Strange economics

I was listening to an old Roger Whittaker song the other day – one called “From the people to the people”, and the ideas and emotions engendered by the lyrics struck home:

“You take it from the people, you give it to the people.

Its people who reap and people who sow.

You work with the people or you gotta go.”

These words express very well my philosophy and what I have been trying to say in these posts, for many years. It is PEOPLE who are of paramount importance. Not MONEY. Not the ECONOMY. It is people – without people there is no money and therefor no economy.

The IMF seem to have come to their senses and have realised that what they promoted after the 2008 financial crisis – domestic financial austerity and repaying the loans provided  from internal resources and so “balancing the budget” – doesn’t work and leads, inevitably, to economic and social crisis. 

Just look at Greece, Portugal, Spain and Italy.

Cut wages and increase taxes and what do you end up with? People with less income and without the ability to purchase anything other than essentials - this is no way to “stimulate the economy” and promote the growth that is so necessary. And certainly no way to balance anything!

Superficially, and very simplistically, a country’s budget and economy may seem the same as an individual’s budget, potential income and wellbeing (their “economy”). But it is not. An individual can do nothing to stimulate his wellbeing if his wage is reduced – it is illegal for an individual to print money. All any individual can do is to try and get another job – very difficult if the general economy is depressed – look at Greece, and not good for their wellbeing.

All that cutting wages does is to, temporarily, boost profits and thus benefit shareholders. But there is an old saying, “you can’t get blood from a stone”. Now I understand this to mean that when something is “dry” no matter how hard you squeeze nothing will come out of it.  Sooner, rather than later “squeezed” individuals “dry up” and the governing authorities (and shareholders) are left with nothing except a society that is poor, desperate, frustrated and angry.

This is not good for anybody’s wellbeing!

The words of the song that opened this post are very appropriate – 7Eleven, McDonalds, Walmart and any other organization (market gardeners?) or government, anywhere, that promotes low wages take careful note!!