Anonymous 1 needed this 'Off the Record'

Graham Barlow at #306
"Don't pontificate and carp and criticize a mighty Empire that Britain is fortunate to have in its midst."
I was not aware that we were pontificating, rather engaging in an intelligent discussion. Which posts lead you to state this?
The mighty Empire is long gone. Also, it is not clear what similarities London financial markets in any case have with any Empire, unless you are referring to Financial Services looking after themselves, and empire building.
Please explain.

Prof Eman

Prof

Re: Graham Barlow's posts.

The City has trading outposts all over the world. It achieves its influence through trade, not military might. Are you so literal minded that you do not recognise empire as an analogy? Or do you just play at being dim to force others to write as though for an audience of infants? This will eventually have the effect of everyone else simply ignoring your posts. You may think that is a victory. Enjoy it - on your own.

Graham Barlow
Post #306
I’ve dropped out of this thread because my knowledge of economics is somewhat limited, but my knowledge and experience in engineering is first class, ONC, HNC, B.Eng and 50+ years of hands-on experience in engineering. I do know how goods are made, how oil& gas is produced and am an expert in robotics and automation. And I do know that without engineers such as myself the financial sector would have no finance to shuffle around in its complex sophisticated world, nor would there be an empire in any sense of the word.

Earlier I’ve used an analogy to help me understand the financial services sector, which imagines the start of a simple economy in a new wild west own, each person contributing to the wealth of the town in his own speciality. Over time a few people, though luck or hard work, perhaps by cheating and crooked activity, get ahead and start to buy up the properties of the other farmers and workers.
With this accumulated wealth these “financiers” lend at interest and also employ their former co-workers.
And here’s the start of problems…the new found power of wealth enables these guys to exploit the less privileged and make even more money, rising to positions of great influence, believing that they are in fact a different breed. Greed and power corrupt, no longer satisfied with a log cabin and a couple of horses, these guys want a mansion and rows of stables. They want to have hundreds of times more of everything than the people who actually produce everything.
When this power and privilege gets to ridiculous levels, we might see a protest, a revolt or a revolution and these unscrupulous people are executed.

Strip out all your “complexities” of your 40 years in the city and you’ll get a clearer view of what is going on. You want food but you don’t grow or make any. You want a car but you don’t know where the engine is. You want a house with gas, electricity, water and drainage but you don’t have a clue how it all works. You want communications, clothes, computers, furniture without making anything yourself. Step back and see the system at work, part of the planet is making things, growing food, finding better ways to build and construct, and part of the planet is taking a slice of the cake by passing paper to and fro, claiming to provide a service. These greedy rascals don’t want a slice in fact they want the whole cake.
Hence we have Chinese workers producing all our mobile phones & goodies in general, coffee growers living at subsistence level, and the world’s financiers living as millionaires, and unable to pay for what they are consuming.

Prof / Jeremy

I do appreciate the grey areas of manufacturing and services but for this thread I need to simplify to more black and white and try to show how it looks from the point of view of a skilled engineer. We would get into an even deeper debate if we try to say which goods and which services we consider useful or are making a positive contribution to society. This is the market, a traders market where you sell to the highest bidder even if it is coloured water with caffiene and sugar added, or junk food with added hype, and then we add this to the GDP.

When I look at the financial services sector I can only see it from the point of view of a working class hard working Engineer from the north of England, with memories of the great poverty and suffering of my parents in the 1940s & 50s. Middle class Britain built their empire but it was at a high price both in the UK and in the countries that they exploited, and yes we are all living on the spoils even now.

If everyone could see the system as it is, start with the small wild west town and work along to those priviliged few who come out on top and start to exploit the rest of the community to an unreasonable degree, we would grasp economics for what it is.. I tried to show that if I swap my horse or chair for a piece of gold of equal worth that is one thing, or a piece of paper saying that my piece of paper is backed up by some gold somewhere, but now we are swapping our goods for ticks in a computer, or paper with no intrinsic value. So if I print a load of money, equivalent to a certain quantity of real wealth, say 1000 houses, then I can then effectively steal the houses without having made any contribution to their making.

These financial service providers hide amongst the complexities that they have created.
Call it insurance, they take my money with a calculated risk in their favour, pay out half to the claimants and the rest goes in luxury offices, high salaries, perks & bonuses, shareholders, and bent accountants to make sure it doesn't appear too profitable.
Call it banking, they take my money and lend it to someone else at a huge profit to themselves, juggling around with shares in other companies, building societies, investment bankers, buying and selling always with a cut for themselves. And someone on this thread said all this jiggery pokery counts towards the GDP. Perhaps if it's some foreign outfit which is being ripped off then we could see funds coming to the UK, but I can't see how it's creating wealth.
Call it taxes, income tax, capital gains, council tax. They take my money and build posh municipal buildings, spend on perks and expenses, mess up large projects because they've no experience, and in the case of MPs have a sly dip into the till with false expenses claims.
Call it stock broking. So what is a stock broker? The farmers in my wild west town could sell shares in their farms to the better off, shares which can be sold on and marketed as any product. The share value varies as the farm prospers or not. A guy building stagecoaches does well and his shares rise in value or vice versa. Alongside the market in stagecoaches is a market in shares in stagecoach builders, all buying and selling, with commission and expenses. This market is the stockmarket, buying and selling shares in companies who actually make things. This market also trades in shares in other companies who only buy and sell shares, who may buy and sell shares in banks or unit trusts or investment trusts, who hold shares in pension funds, who buy and sell shares in insurance companies………and so on forever. Each of these organizations wants a big office, a supercomputer, a string of accountants and lawyers, and layers of managers all getting a fat living. But who is making the coffee, cars, the carpets, clothes, cameras and yachts that these people are consuming?

Meanwhile the cocoa farmer has a choice, keep growing cocoa for a few pence per ton, so that Nestle can make obscene profits OR starve to death.

engineertony

I forgot the cocoa farmer. She goes to Oxfam and gets development funding. With this she grows superior varieties and gets a better price. With the extra money she sends her kids to school so they don't have to labour all day in the fields. Or she invests in processing machinery, perhaps gets together with the neighbours in a co-operative to build a factory. She will need to buy in specialist expertise to make chocolate that does not liquefy in a hot and damp climate but, in principle, it is doable.

In case you wondered, I do not approve excessive greed and loathe that big bosses are paid tens or even hundreds of times as much as those at the bottom of the heap.