Pensions and dreams

Many people like to dream about the things they will do in retirement and count on their pensions and savings to make the dreams come true.  For lots of current seniors this has been true but younger people may not get beyond the dream.  All the uncertainties of the economic future come to the fore when one starts thinking about pensions.

One hears two major concerns about pensions:  most  people are not saving enough and too many pensions are based on unfunded liabilities.

The one certainty about retirement futures is that well-being and standard of living will depend upon the quantity of goods and services we are capable of producing and the number of people with whom those goods and services must be shared.  Inflation or bankruptcies could easily wipe out  pensions and savings. In any case an increasing population and people living longer into retirement will put pressure on pensions.

There are two ways we can try to ensure our futures into retirement – we can work our butts off in an attempt to return to economic growth or we can reduce our expectations so that we don’t need so need so many goods and services.  It is possible the second option will be forced upon us.  That may not be all bad.  This blogger knows from experience that canoe camping is a lot cheaper and more enjoyable than the large cruise ships..   I also have to recognize that camping would be a lot less fun if we had to share the lake with 2,000 people at a time.

Most  of us are subject to a lot of media hype about the importance of pensions and saving for retirement.  We should keep in mind that we are in for the long-term while the people selling investments are more interested in their next pay cheque.  What is good for them may not be good for their customers and by the time you find out you may not even remember their name.

Some people are worried about government pensions and see private investments as the answer.  I figure the whole financial system is at risk of either inflation or bankruptcy.

In planning for the future we have to evaluate the potential for a return to economic growth.  If one believes we are going to return to growth then it might  be okay to put a lot of effort into a pension.  .  Personally, I think the best long-term investment at this time is a market garden.

 

If you liked this post your are invited to comment, press the like button and/or click  one of the share buttons. If you disagree you are invited to say why in a comment.  While I like the idea of sharing this platform, my personality is such that I don’t reply to many comments.

A universal income scheme

I believe we should have a collective responsibility to ensure everyone has the opportunity for a standard of living similar to most others.  I also believe our technology is such that everyone should not have to work throughout their lives, that subsidies should be given to consumers rather than producers, and that there is a need to change the way in which we create money.

I have been asked by a member of LinkedIn to elaborate on the collective responsibility.  The other things are important to the answer.

In some small-scale societies the collective responsibility takes the form of a sharing economy where people share their food and other production with relatives, clan members or anyone who needs it.  We probably need something a little more formal and impersonal.  One way would be a universal income scheme.  Milton Friedman proposed a negative income tax which is a good place to start a discussion.

The key to our high-tech society is the number of people for whom each agricultural worker can produce enough food.   That is clearly somewhat high which means the rest of us can be doing other things.  Sometimes it seems what most of us do is to work  to keep the military-industrial complex going.

Subsidies to producers distort prices and interfere with the efficiency of the economy.  Therefore subsidies should be given to consumers.  A universal income scheme would be a fair way to do this.  I see this as being good for the environment and as a transfer of decision-making from government and bankers  to individuals.

I believe the most funny of all money creation schemes is the fractional reserve banking system.  Interest is charged on the money created, bankers are very powerful and too important to let fail, and it is all a Ponzi scheme.  One alternative could be to take  the concept of the Local Exchange Trading System (LETS) and expand it into a National Exchange Trading System (NETS)  It would probably be feasible to include a national income scheme into this type of money creation.

With the world economy in trouble and with so many indications the slide will continue for some time more and more people, through no fault of their own, are going to find themselves unemployed and without an income.  Thus it gets more and more important for us to live up to our collective responsibility to ensure everyone has the opportunity for the same standard of living as everyone else.

Some of the ideas in this post are included in the essay “LETS go to market: Dealing with the economic crisis” on this weblog.

Poverty

In exploring the world beyond the view from my study window (a large, lush green yard surrounded by tall trees and the mountain beyond the river valley) I came across a discussion of reasons for giving money to the poor.

I believe we have a collective responsibility to ensure that everyone has the opportunity to experience the same standard of living as everybody else.   This should apply to all the people of the  world.

This does not mean that everyone should have to take that opportunity. If a person chooses to do something else that is okay whether it be a life of poverty and medication in a cave or a life ruined by  drinking.

I also believe that full employment is not a realistic goal.  Nor is full employment desirable if it means working for the sake of working when there are other things people could do if they wanted. Nor is full employment desirable if it means using up scare resources or destroying the environment.

I also believe subsides should be given to consumers rather than producers.

And I believe that we as individuals should be able to make our own decisions according to our own values.

Therefore we should deal with poverty and/or ensuring everyone has the opportunity with some sort of universal income scheme.  Milton Friedman proposed a negative income tax.  I take the concept further and suggest an income scheme combined with a new way of creating money in the form of universal subsistence payments.

In either case the income scheme would replace all subsidies to producers and all other income support to individuals.

This approach would require some heavy-duty changes in our ways of thinking and behaving.  Many people would find it difficult to get their minds around these changes.  However, considering the current economic crisis and all the threats it may be that we need drastic changes.

Friedman, capitalism, freedom and a negative income tax

Another Milton Friedman book. This time Capitalism and Freedom.  I was a little surprised and quite relieved when I got to Chapter 12, the second last, and found Friedman advocating a negative income tax.

I was surprised  because one hardly ever hears about this part of his economics in spite of so many people claiming  to be followers.

I was relieved because as I read I liked most of what he said.  However, I believe we have a collective responsibility to ensure that everyone has the opportunity to share the same standard of living as everyone else.  I also believe full employment is not a realistic goal.  Therefor we need some sort of income plan.

If you think about it Friedman without the negative income tax proposal provides a rationalization for the who what to say “to hell with everyone else.”  I must say I figure this applies to only a few of the people who like his approach.

There are two groups of people to whose attention his negative income tax should be brought..

The first are all those who want a smaller and less intrusive government.  We can have that without destroying the lives of many other people so long as we combine it with a negative income tax or some other universal income scheme.

The second group is those who reject a market economy on humanitarian grounds. These are the people to whom “economics”. “profits”, and “business” are dirty words.  I suspect a few of the people who want the government to intervene in the economy are people who like to tell others how to live their lives.

If these people were to study the competitive economic system they would find it promotes a high degree of equality and minimizes profits, goals of which they should approve.

When these two groups have adapted their thinking to a negative income tax or a guaranteed income scheme they should have no trouble coming to a consensus that we should be moving towards a market economy based on the principles of perfect competition.

The problem then would how to deal with those who don’t care about others and those who think they have a right to tell others how to live their lives.

In conclusion I would like to state I believe there is a need to change the way we create money and that an income scheme should be part of  a new monetary plan.  For more on that see the essay “LETS go to market: Dealing with the economic crisis.

 

If you liked this post your are invited to comment, press the like button and/or click  one of the share buttons. If you disagree you are invited to say why in a comment.  While I like the idea of sharing this platform, my personality is such that I don’t reply to many comments.

Economics and environment in Rwanda and for us.

I believe there is a basic conflict between the way our economy is organized and the need to protect the environment.

An interesting perspective is given in this article about the conflict in Rwanda.  Here the resources needed to maintain the poor people are rather basic – firewood and wetlands.  It may be that environmental degradation is more of a short-term concern than it is for us in industrial countries.

For us the short-term concern is to keep our jobs and maintain a standard of living.  For most of us most of the time short-term priorities win over long-term priorities.

The solution to this economic and environment  conflict is the deal with over population and to reorganize our economy.  One way we could rearrange our economy is suggested in my essay “LETS go to market: dealing with the economic crisis” which is here.

Feeling defeatist about the economy

Today is a day for feeling defeatist especially  on hearing the results of the French and Greek elections.

A lot of the economic hot air currently being generated is based on a faith that all our problems can be solved with the “correct” policy which will return the planet to economic growth.   The correct policy varies according to the economic theology of the writer.

My own economic theology is that a return to economic growth probably is not feasible because the root cause of the crisis is resource depletion, or rather the depletion of those resources which are easily extracted.

If this is true then there is no politically feasible solution because as well as getting most people to recognize the problem one would also have to get everybody to voluntarily reduce their standard of living.

Here in British Columbia  teachers are taking job action to support claims for a wage increase.

I would feel a little less defeatist if they were to use  their monopoly power to demand increased benefits for the homeless and welfare recipients.

Delaying retirement and young people

Statistics Canada reports Canadians are delaying retirement and working later in life.  Presumably this is an attempt to maintain our standard of living into our golden years.

At the same time young people are taking to the streets in frustration at what they see as a lack of opportunity for the same standard of living.

I wonder if the older folks were to retire earlier and accept a slightly lower standard of living, would it provide more opportunities for the younger people?

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