Saturday, 24 August 2013

Now, who could they be talking about...

From Mises

"To argue that Africa Great Britain will be transformed into a manufacturing hub, one would need to argue that the average African’s Britains time preference will decline in order to release the necessary savings and investment to develop rich and sophisticated higher and middle order goods sectors. AfricansBritains must stop spending on consumer goods and start saving and investing in production processes. However, with mismanaged currenc[y[ies, negative real interest rates, and rising consumer credit, along with money mismanagement abroad, there is a strong anti-saving institutional structure in place. To the extent that we are seeing an increase of savings rates, the state is frustrating these efforts and funneling resources toward government consumption.

4 comments:

Bayard said...

Reminds me of the scene in "Edge of Darkness" where Joe Don Baker's character, Darius Jedburgh, is accosted in Britain by a fellow American and asked why he is not in his usual haunts, the Third World and he answers "This is the Third World".

paulc156 said...

"Britains must stop spending on consumer goods and start saving and investing in production processes."

...but UK.PLC sits on huge cash piles.

"However, with mismanaged currency"

A 'lower' currency wouldn't normally be expected to put off potential 'exporters', who are presumably the same folks who we want to scale up 'investment', so how would this put them off?

"To the extent that we are seeing an increase of savings rates, the state is frustrating these efforts and funneling resources toward government consumption"

So they should further cut public pensions, historically low JSA, etc.
Which in turn increases the 'reserve army' of unemployed forcing down wages...further.

Lola said...

@P156

"Britains must stop spending on consumer goods and start saving and investing in production processes."

...but UK.PLC sits on huge cash piles.
This is because of bad government policy, not despite it nor a cause of it.

"However, with mismanaged currency"

A 'lower' currency wouldn't normally be expected to put off potential 'exporters', who are presumably the same folks who we want to scale up 'investment', so how would this put them off?
Mismanaging a currency does not just affect export opportunities. It further confuses the signals on which entrepreneurs must base their investment decisions.

"To the extent that we are seeing an increase of savings rates, the state is frustrating these efforts and funnelling resources toward government consumption"

So they should further cut public pensions, historically low JSA, etc.
Which in turn increases the 'reserve army' of unemployed forcing down wages...further.
Yep. Why should one group of people – tax consumers – should be insulated from the effects of government and bureaucratic failure on another group – tax payers? In any event that is only part of the story. Spending on boondoggles like HS2 sucks great gobbits of wealth out of production.

paulc156 said...

"...but UK.PLC sits on huge cash piles.

-This is because of bad government policy, not despite it nor a cause of it."

'Bad' Government policy 'causes' big increase in retained profits[cash pile]is a circular argument. Chicken and egg conundrum that requires some evidence. We've had bad government since the rise of the nation state. What's so different about bad governance now.

"Mismanaging a currency does not just affect export opportunities. It further confuses the signals on which entrepreneurs must base their investment decisions."

...so begging the question. How would 'you' like the currency to be managed?

"Yep. [to increased hardship on public sector and benefit recipients] Why should one group of people – tax consumers – should be insulated from the effects of government and bureaucratic failure on another group"

One reason would be you haven't established that government or bureaucracy has 'caused' anything.
I can just as plausibly 'assert' that management [FTSE100/private sector]has failed to invest because they prefer self enrichment today [remuneration since crisis has been rather generous] to long term benefits for everyone else. That without some new and transformative technologies capital is demonstrating its limitations. Which in good circular fashion is one plausible reason why capital tends to lobby for and get what capital wants from governments. That is, we have the governance [good bad or indifferent] that capital wants.