Thursday, 28 March 2013

Work is the best insurance for all concerned

Work is the best insurance for all concerned

The British government is concerned about a new financial disaster and the Bank of England told banking institutions to find 25 billion Pound to boost reserves, money reserves that according to City advisers will mean less money available for both individuals and businesses.

We keep putting electronic money and paper money in a box, producing nothing and expecting that there will be economic recovery that will suddenly appear out of thin air. In the meantime, prices keep going up and up reducing the amount of disposable income of both families and businesses. The fact that prices keep going up is not necessarily conducive to wealth creation. Inflation is devaluing peoples’ incomes.

Here is an example of negative pricing policies. Do you use Royal Mail services? I use Royal Mail services less and less often. Why? Because of periodic hikes of Royal Mail fees that are making Royal Mail uncompetitive. Royal Mail executives seem to be oblivious to the fact that higher prices in a depressed market economy deter customers. If they keep putting prices up, the customer base will shrink and any business knows that when the customer base shrinks the long term viability of the business is in danger.

Here is another example of negative pricing policies. A set of goods providers is building up problems for the future. Big supermarket chains’ pricing policies are punishing both producers and consumers. When the said supermarket chains impose abusive prices they are effectively determining what we eat and what we don’t eat. A few days ago, business leaders were complaining about a proposed rise of the prices of alcohol. Alcoholic drinks are non essential and can seriously damage your health. Curiously enough, I seldom hear business leaders complaining about food prices and talking about lowering food prices. 

It is increasingly difficult to obtain credit for investment at a time when we collectively should be able to invest to create and to protect jobs in Britain. This is why Vincent Cable MP floated the idea of creating a banking institution that would specialize in lending for businesses. But, what is then the role other banks are supposed to play? Isn’t lending to businesses a fundamental function of any banking institution?

In addition to measures to facilitate lending for investment, we should be taking a closer look at what we call Green Taxes. Green Taxes are killing businesses at a time when the priorities should be to lower prices and to create more jobs to have a more dynamic and sustainable economy. At a time when many people complain about inflation, Green Taxes are inflationary. Green Taxes will not save the Planet. They are just money making schemes that are making the gap between rich and poor bigger and bigger.

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