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The Forum > Article Comments > Letís kill welfare > Comments

Letís kill welfare : Comments

By Everald Compton, published 3/7/2018

Around a decade from now, robots will be our prime source of productivity and we will lose control of them as robots will produce more robots without human input.

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"Our government is a sovereign currency issuer; it has unlimited credit so can't run out of money."

This 'Magic Pudding' economic theory is nothing more than an attempt to avoid the question of affordability of big government. The idea that we can merrily spend on any notion that comes to mind with no potential adverse consequence is something that could only be conceived in the absence of any historic understanding of the results of such recklessness.

At the very least, this results in increased inflation AND reduced currency strength both of which result in a downward economic spiral and ultimately impoverishment of the middle class.

"That statement is truly idiotic. A job is a job "

Well I was paraphrasing John Stone, ex head of Treasury. In the days when I used to visit in the old Soviet Union, there was saying I heard often - that the unemployed in the West were outside the factory gates, while the unemployed in Russia were inside the factory gates.

Governments spending money they've taken from others to create the semblance of work is an unsustainable project. It never works, it always ultimately fails - but only after it does severe damaged to the country silly enough to go down that path.
Posted by mhaze, Friday, 6 July 2018 2:41:55 PM
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mhaze,
"The idea that we can merrily spend on any notion that comes to mind with no potential adverse consequence"
...Is indeed idiotic.

However the potential adverse consequences are nowhere near as adverse as you think they are, and nor is there anywhere near as much as potential for them as you think there is.

"At the very least, this results in increased inflation AND reduced currency strength"
No, that's what happens at the very MOST.

"both of which result in a downward economic spiral and ultimately impoverishment of the middle class."
Dubious, for as I explained before, devaluation makes our industry more internationally competitive. It's the penalty for failure, not the cause of it.
Inflation does have adverse consequences, but it's relatively easy to halt by raising taxes or cutting government spending. Or of course raising interest rates but that, rather than the inflation itself, risks impoverishing the people (regardless of class).

"Well I was paraphrasing John Stone, ex head of Treasury."
Fair enough, but considering his original opposition to the floating of the dollar, I'd advise against taking his claims at face value (despite his sharing my opposition to the GST). And of course a false statement is false whoever it's from.

"In the days when I used to visit in the old Soviet Union, there was saying I heard often - that the unemployed in the West were outside the factory gates, while the unemployed in Russia were inside the factory gates."
When did you start hearing it?
One thing I still don't understand about the USSR is how it got to that situation. They used to be interested in efficiency, but they obviously weren't by the end. So why did they become so indifferent? What prevented those factory managers making better use of their workforce?
Posted by Aidan, Saturday, 7 July 2018 12:41:39 AM
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mhaze (continued)

"Governments spending money they've taken from others to create the semblance of work is an unsustainable project."
Yes. But governments using that money to create real work that benefits people and businesses is sustainable and desirable. And more to the point, so is governments creating money for that purpose. At first glance that may seem too inflationary, but remember two things: firstly they can spend it on infrastructure that's deflationary because it makes businesses more productive. Secondly, automation is highly deflationary - and if there's as much of it in the near future as Everald predicts, there's going to have to be a big increase in the money supply to counteract that.
Posted by Aidan, Saturday, 7 July 2018 12:42:54 AM
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Secondly, automation is highly deflationary
Aidan,
Agree, but super salaries for negatively effective bureaucrats are even more deflationary.
Posted by individual, Saturday, 7 July 2018 7:28:16 AM
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individual,
No they're not. Do you even know what "deflationary" means?
Posted by Aidan, Saturday, 7 July 2018 11:07:12 AM
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Aidan,
There's deflationary for workers & there's deflationary caused by highly paid parasites. Which one do you doubt I know the meaning of ?
I have realised long ago that just simply keeping on supporting a systems that favours some but not all will never serve all. That's why we need change & negative gearing, immoral benefits, selling out to & exploiting cheap labour outside Australia practices need to be changed. The kind of commerce that'll bring about sustainability can never be achieved by a growth that depends on selling the house to pay for the mortgage. It's a mentality that has not worked yet unless you believe rorting, corruption & exploitation are fit policies to base a country's economy on.
Posted by individual, Sunday, 8 July 2018 12:06:10 AM
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