What recession means for us

i think the causes of the current recession are much more structural than that, and the sheer scale of the amounts being wiped off the stock market goes beyond anything that could be attributed to (hypothetical) government corruption. the above article is accompanied by this one, which gives some background to the causes of this crisis.

Ne00

My point is this as we the working class are over taxed we can not afford to contribute to economic growth

i don't think our poverty stems from taxes. the article i linked above deals precisely with the contradiction in a low wage 'flexible' economy (good for profits, bad for growth).

Ne00

for example Government deliberately pay far too much for medicines via the National Health, which is profitable for Government as they can raise Taxes

i don't think this makes any sense. the government deliberately paying inflated prices for things wouldn't be profitable for the government.

Ne00

for example the Government pays billions of pounds in grants to housing associations such as Chiltern Charitable Housing Association who have a commercial arm that in itself is embezzlement of public funds

the state does spend a lot of money on a lot of things - PFI is another massive subsidy to the private sector, and one which keeps debts off-balance sheet for the state. but such spending is a subsidy from capitalism in general to specific private capitalists; these private firms make a profit and pay their workers like all others, distributing purchasing power. so state tax and spend is not responsible for recession (in fact state intervention has undoubtedly smootheed the business cycle relative to a more volatile free-market approach).

glad you like it. we're discussing what to do with it at the moment - there's no pdf at present, but feel free to adapt it if there's somewhere you want to distribute it offline.

Tea Break's strength has been its dispute-focus rather than being another general lefty analysis. the latest stuff we've written is more about how the crisis in general will effect workers in general, so we're discussing the best format for a print version for things like distribution at railway stations or possibly employers making redundancies etc. we can be a bit slow sometimes, but the wheels are in motion!

ne00

It does make sense when you realise the government are paying highly inflated prices to themselves creating FAT CATS with the double whammy of being able to raise taxes so therefore more scope for greater embezzlement

now there are government cronies getting rich off PFI schemes and the like, for sure. what this has to do with causing recession rather than being an expression of nepotism kinda inevitable in a capitalist economy i'm not really sure.

ne00

for example you will see that all heads of housing associations and NHS departments etc. have deep roots in Government ex councillors and M.P's that sort of thing

yeah there's all sorts of cronyism and the like, but like i say i don't see what this has to do with causing recession. the business cycle is not caused by the moral failings of business people.

ne00

please do not be so quick to try and discredit an others view try opening your mind I have taken the time to write I must have a point evn if you can not see it.

i'm not trying to 'discredit' you, i'm just politely engaging with you without agreeing with your argument that nepotism causes recession.

Ne00

The rich are getting richer and the poor are getting poorer

this is true, but i think it's more to do with what capitalism actually is - in essence money making money. if you have enough to invest, you do so, workers are paid to produce stuff, but their wages are less than it's worth so you make a profit, and your money returns to you with a bit extra on top. then you re-invest, and get richer...

Ne00

I believe it causes a recession when those with more than they can spend keep receiving more than they can spend quicker than they could ever possibly hope to spend it and are hoarding and keeping it to themselves

the rich who have more money than they can spend put it in banks or other savings/investment institutions, who invest it somewhere that money will make more money (property speculation, or industrial production, or the stock market, wherever), so unless they literally hoard cash under the mattress (and less than 3% of the money supply is physical notes and coins rather than electronic deposits in bank accounts), the rich having more than they can spend doesn't cause economic slowdown, it just means more is spent on capital investment than consumer goods, which creates more goods requiring consumption in the future, but doesn't directly cause recession.

Ne00

Exactly the rich are hoarding property goods and anything they can get their hands on but not investing in people (wages) so that these goods properties can be shared.

but where do these "property goods and anything they can get their hands on" come from? they are produced by firms, who pay a portion of that income as wages, a portion to other firms for raw materials etc, and keep a portion of profit. i.e. 'hoarding property goods' distributes purchasing power like any other spending does, and so isn't a cause of recession.

Ne00

i totally agree that we must help ourselves and collectively is the way forward, the problem that we the poor working class have is that the rich have become too rich and powerful changing the rules (Laws) as it pleases them we are no longer batting on an level pitch, we are being over taxed and getting poor value for money, the situation that we are in now is similar to why the magna carta were drawn up.

the situation's completely different to in the time of the magna carta, as the economy and social relations have changed massively in 800 years (nobody's a self-sufficient peasant farmer taxed by lords any more, we're all wage slaves). this 'level pitch' is a myth, how can wage slaves and capitalists - or for that matter lords and serfs - 'battle on a level pitch'? they're defined by inequality.

Ne00

Joseph K the shelves are full but no one is buying.

indeed, this is a symptom of recession (although of course people are buying, only a few percent less than a year ago which is enough to constitute a crisis given the irrationality of capitalism).

Ne00

Companies have invested to heavily in products and pensions instead of people we need money to spend now !

again, these aren't causes of a recession, in either factual or logical terms. we do need more money (well, ideally a society without it), but that means collective action to gain a larger share of the social wealth which we create. but that would hit profits, not helping the economy either, i.e. the crisis isn't caused by 'companies investing in products and pensions,' unless i'm mistaken and you can explain a plausible mechanism for how this could be the case?

you seem pre-occupied with taxation as causing this crisis, as if lower taxes (and consequently lower state spending) would have averted it. taxes are only the most visible way in which the wealth we create is separated from us. we go to work, produce products worth a certain amount and get paid some fraction of this in wages. this 'surplus value' is the basis of the bosses profits. then the state takes its cut, but we see this on our payslips as tax/NI, but this doesn't mean the tax is any more a cause of our poverty than the exploitation inherent to wage labour, it's only more visible. in any case, if we were paid more, this would hit the economy too, since profits would be lower. i.e. while low wages boost profits, high wages boost economic growth, but neither can adequately account for a crisis where both profits and growth are threatened.

Ne00

Today there is more money in the world than ever before so please explain to me why their is a recession

i linked to an article trying to give some background in my first reply, it's also linked in the article we're commenting on. here it is again.

Ne00

Yes there is too much state spending because the state poorly spends deliberately being wasteful (but obviously lining their own pockets along the way) Paying too much for housing and too much for medicines (investing in their own companies and so forcing taxation council tax up) then there are things like fines etc which they receive for motoring offences for example, and again deliberately poorly invest etc etc. put simply the Government are embezzling Public funds!

you see, this isn't an argument it's just a restatement of your original assertion. yes, some state spending is wasteful, so is some private sector spending. but even wasteful public spending doesn't cause recession, in fact it was one of the main ways the Great Depression was ended. ever hear of Keynes and WWII, waste par execllence?

also, can you name these companies? because while some MPs do have shares in various companies, you're just making vague assertions. again, the claim revenues from motoring fines are "deliberately poorly invested" is unsubstantiated...

S.Welker

It's Newton's Third Law in action (although applied to economics instead of physics) in that what goes up must naturally come down.

although i agree boom-bust is an unavoidable fact of capitalism, i don't think it's a natural law since it doesn't apply to all modes of production - its rooted in the need of the economy to constantly expand, and to do so profitably, but there are unavoidble contradictions; that lower wages boost profits whilst hitting consumer spending, disproportions between growth in different sectors overproducing for their markets etc. so a social law rather than a natural one, reflecting a given set of social institutions (market exchange, wage labour, private property...)

S.Welker

Granted, those people that earn more money than the most of us probably (benefit of the doubt) earned it

nah bollocks to benefit of the doubt! ;) how does one person create say, £500m worth of wealth in a year? they don't, they hire workers who do, collectively, and reap the reward of owning their time and the things they make during it.

Ne00

I think put simply inflation happens when everyone has a lot of money and relatively few goods for sale too much spending

that's quite a crude 'quantitiy theory' of money - factors like velocity of circulation (how quickly money changes hands) and mutual settlement (if i owe you £100, but you owe me £90, we only need £10 cash to trade £190 of commodities) also play an important role.

Ne00

whilst recession put simply is when there is too little money and too many goods not enough spending

well recession is simply put two consecutive quarters of negative growth. the causes are complex and arguable, but a simple lack of money is an unsatisfactory explanation in both logical and empirical terms.

Ne00

as we know that there is a lot of money, their must be too little spending (hoarding), by the haves

hoarding would have to be literally notes and coins under the mattress, not saving in banks (where it would not be outside circulation, unless banks are unwilling to lend. they are actually, but not because of hoarding but over worries of their capitalisation levels after the bursting of the property bubble left them holding blended mortgage-backed securites* of indeterminate value). in any case, less than 3% of the UK money supply exists as notes and coins (as opposed to bank deposits), so even if every note and coin was hoarded under a rich guy's bed, it's hard to see why all other things held equal the other 97% wouldn't just circulate faster to compensate, and this wouldn't be a cause of recession. in any case, hoarding is an empirical question, do you have any evidence?

Ne00

the only question is how did the few haves get so much put simply the same way they have always done from biblical times, render unto Caesar and all that, by embezzling public funds (taxes) certainly not from honest toil.

well quite a lot has changed since biblical times actually. massively in fact. wealth is now primarily aquired through the exploitation of labour (hiring workers for X wages to produce goods worth X + S, S being the 'surplus value' accumulated by the capitalist). taxes are just the government's cut of this surplus, they're more visible because they appear on our payslips while surplus value is hidden by the fact we appear to receive 'a fair days wage for a fair days work.'

in any case you're ignoring the earlier point made by Steven. (with which you "concurred") and are just repeating your initial assertion that embezzlement causes recession:

Steven.

nepotism is pretty much constant whereas recessions are only temporary and cyclical, so that should demonstrate that one does not cause the other.

it's very hard to have a constructive discussion if you simply keep repeating the same assertion over and over even when it's shown to be false.

* please ask if you want me to explain any of this jargon, a lot of it's fairly new to me too

Ne00

Are you trying to give me a basic maths lesson you insult me, you really need to expand your mind

i've been going out of my way to not insult you and to explain myself clearly, unfortunately i'm left with the sensation of arguing with an algorithm stuck on loop.

if it's patronising "basic maths" that capitalist wealth comes from exploiting labour, why do you continue to insist it comes from taxes and embezzlement of the revenues therefrom ("the same way they have always done from biblical times" no less)? we are not poor because we are taxed, but because we posses no capital, capital that entitles its owners to the surplus created by labour, leaving labour with only enough to reproduce itself ready to return to work while the capitalists accumulate ever-more.

if you cut say income taxes, all other things held equal this would simply boost profits, since take home wages equilibriate back to their level (probably by rising more slowly than they otherwise would, cancelling the short-term benefit to workers), whereas capitalists would still continue to charge as much as the market can bear for their goods and pocket the diffference as extra profit (which is the surplus value previously appropriated by the state via tax). this is why it's always right-wing, business-backed groups like the 'Taxpayers Alliance' demanding lower taxes, whereas there has only ever been working class opposition to specific regressive taxes (like the Poll Tax) designed to shift the tax burden onto workers.

Ne00

A builder can build a thousand houses yet can't afford to own one because of taxes, not just those on his wages but those on the property etc, etc, yet he probably owns a third of a "star wars missle" and helped pay for a war that most did not want, at a hugely ridiculous cost, I mean who makes up these prices, that we have no choice in paying!

ok, i'll try another angle. i agree that workers create all that value (of houses, missiles or whatever), and can only buy a fraction of it back. i also agree that taxes form a part of that 'surplus value' over and above what they can buy back. agreed so far?

where we differ, is that i don't think taxes are the main, let alone the only way in which workers are robbed of the value they create. you talk about it this robbery being done "the same way they have always done from biblical times" - but things have changed markedly since then.

a medieval peasant was primarily robbed by taxes; the landlord's men would turn up and simply take a tenth (or however much) of their produce, and there would be naked theft.

however today, workers are robbed in a more subtle way too. we sell our ability to work for a 'fair price', but the things we produce at work (be they houses or pens or services or whatever) are worth more than our wages to make them (and all the raw materials etc). but this robbery isn't so visible because unlike the medieval peasant we never own the things we make at work and consequently never have them nakedly stolen from us.

of course taxes remain the most visible form of this 'surplus value' that is stolen from us, but i think it is a mistake to see taxes as exclusively responsible for our relative poverty, because the whole way society is set up is to accumulate wealth produced by workers for a class of parasites, and that would happen even if taxes were cut massively (which like i say, is always a call that comes from the private sector parasites, since it means more of the surplus accrues to them instead of the state, but not to us).