Gloom and Doom for Oz Thread

[Miksture]

@Miksture I’ve never heard of that theory. I suspect it has no validity because if we are getting wealthier, then we’re not being exploited.

Reinvesting profits to improve productivity is done so at the discretion of the business owners. It is but one tool at their disposal. Shipping profits offshore to buy more Caterpillars to increase productivity or meet unmet demand is another.

Check your definitions.

1. You say "if we are getting wealthier then we are not being exploited". Firstly, are we getting wealthier? We certainly pay more tax than ever before. We have more people who own wealth and when you put it all together we have more money total, but do we have more money each?

Secondly, if person A earns $100 of which they spend $50 to live, pay $30 in tax and has $20 free; and person B is paid only $80 for the same job, gets taxed $24 and lives on $50 and has $6 free would you not say that person B is being exploited? They are both getting wealthier but the rate is lower for the exploited person.

2. Now look at the company that hired person B. They are a multi-national. Now have $20 extra profit which they take out of the Australian economy. It is not left in an Aussie bank and used to make loans, nor is it spent on expanding the business or on luxury items or anything. It just leaves the economy. No, it is either spent in a foreign economy, invested or banked. Remember money is never destroyed, but it does expand an economy, it is spent again and again to create more productivity and profit opportunities. Sending profits overseas does not result in Caterpillars in Australia.

 

[Miksture]

No we’re not talking about money going overseas when we talk about GDP.

But profits are the reward for risking capital in order to meet market demand. Consumers buy goods, entrepreneurs are hopefully rewarded with profits. Those goods we can’t economically produce ourselves are bought from overseas with our money. Naturally the profit that results from that exchange in value may go back overseas to the suppliers/manufacturers business owners that met the market demand.

It doesn’t matter therefore if an increasing amount of profit goes overseas as long as the wealth (prosperity) of a nation is enhanced. These profits take the form of money whereas wealth on the other hand is our capacity to enhance value ie meet our needs and desires. As long as prosperity is rising the amount of profit being exported to foreign countries can also continue to rise. If our prosperity starts declining though then it’s not the amount of profit being exported that is a concern, it’s our productivity. And restricting or reducing the amount of profit going overseas will not solve that.

So we shouldn’t concern ourselves with profits, that’s the domain of the entrepreneur (and the tax office), but rather our focus should be on prosperity and productivity.

Sort of. Profits leave our economy and so do not circulate to stimulate growth. Profits going overseas do expand their economy while ours shrinks. Part of the theory of exploited economies is based on the profit siphoning principles where you must leave enough profit in an exploited country to provide the infrastructure to continue to support the exploitation but move the bulk back to your own country and contribute to the wealth of the local economy. This was the principle behind the colonial period and still exists to this day.

 

[mmm....shiney!]

1. You say "if we are getting wealthier then we are not being exploited". Firstly, are we getting wealthier? We certainly pay more tax than ever before. We have more people who own wealth and when you put it all together we have more money total, but do we have more money each?

No, Australia is not getting wealthier. From memory according to the Legatum Index we are the only G20 nation to have experienced a decline in our level of prosperity, in fact the world’s level of prosperity is the highest it’s been in the last 10 years. (The Legatum Index has only been around for about 10 years).

Remember, wealth is not money, it is a medium of exchange. Wealth is measured by how well we meet our needs and desires.

My earlier point was that profit leaving a country does not lead to declining prosperity because the only way a company can make a profit, is by meeting consumer demand. If a company generates a profit it has enhanced consumer wealth. And also remember, the profits that a company makes is the money consumers willingly gave them because they wanted other stuff more, if given a choice the consumer would rather have goods than money.

Secondly, if person A earns $100 of which they spend $50 to live, pay $30 in tax and has $20 free; and person B is paid only $80 for the same job, gets taxed $24 and lives on $50 and has $6 free would you not say that person B is being exploited? They are both getting wealthier but the rate is lower for the exploited person.

That’s a different issue.

2. Now look at the company that hired person B. They are a multi-national. Now have $20 extra profit which they take out of the Australian economy. It is not left in an Aussie bank and used to make loans, nor is it spent on expanding the business or on luxury items or anything. It just leaves the economy. No, it is either spent in a foreign economy, invested or banked. Remember money is never destroyed, but it does expand an economy, it is spent again and again to create more productivity and profit opportunities.

Profit is the reward for meeting consumer needs and wants. If a company believes that there will be further reward by doing business in a nation then an incentive exists to re-invest a portion of that profit in order to generate even more profit. If there is a lack of incentive say caused by a high corporate tax rate or by the erection of artificial barriers in the market, then it’s highly likely those funds will not be reinvested.

Sending profits overseas does not result in Caterpillars in Australia.

It’d be awkward to get Caterpillars into Australia if the profit from their sale wasn’t sent to whoever built them in the first place.

 

[mmm....shiney!]

Sort of. Profits leave our economy and so do not circulate to stimulate growth. Profits going overseas do expand their economy while ours shrinks. Part of the theory of exploited economies is based on the profit siphoning principles where you must leave enough profit in an exploited country to provide the infrastructure to continue to support the exploitation but move the bulk back to your own country and contribute to the wealth of the local economy.

Sounds more like Marxism/national-socialism to me. I googled the theory of exploited countries and couldn’t find any leading thinkers of the school.

This was the principle behind the colonial period and still exists to this day.

Clearly the data from the Legatum Prosperity Index, and others disputes that assertion.

 

[leo25]

It's taken a while, but the mainstream is finally seeing what I've been talking about for a while now regarding Sydney increasing rental vacancy rates.
I've been seeing it with my own eyes every day for over a year now, only to see the property Permabulls stick their heads in the sand when i talk about it. And they keep building more

Sydney renters have the greatest choice in at least 13 years, with vacancy rates at the highest level on records that go back to 2005.

http://www.abc.net.au/news/2018-07-17/rental-vacancies-in-sydney-hit-13-year-high/10002240

 

[toorak13]

No, Australia is not getting wealthier. From memory according to the Legatum Index we are the only G20 nation to have experienced a decline in our level of prosperity, in fact the world’s level of prosperity is the highest it’s been in the last 10 years. (The Legatum Index has only been around for about 10 years).

Remember, wealth is not money, it is a medium of exchange. Wealth is measured by how well we meet our needs and desires.

My earlier point was that profit leaving a country does not lead to declining prosperity because the only way a company can make a profit, is by meeting consumer demand. If a company generates a profit it has enhanced consumer wealth. And also remember, the profits that a company makes is the money consumers willingly gave them because they wanted other stuff more, if given a choice the consumer would rather have goods than money.



That’s a different issue.




Profit is the reward for meeting consumer needs and wants. If a company believes that there will be further reward by doing business in a nation then an incentive exists to re-invest a portion of that profit in order to generate even more profit. If there is a lack of incentive say caused by a high corporate tax rate or by the erection of artificial barriers in the market, then it’s highly likely those funds will not be reinvested.



It’d be awkward to get Caterpillars into Australia if the profit from their sale wasn’t sent to whoever built them in the first place.

Australians are NOT getting wealthier. eg. government taxed you 30-45% tax, gst 10%, other hidden taxes like (sugar, ewaste) ,tobacco , alcohol, rego, council rates, increase water, gas, electricity , what's left?

 

[mmm....shiney!]

Unlikely to change at all with Shorten intent upon pursuing a class war and The Greens intent upon dehumanising us and expanding the footprint of the State.

 

[House]

Australians are NOT getting wealthier. eg. government taxed you 30-45% tax, gst 10%, other hidden taxes like (sugar, ewaste) ,tobacco , alcohol, rego, council rates, increase water, gas, electricity , what's left?

I feel @JulieW needs a Bob Dylan quote for this! But Another Bob will do for now “The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively”.

Sweeping generalization but Australians *are* getting wealthier... otherwise we wouldn’t have reached an all time high for disposable income in Q1 2018.
GST has been around for 20 years so that’s a moot point, the Gov has been taxing 30-45% for decades so nothing new there (significantly down from the 60-75% rates seem back in 50’s and 60’s), what sugar tax and ewaste taxes? tobacco is a tax on stupidity so that’s fair game, all the others will never go down no matter what generation you live in

 

[mmm....shiney!]

I feel @JulieWSweeping generalization but Australians *are* getting wealthier... otherwise we wouldn’t have reached an all time high for disposable income in Q1 2018.

Income (money) is not wealth. Wealth is the capacity for us to meet our needs and desires. It's also known as prosperity and Australia's level of prosperity is declining.

Global prosperity is at an all time high however the Legatum Prosperity Index shows Australia has fallen from 2nd place to 9th over a period of 11 years. Of particular concern is our weak performance in Economic Quality (20th), Safety and Security (22nd), Personal Freedom (15th) and Governance (14th).

 

[JulieW]

ahem:

What's money? A man is a success if he gets up in the morning and goes to bed at night and in between does what he wants to do.
- Bob Dylan

There's an evenin' haze settlin' over town
Starlight by the edge of the creek
The buyin' power of the proletariat's gone down
Money's gettin' shallow and weak
Well, the place I love best is a sweet memory
It's a new path that we trod
They say low wages are a reality
If we want to compete abroad
My cruel weapons have been put on the shelf
Come sit down on my knee
You are dearer to me than myself
As you yourself can see
While I'm listening to the steel rails hum
Got both eyes tight shut
Just sitting here trying to keep the hunger from
Creeping its way into my gut
Meet me at the bottom, don't lag behind
Bring me my boots and shoes
You can hang back or fight your best on the frontline
Sing a little bit of these workingman's blues

- "Workingman Blues #2" - Bob Dylan

“They tell you ‘Time is money,’ as if your life was worth its weight in gold.”
- Bob Dylan

 

[leo25]

Sweeping generalization but Australians *are* getting wealthier... otherwise we wouldn’t have reached an all time high for disposable income in Q1 2018.

Wealth seems to have different meanings depending who you ask. Some see wealth in dollars/possessions and some see it as Shiney describes "capacity for us to meet our needs and desires". They are two very different things.

 

[mmm....shiney!]

The classical economists viewed wealth as a measure of how well we satisfy our needs and wants in an attempt to differentiate from what they argued as an erroneous view of wealth as being money (gold). I think they had two reasons for this, the first is that as a measure of human achievement we are wealthier than ever before because we have an ever increasing capacity to satisfy those needs and wants thanks to technological advancements, and secondly to combat the State’s propensity to inflate the money supply which distorts the concept of real wealth.

 

[mmm....shiney!]

Trump views money as wealth, hence his retarded notions about and policy on trade.

 

[leo25]

Trump views money as wealth, hence his retarded notions about and policy on trade.

Don't most policy makers have that view these days? Hence why they are failing.

 

[mmm....shiney!]

Don't most policy makers have that view these days? Hence why they are failing.

Yep. And it’s not a new view either, Adam Smith was combatting it in the 1700’s.

 

[House]

And the beat goes on, everlasting

The struggling Aussie economy has entered a record 28th year of expansion, with a seasonally adjusted 0.9% growth.

GDP growth surged to 3.4% in FY2018, the strongest annual growth in 6 years.

National mortgage arrears rate fell by 5 basis points in 2Q18 to just 1.09% according to Fitch’s RMBS Index.

Aussie exports ended FY2018 with an incredible month with a seasonally adjusted $36.44 billion. That's the greatest ever month for Australian exports, taking the annual total blazing past $400 billion for the first time on record, nestling it at a lazy $401.5 billion. Must be all that baby formula.

Brisbane's unit vacancies were considerably lower year-on-year at 2.3%, down from 3.6% last year.

SQM reports that apartment glutted Brisbane continues to experience a sustained 2018 decline in vacancy rates from 3.6 per cent in December to 2.9 per cent by July.

Youth unemployment is trending down nicely too to the lowest level in about 6 years.

In July, Victoria's unemployment rate dropped to the lowest level since 2011 following on from a tremendous leap in job vacancies. Post the end of the car manufacturing industry.

The total number of rental vacancies in Australia has declined over the past year from 75,733 to 72,748, according to the latest figures from SQM Research. This represents a decline from in the national vacancy rate from 2.4 per cent to 2.2 per cent.

IO loans and high LVR are *so* 3 years ago

 

[willrocks]

... And auction clearance rates continue their decline. Barely maintaining 50% in NSW.

 

[House]

... And auction clearance rates continue their decline. Barely maintaining 50% in NSW.

View attachment 17497

Not a bad result for a Wednesday. Whereas last Saturday’s was a smidge under 60%



That belongs in the 3 year old Sydney is Crumbling thread anyway. This thread is for how bad the Aus economy is going... and it’s going well bad as you can tell from my posts.

Forgot to add;

The jobs figures surprised everyone with a seasonally adjusted increase of +44,000 in August 2018 to a record high of 12,631,300, with almost all of the gains driven by New South Wales.

Full-time employment was up +33,700 for the month, for another very solid gain.
Total employment has surged by an outsized 2½ per cent over the year, or an increase of +306,400 additional jobs on a net basis.

Trend unemployment rate declined a bit more to 5.3 per cent, down from 5.5 per cent a year earlier.

 

[leo25]

House, maybe you should refresh yourself with this video since you love massaged data so much. Oh wait we are honest in Australia.

Anywho RBA still thinks Australia real numbers look like crap and feel we need to stay on emergency low interest rates.

 

[House]

House, maybe you should refresh yourself with this video since you love massaged data so much.

Leo, indulge me. Exactly which ones are ‘massaged’ data and what are the true figures according to yourself?