You are being disingenuious .
A lot of the mortality was in the early years. Even today your first day of life has a higher mortality rate than any other day of your life.
What a difference a new government makes, eh? Only parts of the budget are entirely lunatic rather than all of it. I dealt with the playing around with fuel duty and further taxation on oil companies years ago when it was being proposed by idiot Lefties rather than idiot Tories. That it's someone from supposedly my side of the …
"The plan to subsidise deposits for first-time home buyers is even more glaringly insane. We've just seen most of the financial system of the western world collapse from the error of lending the money to buy a house to people who cannot afford to buy a house. As a method of digging our way out of this rubble lending more money to more people who cannot afford houses lacks a certain logic to it."
There's a huge difference between being able to afford to repay money loaned, and having tens of thousands of pounds sitting in the bank. I bought my first apartment 2 years ago with the help of a private shared equity scheme offered by the developer who put in 25% of the apartment's cost, enabling me to get a mortgage with effectively no deposit.
I'm in a perfectly stable job with decent career prospects and have absolutely no trouble whatsoever meeting my mortgage payments, but I did not have £16,500 sitting in the bank to put down a 15% deposit, which would have netted me a significantly more expensive mortgage than the one I currently have, having had 25% put down by the developer.
Without the help of a shared equity scheme, my currently perfectly-affordable situation would have been hopeless - No deposit, and the problem of getting one together becomes circular when you consider that renting an equivilent small apartment would have cost more per month than my mortgage currently does - Even if I did have a minimal deposit, it would have netted me a more expensive mortgage from the banks than i've managed to secure thanks to a shared equity deal.
I'm certainly not alone in this kind of situation, and was lucky as hell to have gotten a private shared equity deal from my apartment's developer that was actually a better deal than the Homebuy shared equity offered by the government at the time.
You (and the banks) need to seriously re-evaluate the difference between risky lending prospects (those who may well end up defaulting on loans that they cant afford, and who caused this mess) and perfectly good lending prospects with decent salaries, secure jobs and good credit histories, but who just dont happen to have tens of thousands of pounds kicking around in a bank account.
House prices don't reflect the cost of building the house. They have been massively inflated by
a) Supply and Demand and
b) The finance industry
I suspect that in most marriages in this country the lesser earning partner is working solely to pay the interest on the vastly inflated house prices which in turn only goes to make estate agents and bankers rich. The supply of houses isn't going to change very much unless we decide to build over every piece of land within 300 miles of London, so all this measure is going to do is to bump up the price of houses some more.
The more you are allowed to borrow as a first time buyer the more house prices are going to go up. The less you are allowed to borrow then, ultimately, house prices will go down. First time buyers will never be priced out of the market, because without first time buyers there is no market. If house prices go down all those who are sitting on paper gains lose paper money, but in the long run everyone except the bankers and the estate agents wins. The difficult part is managing the transition between now and sensible prices. No ideas here!
just reflecting the true situation. When this whole recession mullarkey started a few years ago, a heated debate in my office insisted house prices would fall by dramatic amounts ... 20, 30, 50%. Mysteriously, I can't find anyone today who remembers their bold statements, against my view that there might be a small decline, but the overall trend will be up.
Our ever-shifting social dynamic has more people getting divorced/seperated - which *doubles* house demand in a key demographic. Add to that the zero-incentive for housebuilders to build houses for families (twice the land, but the same price as an executive apartment), along with news that to KEEP PACE with population demands 300,000 *new* (i.e. where there were none before) homes are needed, and you can see why house prices cannot, and will not fall.
Shit transport and the insistence of employers for bums on seats is also a major factor in skewing house prices. But that's another rant.
there was as economics show on radio 4, either Tuesday or Wednesday (I can't recall).
anyway, the point I'm getting to is that in America it appeared that there was consequence to actions, banks did close, loans were foreclosed, homes were lost.
the end result, in the place where they were reporting from (Chicago?) even though they were in a nice neighbourhood there were now a lot of empty houses, there was also around a 50% drop in house prices.
Don't get me wrong, I don't want people to loose their houses, their lives, or their fortunes, but if that's what it takes for house prices to be actually realistic then I'd prefer that to these crazy schemes where the government are pissing away everyone's money helping a small handful of people.
I dont think the problem is supply and demad at all. If there was a demand issue then people would be living in overcrowded accomodation. This is not the case generally.
The problem is that Buy to Let has mopped up property, and distorted the market. Instead of ones housing costs going to provide accomodation (and eventually buy a house) it is now doing that, and supply a pension for someone else.
There is a demand for renting because people move around a lot more, and dont want to commit, so rent - fuelling buy to let. Then the government comes along and throws petrol onto the fire to pay for the feckless and workshy - bumping up the income for buy to let landlords enabling them to go and get another mortgage, inflate the market that little more - and the cycle continues.
The finance industry were just supplying a service. What should have happened is that they felt the concequences of their folly, and yes, some should have gone bust.
We are all living in a parallel universe, where the recession has been papered over (with free money). Sense will return eventially, and those that stoked the fire will, should, get very badly burnt. Including those that take up all these schemes in an attempt to maintain artiicially high house prices.
I think what you're missing is that pensions are not to compensate for "death" so much as "the inability to earn".
How many people do you know over 65 who are in a full-time job, or could manage a full-time job, or can *get* a full-time job? It's not zero but it's also not a huge percentage - yes, you have hard-workers carrying on way past infirmity and people slinking off with a bad back in their 20's but the 65 is the age at which it's harder for you to earn money because of illness, infirmity, or just plain inexperience with the necessary tools. Unemployment is already high and do you think it's the 20-something's who will work for £6 an hour, or the 60-something's who have worked themselves to exhaustion, got huge pensions nearing and have been earning many times that who will keep their jobs?
Hence the rise in age-discrimination legislation to counteract that, and making retirement more voluntary. It probably won't be enough.
Pensions are a complicated and now almost outdated thing, and the age will keep rising and rising and although our health rises, it rarely rises in line. Our earnings will never cover more than an "insurance" and so ages will be pushed back, contributions will be pushed up and pensions will be pushed down as necessary to ensure it balances.
The fact is that I, at 31 years old, won't see a pension. By the time I do, I'll either be dead, or on some kind of disability benefit that effectively negates the need for a pension. By that time, the retirement age will probably be closer to 80. As an IT guy, if my skills are still "current" at age 65, let alone 80, then the IT world has more serious problems than the pension contributions of its members.
If I do work for 60 years (I was 20 when I graduated) and pay X percent to the government and live that long and hold a job for that long and then retire, I probably won't get much more than state pension is now, in relative terms, no matter what happens - unless I'm infirm where it'll get paid for me anyway (not to mention things like Winter Fuel Allowance). You also have to contribute the SECOND you start work (they used to say from 18, but you can still be in education at that point today, so how is that going to affect the tax I pay towards those people's pensions now and in the future?) and never miss a payment to get the pittance allocated anyway.
And then people wonder why the younger generations aren't engaged and aren't worried about their pension contributions. Myself? I just pretend that pensions don't exist. I don't contribute to them (but obviously pay my NI etc. in full) - and I work in education and have access to some wonderful final-salary pensions - and don't expect them to contribute back to me in the long run. It's a sad situation but it's one that I have to take account of - it's the most likely outcome that I will never draw it and if I do, it's unlikely to be much more than a token pittance.
Hence when legislation for a "compulsory" pension payment from your salary etc. have to come in.
I can only hope that I won't be around to scrape a living by the time retirement comes along. It's very doubtful that any pension scheme in the UK at that time will do anything useful for me.
"As an IT guy, if my skills are still "current" at age 65, let alone 80, then the IT world has more serious problems than the pension contributions of its members."
So you don't expect your skills to develop over your working life at all then? Most "IT guy's" I know (I'm one of them) like to keep my skills current, that way if you end up losing your job you can find another one a little bit easier.
Enjoy the working till you drop!
For the great majority mental ability and the ability to concentrate and the energy levels have deteriorated notably by the age of 65 (there are exceptions of course). It's at its most extreme with scientists and mathemeticians where productivity is demonstrably lower past the age of about 40 (again, with exceptions). The accumulation of knowledge and experience can still be beneficial in some areas up to the age of 60 (according to a number of studies), but basic cognitive skills start dropping from 27.
If anybody is able to operate as a top-notch IT technician by the age of 80, then hats off to them, but they will be very much the exception.
What's this obsession with living out one's life as though on a treadmill, giving one's all to work and finally snuffing it a tired and broken wreck in one's seventies? Much easier is to take life a lot easier, work less hard and accept the lower pay levels; that way you can maintain a skills-set right up to your mid seventies and carry on working at least part-time all the way. Granted you're not as productive when old, but better that than surviving on a pittance of a pension.
...is the suggestion of compulsory pension scheme. The Government may need to tweak employment taxation and pensions regulation when bringing it in, and it's by no means perfect, but a similar system to Australia whereby 9% of income goes into a regulated pension scheme is now in order. You can't have people just opting out of paying and banking on a State backstop. I'd also put an end to defined benefit schemes, especially for politicians, as they are in most cases poorly run and funded, thereby creating a never-ending financial hole for others to fill.
"If the employee paid all the NI, then the employee would demand higher wages (so they make the same after tax), and the employer would be able to pay that (because they're no longer paying employer's NI)."
If this happens, let's see whether employers would actually pass the entire ER NI onto the staff, or miraculously not, like the 2.13% VAT increase became 10% and 15% rises in prices.
"If this happens, let's see whether employers would actually pass the entire ER NI onto the staff, or miraculously not"
Disclosure: I am an employer
What would really happen is both; some employers would pass on the difference, others wouldn't. Those that don't would in the short term see reduced costs and therefore extra profits. That extra money would be in the pot to pay existing and/or new employees with.
The fact of the matter is that someone being 'paid' £24000 is actually costing their employer £27072, and the employee in question is actually receiving £18484. The employer pays this as the labour in question is worth £27k to them, and the employee considers the soul destroying drudgery worth the £18k
If employer's NI ceased to exist; the labour would still be worth £27k to them (at least for the existing job we're discussing here). Therefore the pay for that particular person could rise to that without the employer suffering. If the money wasn't passed on, the money would probably stay in the conceptual pay pot and be there for future rises or new employees, and even if the employer just banks it as profit it'll still be spent somewhere (towards a new Jag? redecorations?). If there's any competition whatsoever for the business, then the competitors will be doing the same sums. If employer A can afford £27k for a widget polisher, then employer B probably can too, meaning there will be increased pressure for pay rises because the others can afford to 'pay more' at the same actual cost.
If I suddenly started paying employers' NI and didn't get a payrise to compensate for the same amount, I would look for another job at an employer that isn't that dumb. In fact, there's possibly a small saving there somewhere for the employer who has a simpler tax calculation to make. Some employers will inevitably try to do this though, especially if they were wanting to make pay cuts that are normally impossible to put into effect. But when push comes to shove, the economics of the employment market means you have to pay a salary high enough to attract the employees you need. And that depends on the market you are operating in.
If your industry has a buoyant employment market then your employer would be insane to give you a pay cut, and if it's a shrinking employment market then the natural background will be one of wage deflation and redundancies anyway. It seems reasonable to suggest that in the latter circumstances, the option for employers to apply an across-the-board pay cut would have the effect of deflating wages rather than make redundancies, and allow salaries to adjust quicker to the economics of the market. Whilst this won't be good news for some who still have their jobs in depressed markets, its effect is actually neutral and you could argue that it is more flexible and less disruptive to the economy as a whole.
Your arguments over the stupidity of the reduction in duty on one hand and increasing taxes on the other is not a coherent argument. The majority of companies in the North Sea are dealing with a declining supply. Improving extraction will simply extend the life of the field, it has limited effect on supply from the field which is fairly constant based on flow through. Moreover, fuels are separate commodities to oil. The are all traded separately on the commodities market.
The Govt has simply sought to a zero cost solution by moving the tax from consumer to provider.
Making the product more expensive actually has massive downstream consequences for a much wider part of the economy than the actual oil exploration/extraction industries. If the price of goods increases to much they will not sell, manufacturers then go out of business, large numbers of people become unemployed, those still working cannot afford to go to work and ultimately you get civil disturbances on an Egyptian level (is this a new form of measurement for El Reg?).
The bigger problem is that demand outstrips supply and the issue of increasing supply is not a quick fix that can be achieved before the start of the riots. Building new refineries to increase capacity takes time (years) and the vagaries of global economics make it a risk ventre since there is no guarantee that the capactiy will still be required in x years (just think of all the electric cars that will have been sold in the meantime). It is only when the refining capacity increases that supply of oil becomes an issue and that is already being addressed by the number of new wells being sunk in places like the Gulf of Mexico.
In reality the Govt did the bare minimum to avoid civil unrest this summer (and even that is not a given) and when the cuts do start to happen they will have to make the harder decision, whether to reduce the rate at which they cut the defecit or risk marches every week from the unemployed benefit-less hordes and middle classes who have realised that £9k in 2012 is not the end but the start 'cos will be £10-12K by 2015.
"We've just seen most of the financial system of the western world collapse from the error of lending the money to buy a house to people who cannot afford to buy a house"
No, you've seen the US crash because of the verging on fraud antics of the financial markets, including the infamous CDS. Ireland has crashed because of the verging on corrupt antics of lending money to property developers to build houses noone wanted or needed. Error, my backside. Fraud and gambling. IIRC, if you took all the mortgages in the UK, added them up, you wouldn't cover the potential losses made by selling,chopping up and reselling the same thing five, ten, twenty times.
As for the trick of lumping three separate things together (income tax, employee NI and employer NI) in order to "prove" that tax is too high then this is mathematical trickery. Why stop there? Why not chuck VAT in as it costs for heat, light, water, materials etc. Business rates on the office? Fuel duty? Company car tax? Go hog wild, on that basis, I'm sure we can get the "tax" up to about 125% of salary.
The employer pays NI. The employer doesn't pay the employees income tax, nor the employees NI. (It collects it, but doesn't pay it.) Trying to add them all together and come to some 43% figure claim is hugely disingenuous because they are separate things.
There are enough differences between the different types of tax that it's tricky to lump them all together, but the results aren't useless.
NI: part of the payment arising from an employer isn't part of wages, but it's part of the total cost of employing somebody, and it's a proportion of wages. NI does have a sort of "allowance" at the bottom end but it has a definite top limit and a fixed rate. So the high-paid pay less as a proportion of income (but probably pay for private medical care and pensions).
Income Tax: Based on income, with tax allowances, So the low-paid pay less as a proportion of the total, even before variations in tax rate come into play. No upper limit.
Combining the two is not going to be simple.
All taxes are paid by the employee - if you follow the money trail to the end. Income tax is paid by the person as they can get their income from many different sources. The person pays employee NI because it's labelled employee tax. But employers tax is also paid by the employee in terms of a lower take home salary as the business does not have a magic money tree to create money - it has to come out of some budget. The reason they can be lumped together and not include business rates and such like is because the other taxes can't be allocated to individuals unlike NI.
VAT is not paid by companies because they generally can claim it back. The only people who pay vat is the general public.
Go back to school and learn some real business.
For there is a book avaliable by me over on Amazon. "Chasing Rainbows", essentially, assume that the scientists are right about climate change. Great, so, what should we do? Turns out to be economic growth, globalisation, markets: the neoliberal mantra (plus a carbon tax), rather than anything that the Greens propose.
Greens are very supportive of carbon tax. After all, one of their key points is that market prices of energy don't reflect externalities. In fact the Green Party manifesto has the following line in it:
Introduce a Carbon Tax based on carbon content of fuels
That's from the 2004 manifesto by the way, so their proposal has been around for 7 years.
I'm not a Green Party member, I just figured that it was so completely obvious they'd support a carbon tax that I thought I'd look it up.
Pensions are taxed, funnily enough. Lump the NI into income tax and pensioners have no way of negotiating with an 'employer' for a compensatory wage increase from the 'employer's ' NI contribution . So the government's aim is to get the pensioners to take a significant pay cut ?
40 odd years ago it was realised that the ordinary worker would not voluntarily save for a pension in retirement so Final Salary (and Government top up ) schemes were introduced.
When the good times showed notional surpluses in the schemes in the 80's and 90's the employers managed to convince the governments of the day to give them various means to leech them away. (Actuarial valuations based on spot market prices being just one...)
Result? When the bad times came along the funds showed alarming deficits and were/are deemed 'too expensive ' for you lackeys, so it's back to square one for the workers.
rant over... :( (until my pension gets clobbered for more tax!)
"Setting high prices for something means that we'd like to encourage companies to find more of it and encourage people to use less of it."
I fail to see how "setting high prices" which come from government taxes inflating the end-user price has the effect of encouraging companies "to find more of it." In fact the opposite occurs. Just as with consumers the producers are encouraged to find something better to do with their resources.
On the other hand if market conditions supported higher prices that the producers got to pocket, *then* they'd bust butt to bring more of it to market.
When taxes make the price artificially high there should be more market stability. (Contrast that with the USA.)
Add to that the fact that our current global supply falls a little short of the required billion years and you have a more predictable return, even if it takes a little longer to get it.
The fisrt comment? The one about life expectancy? The one actually addressed in hte piece like this?
"Average lifespan (hugely lowered by child mortality of course) was 45 for a Prussian. Average lifespan for someone who had managed to reach working age was more like that 65 figure. So, being rational (yes, I know the idea of rationality in economics has taken something of a hit just recently) your average working man would be trying to save enough to carry him through from the end of working life to his likely age of death: 65-ish.
What the pension did was insure yon sausage muncher against the risk of living too long and outliving those savings. It's a happy circumstance to live long, less happy to do so in penury.
Lloyd George's implementation of the same plan here started the pension at 70, it wasn't lowered to 65 until later and to 60 for women only after WWII. But now, of course, the average age at death is more like 77, 78 for men, 81, 82 for women, and there doesn't seem to be any great slowdown in the rate of its increase (one of the more fascinating, for a given value of "fascinating", demographic facts is that there is now almost no difference between life expectancy at birth and life expectancy at working age. We've largely conquered those appalling rates of death in infancy)."
That's pwned these days, is it?
Yes, in The Guardian piece. In the first comment. About real-world economics:
"Energy supply in the real world is sadly not even close to perfect market economics, as the barriers to entry are so high."
Maybe you have the contacts and the experience to get a bunch of investor types interested in whatever high cost scheme you have on the boil, but when you start talking about billions of dollars to go up against entrenched multinationals and belligerent nation states, you have to be pretty rich and pretty influential to get people interested. And rather bulletproof, too, in various respects.
In this context, name-dropping Smith starts to look like name-dropping Newton at a conference on galactic mechanics.
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