Are all caring people socialists?

They might not call themselves one, and they might not call themselves religious either, but, when you do certain things, surely you have taken on some attributes of that nature, e.g. a greedy capitalist, that decides to give a single penny away, shall we call him Scrooge?
Has taken on a more caring personality, but how much?

There is nothing wrong with making a profit, and it is the only way an economy can function, and people need rewards and security, but the question becomes at what point, where should the balance be?

You could take the extreme example, what happens when the rich have their livelihood threatened, as per WWI or WWII, the rich always have to most to lose, could lose everything, but then they realise that it will be the worse off, the poor, who are in sufficient numbers to protect them. Are the poor healthy, well fed enough, to fight?

This is what happened after WWI, a land fit for heroes?
The payment, the begrudging understanding that when under threat from a strong enemy, it doesn't matter how rich you are, but the rich will have to pay.

Perhaps it is a lesson that the rich will always forget and will only show any respect to poorer people when their lives have been saved by them. Those lives that they don't hold dear, but are sacrificed for their survival.

The Royal Family realised it had to change.

Dodging taxes, becoming a tax exile, is like two fingers up to every poor person that has died in any war for their country where they were born, especially if those taxes go to the police, to protect the rich from theives, the armed services to protect the rich from nut cases of tyrants who want a bigger empire, the research done in universities to make drugs or new immunisation programmes, that protect the rich from diseases.

You could get private armies, private police forces (militia), companies doing the research as well, etc etc, but efficiency is lost in some cases.

If the fighting force to beat Hitler etc (Axis powers) numbered 50 million say, then each rich person would theoretically need the same size army, navy, etc, etc. taking there to be 10 million rich people in the world, they each would need 50 million soldiers to protect them, i.e. more than the whole planet population i.e. but, working together, the rich people don't need so many between them, so their costs are reduced.

But it isn't just the rich.

I have given an extreme example here, as many richer people, e.g. Prince Harry serve in the armed forces.

The problem with rich tax haven exiles, is that no one would fight for them, unless those locations have their own army/navy/airforce medical care etc, etc, etc.

But there is an increasing tide of rich people who don't think like that, and when the next war comes, will they come crying home to their home nation, if their tax haven gets invaded?

Or will they be dead? So much for being rich.

With the banks failing, rich people don't realise that when a government steps in to bail the banks out, it is the whole population of the country that has just supported the rich, supported the system on which the rich depend.

The loss of the rich has been converted into a longer term debt, being repaid by the whole population. If the rich want secure banking, all around the world, they have to pay for it, but again, you've heard of NIMBYs, I think this is a case of ANYONE BUT ME.

That secure banking takes legal systems, political agreements, but then if the poor do not earn enough to pay tax vis 50% of Americans, isn't it the richest 50% of the population that has to........repay that debt.

This is really clever. The rich refusing to pay off the debt that they have created, that they owe themselves.......because they are obsessed with the size of their current account / net worth?

Of course the bankers should be paid based on the size of the deals that they do, and if it brings in business / work to the UK that is good, as that creates employment.

If we are all having to pay off the Billions of debt that was incurred by reckless banks, i.e. pay money back to the rich for the failings in the capitalist system, i.e. no proper regulation, we are all consigned to a lower standard of living, paying for that reckless behaviour, unless the government reduces taxes for the poor, or pays for income support for those without work.

Keynesian economics / stimulous might work in a country that hasn't mortgaged itself up to the hilt, but the cost of borrowing means that the debt has to be paid for.

As we have had three things:
a) Bank system regulation failure
b) Private Finance Initiative - what rate of interest? - well above the 0.5% Bank of England base rate
c) War on terror

If the government is borrowing at higher rate than it lends, what bank would survive?
Government departments that do not tie their deals up to the Bank of England base rate + 1% or so or RPI / CPI should be sacked, or prosecuted.

If companies (rich people) get good deals, and the population is limited to savings accounts with interest rates below inflation after tax, there is no reason to save for the less able people - of course there isn't, why save your hard earned cash, if it is going to be eroded in value, year after year?

I am not talking about rich people, people who know about investing, with enough money to invest, some might have a company pension, it is the lower paid, with no reason to save.

You have to ask the question, how many more shocks / costs will each government face?
Could Greece survive or thrive on more borrowing?

The Keynesian answer to everything?

If the Greek people were about to invent a fusion technology and license it to the rest of the world, cutting the cost of energy to the developed world to below that of oil & gas, then yes, certainly they could borrow a lot of money. Or several other technologies that many people would pay good money for, either licensing or in terms of products that they produce?

You couldn't repay it on farming, olives, etc

Are they going to reinvent their country as a major financial centre?
Are they going to become a centre for aerospace, or any other major manufacturing sector?
Anything to increase country income?
Is the government good enough to create work to get income or reduce expenditure (the country's balance of payments)?

Is it going to happen?

Living beyond your means applies to whole countries as much as a family or company or individual.

But why have unemployment? why pay for people to sit around doing nothing?
Why not require those people to work for charities.
Why not require those people to do community projects etc.?

Will the rich insist on conditions that demolishes the capitalist system, country by country?

So could Greece borrow more......No.

There has to be a reestablishment of an equilibrium.

Greece, where no one pays tax or at least lower tax than their government spending dictated, used to have inflation, running at 10% or more.
If the government couldn't borrow, except at high rates, it had to print the money to pay government workers, especially as they didn't get enough tax in.

But Greece wanted to join the Euro - cheap borrowings, brilliant, cook the books, get in under the conditions required for joining the Euro, but the constraints mean that borrowings have to be repaid in a hard currency, not the soft inflationary one they had.

So, the fantasy Greek economy, based on the Greek government printing money and inflation was forced into an economic habitat of a hard currency to which it was not adapted.

The Chinese won't lend, the Germans won't lend without conditions that mean that they are not pouring money into a bottomless pit - German money going to other rich nations, e.g. Chinese via Greece, unless the Germans had invested their money in the Chinese companies (bought shares), but then they would be getting income and profit from their own money.

Let me give you an extreme example. Would you spend your life savings on a drug addict, so they can buy drugs where the money goes to drug barons, giving them all your wealth, so you have nothing?

They don't raise enough tax, fast tax rises push economies into recession, so the government has to cut spending. The Greek government cannot print money as it used to, and the Germans won't print money - hyper-inflation and all those problems.

Government cutting spending means recession, especially if the economy was based around government spending.

The problem is that the Greek government, in joining the Euro, has actually caused the problem because they didn't understand the immediate severe economic constraints that were going to be imposed.

Those constraints have to be imposed for the other countries not to be dragged down. If there is political union, and agreement that all European citizens are equal, equal conditions, equal safety nets, equal financial responsibilities, equal financial behaviour, then it works.

But if one country doesn't want the same conditions as the others, it all falls apart.

For the Euro to work, governments have to have the same tax raising ability and powers, and taxes must be equal, social benefits must also be equal, otherwise the different countries, with their different cultures of tax avoidance, benefit rates, etc etc, must have separate currencies, and if the countries cannot borrow the money, or raise taxes, to support its liabilities (costs such as unemployment) the country has to print money, and have its currency inflating, and causing price rises.

AND if one country has a higher unemployment rate, all the other countries have to agree to supporting that, at a rate of expenditure that means that the unemployed can survive, else it all falls apart.

If you want a stable currency, or stable country, you have to have stable tax receipts, and those tax receipts (or hand-outs from other governments) have to pay for the debt of the country, and they have to be stable relative to the debt.

Effectively Greek inflation has been replaced by a deficit (borrowings) that it cannot afford.

And until the tax system gets sorted out, and all Greek assets slowly get repriced, based on the real productivity of the Greek economy relative to the other Euro economies, of course there is going to be hardship. It was bound to happen.

If the Greek government actually restructured their economy slowly over two decades, this suffering could have been avoided, but the attraction of cheap money, was far too appealing, and so they decided to take a short-cut, straight into severe recession.

So there you have it.

A government with its institutions must either, raise taxes, borrow, or have inflation.

You cannot borrow if you do not raise taxes, what creditor would lend money to a government that is only printing money?

And borrowings cause inflation, because you have to pay interest on the borrowings, unless you can grow the economy.

Governments pretend that they can do something about the wealth of a nation, but that wealth is created by companies and products, things other than the essentials of food, water, sanitation, housing.

If a government (the people of a country) creates a product or service and sells it, that gives a bargaining tool for trade, commerce, investment, etc.

What would Keynes do?

I think that there are too many people who have lost sight of basic economics.

The larger the proportion of the population that has to be supported by the tax payers, who are creating the wealth, the tax payers will start to question why and for what or whose benefit they are working, but may forget that their wealth is built on other people being poorer than them. The question is what level of disparity will people stomach?

The Greek papers now show the Germans as Nazis, which was inevitable, they believe that the Germans are unreasonable. But the Germans are not acting unreasonably, it was because of the decision that the Greek politicians made to join the Euro which set off a series of events and economic constraints that were inevitable.
Those inevitable constraints have put an economic pressure on the Greek economy that means it will have to adapt to working within the contraints that a hard currency inflicts on an economy.

The Greek population have to accept the economic discipline that comes with hard currencies, where inflation is stamped out, else leave the Euro.

They could try to change the Euro, and have inflation, but the Germans wouldn't tolerate it, so they might as well have their old currency back if that was their desire.

All economies are like an organism, an energetic system, that in competing with each other have to work efficiently, that have to ensure that income exceeds expenditure.

If expenditure exceeds income the economy declines, the standard of living declines.
This applies to whole economies as it does individuals/companies etc.

The economy might decline back to just farming, or if society breaks down, hunter-gathering, tribal conflicts, the same things that happened in the development of the human race, but those earlier stages would happen again.

If the Greeks created many solar power stations and exported that energy, giving energy that was cheaper than oil or gas, they could earn income from that.

Every civilised country has a welfare bill to pay, either by countries, companies or individuals, someone has to pay, unless someone does it for free, but only the rich can afford to do things for free!

Richernotbroker
I am intrigued by your family business approach to the UK plc.
However it is very unlikely that this can happen. You see we are not really a UK family, but more like two families, the richer and the not the richer, further complicated by 'every man for himself' attitude.

Are we getting to the stage that what we have had are some very small crashes based on individuals in the population being "geared", buying on margin, but this is now happening with whole countries on a larger scale, where individual countries have been geared, due to the "Keynesian philosophy", and those countries that borrowed the most - e.g. Greece have been living way above their means / ability to pay for the high standard of living.

If America keeps borrowing and then the Chinese need their money back as their demographics change, i.e. their population ages, and they have saved for their retirement, will the borrowings of America from China, and the Chinese needing their money back in 20 to 30 years time, actually put the whole world into conflict?

If the Chinese cannot afford to lend any more, will America have to print more money, and cause inflation?

Or will the American debtor, Chinese creditor relationship remain stable, where America will be geared, and China will not, and this is the only way to stop the two super-powers from ripping each other apart - mutual economic destruction - who needs a nuclear bomb?

When the oil runs out, America won't be able to borrow from the Saudis, or other middle eastern countries.

Are we getting to, will we get to a point, where Keynesian stimuli cannot work, or the global economic climate means that stimuli is no longer available?

You can suggest a defibrillator for someone having a heart attack, but if you haven't got one available, you have to stick with CPR, and perhaps the same will apply to the different economies, and I think people know that a defibrillator works better, and that CPR or other stimuli don't always work! Sometimes the patient dies!

Greece is selling off some islands. How long will it survive as a country, unless the rich take a loss? Will Greece tear itself apart?

Is there a bigger crash coming that economists can't even imagine?