Raising the pension age in order to pay for pensions

CLAPTON

Loughton_Monkey wrote: »

Both here and abroad. True.



True.



Not quite sure of the word "redistribution". But certainly I understand the gist. I take £70K in crisp tenners from my wallet and give it to the BMW salesman. He keeps £5K and throws the rest to Germany with an instruction to make a car of my specification. They spend that money on materials and labour and shipping the thing to England, pay their labourers, and presumably bank a nice little profit for later distribution to the German tax authorities and shareholders in BMW....

At the other end of the spectrum, I take out £15 and distribute this to the window cleaner who's just cleaned the windows. I guess he throws £10 of that to the woolly hatted youths who did the work. With any luck, HMRC may see a small slice of this....

So basically what we have here is a 'distribution' of cash from a consumer to a business. Then we have the 'distribution' of a product (tangible or intangible) from the business to the consumer, of equal value to the cash. And finally we have a distribution of the cash to lots of people, including the hard-pressed working man who put in most of the effort.....

Don't know where all this is going.....



Well I [sort of] explained that above didn't I?



You're breaking up a bit here. All I can understand is some bits about what I've been trying to explain to you.

In this case, the £70K car and the £15 clean windows are, indeed, the GDP. Both these Goods/Services have been exchanged for cash of equal value.

Seems fair to me! And yes... the resulting 2,746 little slices of that cash going in a myriad of directions is purely the normal distribution of cash that occurs every minute of every day according to natural market mechanics.



Well that's what I really call "Cart before the Horse thinking".

If I read you correctly, all we have to do to increase GDP is to send out instructions to the Jaguar Car Plant begging "Quick! Get everyone on overtime! Produce more goods! Make £100 million worth of cars and chuck them in the parking lot." QED we have £100 million extra GDP!

Hate to disappoint you, but that's not GDP until they are sold. It's the cash that drives the GDP and not the other way round. So the only true measure of 'wealth' at any one time is the amount of cash [or other assets]. Some of it is in my wallet. Some of it is in your wallet. A lot of it is in the pockets of businesses [or more correctly, perhaps, the owners of the business]. For logical reasons, there is a very strong correlation between GDP per head, and change in wealth (amount of cash per head) for any particular year, but I really don't see where that takes us or what you are trying to say. The vast, vast, vast amount of wealth in UK was produced tens and literally hundreds of years ago! Just ask the Duke of Portland.

Over 40 years ago, I started being a little worker bee. I slaved hard and helped the business I worked for produce goods and services to boost GDP. In return I got cash. Luckily, I chose to save a lot of that, and now I don't personally produce one iota of GDP for anyone. I just sit around consuming G&T all day.

In round figures, therefore, I've made my pile and to a large extent, whether you (or anyone else) produces another £1,000 of GDP today has no effect on my own wealth. So GDP doesn't drive my wealth very much at all. Perhaps marginally on my investment returns if the truth is known, although I need rather more Indians & Chinese to produce GDP than UK workers. Every day, I sit here and look at my wallet. The other day, I decided to 'create' £20 of GDP so I went and had a pint and a haircut.

I'm a bit of a nerd in that I have kept personal accounts all my working life. Give me a bit of time, and I could probably use a bit of 'fifo' logic to tell you that the £75 currently in my wallet came from my August 1982 salary.

Today, I can decide to take another £20 out of my wallet, walk down the town, and boost GDP by buying Mrs LM some flowers..... Shall I or shan't I?.... Nah..... they tend to wilt over a couple of days and are then worth nothing. Alternatively, I could take £50 out and buy her a gold pendant. It will retain some of that value even after a year. May even be worth more one day.......

Or I could just stay in, read an economics book, and have a nice gin & tonic.....

No, nothing like that at all.

It's about the macro economic issues about production and consumption and not about car sales.

The redistribution from those that produce to those that consume.


It is about how people who produce nothing get the means to live : this is achieved by redistribution of the goods and service via a money mechanism which includes taxation, profits, dividends, benefit, pensions, savings etc.

grizzly1911

MFW_ASAP wrote: »

Again with the distraction to closed/rare pivate sector DB schemes? Really? Well as they are not financed by the taxpayer they are not relevent to the discussion. Let's park them a ditch the distraction, huh? It's not working anyway, I'm seeing through it.

Employers do make contributions under DC schemes, but they are not open ended commitments to pay the employee an income no matter what happens with the economy.

I'd argue that as DC schemes are not as wildly generous, nay extravagant as DB schemes, that my taxes would not rise to pay for them. Indeed, my taxes may reduce. However, to answer your question, I am happy to pay for the services I receive from central and local government and other government department. I expect that the people woking in these departments will receive remuneration appropriate to the positions they work in and I accept that part of their remuneration package includes an element of pay to go into a pension scheme. What I like about fully funded schemesis that they are transparent - there is no hiding public sector workers pay levels by deferring pay to another generation. I also strongly feel that I receivve the sevices these workers supply and I should pay for them - not my kids, they should pay for the services they receive.

Your last sentence is nonsense because all you are doing is moving money around - using tax money to pay to public sector workers to then take back as tax. All thathappens is that 5% of their income will go into a pension and be invested (like mine and other private sector workers) into the economy via shares, bonds and gilts.

So, ar you going to answer the original question: Why do you think it's OK to 'kick the can down the road' for pubic sector pensions but not other financial areas and why do you think it's OK to have a Ponzi scheme for pensions but you moan about it with house prices?

I wait in excited anticipation to see your next tactic for dodging these questions.

When have I called housing a ponzi scheme?

I am sure the local merchants will appreciate public sector peeps having less discretionary money to pay for goods and services. The problem with trickle down effects are a bit like "penny falls" you can't really tell where they will fall or how long they will simply stay on the ledge.

Your tax will go up in your life time as the existing payments will need to be made together with a log jam of existing pension entitlement yet to be paid. The government will then need to provide now in full for the employer side of the DC from here on in for that overlap period. With increasing life expectancy that cross over period will last for perhaps 40 years or more.

What you want is for a certain sector of the population to have pension benefits reduced. There is no reason why that couldn't be achieved through PAYG.

If you really expect taxation to reduce or at least stabilise good luck.

Loughton_Monkey

CLAPTON wrote: »

No, nothing like that at all.

It's about the macro economic issues about production and consumption and not about car sales.

The redistribution from those that produce to those that consume.


It is about how people who produce nothing get the means to live : this is achieved by redistribution of the goods and service via a money mechanism which includes taxation, profits, dividends, benefit, pensions, savings etc.

If you say so.

Congratulations in advance. You are bound to get a Nobel Prize for such profound observations.

Southend1

MFW_ASAP wrote: »

Sorry Griz, but you just seem to be waffling around the subject to avoid answering my question - writing a load of information (that I already know about pensions) in order to pad out your post and hope it distracts from the reality that you're not answering why you think it's OK to 'kick the can down the road' or have Ponzi schemes with pensions when you are so opposed to them in other areas.

You also keep trying to distract with references to private sector schemes, even though we both know that most have closed to new members or closed completely because they are to expensive to fund.

This is my point with public sector pensions, they are too generous for the country to afford. Everyone should be on Defined contribution, with the onus on the employee to sort out his own pension - which is exactly what happens now for private sector workers. Why should public sector workers be any different?

How can it be right that someone who is no longer able to work to provide for themselves should be at the mercy of the stock market as to whether he or she is able to survive in retirement?

Makes me laugh every time someone says the country can't afford decent pensions for all. This is complete nonsense. It's simply a matter of how we choose to use our resources. Clearly if we choose to grant massive amounts of wealth to a small number of individuals e.g. Bankers energy company bosses, etc then we can't afford decent pensions for everyone else. There is another way, you just choose to turn a blind eye.