What do they spend it on?

Soontobe - I quite agree with what you say. Communism seems to breed corruption, doesn't it? It's that on-going human condition, I suppose.

Thanks for that (I think?) Crun. I absolutely know that if I suddenly came into some money then all of my small family would be happier. I know it wouldn't be a magic solution to all of my problems but it would cetainly allow me to provide a better life for those I love and care for.

I wouldn't want flash cars, huge houses or luxury holidays but just not having to worry so much about money would mean that I could actually enjoy the simple things.

I too thought cruns link sounded like communism.
I think of communism as a sort of young persons ideal. It doesnt have much basis in reality.
People dont act like other people want them to act. People just are not made like that.
Also some of the communism countries are some of the worst, if not the worst, for the gap between rich and poor.

Hello, Eloethan. No, I'm sure Crun was not targeting anyone in particular. Isn't what you describe - 'everyone having the basic necessities of life' - isn't that the thinking behind communism before it all went wrong? I remember my father, a very kind and mild man who would not harm a fly, arguing in favour of what he saw as communism many moons ago and you can't really argue against the early principle of everyone having the basic necessities of life, can you? In theory at least it must beat the whole idea of consumerism which, as I think you suggest, is really just greed. (We are getting very philosophical on this thread, aren't we?!!)

NotTooOld I don't suppose crun's comments were aimed at anyone in particular on Gransnet.

You may well not be concerned about keeping up with friends and neighbours but I feel sure many people are. I have to admit, shamefacedly, to having the occasional twinge of envy myself. It's hardly surprising that people are always wanting stuff - our whole system is built on engendering discontent and acquisitiveness.

On balance, I agree with the extracts that crun cut and pasted. I think it would be a far nicer society if we concentrated more on everyone having the basic necessities of life. Perhaps it will happen one day - some countries have at least made a stab at it.

Blimey, Crun. Have you been at the After Dinner Mints? All wise words, I'm sure, although I might take issue with your definition of conspicuous consumption. TBH I've never had the urge to keep up with the Jones's. Me and DH own this house because we like it, not because we hope others will be jealous. We have a modest car because it is all we need, not because we couldn't have a bigger, posher one if we wanted to. I think it's important to be happy with what you've got. Hankering after bigger and better all the time is a sure path to unhappiness. What do others think?

Gracesgran No, Frank is talking about personal taxation.

^"I laugh when I hear people say "money doesn't bring you happiness" and I wonder if those people have experienced the alternative? Money in itself may not guarantee happiness but it does ensure you are warm and well fed. It pays the bills and for luxuries too. It could pay for your grandchildren to have a better education, holidays etc. if having money was really so bad, why don't those who have plenty of it (bringing them nothing but misery they would have us believe) give it away to a worthy cause?

If I suddenly came into some money I know it would bring happiness to me and my family. Does that make me shallow?"^

Gillybob There's a difference between having more, and having enough. It is highly damaging if people don't have enough for the basics like food, shelter, warmth, healthcare, education, a reasonable amount of leisure etc., but beyond that, it is well established that happiness doesn't increase.

Why don't people give it away? The same reason they seek it in the first place: status competition. If people will excuse me cutting and pasting some of this from another thread:

In essence people compete for status because higher status individuals obtain access to higher status, better quality mates. Now there are many ways of competing for status, but a consumer society is one in which the main method is consumption of goods. People are trying to consume more than their peers because that earns them more status, but the problem is that status is what is called a zero sum game; you only get more at the expense of someone else getting less. The Ford Sierra that satisfied when the neighbours all had Cortinas, looks a lot less appealing when everyone else has a Mondeo. The Smiths are only happy when they have more than the Jones’, but the Jones’ are only happy when they have more than the Smiths, so they’re locked into a competition to consume more and more, and wrecking the environment in the process, when no amount of wealth can ever make them both happy at the same time.

The term conspicuous consumption refers to whether the value of a good is judged in absolute terms or relative terms. Something like a central heating system for example is judged by how well it heats the house, and not whether it’s bigger than the neighbours, so that’s an example of inconspicuous consumption. A house or a car, however, are conspicuous because their value is determined by whether they’re bigger than other people’s. Since it is the conspicuous items which contribute to status, people will always tend to preferentially spend on these in favour of inconspicuous ones, even if it’s not in their objective best interests to do so.

This is why people get so irate about public spending: public spending elevates the wealth of the collective community, whereas private spending elevates your own wealth (and status) relative to that of others.

Conspicuous leisure is another canon of status competition: having enough wealth not to have to spend time on the vulgar process of earning a living is a status symbol, as is the wealth to pay others to do menial jobs for you. This then results in useful jobs and skills having low pay and status (plumber, builder, engineer etc.), whilst less useful jobs and skills assume very high status (pop star, footballer etc.).

Another method of status competition is conspicuous outrage, which derives from the psychology of conformity. In society people are under huge pressure to conform to what others do and expect, the price for not doing so can be dire. Therefore high status individuals can demonstrate their status by doing something outrageous to show that they don’t need to conform. This is what leads to fashion. A social elite will assert their status by doing something that is different, and then people beneath them will copy that behaviour in the attempt to acquire some of that status. However, the name of the game is to look like those above you and different from those below, so as fast as someone is copied, they will change their behaviour for something new. In this way fashions ripple their way down through the social strata from top to bottom, one after the other. The more wealth people have the faster fashions can change.

The last method of status competition is conspicuous waste: demonstrating the ability to afford to throw things away, this is why some of the campaigns to reduce waste are so naïve. If someone brags about the amount they're spending on a gym membership that they don't use, or buying expensive wine when they can't taste the difference they are both examples of conspicuous waste. Throwing food away after laying the table with so much food your guests can't possibly eat it all is another, it would have been a real faux pas if the food had run out. The archetypal example of this is the Kwakiutl potlatch.

The Kwakiutl were a tribe of North American Indians, renowned for holding feasts called potlatches, in which they would demonstrate their wealth to their guests by gratuitously destroying something. The competitions for status escalated to such a degree that they would end up by burning down the whole village.

The problem with status differentials is that if they become too large, they lead to all sorts of social ills as Wilkinson and Pickett show in The Spirit Level. Famous research by Marmot has shown how low status leads to both higher morbidity and higher mortality, quite independently of wealth. This is something that the Scandinavians appear to understand, better than us.

If you came into some money it would indeed make you happy, but only for a short while, and the reason is habituation:

The brain has evolved an ability to adapt to it's environment, therefore the nervous system will generate a response when the stimulus is changing, but not with an unchanging stimulus. A simple example is to hold a tinted cellophane sweet wrapper over your eye, and watch the way that the colour you see gradually fades after a few minutes. Take it away, and you see the complementary colour until that fades too. Or watch this. It's the reason why people may feel suicidal after an accident puts them in a wheelchair, but not after they've had time to adjust, and why people can't smell their own BO, for example. But it's also why an elated lottery winner doesn't still feel elated a year or two later, why people aren't still excited by new purchases a few months after they've bought them, and why the poor aren't impressed when they're told that they're better off than their grandparents were. They judge their wealth relative to that of the peers who live in the society they're habituated to, not that of previous generations.

Here's another example you can try: get three bowls of water, one hot one cold, one room temperature, and put your right hand in the hot and the left in the cold. After a few minutes put both hands in the room temperature bowl, and you will find that the same water feels cold to your right hand, and hot to the left. The reason is that they have become habituated to different temperatures.

When you drive to the dealer to trade your car in for a new one, you are full of excitement imagining how much better your commute will be in the new car, but you have completely forgotten that you felt the exactly the same way about the car that you're sitting in when that was new. Habituation means that the satisfaction of a new purchase doesn't last, which is another reason why increasing wealth produces no more happiness in the long run.

Some people seek an escape in drugs or alcohol, but again they're thwarted by habituation. As they get used to the dose they're on the effect fades, and so they have to increase the dose in order to maintain it, only for the same to happen again. They still feel worse if they reduce the dose though, so they're trapped, addicted, and they just keep increasing the dose until it kills them. If we don't go cold turkey we'll just keep increasing the dose of consumption until it kills the environment we're dependent on, and us with it.

What we need is to cultivate a society in which status is obtained by being environmentally friendly instead of from consumption, but that's a catch 22. In order to make the change, you need the population to stop denying climate change, but people are not going to do that so long as they're earning status by consuming.

It's a classic example of the Prisoner's Dilemma: society is collectively better off if people stop competing, but each individual is better off if they do compete. The Tragedy of the Commons.

Good post NotTooOld.
To get elected as an MP, is it necessary to have money as well?

Hopefully it's not just money that does it, NotTooOld, as the Tory party have got more to fight the next election than all the other parties put together.

I'd get elected to government - you can do that if you have money - and then I'd become Education Secretary and I'd make da**ed sure every child in the country got the best education possible (whether they wanted it or not), no expense spared. I'd also pay off both our own kids' mortgages and send the grandkids to my excellent schools. No point in funding research for a cure for cancer as I think Bill Gates is doing that. I'd help him out if he needed extra cash, though. :-)

Crun

Interesting summary Crun. Would this form of taxation capture the money the global companies are not paying e.g., Amazon, Google.

(That's made my reading list even longer for 2015 )

I do not see what is wrong with sharing the wealth of the country more evenly, so that we do not have to pay housing benefit to people in work. There is something infinitely obscene about that.

A very long link for those who want to read it. The comments at the end are interesting, too.

www.taxresearch.org.uk/Blog/2015/01/04/this-is-our-task-for-2015-whatever-else-youve-got-on/

It's been suggested before that those who yearn for power are often the people who we would least like to have it.

Perhaps the same is true of those that yearn for money. It seems that many of us feel that money can make life easier and less stressful but we don't understand why anyone would want several houses, cars, planes, etc. etc. Unfortunately, it seems that the mega rich will never be satisfied with what they have but will always want more, at the expense of "ordinary" people.

No, it doesn't.
And at least you could be miserable in comfort, gillybob if you felt like it

Gillybob you are right there, It does not bring happiness but not having enough money to feel secure brings a lot of stress.

I am lucky enough not to have to worry about the cost of keeping the house warm etc. All of which is down to having being able to work in a job with a pension and having parents who went through hard times in their younger years and saved well for rainy days. My mother to the point of being afraid of spending.

I think I am by nature similarly restrained in my spending I am able to buy what I want but just would not do really expensive cars etc.

I laugh when I hear people say "money doesn't bring you happiness" and I wonder if those people have experienced the alternative? Money in itself may not guarantee happiness but it does ensure you are warm and well fed. It pays the bills and for luxuries too. It could pay for your grandchildren to have a better education, holidays etc. if having money was really so bad, why don't those who have plenty of it (bringing them nothing but misery they would have us believe) give it away to a worthy cause?

If I suddenly came into some money I know it would bring happiness to me and my family. Does that make me shallow?

You may be interested in reading Robert Frank. Frank is Professor of Economics at Cornell, and his argument is for a steeply progressive expenditure tax instead of an income tax.

Expenditure rather than income so that it provides an incentive for saving, thereby releasing funds for investment in public infrastructure, and steeply progressive to reduce the wealth gap without eliminating the social hierarchy between different occupations. The principle is that essentials should be less heavily taxed than luxuries, and this is achieved by a progressive tax because people buy essentials with the lightly tax first part of their income, and then the higher taxed tiers are spent on progressively more luxurious items.

Expenditure taxes have fallen by the wayside before because they were levied on the purchase price of the goods, (eg: fags & alcohol), which meant that it was the treasury and not the consumer that decides what is and isn't a luxury. (eg: I don't regard fags as a luxury, because I don't smoke.) In Frank's progressive system it is the consumers themselves who are effectively deciding what are the luxuries, by which items they choose to buy first.

A couple of Frank's other books are worth a read, too:

The Darwin Economy
The Economic Naturalist

If you think £50,000 a week obscene POGS what do you think about Wayne Rooney who is on £300,000 aweek, over £million a month? How can a sportsman ever justify that sort of salary? It is said they bring the fans in, the ordinary supporter can,t afford to go to big matches now and children are held to ransom for the latest kit which is changed perhaps every season.

Just a point in question and out of interest.

If you hold a strong belief that somebody earning £300.000 should not receive such a figure but it should be divided between 10 people and each receive £30,000 because you are committed to the equal distribution of wealth, irrespective of what/how difficult those jobs may be. Do you put that belief into practice on a personal level.

For example, if you received a pension of £30,000 plus the state pension do you say that is unjust because you believe wealth should be qually distributed and therefore your £30.000 should be distributed to yourself and 9 others who should take a share of your £30.000 because they only get state pension?

After all it's not the sum of money, nor the process of how one person gains more than another that is in question but the belief that we should have equal pay. That means there there must be people who only take what is perceived to be the 'average' wage/pension and any money they receive over and above they give away because of their belief.

I agree there are wage packets that are offensive to me, footballers, celebrities, film stars,NH S and Council executives to name a few.

That is different from saying there should not be a variation in wages for the job you do. I was a telephonist I would not expect to receive the same wage as a telephone engineer. I have never re mortgaged my home or taken out a bank loan to start up a company that could have failed and bankrupted me. I could however have been employed as a cleaner for that person so why should I receive the same wage.

There are what we call obscene wages such as a football club paying a player £50.000 a week. Is it up to anybody to 'tell' the club you can only pay him the average wage. How would you get to an 'average wage' anyway if everybody received the same wage?

I think there is certainly a case for nobody in the public sector being paid more than the governing Prime Minister. I don't understand how councils pay their executive 2/3 times more pay than the Prime Minister.

Money makes the world go around is certainly true. If some couldn't afford to holiday in some countries what jobs would there be for the poor in those counry. Wealth distribution will never be equal because jobs are not equal. The pay gap could be legislated for but that would only make sense if the entire world used the same scale … It's a pipe dream to think otherwise but yes it is an obscene practice .

I don't like the idea of an upper salary limit soontobe as I would like us to be a high earning country, but I am quite attracted to upper multiples, i.e., the top earner in the company not earning more than x times the lowest earner. I have never heard of anywhere that it works though.

More about the bankers.

www.taxresearch.org.uk/Blog/2015/01/02/how-can-i-put-this-subtly/

The government has said that it wants more companies to be run like John Lewis.Pay differentials would be the perfect start, except of course, John Lewis is not perfect. There is going to be a demo this weekend to get them to ensure their cleaners are on a parity with the rest of their workers.

www.taxresearch.org.uk/Blog/2015/01/02/cuts-are-crippling-hmrc-and-thats-deliberate/

There is a big problem at the moment in collecting tax, Grumppa. That is because many of the indians have been made redundant. If someone at the top only earned £150, 000 there would be another five indians to be employed in working out people's tax in order to bring in more tax. If the chief only earned £100,000 there could be nearly two more tax collectors. Just using tax as an example. I have no idea how much they earn.
The same goes for banks. It's usually the indians and not the chiefs who are told to look elsewhere for a job.
Hope I am not stating the bleeding obvious here.

Yes, grumppa DH is often saying that there are more admirals than ships in the RN.