h2g2 The Hitchhiker's Guide to the Galaxy: Earth Edition

Perhaps?

http://www.johnlewispartnership.co.uk/

MMF

Tell you what. Be good chaps and just answer post#36 in its own terms.

Because I think, and in fact I'm sure, that if the private sector contracts and the public sector doesn't, and if the private sector cuts pension benefits and the public sector doesn't, and if wages decline in the private sector but not in the public sector, then that's unsustainable, whatever else the word might mean.

We have to look after wealth creation first, don't we? And a great chunk of what we've been relying on for wealth creation, in financial services, has now fallen over, hasn't it? And so the first priority has to be to keep a productive economy in high value-added and exportable manufacturing and services going? That's what we build everything on in the first place, right? And only when we've secured it can we use its earnings to pay for the public sector, surely?

If I've got this wrong, then please explain. I honestly don't understand why people contest it. You lot always sound to me like intellectuals in denial about your own jobs not being as vital as those of craftsman.

OK...but first let's turn it on its head. What if *everyone* were wealth-generating craftsmen. Would that work - or would we still need some level of public service? If so - what level?

I'm not entirely disagreeing, but it's a decision question: where to but the balance?

I think we're on dangerous ground when we see the public and private sectors as completely distinct, without any impact of one upon t'other.

More people unemployed in the private sector requires more staff in the job centre.

Money into public capital projects like roads and new schools means support for the construction industry.

Public sector forestry produces a tangible product.

3rd sector support for community projects can lead to job creation, and to a lowering of social unrest (and hence a saving in the policing bill).

Ireland was quick to pick on its public sector as an easy target, and I know colleagues there are facing wage and pension freezes (and cuts) as well as expenses being severely pruned.

I'm not saying we don't need a public sector. Of course we need it.

I'm saying that it's dependent on the private sector to fund it, so when the general economy declines, the public sector has to be downsized and its costs have to be cut.

And as for the craftsmen point, here's a controversial thought. What job do most top-performing schoolkids aspire to? That would be medicine, right? But medicine doesn't generate direct wealth, or very little anyway. And the same kids seem to think that engineering, say, is a blue-collar career with inferior earnings and intellectual reward.

Do we really want half our straight-A students going into a single career path, whatever that career path is?

And then the government compound this imbalance by paying GPs a hundred grand to try stop them leaving in mid-career. But they'll still retire early to fat, protected pensions, won't they?

Aon were the first big firm to pull out of final salary pensions. Now they're cutting contributions, and they might well get away with it. If they do, how much of the private sector will follow? How close are we to a position where no school/uni-leaver in their right mind will consider a private sector career, because the long-term security is so inferior?

Because soon after we finally cement that mindset, it looks to me like all the wheels come off and the UK economy goes so far south that nobody gets a pension.

Same questions as before still apply. It's untenable, isn't it? I'm not slagging off the public sector. I'm challenging the people who seem to believe it's an economic foundation, rather than a desirable investment made possible by a more fundamental economic success.

Ok, to answer pinniped post 36 on its own terms.

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That figure is wrong. It would equate to 20m people given pensions of £50k a year, and is a bit under double the govt's annual budget. I don't think we've had that many MPs. It's unsustainable if we can't pay for it indefinitely; it may surprise you that I'm quite open to the idea that it is unsustainable. Some evidence would be nice.

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I'd agree, if it's necessary.

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More or less; can't forget services though.

<< And you do accept that people who work in the public sector contribute very little to that balance of trade? >>

I think it's almost impossible to measure in some areas. If you mean people who clean schools, then yes. If you mean teachers of university lecturers, I genuinely don't know how you'd work out the 'value added'. How do you work out the effect that Craig Venter's phd tutor had on his companies (if he did one; maybe it was a high school teacher who inspired him)? Or Bill Gates not being murdered because police stop people getting killed? Or the publicly-funded infrastructure that all private sector firms take advantage of? Basically while the private does generate wealth, the public sector provides a huge platform for it to do so. As Beatrice said, it's maybe not productive to see them as totally distinct.


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Yeah, pretty much, although higher interest rates can offset that to a degree.


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We're as one!


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In the long term, certainly the public sector must be proportionate to the private sector. But also in the long term, we're much more likely to get back to growth than stay in a decade-long depression (if that does happen, we're royally screwed to the point where these pensions will merely be one of a number of huge problems), and that's how the ability to pay the pensions is worked out. If the economy starts growing again then it might be possible to pay for them without too much difficulty.

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How dull life would be if we never disagreed.

*admiring the polite and erudite debate that's going on here*

Timing's another factor though, isn't it. If we are reaching the trough of this depression later on this year, (as most analyses I've read indicate) after which we're in recovery mode - how much can we run down the public sector and then build it back up again? It's no secret that such a juggernaut ain't built for speed.

Timing's a big factor, yeah. This recession's basically caused by a lack of money (due to the banks being so crap); taking more money out of the economy in the short term would be totally nuts, which is why the govt is borrowing so much. Cutting back the public sector at the moment would damage the private sector enormously. Even the suggestion of cutbacks could cut consumer spending, as public employees might decide to reduce their own spending while they wait to see if they'll get paid off.

Just remembered another thing the public sector is doing at the minute: normally bills are paid within 30 days. That's been cut to 10 days, in order to improve cash flow to suppliers.

>> taking more money out of the economy in the short term would be totally nuts, which is why the govt is borrowing so much. <<

Yeah, but borrowing from where? I mean in the end - the final financier (who's getting an awful lot of business just now).

From anyone willing to lend. I'd bet govt bonds are quite a bit safer than shares at the moment. Pension firms, banks (any that have any money left), insurers and so on.

<< From anyone willing to lend >>

That's my problem. I have great difficulty accepting that there's much left that's still available...

Presumably even Mr Scrooge might let some go if conditions dictate - but how far off that are we?


[Or, more optimistically , are advances in technology (global-wise!) helping to speed-up the *natural* cycles (brings Kondrattieff to mind)? Can we look forward to boom/bust cycles of just months... weeks... days - and eventually fading away? ]

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I think the global finance industry has £trillions of assets. The UK govt has borrowed £140bn in the last year or so, which is a trifling amount compared to the total. It's probably not just to UK companies, but I've no idea. (If ReddyFreddy is reading this he'll probably have a better idea. RF?) And I think most of it will be a transfer of one type of asset to another, rather than finding spare cash down the back of the sofa.

<<[Or, more optimistically , are advances in technology (global-wise!) helping to speed-up the *natural* cycles (brings Kondrattieff to mind)? Can we look forward to boom/bust cycles of just months... weeks... days - and eventually fading away? ]>>

Well, globalisation is a daily reality for moving capital around (partly the credit crunch is so widespread because of the amount of foreign money invested in crappy American mortgages). It's possible that global govt action could end a recession sooner than otherwise, but I don't know. idea though.