Monday, 13 October 2014

The only true economic indicator

People have got to learn what the heirarchy of economic figures are, and which ones count to them. Growth is a non-starter, partly as it includes some inflation and tax rises and partly as it doesn't affect anyone directly. Inflation is more important, but you need to do your own investigation and factor in the commodity prices the government avoid, making them virtually meaningless. Secondly the official inflation figures publicly treat price inflation and wage inflation as the same thing, despite one being growth and the other reduction. I can't understand how they do that as some times in the past when inflation was double figures some of that was actually a result of strong unions raising average wages across the board, making workers actually better off. How could inflation present that in a negative way?

No, there is a headline figure we all need to know and use, the one we used when China took over Britain as the bigger economy. It used no more than bare growth a a parameter, using absolute rather than relative figures, treating the growth in a year of your child and an elephant as equally valid. No, in the small print the news quietly mentioned, as if it was just a minor detail (but actually the only detail anyone needed) "but China's average wage is still a seventh as much as Britain." Now that pretty much covers what you needed to know, meaning Chinese workers still have slave rates and conditions, as the people's republic based nominally on the rules of Marx and Lenin treat their labour forces as badly or worse than the factory owners in 19th century Europe that created Marxism and the successful union movement as a direct result.

Applying the figures, roughly house prices in Britain have risen on average from 3 to 10 times average income in around 40 years. In America an average worker could buy and run a detached family house, they probably still can. Now half or more first time buyers here can't buy anything. Commodity and energy prices rising, partly as hedges against record low interest rates, have meant the proportion everyone pays on food, housing and energy, the three main essentials, are growing annually, and wages have risen more slowly than prices, even using the official figures, since 2007. Using the house and energy prices as well the inflation is heading towards double figures but unless the government admit it people just wonder each month how they have less to spend than last year or the year before if inflation is hardly rising. As of course it really is.

So to summarise, growth is virtually meaningless, as it is both biased and does not relate directly to individual conditions. During the great depression some people became millionaires through exploiting the markets left free by businesses failing to deliver. Everyone in a free market can make their own growth by adding value through study, work and creation, so using a rising economy to relax and a falling one to suffer are false conditions. You do your best regardless, and if more people exploit falling markets (as the experts always do as they learnt how) then by all pulling together they will raise the economy through their own collected individual actions. There are no vacuums in a free market, someone will and do always fill them, and those who follow sound business procedure, called customer service and providing what people need at a fair price, they will do well, often with little or no subesequent advertising if providing a product widely available in shops. The best tradesmen don't advertise as they have too much work from personal recommendation, and a good shop or product will sell the same way and keep its prices down as a result- Coca Cola's portion of advertising in their price is almost as much as the product itself, almost doubling the price to the consumer as a result.

What counts more than anything else is wages outstripping prices. The larger the price the more it takes from the economy. Houses are by far the greatest component of everyone's spending, as rent or mortgage payments are always very similar per month for a property as you are paying for the same thing, the interest going either to the lender or the landlord. As everyone has to live somewhere, keep it warm and lit, eat and travel then they spend on these first and the economy cannot grow more from the remainder when there is less available to do so. That is not related directly to growth itself but price inflation, as the amount of money circulating after essentials is what allows expansion in the actual physical economy as people can't support new businesses as customers or investors as much if they haven't got it. It's only looking at the same thing from another angle, as this form of inflation slows down everything except hard work. You can sell products but not as fast, except essentials such as funerals and accounting as they are not affected in a recession and where the smart money always goes. But individual enterprise is not the way out for the economy long term or those in it, only the people who are able to do so and succeed, which not everyone is capable of doing if not at that skill level. The low skilled as Marx correctly stated can only work their way to success, and that cannot be rewarded adequately, causing them the growth they need to keep up with inflation, as they are wage slaves. Those paying the wages are restricted by government policies such as interest rates, as every business owner not in property is also paying more for their accommodation as well, and everything else, so they have less left to pay wages. It is a circular issue, like being strangled by an anaconda, as the inflation created by government policies of low interest rates and everything Keynesian, debasing the currency like watering the beer, will make everyone poorer so their efforts will be slower and harder than when allowed free by a market rate for all.

As the interest rate (in Libor at least) and now gold and the foreign exchange market are discovered to have been fixed for years you can see what added to such a shrinkage in the economy, in its genuine form of universally reduced spending power, on top of governments doing the same things to fuel the commodity price rises (like houses, gold rose four times in price over a far shorter period) the money is being siphoned from the system pretty well deliberately and people have no idea about it, unless you learn how. So all you need to know is a) how much do you need to earn to buy a house and b) how much has that changed in the last few decades? Either way we've done very badly, and are falling as the third world economies look set to overtake. Theirs is partly through slave labour and poor regulations, but that's how Britain did it in the 19th century before we became civilised. Now we are dropping back the other way, until enough people realise and sort it out, by information and the ballot box. When enough people know the media will take over as they have no moral compass, they always back the winners whatever their motives.

No comments:

Post a Comment