Either way, to be honest, let's face it - regardless of how many of us witter on about our socioeconomic theories on the internet, New Zealand is going to stay a woodchip-and-milk-powder based economy, and India is going to stay a...

... what is India's economy based on, anyway?

Has it ever had one, as such? Or does it just sort of generally muddle along?

Quite frankly, most of my impressions of India were formed reading Rudyard Kipling's Kim and W. Somerset Maugham's The Razor's Edge, and subsequently modified by maddeningly dense Indian programmers. I'm not sure whether any of that has much bearing on the general reality of the place.

Check it out yourself ...

http://en.wikipedia.org/wiki/Economy_of_India

[jrandom]

http://en.wikipedia.org/wiki/Economy_of_India

(a) Linking to Wikipedia is cheating.

(b) I read it and I still have no idea. Basically it seems that the place is fundamentally fucked, but being chilled about that fact is such an ingrained tradition that nobody really worries about it.

[FJRider]

(a) Linking to Wikipedia is cheating.

(b) I read it and I still have no idea. Basically it seems that the place is fundamentally fucked, but being chilled about that fact is such an ingrained tradition that nobody really worries about it.

10% unemployment ... so their biggest "gross domestic product" is the availability of cheap labour ... They're spending more on imports than exports ... so attracting foreign business is their priority ... and it's working ...

Low salaries in most sectors ... mean a high corruption rate ... anything can be bought ... (remember the Exide battery factory debacle)

The military are equipped with Russian gear ... and is now a nuclear power ...

And ... with Pakistan a hated neighbour ... things are starting to get scarey ... but we are on the other side of the world ... so it's ALL ok ... eh ... !!!

[rainman]

Ah, I think you are missing something here.
YOU (the poor of this fine land) paid ALL of the tax in 2009 anyway.

Of course, in prices - but not explicitly. Your logic is based on the fiction that businesses would permanently drop prices directly in line with reductions in their tax rate. (Got any empirical evidence for that?) By that logic they should slash their wage bills, so they could discount product to the consumer... Henry Ford figured that one out a while back.

Knocking a third off the purchase price of everything isn't beneficial to the economy? Adding the difference to wages and then taxing accordingly is a bad idea?

Don't see it happening. Got any prior examples, empirical evidence, that sort of thing? Y'know... facts? Anyone in the world done anything like this and had it studied? Must be heaps of cases... no? 'Cos I'm pretty sure a moment's googling will find cases where this is not always true.

When (and if) business is easier to do here then results will improve

We're about the easiest place in the world to do business. Get a grip, man, and quit yer whining. Tax is a necessary part of a civilised society. Our tax rates aren't even that high.

I'm an engineer. I like cartoons. And I don't do "grown up".

An honest assessment; onya. But the problem is society is not tractable to engineering solutions. People are messy things - particularly when money is involved.

My current business IS my labour. If I have a bad month I don't get paid. That's fair innit?

Me too, but so what? You think this is a unqualified good? How about the self-employed who are just de-tribalised wage slaves, rather than brave entrepreneurs with the wind in their hair, leaping from challenge to challenge?

Only in bizarro-engineer-world is everything so idealistic and deterministic. Do you seriously think the entire society could be self-sufficient self-employed, live-and-die-by-the-sword small biz owners? It's not 1700 anymore.

There'll be absolute hell to pay

Yet by the time I get there undoubtedly I will have to work the extra years, and be means tested too, and I may be lucky to get that. My kids probably won't get a bean. The issue with raising the super age (like Aussie and the UK, btw) is not dole bludgers, it's boomers - which group I suspect you are one of.

Not so long ago I closed the doors on a NZ$20M manufacturing operation....200 jobs....Gorne.

Globalisation's a bitch. The liberalisation of this economy in the 80s has well fucked it, we didn't get growth, stable prices, full employment, or a balanced current account. Exports fell in a hole - funny that - and we became more dependent and less free. Most incomes nett of debt have not grown significantly. We have an entrenched underclass, and few local industries to keep them busy. Look at the Hillside workshop losses - where are those guys going to get work? Not like we have a big industrial sector.

Anyway it's too late to fix it now, and with the trouble rolling in over the next 10 years, well, we're fucked. Just remember who did this to you, is all I'm saying - those fine captains of industry that you aspire to be. But why you lot continue to defend and advance this Friedmanite bullshit when it's clearly screwed you over is beyond me.

By righties I assume you mean those dudes that traditionally have money?

No, I mean neolib useful idiots who think they know shit. Here's a parting quote from Alan Budd, who was involved in the Thatcherite version of the same game, with a different engineering view:

I was involved in making a number of proposals which were partly at least adopted by the government and put in play by the government. My worry is as follows; that there may have been people making the actual policy decisions, or people behind them, or people behind them, who never believed for a moment that this was the correct way to bring down inflation. They did however see that this would be a very good way to raise unemployment. And raising unemployment was an extremely desirable way of reducing the strength of the working classes; if you like, that what was engineered there - in Marxist terms - was a crisis of capitalism which recreated the reserve army of labour.

[The Stranger:Me]

Of course, in prices - but not explicitly. Your logic is based on the fiction that businesses would permanently drop prices directly in line with reductions in their tax rate. (Got any empirical evidence for that?) By that logic they should slash their wage bills, so they could discount product to the consumer... Henry Ford figured that one out a while back.

NO! I clearly cover that in my post.
I state that business by nature is greedy.
That (as I see it) is it's purpose, it's reason for being.
As such I need no evidence.

FFS man, stick your preconceived notions aside and entertain the possibility that there exist options beyond repeating the same mistakes over and over again.
A hint Google Albert Einstein's definition of insanity.

[Ocean1]

Don't see it happening. Got any prior examples, empirical evidence, that sort of thing? Y'know... facts? Anyone in the world done anything like this and had it studied? Must be heaps of cases... no? 'Cos I'm pretty sure a moment's googling will find cases where this is not always true.

I don’t see it happening either. Don’t believe prior examples or the lack of them prove fuck all. All that’s needed to explain the upward historical tax trends is the greed of those who believe someone else has their share of money.

We're about the easiest place in the world to do business. Get a grip, man, and quit yer whining. Tax is a necessary part of a civilised society. Our tax rates aren't even that high.

I’m not whining. I’m not blaming tax, per sae. I’m simply describing NZ business failure modes I’ve become familiar with. The history of business failures here suggests that either our businesses are uniquely incompetent or the environment is caustic. In some cases businesses that have failed here are the same ones that are successful off shore. My observation based on impartial professional involvement: the environment for businesses in NZ is less favourable than our trading partners. Don’t shoot the messenger.

An honest assessment; onya. But the problem is society is not tractable to engineering solutions. People are messy things - particularly when money is involved.

I don’t give a fuck how messy “people” attempt to behave, they need to live within their means. Good advice on how to achieve that has been around longer than recorded history, I’m sure you’d have no problem googling it.

Me too, but so what? You think this is a unqualified good? How about the self-employed who are just de-tribalised wage slaves, rather than brave entrepreneurs with the wind in their hair, leaping from challenge to challenge?

As opposed to hiding under the skirts of an employer? Absofuckinglutely.

Only in bizarro-engineer-world is everything so idealistic and deterministic. Do you seriously think the entire society could be self-sufficient self-employed, live-and-die-by-the-sword small biz owners? It's not 1700 anymore.

Of course not. But the vast majority need to be producing real live goods, and even then there’s a limit to how many camp followers they can afford to support.

Yet by the time I get there undoubtedly I will have to work the extra years, and be means tested too, and I may be lucky to get that. My kids probably won't get a bean. The issue with raising the super age (like Aussie and the UK, btw) is not dole bludgers, it's boomers - which group I suspect you are one of.

I once had a senior politician tell me that I couldn’t seriously expect the government to support me in retirement, it simply wasn’t financially possible. I suggested that not only did I expect exactly that but given that it’d take a relatively small portion of my lifetime’s tax contribution to make that possible I’d very much like to know why him and his mates had conspired to spend that portion on everything but. What’s cost me any reasonably comfort in old age isn’t some minor bulge in the age demographic, it’s the purchase by successive government of the votes of those who contribute nothing.

Globalisation's a bitch. The liberalisation of this economy in the 80s has well fucked it, we didn't get growth, stable prices, full employment, or a balanced current account. Exports fell in a hole - funny that - and we became more dependent and less free. Most incomes nett of debt have not grown significantly. We have an entrenched underclass, and few local industries to keep them busy. Look at the Hillside workshop losses - where are those guys going to get work? Not like we have a big industrial sector.

Kiwirail desperately need heavy engineering support that actually produces effective results, trust me, Hillside Workshop losses are mostely due to their inability to provide that.

Anyway it's too late to fix it now, and with the trouble rolling in over the next 10 years, well, we're fucked. Just remember who did this to you, is all I'm saying - those fine captains of industry that you aspire to be. But why you lot continue to defend and advance this Friedmanite bullshit when it's clearly screwed you over is beyond me.

What’s fucked the economy is the loss of primary and secondary industry. Without those the burgeoning “service” industries have no clients capable of supporting them. We have an entrenched underclass because of a lack of the acceptance of a direct link between the production of marketable goods and income. Yet again: make wealth creation easier, make alternative behaviours more difficult.

No, I mean neolib useful idiots who think they know shit. Here's a parting quote from Alan Budd, who was involved in the Thatcherite version of the same game, with a different engineering view:

Congratulations, you got to use neolib in a sentence. The rest is drivel.

[jaffaonajappa]

The military are equipped with Russian gear ... and is now a nuclear power ...

And ... with Pakistan a hated neighbour ... things are starting to get scarey ...

Ohhh come on! Troll.

Anyway, theres too much reading and not enough videos on this thread.