Monday Message Board (on Tuesday)

It’s past time for another Monday Message Board. Post comments on any topic. As usual, civilised discussion and no coarse language. Lengthy side discussions to the sandpits, please.

42 thoughts on “Monday Message Board (on Tuesday)

  1. quite true Donald Oats. when a person is ill the private system knows how to extract the maximum dollar before sending that person for the real deal in the public system. the current system works well for the doctors but a not so well for patients or taxpayers. The government legislation barely begins to look after the taxpayer while patients will stay on the medical hurdy gurdy.

  2. @Donald Oats

    You make a very important point, Donald Oats. IMHO, your point about the fragmentation of ‘expertise’ (knowledge management?) applies to more and more professions, including lawyers and economists. There is a limit to the benefits of the division of labour and this limit has been exceeded in a growing number of areas.

  3. I am really struggling to understand how private health insurance takes pressure off the public system. I’m undergoing knee surgery soon – going through a private hospital; but when I got the bill it seems my private health fund is paying bugger all, Medicare is paying a fair whack, and I’m paying the majority. I have no particular issues about having to pay myself (I earn a good income and I’m going to a top surgeon), but WHY does Medicare pay? Shouldn’t it be the private health fund? I really wish I knew what I was paying them for.

    Please can someone explain!

  4. Help.

    I am ‘discussing’ Greece with a friend and part of our disagreement has come down to
    whether countries’ finances can usefully be compared to houshold finances. I have offered
    straight forward reasons such as printing currency to no effect. Is there a generally agreed
    set of succinct reasons this analogy fails in the literature or on the web?

  5. In my opinion, het, household mangaement is the most complete analogy to national accounts as they more completely include the full set of government functions as destinct from a “business” comparison. Family budgets include work (first and formost), sustenance, health, education, entertainment, communication, community connection, etc.

    My opinion?

    Greece has to take on the challenge of reviving theie economy and take the hard hit. Greece has to go to work, and fast.

    For starters having a retirement age at 55 is an absolute luxury.

    Greece has to clean out the corruption agressively.

    Greece has to tax hard the tax dodgers and cheats. A good example was the swimming poll tax. A google earth study of an area that claimed under 1000 swimming pools actually had 10,000 ( or something like that). Massive cheating and lying. It has got to end.

    Older people have got to become business creators, and job creators.

    Greece has its special problems, such as having over 2000 islands. It also has a village subsistence focus in many areas, and this is a special thing. Part of the problem, I believe, has come from a European homogeneity of social welfare expectation. I could well be wrong. But I suspect that there is part of the problem, compounded by the foolish and expensive military conflict/standoff with Turkey.

    Another of Greece’s problems will be the compounding effect the China business bleed. How do you become a small entrepreneur when every thing that you try is undermined by product from cheaper domains?

    The answer is in throwing out nearly everything that you have learnt in accounting and marketing school, and build an entirely new business model. A model that works in the real environment of today, with the business reality of today.

    The fact is that much of the business accounting model has been out of date for decades, and has to be rethought to a format that makes it possible for business to form and grow, and banking has to adapt as well. Government has to engage with business from a bottom up approach rather than the top down as it is at present.

  6. National accounts =/= household accounts

    1. Ability to mint currency
    2. Ability to run a deficit to fund capital expenditure
    3. Ability to run a deficit to create both first- and subsequent-round demand

  7. (Of course, the first of these doesn’t apply to Greece, nor the latter to for the time being. Essentially you could compare them to a bankrupt business undergoing restructuring.)

  8. I’m certainly no expert, but I know there are similarities and there are differences and it is complex. A sovereign nation can create or print more of its currency if it has its own currency which Greece doesn’t have right now. Doing this often (but not always) produces consequences like higher inflation and a devaluing of the sovereign currency which can have both positive and negative implications for dept repayment capacity, short-mid term economic prosperity and asset security.
    Greece had some pretty fundamental structural issues with its fiscal framework from my understanding – there was a widespread culture of tax avoidance by the rich and a very generous pension scheme for the public sector (75% of salaries) IIRC and an economic base which wasn’t competitive due to various reasons (corrupt/crony culture & the overtaxing of production). The Athens Olympics didn’t help either.
    The analogy with the household budget would be your boss significantly underpaying you, but your kids not prepared to miss out on their latest gadgets meaning your spending was higher than your income, so you leverage your mortgage to pay for it. As we all know, more debt = more interested to service and that’s another cost which needs to be considered.
    Add to the mix that Europe is quite a diverse mix of cultures, ideologies, economic bases, historical prejudges and fiscal cultures. The strongest of these countries have strong manufacturing sectors and generally more of a prudent or financially conservative culture, although that doesn’t necessarily extend to their actual financial sectors or even government levels. This is the case now and was the case when the Euro was created, which has to inevitably create strains on internal relationships within the zone, particularly when a crisis occurs.
    So, Greece can’t create more money, it requires the blessing of the power economies in the Euro zone to provide assistance, but you also have the avg joe in Germany saying “why are *we* bailing Greece out; a place than fundamentally can’t manage their economy”, “we know not to spend more than we save, so why are we paying for their mismanagement”. Fair questions to ask too. Solutions? Dunno. There’s a structural problem with the Euro and I’m not sure if there’s a long term solution for it.

  9. TroyP,

    I don’t see the printing money aspect of the comparison as being a relevent negation. Households have many mechanisms that can be considered to having similar effect to printing money. Bartering and making preserves for instance.

    There are many possible solutions, most of which would be seen as radical.

    One possible radical solution comes to mind. The Eurozone could create a second currency called the Eurette. Et. Countries in crisis would switch (their debts) to the second currency which would float at a much lower level, but allow numerical consistency within those countries, but have a declined purchasing power within the zone thereby allowing for these lower level economies to work their way out of debt and disadvantage. The Eurette currency would be the same as the current coins and notes only they would be trimmed on one edge or corner ie coins would be slightly “d” shaped for easy identification.

  10. @BilB

    ‘Households have many mechanisms that can be considered to having similar effect to printing money. Bartering and making preserves for instance.’

    Apart from the laboured analogy, where are you posting from? Amish country?

    I believe a North Euro and a South Euro will be enacted either as an interim or final measure.

  11. Well, Dan, as I said above I don’t accept that the printing of money is an issue. The ability to collect taxes would be a more siginificant issue, But I don’t think that het was attempting to be that literal in her/his discussion.

    How do you think that Greece can resolve their issues?

  12. Quite so Dan. I hadn’t seen your second comment before posting the question. Sere the comment time stamp.

    However there has to be much more than just a currency method. I guess that the solutions are really all obvious, it is just the Greek People have to face the reality of their situation.

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