Socialism

[our obsession]

IV, another question, should we be considering an economic model without regard to the social model? Meaning would we be doing ourselves a disservice? Cutting nose off to spite face?

Nordic Model again..

The Nordic model refers to the economic and social models of the Nordic countries (Denmark, Iceland, Norway, Sweden and Finland). This particular adaptation of the mixed market economy is characterised by "universalist" welfare states (relative to other developed countries), which are aimed specifically at enhancing individual autonomy, ensuring the universal provision of basic human rights and stabilising the economy. It is distinguished from other welfare states with similar goals by its emphasis on maximising labour force participation, promoting gender equality, egalitarian and extensive benefit levels, large magnitude of redistribution, and liberal use of expansionary fiscal policy.[1] The Nordic Model however is not a single model with specific components or rules; each of the Nordic countries has its own economic and social models, sometimes with large differences from its neighbours.

 

[oracle]

So, that dole payment of $257 is enough for a comfortable life?

Come off it.

I've heard some ridiculous generalisations, but that takes the cake.

As Dazz said, we see what we want to see.

In my post to which you replied I clearly stated there is no problems to help the disadvantaged due to any hardships they might be facing (that would include dole payments). But since your reply looked like you are thinking, big deal $257 is hardly much money and it is ok to hand out to anyone and everyone.

I would ask you a simple question, would it be still OK if 90% of the population decided they are happy to live on dole payments even though they are perfectly eligible to earn and you happened to be in the 10% minority who worked hard to fund their lifestyle?

If someone is living on dole even though they are perfectly capable of finding a job and working they should not get a free ride and should work.

Cheers,
Oracle.

 

[tom32]

IV, another question, should we be considering an economic model without regard to the social model? Meaning would we be doing ourselves a disservice? Cutting nose off to spite face?

Thought provoking stuff.

I do think a countries economic policies can be taken seperately from its social policies. I think that while there is interplay between economic and social policies in broad terms the two can be at opposing ends of the spectrum of left and right as we like to call it. As you point out Nordic countries are able to have progressive social policies and a strong welfare system while maintaining liberal economic policies, exception in some cases around the labour market, chiefly because some of these countries are so profoundly resource rich it makes more sense to share the oil jobs around then to have a few get very wealthy doing long hours.

It seems I might think differently to you in that I think it is actually important to think about the two seperately while of course understanding that the two policies have a profound impact on the other, but varying combinations give very different results.

If you don't seperate the two as per this thread and multiple other somersoft threads you get people claiming provision of social infrastructure / infrastructure is a socialist idea and that liberal economic thinking says we should abandon government services.

You can end up lumping a whole lot of countries in the wrong basket if you take the two collectively as left or right. Liberal economic policies with a strong collective commitment to bettering society seems to be a sustainable system even if it does not fit in a left or right view of the world.

 

[tom32]

I would ask you a simple question, would it be still OK if 90% of the population decided they are happy to live on dole payments even though they are perfectly eligible to earn and you happened to be in the 10% minority who worked hard to fund their lifestyle?

I would expect we would end up with massive wage inflation and $257.00 would all of a sudden buy you very little.

Market economies fortunately have a way of rewarding those who want to work even if many in society want to leach of it.

It is why I would rather see a strong social safety net but a much more liberal labour market in Australia.

If the market is only prepared to pay you $30,000.00 p.a. for your work then perhaps the government should give you a co payment of $10,000.00 a year but I don't think employers should have to pay a minimum wage. The market should be left to set that. In theory at least without a minimum wage and a completely liberal labour market you don't have such a thing as unemployment. This also assumes there is not a safety net or any payment is a co payment rather than an unemployment benifit.

I do think it would make more sense to pay more people the unemployment benifit including those on minimum wage or low wages so that the benifit itself is not a barrier to working.

 

[our obsession]

Tom:

If you don't seperate the two as per this thread and multiple other somersoft threads you get people claiming provision of social infrastructure / infrastructure is a socialist idea and that liberal economic thinking says we should abandon government services.

You can end up lumping a whole lot of countries in the wrong basket if you take the two collectively as left or right. Liberal economic policies with a strong collective commitment to bettering society seems to be a sustainable system even if it does not fit in a left or right view of the world.

It is interesting Tom, also the Nordic countries (is my understanding) do not consider themselves to be 'socialist countries', and up until recently Norway also had more millionaires per capita than any other country in the world..and yes, their tax rates are high but they do have the government-provided benefits and services and their thriving, and highly competitive market economies.

I can understand though it getting into apples and oranges with something like a comparison the huge 'beast' of the USA. The States seem to me to be all these smaller countries within the huge mother ship. Akin to herding cats?

Fascinating stuff nontheless.

 

[Mr. Fabulous]

Anyone who has a mind that leans to the left wing of politics.

Anyone? I consider my political views extreme left and I don't think that at all. I've said this before, but it bears repeating. Our socialist system isn't perfect, but it beats the heck out of the alternative. Take welfare away from people and watch crime rates soar. I would much rather have a relative handful of scammers on the dole than live in an American-esque society.

If that is the kind of society those who oppose the dole want to live in, move to the United States. After all, a pure capitalist state worked wonders there, didn't it.

Oh, one more thing - those of you who think this over simplified garbage is relevant, I' m sure you're cancelling all your negative gearing benefits and refunding all the money you claimed on your rentals, right? After all, negative gearing is welfare for landlords.

 

[kathryn d]

Oh, one more thing - those of you who think this over simplified garbage is relevant, I' m sure you're cancelling all your negative gearing benefits and refunding all the money you claimed on your rentals, right? After all, negative gearing is welfare for landlords.

I don't have any negative geared properties.

 

[Aaron_C]

I do think it would make more sense to pay more people the unemployment benifit including those on minimum wage or low wages so that the benifit itself is not a barrier to working.

Problem is a lot of people consider certain types of work to be below them, and they would rather get a govt handout instead. I see it with my friends all the time.

 

[Mr. Fabulous]

I don't have any negative geared properties.

You live in a socialist country, are you saying you have never ever ever, not even once, claimed any kind of welfare ever?

 

[kathryn d]

You live in a socialist country, are you saying you have never ever ever, not even once, claimed any kind of welfare ever?

1)Welfare/ Social assisstance.... no.
2)Unempoyment benefits .....yes, which is an insurance premium we pay while working

Everyone is entitled to the below benefits
3) Child tax benefits...yes, I qualified until my income was too large
4) GST rebates...yes, until my income was too large

I also take advantage of every tax deduction/ loophole available to offset the higer taxer I pay, to keep the welfare recipients renting our properties.

 

[Mr. Fabulous]

Kathryn, everyone that receives any kind of welfare benefit (doesn't matter what kind of benefit it is - dole, childcare, investment, corporate, whatever) feels they are entitled to it.

I know you are opposed to the dole, you feel it should be taken away and everyone should go get a job. Well, some people also believe that child care benefits should be abolished - after all, it was the parents' choice to have children, why should the taxpayer foot the bill for that choice?

To be clear, I don't share that view, but as I mentioned to you in a similar thread, you do understand that there will always be unemployment, not everyone will always have a job? Some person turns up to work one day, only to find out they no longer have a job. For whatever reason, they can't find work for a few months. Hey, it happens. Should they be penalised for something that was (and is) largely out of their control? This is the reality for most people on the dole. We also have an insurance premium here in Australia for unemployment - it's called PAYG tax.

As stated earlier, there are people that scam the system, sure. However, most people don't and I for one am appreciative that our government chooses to support these people rather than leaving them to fend for themselves, which potentially leads to them making (in extreme circumstances) certain 'illegal' decisions simply to survive.

 

[oracle]

Oh, one more thing - those of you who think this over simplified garbage is relevant, I' m sure you're cancelling all your negative gearing benefits and refunding all the money you claimed on your rentals, right? After all, negative gearing is welfare for landlords.

From the way I understand our taxation system. If any activity used to produce income and thereby be subject to tax then any expenses incurred to produce the income should be tax exempt. That is your incentive to go ahead and produce more income and thereby pay more tax in future.

Businesses get to claim expenses against their income, so do ppl who use margin loan to invest in shares. I personally do not see much difference in terms of the logic when claiming negative gearing benefits. Yes, you do get to claim the -ve gearing benefits against your other income, but once your property becomes +ve geared your rental income is also taxed at your marginal rate. So I think the rules are fair. And most importantly, the rules are the same for all Australian citizens for taxation purposes who decide to invest in property whether they earn $30K or $300K.

Cheers,
Oracle.

 

[our obsession]

Okay, so an interesting bit of research by Max Chafkin, he goes into the heart of Scandinavian socialism to see for himself what it is really like to be an entrepreneur in a socialist country...we get an interesting comparison (Norwegian vs American), of not only the start up process of establishing a business, but many aspects also associated with..it is 7 pages.

From Max Chafkin, Jan. 2011 "Inc.":

In Norway, Start-ups Say Ja to Socialism..

A few brief excerpts:

In other words, instead of some American version of European socialism, what if we got the genuine article? What if the nightmare scenario were real? What if you woke up tomorrow as a CEO in a socialist country?

To answer this question, I spent two weeks in Norway, seeking out entrepreneurs in all sorts of industries and circumstances.I met fish farmers in the country's northern hinterlands and cosmopolitan techies in Oslo, the capital. I met start-up founders who were years away from having to worry about making money and then paying taxes on it, and I met established entrepreneurs who every year fork over millions of dollars to the authorities. (Norway's currency is the kroner. I have converted all figures in this article to dollars.)

The first thing I learned is that Norwegians don't think about taxes the way we do. Whereas most Americans see taxes as a burden, Norwegian entrepreneurs tend to see them as a purchase, an exchange of cash for services. "I look at it as a lifelong investment," says Davor Sutija, CEO of Thinfilm, a Norwegian start-up that is developing a low-cost version of the electronic tags retailers use to track merchandise.

Sutija has a unique perspective on this matter: He is an American who grew up in Miami and, 20 years ago, married a Norwegian woman and moved to Oslo

Norway is also full of entrepreneurs like Wiggo Dalmo. Rates of start-up creation here are among the highest in the developed world, and Norway has more entrepreneurs per capita than the United States, according to the latest report by the Global Entrepreneurship Monitor, a Boston-based research consortium. A 2010 study released by the U.S. Small Business Administration reported a similar result: Although America remains near the top of the world in terms of entrepreneurial aspirations -- that is, the percentage of people who want to start new things—in terms of actual start-up activity, our country has fallen behind not just Norway but also Canada, Denmark, and Switzerland.

Employees

In a country with low unemployment and generous unemployment benefits, a worker's threat to quit is more credible than it is in the United States, giving workers more leverage over employers. And though Norway makes it easy to lay off workers in cases of economic hardship, firing an employee for cause typically takes months, and employers generally end up paying at least three months' severance. "You have to be a much more democratic manager," says Bjørn Holte, founder and CEO of bMenu, an Oslo-based start-up that makes mobile versions of websites. Holte pays himself $125,000 a year. His lowest-paid employee makes more than $60,000. "You can't just treat them like machines," he says. "If you do, they'll be gone."

If the Norwegian system forces CEOs to be more conciliatory to their employees, it also changes the calculus of entrepreneurship for employees who hope to start their own companies. "The problem for entrepreneurship in Norway is it's so lucrative to be an employee," says Lars Kolvereid, the lead researcher for the Global Entrepreneurship Monitor in Norway. Whereas in the U.S., about one-quarter of start-ups are founded by so-called necessity entrepreneurs—that is, people who start companies because they feel they have no good alternative—in Norway, the number is only 9 percent, the third lowest in the world after Switzerland and Denmark, according to the Global Entrepreneurship Monitor.

This may help explain why entrepreneurship in Norway has thrived, even as it stagnates in the U.S. "The three things we as Americans worry about—education, retirement, and medical expenses—are things that Norwegians don't worry about,"

On the high taxes:

In 2009, Nordlaks pulled in $62 million in profits on revenue of $207 million, making Berg, the sole owner, a very rich man. Although the Norwegian wealth tax includes generous deductions that allow Berg to report a net worth of about $30 million, far less than he would net if he sold his company, his tax bill is still substantial. Even if Nordlaks made no profits, paid no dividends, and paid its owner no salary, Berg would owe the Norwegian government a third of a million dollars a year. "Every year, I have to take a dividend, just to pay the tax," he says, sounding genuinely angry.

Berg is successful enough that paying the wealth tax is no hardship—in 2009, he took a dividend of nearly $10 million—but when a company slips into the red, entrepreneurs can find themselves in trouble. "If a company grows to a large size and then has two bad years in a row, the founder may be forced to sell some stock," says Erlend Bullvåg, a business-school professor at the University of Nordland and an adviser to the Norwegian central bank. But none of the entrepreneurs I spoke with had been forced to sell stock to pay their taxes—and Bullvåg, who has interviewed dozens of entrepreneurs on behalf of the Norwegian central bank, hasn't encountered a case personally. Berg told me that he hadn't given much thought to the wealth tax; he didn't even know exactly how it was calculated. "I get so pissed sometimes," he says. "But you just have to look forward, and it passes."

 

[our obsession]

Corporate profits tax:

In addition to regulatory stability, Flo pointed to a number of other advantages his company enjoys in Norway. Although personal taxes on entrepreneurs are high, the tax rate on corporate profits is low—28 percent, compared with an average of about 40 percent in combined federal and state taxes in the U.S. A less generous depreciation schedule and higher payroll taxes in Norway more than make up for that difference—Norwegian companies pay 14.1 percent of the entirety of an employee's salary, compared with 7.65 percent of the first $106,800 in the U.S.—but that money pays for benefits such as health care and retirement plans. "There's no big difference in cost," Flo says. In fact, his company makes more money, after taxes, on items sold in Norway than it does on those sold in its California shop.-------------------------the more time I spent with Norwegian entrepreneurs, the more I became convinced that the things that make the United States a great country for entrepreneurs have little to do with the fact that we enjoy relatively low taxes.....

 

[coastymike]

Social welfare isn't going away any time soon. Deal with it.

 

[BMan]

i remember on ACA or one of those shows a year or so ago about a family with the husband that wanted to work and did but the fact he was getting less money that he did on the dole and there were no benefits to cover the shortfall

wheres the justice if you can get paid more to do nothing than hard work?

 

[kathryn d]

i remember on ACA or one of those shows a year or so ago about a family with the husband that wanted to work and did but the fact he was getting less money that he did on the dole and there were no benefits to cover the shortfall

wheres the justice if you can get paid more to do nothing than hard work?

It's the same in Canada.

A single mother can claim welfare, her boyfriend visiting her, which means she "says" he isn't living there, even though he never goes "home" and nothing is ever done. Even contacting welfare doesn't do any good.
The only thing that keeps more from doing this, is the social stigma and their own pride.

We see it with our tenants all the time. They all smoke, drink beer, have take out food and pop. All have mobile phones and the big TVs.
A former co-worker asked once "How do they afford it, I can't" then she shook her head and looked straight at me "because they don't pay their rent"

Some do work..and get paid cash in hand. One is so brazen he has an ad right now on Kijiji (similar to Gumtree).

 

[geoffw]

drink beer, have take out food and pop.

From too much beer and food?

Or is "pop" used as in the North American variant of the English language?

 

[kathryn d]

From too much beer and food?

Or is "pop" used as in the North American variant of the English language?

lol...
That is what we call pepsi, coke and all brands other soft drinks.
Rob calls them lemonade..but that means something completely different to me.

 

[our obsession]

Bman:

remember on ACA or one of those shows a year or so ago about a family with the husband that wanted to work and did but the fact he was getting less money that he did on the dole and there were no benefits to cover the shortfall

wheres the justice if you can get paid more to do nothing than hard work?

Kathryn:

A single mother can claim welfare, her boyfriend visiting her, which means she "says" he isn't living there, even though he never goes "home" and nothing is ever done. Even contacting welfare doesn't do any good.
The only thing that keeps more from doing this, is the social stigma and their own pride.

We see it with our tenants all the time. They all smoke, drink beer, have take out food and pop. All have mobile phones and the big TVs.
A former co-worker asked once "How do they afford it, I can't" then she shook her head and looked straight at me "because they don't pay their rent"

Some do work..and get paid cash in hand. One is so brazen he has an ad right now on Kijiji (similar to Gumtree).

I do not condone welfare fraud, but you guys are aware of the cost of the 'Corporate Underbelly fraud' right?

Corporate fraud is an epidemic costing the Australian economy A$5.8 billion a year – and surveys show these costs have jumped in the tougher economic climate. With up to 80% of fraud committed by internal staff – half by middle managers – big companies are not immune and dollar losses can be extreme.

In a 2009 case, a Sydney senior accountant was accused of defrauding financial group ING of more than A$45 million. In another 2009 case, a Melbourne senior accountant allegedly stole A$19.4 million from electrical retailer Clive Peeters. Fraud sizes have escalated in the downturn, with KPMG's Australian Fraud Barometer estimating that courts saw 81 cases of fraud worth A$217.9 million in the second half of 2009, up from 69 cases worth A$100.1 million in the first half.

Australian fraud levels are much higher than global averages. More than one in three (37%) Australian firms reported fraud costs of more than US$1 million in the previous year, compared to 17% globally, according to the PwC Global Economic Crime Survey 2009, released early in 2010. Identifying “an epidemic of fraud permeating Australian organisations”, the survey says nearly half of the 75 Australian firms interviewed (four out of 10) reported at least one incident of fraud, compared to 24% globally. More fraud is detected in Australia, the PwC survey says, because of a higher awareness of fraud, low tolerance of fraud and a strong regulatory and corporate governance environment.

Excerpts taken from:

http://knowledge.asb.unsw.edu.au/article.cfm?articleid=1118

Fraud Epidemic: Revealing the Corporate Underbelly


------------------------------------------------------------------------------------