Danmark

14. juni 2006

Top and Bottom


Will the welfare be rearranged?

In all the Western welfare-democracies the debate is going on in these years: Is it possible to rearrange the welfare, and if it is possible, is it necessary then to make substantial changes or just larger or smaller adjustments? In all the countries the welfare is financed partly by the insurance principle partly tax-financed. The taxes are mainly income tax and value added taxation. In Norway 1.3 mio. live on public transfers (2005), of which 625,000 are pensioners of age (Norway’s population 4.4 mio.), in Germany the official unemployment (2005) on about 10 p.c. has to be doubled in reality, when the expelled ones without any connection to the insurance arrangement on the German labour market are counted in.

The international competition that has to be called globalisation these years pushes the development further. The developing countries, the Eastern countries and the Far East begin to supply products and labour to much lower prices respectively much lower wages compared with those of the old welfare-democracies.

The official accounted Danish working force that should include the number who supplies their working force on the labour market has to be corrected, because expelled ones – over the years a very varying but always increasing group – from the group of receivers of unemployment funds, and then transferred to social security or early retirement pension without having any other handicaps than those of the community have to be counted in in working force as unemployed:

topand.gif

423,858 receivers of sickness and childbirth benefits can not be distributed between public and saleable emplyees and are not included in table 1

The official number in the working force has been reduced by more than 30,000 in period 2001-2005. The official number outside the working force in the working ages 15-66 years old has increased by more than 50,000 in the same period. The Danish Welfare Commission maintains that there still are 200,000 more in the working force than outside the working force. Here we have to remember that about 1 mio are 18 years old or younger. Only a part of those are included in the figure 1,1000,000 in table 1. Close on 40 p.c. or 440,000 of the 1,1000,000 on public transfers in table 1 are immigrants, descendants of immigrants, naturalized or descendants of naturalized (se below).

To this must be added the question of ageing that has resulted in a skew age distribution with an increasing part of elderly. This contributes further to the support-problem. The Danish model of welfare has ostensible been constructed to equalize the payments between yielder and receiver on lifetime-basic. This will not be possible in future with a continuous smaller working force and a continuously increased number outside the working force in the working ages. It is even further impossible to finance the existing arrangement, when the development of the population continues with:

  • A distribution of ages changing to a relatively larger number pensioners of age
  • Unsuited immigrants for the labour market

The immigrants receive 40 p. c. of social security, the former Minister Social Security maintained. May 1st 2005 Aarhus Municipality (the second largest city of Denmark), according to www.filtrat.dk : ’58 p. c. of the immigrants on social security etc. are unsuited for work – the politicians shocked’.

Even though the question of ageing among Danish in a distinct minor scale is corresponded by a relatively very large part of children and young-ones among the immigrants (35 p. c. are 25 years old or younger) the central issue in a manageable future will be to finance the consumption of the 1,822,000 receivers of public transfers plus the 850,000 public employed. For now there are a small million who provides and sells the saleable production in Denmark.

In ’Yearbook about immigrants in Denmark 2001 – Balance sheet and development’, Ministry of Interior, 2001, you read officially that 53 p. c. of the male immigrants from non-Western countries are unemployed or outside the working force, for females it is 72 p. c. As the part of pensioners by age among the immigrants still is very small, the mentioned percent-figures will be found again as an absolute number in the figure 1,100,000 in table 1.

If the immigration could be corrected the ageing problem in the Danish community, where the welfare is built on equalization in life-income is making the system tremendous vulnerable, then the time factor would have caught up with the restoration, and it must be concluded that the immigration actually has increased the problem of finances substantially.

Economist, chairman of a think tank and lecturer Hans Kornoe Rasmussen has at several occasions like the EU-Commissioner Vladimir Spidla proposed a many times over increase in the immigration into EU and with it to Denmark. The Danish Welfare Commission asks, ‘Can increased immigration solve the support-problem’? Thereafter the commission supposes for the sake of argument that you could imagine 30,000 extra immigrants from more developed countries every year form now and for ever (a lot more if they bring their families too) added to the present 10,000 a year from developing countries, and that those would work and pay taxes here, then the hypothetical problem of finances would have been solved for the Welfare Commission.

The Danish State-debt has almost been multiplied by 10 (accounted in constant price level) in the period 1960-2001. If the technical development – in spite of the expulsion from labour market – had succeeded to secure enough saleable production to finance a more than doubled public sector inclusive the transfers of the expelled ones in the period 1960-2001 while the ageing of population developed quickly as foreseen from the beginning of the 1970s, and in addition a huge import of immigrants, of which more than the half just contribute to the opposite of the solutions of the problems, in spite of a small share of elderly people among the immigrants, then the international competition still remains. I have to say, this project does not build on any positive knowledge in so far the agenda was as presented to the public.

Differences of structure and competition will been equalized by the market without any state latitude. The main battlefield is the labour market, the social and ecologic systems. The labour market suffers under the wage and social-cost-competition from the employees in the pure zones anywhere, and the ruling national agreements of wage rates and the least-standards of social levels will inevitably be liquidated. The market brushes them aside, the employers use their potentials of threat more and more: they have the possibility to outsource the productions to favourable wage, social, tax and ecology-cheap areas in Europe and outside Europe. About 10,000 jobs in Denmark were outsourced in 2005.

The enterprises invest if their marginal profit determine the production or determines an altered/adjusted production. The difference between the costs and expected revenue (sold quantity multiplied by the price) that these costs demands for unit by unit, is too small to employ 700,000-800,000 unemployed of about 2.9 mio. in the official Danish working force, or 3.3-3.5 mio. of the real fitted for production. If sufficient difference can be realized at lower level of production, the production is realized at that lower level including a lower level of employment, if the best alternative is even worse. It is not when you compare with Danish relations. Passive earnings outside the production or production abroad is preferred. Therefore the purchasing power is transferred to private capital outside the production or invested abroad: Capitalization:

https://danmark.wordpress.com/2006/06/14/when-capital-leave-real-production/

Enterprises do not use price margins to invest, but they use profit-yielding price/cost- margins. The problem is not one dimensional, but at least two or more even multidimensional.

The economic reality is that the producers drive the economy forward, the savings are looked at as the fuel for this process. The private and the public consumption are nothing but maintenance and rubbish.

What the consumers spend does not get the economy going, but it just maintains the apparatus, eventually put it on the back burner. The other thing has never, and will never happen. Sometimes you hear the commentators report that the expenditures spend on private consumption makes up to this or that, and it amounts to a certain percent of the entire demand. We also hear a lot of nonsense concerning the expectations of the consumers – that indicates more about their choise of TV-consumption. To give the reader the impression that the opposite actually is deciding: In 1920s the American private consumption was accounted to about 8.5 p. c. of the producers’ expenditures on factors and producer goods. This means that the total consumption on capital goods to provide, distribute and deliver goods was 12 times larger than all private consumption. Today this relation-ship has turned even more skew.

The problem can certainly not be illustrated just from above and downwards, if by any chance of solution has to be found in the near future. The saleable production has to be increased substantially, or the welfare system has to be canceled. A process that promotes the production is not started by presenting the working force for the businesses. The possibility is to make the productions in this country more competitive. The key to this is a substantial wage and tax-adjustment. The latest four years the problems have just grown bigger, a reduced working force and more to provide for in the working ages (as mentioned above). The problem has just become even more difficult to solve for the last four years. Nevertheless, The Danish Welfare Commission: ‘ it is ambitious to increase the rate employment substantially more than today. The employment is already quite high in Denmark compared with other countries.’

It has to be underlined that some adjustment of the job release scheme concerning the payments or the time or age-limits, eventually its abolition, or an adjustment the age of pension or in the social transfer payments do not solve any problem.

The problem is simply that the cost of the entire tax-financed welfare system are put in taxes and thereby into the monopolized claims of wages. The leads automatically to profitable productions, the earnings of which are the conditions for the welfare system, are made unprofitable.

USA exploited the advantages of the globalisation already in the beginning of the 1980s with outsourcing of quite a few wage-heavy productions. At the same time the Chinese was let to invest in American government bonds for the money they could not real-invest immediately. In this way a part of a safety net was constructed for US-dollar at the same time. EU has broad itself into a defensive position, and chooses protecting duty on varying types of products from low-wage-areas among other China, as the threats against the retained productions appear.

If we shall see the welfare system gradually break down caused by lacking finances, eventually with a last grasp for inflation outside the Euro-zone, and as long as EU has not stopped it, the near future will bring more and more cheap import products to our country, perhaps second-rate goods with prices better matching the social-rates of more and more who will be allocated to social-welfare-transfers to live on, while we look at a partly derailed sector of education and research, where 2 out 3 educated continuing turn their eyes toward jobs in the public sector. Exchange of goods and factors of production included knowledge with the wage-light areas will be topical for some years to come.

The experiment to attract well-qualified workers for example to the IT-line in Denmark does not seem to succeed, most because of the personal income-tax, investigations unveil. This should be proof enough, but in addition there are several more burdens on the businesses and on the every hiring.

We have to conclude, as our own educated people emigrates or turn their eyes toward jobs in the public sector, immigrants for the latest 30 years have definitely turned to the knowledge-light lines, if not towards the public transfers, and our unemployed and expelled in the working ages together with about 7,000 Baltics and Poles (in 2005) cannot fit the everlasting ideology-experiment – the Danish Utopia – that reality soon shall stop the projects that certainly was not introduced caused by any popular claims what so ever, but (also) to serve to the ideological leaders themselves from the beginning.

M. Sc. (Economics) Joern E. Vig, Denmark

When Capital leave real Production


Meltdown of the monetary system is not new

From the laws of nature versus laws of humanity
– no insurmountably terminological shallow-like clichés included

Real capital is the quintessence of those goods that produces the means of our consumption, and that maintains itself while the production is going on. Capital as a function. The permanent real capital are bind for a longer period in land, buildings and equipment, eventually in inventory. The floating capital is bound in the input of factors in the process of production while this process is running, and eventually in the inventory. The process of production will typically be repeated.

Private capital is characterized by the sum of rights that permits unearned income (often in form of interest and profit due to appreciation), where it is not possible to show any connection to productive activity.

The capital formation should be concentrated in production to satisfy the all kind of needs including the needs of meaningful activity of the labour. The natural order will always turn capital formation in this most profitable real direction among human beings in the long run. But there has never been and never will be a natural order thanks to the politicians acting within an ineffective constitutional protection of the citizens.

Only with this interference the capital formation is directed the stream into private capitalization instead or abroad. As it gets worser the politicians have to incur debt by the international bankers, because all the money issuing at home gets the prices of our goods to rise further than the competition allows. The papers (shares and bonds) in the private limited company and the state-debt-bonds make it even worser. The purchasing power has been pulled out of real production by to high wages, made too high by the too high taxes, both of them simply drains the real capital to private interest earning capital outside the production.  

You cannot claim that all political leaders got insane precisely at the same time.

I don’t buy it.

An example:If you get a public subsidy covering a part of the cost in order to prompt you to renew your apartment houses but without collecting the necessary amount of money by taxation, perhaps I would ask why you did not renew the houses without the public subsidy, and while you are being very fond of the public subsidy, perhaps I will also try to get a public subsidy to renew those houses of mine. The raison to the public inter-ference is the political problems in this case following the increasing unemployment also caused by political interference and the monopoly (read close to dictatorship) of the trade unions. They are talking about renewing the towns. That is a lie. There are several other cases collected from the ideology on the life of the so-called good people that every modern politician literally has to live on. With the public subsidy the rents of the apartments increases perhaps 15-20 p.c., and the so-called value of the apartment houses increases with the capitalization of this increase (the present value of the yearly of monthly increases). When the total rent of the apartments of Copenhagen from 1914 to 1926 increased with more than 40 mill. ddk. a year the fine originators have without the society had become richer created about 500 mill.ddk more private capital, realized, when the apartment houses were sold. That is the capitalization of 40 mill. kr. a year anno 1925. A big part of this amount ran into consumption. In WW a surplus capitalization was made by the share and bond markets and by loans used to pay dividends accounted on a false basis of the values of inventory and equipment.

Read Professor Lauritz V. Birck and the Danish History Of Ship Companies 1912-1920 (and about The Crash Of Landmandsbanken, in Danish http://www. lilliput-information.com/economics/truth/app3.html .)

Denmark was very close to the limit of bankruptcy 1923 thanks to our fine President of the centralbank Rubin and Brandes in the Department of Finances, who prefered to finance the unsatisfied needs and the unpleasantness of the war by loans, and then planned to let the small-holders’ values collapse after the war.

While they were dancing and at last were dying in paper money issued by fraud in USA the prices double more times in Denmark in the beginning of 1920s. Enormous fortunes were collected on private hands, while the state just through bonds into the market. If the state had collected a taxation on fortunes once and for all in 1919 instead of telling the people that you can finance a war with nothing, Denmark would not have had any very serious problems later on. Instead they let the inflation run directly into deflation, where all values (real capital) began to be destroyed.

You have capitalized the possibilities of the future yield and trained the propertied classes to believe that war is a good business, the best investment at all. But you forgot to give them a lecture on the uncertainty of exchange rates, of the rate of interest and of the purchasing power to unspecialized (uneducated) individuals.

The real problem is not that people do not live twice here on the Earth. Their experience is just imperfect when it comes to reality, to real life, and this fact has been used time after time.

Some will try to learn from books and studies. But is not easy even if you are pretty clever. In four years 1935-1939 the concept state debt totally lost its meaning. In 1935 it meant everything, in 1939 it meant nothing. If you asked the logical question following this nonsense in the 1969 you got an answer from the professor saying between the lines that you had not understood anything at all. You certainly have to be strong as a 19 years old country boy.

A little from accurated financial history

A few quotations: Under “Must national debt be paid back”?

“…it is not a natural law that national debt ever should be paid back. The state must naturally pay back a loan, when the payments have to be paid, but if it is not convinient to decrease the debt, the payback can always be done by taking another loan… It is true by both raising a loan and by paying back that the only thing that matters is in what way it effects the economic life or the welfare of the society. There can not be given grounds for paying back national debt, if the effects that the paying back has is not wanted. If there is strong demand for labour under full employment at a moment in the society, the result can only be higher wage that necessary will lead to a rise in the prices, then it is perhaps convinient to collect more tax than necessary to cover the running expenditures, that means pay back the debt, because in that way the demand for resources will decrease. Before such condition has occured or better, before you wish to reduce the demand and the income of the society or a least stop its increasing, there obviously can not be given grounds for reducing the national debt…”

“When the state (on the other hand) is paying out money, it always receives the most of the amount from one or more citizens, and directly it creates an income in this way that correspond to the expenditure reduced by the part that goes abroad. If we for a moment assume that there is balance of the payments understood, as to every increase in import there is an export increase of the same amount, there is created with every expenditure an income of the magnitude in the society”.

“If the state in the same tempo, as it gives money away, collects taxes that are paid of means that the taxpayers otherwise would have given out for demand, or raises a loan that is yielded from money, that on the other hand would have been given out for labor and materials, there will obvious not neither be a smaller nor a larger total income in society, the only thing that happens is that the state now confiscates some resources that on the other hand would have been confiscated to private purposes, or would have benefited other persons than those who have the money now”.

“If the state on the other hand get the concerned money by taking it from its account in the national bank and the national bank does not tightening the credit elsewhere, or the state borrow on the market of bonds and the national bank by convinient buying of bonds prevents a fall in the courses, the expenditure of the state means (not alone) that there is created directly a whole new income of the same amount, but that those, who receive the money, again give some of it to people, who once again increases the expenditures. In this way an expenditure of the state creates for example within a year an increase in the income of the society in the same year, an income that perhaps is 23 times bigger than the paid out amount of money, and because the taxes in this country with the existing laws of taxation are about 25 p.c. of the income, will such an expenditure in the concerned or the next year perhaps give the state and municipalities an increasing tax income to an amount the half or three forth of the amount that can be the basic of the new expenditures or it can be used for lowering the taxes”.

Under “The balance sheet of the state”:

“If you actually want to operate with an idea of balanced sheet of the state as an expression of its economic situation, it must be the ability of the citizens to pay taxes compared with the expenditures that state is planning..” (unquote of the later Professor and Rockefeller Fellow Joergen Pedersen in: ‘Topical Economies Problems’, 1939)

Keynesianism, that Joergen Pedersen here is making marketing for, deals with problems of the society in a very unrealistic way. They are made to formulations of problems in a mathematical language of symbols or something just as limited, there has to be cleared up (as here) a logical, coherent chain of thoughts that neither fit the problem, as it really is, nor include all those things that practically effects the solution of the problem.

For example the influence on the economy of the funds, and the inflation have an inferior place in the works of Keynes and in the works of his epigones.

The same can be said about the national debt, as it appears. The new system (at that time) that should be built up in the after war period, should give exactly free admission to incur national debt. And it certainly did.

The targets for the society are always something like employment, activity and similar. The effect of the public sector on the economy is not interesting to a Keynesian, and you will at once be in doubt if the declared targets for the economy are anything but to ‘the exterior’ opinion, as Keynes himself called it, before he won the Nobel Prize (se below).

The whole entrance to the Keynesian way of thinking gives evidence of a fatal need of interest of reality, for example if the assumption all together and each of them draw a true picture of the reality at all, and then this cyberspace reality that they seek to give predictions to. It will be a special problem to the Keynesian to try to cover himself up behind assumptions all the time, so what he has said, is logic, when all assumptions have been remembered. If these logical relations, scholastic rides tell anything about the effects of different political economic actions from the authorities towards some correctly described phenomena in the society do not in principle interest the Keynesian. Here he has secured his retreat. It is a very central part of the Keynesian learning to train this. I have trained myself until I could not take more lies. My upbringing simply forbad me to continue the lies.

Therefore I must say: Do not listen to the Keynesian, he will coax you to do, what he believe in, and if you do not understand, what he is telling you, he will explain to you at last by referring to your lack of education (scholastic).

Precicely the same method that what used about 100 years before when you was explain why the gold standard what mattered

I have to inform you that the Danish Joergen Pedersen, who became a Rockefeller Fellow, perhaps could have won the Nobel Prize instead of John M. Keynes. Pedersen was not very known in the Swedish Academy, and many of his earlier writings were not written in English. 

The practical rediscovery:

From 1994 they are talking about paying back the national debt in Denmark. But nothing of the kind happens, the debt still rises every year until recently (2006). From 31. March we were expected to forget it ever excisted according the rather twisted information in Jyllands-Posten. If the national debt was beginning to be paid back the unemployment would increase, the keynesians would tell you. The unemployment in Denmark is between 500,000 and 700,000 or 17-24 p.c. of the laborforce in 1999. I have tried to give an total presentation of the unemployment-accounts-problems on: http://www.lilliput-information.com/economics/led/index.html (in Danish).

Pupils who always work and always talk, tell you that the unemployment in Denmark is less than 150,000. That is the figure when you when you concentrate on the unemployed members of unemployment security system. The expelled ones do not exist. They did not in the Soviet Union and DDR either.

In 1933 the unemployment was 33 p.c. (the highest ever in Denmark) of the labor force (accounted in 1933). In September 1939 (when the World War II broke out) the unemployment increased 16,000, even if 20,000-30,000 were called to the military forces. In the years before unemployment had been reduced by public occupational work (‘New economics’, ‘Recovery’ or ‘New Deal’ made in USA), by exporting more to Germany, which were preparing for war, and by national debt, that means transforming more and more real capital to private capital.

At this time the unemployment were especially reduced by the Keynesian so-called ‘kickstarting’ operations. That the money was destroyed in this way did nearly nobody discover, because the war also made a new international monetary system that was based entirely on credit economy alone and and paper that is the same.

That the effect of this blind using of the theories of Keynes led to a public sector ruled by bureaucratic principles, a public sector that was a good deal larger than the things ruled by private, individual dispositions, and a colossal national debt ought to have been foreseen, but the theories did very convenient not tell this, the theories that were followed blind for 70 years. The dictatorship based on the nonsense writings by Karl Marx also lasted for 70 years. Nothing has been left to uncertainty if you look in right direction.

How should an unskilled individual know what to do? That is the reason why I got the right to vote.

A little accuracy about the between war period: 

John Galbraight still maintains the German economy recovered from 1933 by civil production, and he intend to let us believe that the German method was a kind of the so-called new economics. He seems to want us to forget a lot. In 1932 4.1 mill. Germans were unemployed. Two years later the number had been reduced to 2,4 mill. In 1998 (the election year) the unemployment in Germany with nearly the same population as in 1933 was officially 4,3 mill. The SPD-politicians just before the election to the Bundestag maintained that this number was not correct. The real or the true number was about 10 mill. (the same four years later at the next election 2002). In the late 1920s and the beginning of the 1930s the motorization came as a gift from the technical knowledge, the arming had been started, and productions and development of arms had long been going on in cooperation with the Soviet Union (unofficially). A restrictive control of the currency, tax discount tickets, and especially the suspension of the trade union wage rates was the axis of the German recovery policy from 1933.

From 1924 Hjalmar Horace Greeley Schacht was commissioner of the the Reichcurrency i Germany, later on President of Reichbank. April 7th 1924 his attack on inflation began with the decision to stop credit. This led to the Dawes Plan og August 16th 1924. The interest rate rose to the sky and the share prices were reduced to the half. With a short pause from spring 1930 to spring 1933 Schacht continued as the highest in charge in Reichbank under the Hitler regime until November 26th 1938. Schacht actually fought the deflation in Germany.

Some do still think that the way Hitler (or Schacht) went to get rid of the unemployment was to print notes. On the contrary as just mentioned. Schacht was not a Nazist, and he was highly respected in every central bank of the Western world. He opposed to Hitlers plans of war and chasing. Schacht ruled the emission of money issuing, decided the economic and monetary policy and controlled the effect. In 1938 Hitler accepted a proposal by Hermann Göring to introduce 4 years plans like the 5 years plans in the Soviet Union. At the same time Hitler intensified the chasing of judes. Then Schacht decided to go (January 1939). He was called back twice but left to join the forces fighting against Hitler.

Hjalmar Schacht got the claims of reparation, first decided in with the Dawes Plan of 1924 (after Worldwar I) reduced with the Owen D. Young Plan (1929). The original claims on Germany of the Versailles Treaty in Paris of 1919 would have brought Germany in famine with thousands of deads. All the industrial network found its way through the international lines but the ordinary germans without the knowledge of what was happening and possibility to use this knowledge went either bankructcy, lost their savings and got hungry. J. M. Keynes documentated this very properly in his excellent book The Economic Consequences Of the Peace (of December 12th1919) in which he took the Versailles Treaty apart. All qualified economists of the time agreeded with Keynes, e.g. Gustav Cassel and Bertil Ohlin and a lot of other. The year before (1918) Hjalmar Schacht wrote in his diary:

“Violence not even Money/Is shaping the World/Intellectual Power and Traditional Trade and Living/Prevail upon Worlds to Alter”

(translated from German). 

Back to capitalization

– without real bases no reality :

This process of capital formation towards private capital or out of the country is speeded up in a society where capital is a stronger and stronger condition to live in freedom and security.

“History do not repeat. Oh I see, people are becoming better and better all the time”. It is tempting to take dismantling for development, I must say. To the first sentence of the last paragraph, try : http://www.lilliput-information.com/economics/gol1/gol1.htm

But no sound production has been carried out caused by the Danish (1993-2000) public subsidy either. The money has been circulated, and the citizens still believe it was sound. But the prices are beginning generally to rise. At the same time the politicians have artificially lowered the interest rate in order to get activity to increase, and by this they stupidly hope to reduce unemployment. Instead they tempt the capital to leave the country. Let us take the subsidy (there are hundreds of issues as well):

Public subsidies draw the initiatives and the money to those areas that the politicians especially are concentrating the subsidies on. The activity then increases for some time, and the suppliers notice sales are indeed growing too. If the subsidies are increased all the time the Economy Of Command and the State Of Civil Servants grow, so does the distortion of the economic natural order. When subsidies stops or they are just not increased further all the time, the depression slowly becomes deeper and deeper, and the end result is even worser than before the subsidy. The reason for this is that politicians deal with problems that do not excist without the politicians almost all the time.

The thirties were also dominated by this subsidy-economy. New Deal it was called, in reality mostly inspired by J. M. Keynes from England. The economist who designed the Bretton Woods Aggreement. Jacques Delors, a French Socialist and the former President of the European Commission, said in 1995 that he was very fond of subsidies like those used in Denmark. Now he is a member of the Bilderberg Group.

Today company emptying is going on (much more explanation to this on: http://www.lilliput-information.com/economics/gol2/gol2.html#pri), it continues while some of the authorities participate themselves in double parts. Just one tiny example more of what is going on, also in Denmark. The state issues bonds at a discount with a constant interest rate on to call in purchasing power that should have benefited the society as real capital, but that is not enough. On this route of death the fine leaders have also tried for a period of ten years now to collect foreign currency abroad in competition with all the other European debt and deficit countries by selling the bonds for foreign currency. They are tempted by the constant rate of interest and secured from collapse of exchange rates in countries they use to buy from. Loan debt in fairness is the most pressing burden.

They built on a lie, they continue on lies until they are dead. Then their fry of the devil takes over the visible power based on more fraud. “In the long run we are all dead”, wrote Keynes.

It is the same all over Europe – except for Switzerland, Ireland and Norway. The real capital has not yet been totally destroyed by war, mostly by secret abundance public consumption in the public and union foundations, much more than the highest taxation of the world managed to finance. Wage confiscation must be the right word, when the rate of taxation exceeds 50 p.c. of income – today all in all about 65 p.c. In Europe an abnormal amount of paper, and even under favourable possibilities of production it would have been a scandal to talk truthfully of prosperity at an acceptable rate employment. But Europe is even lacking of innovation, low technical level and false education at the same time they are constructing a new compulsory and political ruled currency of unit. As a result the direction of the capital formation is e.g. USA and unearned private capital. They try to protect themselves from the truth an responsibility, not as they use to say the Europeans from Globalization, in reality they believe in, what their friends the multi trillionaires abroad told them: “You shall become the real power brokers in a centralized and politically correct European Empire”

I would correct it to: Take your position in the line of Cesar, Filip II, Louis XIV, Napoleon, Stalin, Kaiser Wilhelm and Adolph Hitler.

To secure that we will not return to real life again they even transformed our children to animals. Steady and persistent for a period of 150 years: http://www.lilliput-information.com/economics/wu.html.

And that is also the reason why I look forward to (economic) Globalization without ideology, and the reason why I made some outlines of a new stable international monetary system:

https://danmark.wordpress.com/2006/05/19/new-monetary-system/

It is better for the all peoples to die a natural death than to be executed by the devil’s servants here on Earth. The natural death what so ever makes the few survivers stronger than before. The devil’s servants in contrast to this always execute the strongest.

To go further I would propose:
http://www.lilliput-information.com/economics/gol1/gol1.htm

and
http://www.lilliput-information.com/economics/tida.html 

M. Sc. (Economics) Joern E. Vig, Denmark

Welfare for 40 years and the results


Almost two generations of welfare

In every western nation you find a welfare state today. The basic foundations of these arrangements are very different. Some are organized by principles of insurance, some are financed entirely by taxation. This implies substantial differences in respect to total consumption of welfare, re-distribution and equalization among individuals and over time, and not at least in respect to the vulnerability of the welfare now and in the future, regardless if the degree of preparedness or the willingness to face reality among the decision-makers is taken in to consideration. 

Three years of low growth rates or negative growth rates at least in Germany, France and Italy tells us that unemployment or mass-expulsion from the labour force have to originate from more than the traditional and clearly public outspoken or ditto theoretical reasons. Theories may or may not help you to understand some patterns, but experience shows reality. Regardless which type of welfare system was chosen, the welfare state is being threatened by the so-called globalization or by its preparedness for international competition, the low western fertility, therefore the ageing of the populations, the weight of the welfare system compared with GNP, and the still increasing state-debt in all the western countries.

The starting point for all civilized communities has been production, sale, export and import in a suitable mix since the end of the Mercantilism and the Napoleonic Wars with young Industrialism and the start of organization of international trade. Demand for labour and other resources as a prerequisite for production is a starting point for growth of production, earnings, consumption (private and public) and employment. If the decision-makers of a nation seriously take the needs of citizens into account, they must also concentrate on economic stability that includes the dynamics of capital formation, securing the investment process, securing economic growth, research and new technology, competences and high productivity. Those considerations and responsibilities are the plain basic of transforming resources/wealth into welfare.

Welfare includes a variety of payments and services to replace your income and to help you when certain events occurs:

Unemployment, absence, leave, invalidity, expulsion, early retirement, pension, health care, nursing homes, nursing at home and alike.

The way the welfare programmes have been financed implies plenty of differences as mentioned. Often differences between ambitions and reality are caused not simply by the willingness to realize, but also by the decision-maker’s trained way of thinking. Systems entirely financed by taxation have the characteristics and even inclines to grow according to the public budget, often decided by both an explicit and an implicit steady growing-mechanism of the taxation. Systems entirely financed by individual payments to private or public security-funds on the other hand are based on insurance principles, and they often meant to make considerations entirely of individual lifetime-distribution of purchasing-power without any built-in re-distribution or even equalization for example between different levels of incomes or between payers and receivers of transfers and service unlike many taxbased systems.

Taxbased systems were often inspired by promoters far from production and sales. The welfare theorists’ way of thinking at best have recently presented the alarming results to the public and the politicians in Denmark[2]:

”Does it make sense to increase the supply of work? Will there be a need for “all this work”? There is. There is a need for labour in a lot of areas. For example are lot of hands needed to do the jobs of the welfare service in the future, care to a growing number of elderly people. There plenty of opportunities in the international economy, if we remain competitive. As we have seen high employment is fundamentally the prerequisite of a high level of service and transfers in Denmark. It is wrong to believe that the amount of work always remains constant. That we have to divide the existing amount of work.”  

The central argument and the starting point all the way through is: ”a larger labour force implies larger employment”. The labour force is the part of the population who supplies their work on the labour market. Pensioners, children and young ones in education are typical not included in the labour force. The whole way of thinking is built on Say’s Law, Keynes and Karl Marx: “Supply creates demand” and traditional welfare theoretical discourses.

Take results of the Danish system/model described by a few key figures as a training-example and forget that the population in Denmark is just 72 p.c. of that of London’s 7,4 mill:

Gross National Product (GNP):

1960: 384,6 bill. 1995-dkr., 2001: 1.188 bill. 1995-dkr.

Taxpayments:

1960: 26 p.c. of GNP or 100 bill. 1995-kr., 2001 51,5 p.c. of GNP or 612 mia. 1995-kr.[3]

Employed by the public:

1960: c. 406.000, 2001 c. 850.000.

The total employment increased by:

600.000 in the period 1960-2001, of which 450.000 publicly and 150.000 went to saleable production.

Number of receivers of public/taxbased transfers :

1960: 600.000, 2001 1.822.000, of which 1.100.000 in the working ages, of which 700.000-800.000 unemployed or ”on sideline” (a new official expression), i.e. as receivers of unemployment benefits, social security, early retirement payment or another public transferred income (the numbers are accounted in the year round employment).

Public transfers and service:

20 p.c. of GNP in 1960, 2001 44 p.c. of GNP[4].

Public service:

14 p.c. of GNP in 1960, 2001 28 p.c. of GNP.[5]

Public transfers:

6 p.c. of GNP in 1960, 2001 16 p.c. of GNP.[6]

Danish State-debt:

59,3 bill. 1995-kr. in 1960, 2002 573 bill. 1995-kr.

Changes briefly in the period 1960-2001:

All in all GNP: 3 times more

Tax-payments: 2 times more plus 63,7 p.c. of the GNP-growth

Service-employees: more than 2 times more.

Individuals to support: more than 3 times more

Population: 4,585 mill. in 1960, 1983 5,116 mill. and 2001 5,349 mill.

State-debt: 9,7 times larger

If you fell for the misinformation of the state-debt as repaid in Jyllands-Posten 31. marts 2006, read this:

http://informationomdanmark.blogspot.com/2006/03/mske-en-tyvstartet-aprilsnar.html  (in Danish) 

Please, email a corresponding short but documented account dealing with the welfare in your country or inspire some able individual to do so.

The results in Denmark, continued:

63-65 p.c. of the GNP-increase, and more than the doubled part of the wealth in the starting point has been confiscated by the public and transformed to public consume included transferred purchasing-power and public welfare service in the period, and about 28 p.c. of the labour force is not offered work in 2001. Now the income taxes cannot be increased further. In the same period (1960-2001) the state-debt has been multiplied by almost 10. A striking disproportion between the monopolized sector with compulsory payments and the production sector on the other hand. The need is not just more hands to make more service of care and nursing, as it is proposed in the source mentioned in footnote no.1. There is something else.

The purchasing power creator – the production in contrast to public consume and public compulsory monopoly-supply – has simply been reduced relatively to what might be possible in order to simply change the negative unbalance of payments to the opposite with the result that more than one quarter of the labour force has been expelled and put on welfare transfers while the production has been sent on pilot light.

In the areas ‘education’, ‘health care’, and ‘social care’ more than 25 p.c. of the labour force (or 630,000) is employed. It is impossible to find the distribution of labour between or within the three sectors caused by the lacking public statistics. Number of patients, clients, pupils and students to throw light on productivity (product divided with resources) and efficiency (aims divided with resources) are not available either. It is a fact that the number of employees has more than doubled since 1960. The explanation may be a doubling even though you then account on the part of a three times bigger total GNP.

A few examples:

Primo April 2005 DR-Text-tv reports that 30 p.c. of teachers’s working hours are used on teaching the children. April 11th 2005 TV2-News reports: 57 p.c. of the all schoolteachers teaching Danish in the Folkschool have not chosen the Danish, when they qualified via education to teach in Danish, and the same with 97 p.c. of those teaching Natural Science and Technology. A big international approved investigation showed that 9 years old Dutch school children got two times more teaching-hours in 1996 at half the cost. 10 p.c. of the students drop out from the more advanced studies. The yearly intake of students on the MSc in Engineering has fallen by 50 p.c. from 1985 to 1995. The worst is we were not informed before the system broke down.  

We have 200,000 more in the labour force than outside the labour force, and this disproportion is getting more and more fateful in the future with an growing part of the population in the ages 65 years or more, and an imported group of immigrants who join the labour force less than half as often as the Danish, and therefore consume 40 p.c. (until now) of the social security transfers. To this must be added that 35 p.c. of the immigrants are 25 years or less and therefore very dependent on public transfers and service.   

The Danish model has never been claimed by the voters. On the contrary, our language had to be filled with new words and new concepts to replace the old ones, and some of the old ones had to be emptied for substance and filled new substance. Continuously and obstinately it continued for almost one generation in advance in order to succeed. Perhaps the leading figures then also got an easy start with a large postwar-generation employed in the labour force, and perhaps the weaker followers of the Postmodernists and some politicians had imagined that some kind of equalization of the payments was actual, and perhaps also a imagination of some division of those payments with the welfare over some kind lifetime-consideration. Almost nobody will draw wrong conclusions when the results are shown to them after almost two generations with the Postmodernists’ welfare system financed almost entirely by taxation.   

Regardless which so-called model of welfare is chosen or chosen to do without, there are some fateful false arrangements of the Danish society, that certainly cannot remain unchanged, but cannot be removed without a large power-displacements and an information programme of considerable dimensions.

The Danish Welfare Commission finds it difficult to increase the employment more than today:

“The employment is already rather high in Denmark compared with other countries.” 

And we have to add this: “…with 700,000-800,000 unemployed and expelled of total 2.7 mill. in the labour force”.

 On this background both the Welfare Commission and especially EU proposes an accelerated inrush of immigrants as an obvious possibility. The Welfare Commission asks: “Does increased immigration solve the providing problem?” After this some thoughts of experiment that obvious tries to illustrate if 30,000 extra immigrants from more developed countries were invited to Denmark every year in eternity – besides the inrush from less development countries right now – and provided that they were employed and paid taxes, then the financing problem would have been solve for the Welfare Commission. “And if the moon was made of green cheese”.

 

According to Hans Kornø Rasmussen and EU the immigration to EU must be increased by an even increasing factor 8-14 times compared with 1996, i.e. 8 times more in 2007 and 14 times more in 2024. In 1996 525,000 (net, new) immigrated to EU. The number per year should be 4.5 mio. in 2007 and after this increase gradually to 7 mio. in 2024. At the same background the new appointed EU-Commissioner Vladimir Spidla Marts 18 2005 announced a gradually 12-doubled intake of non-western immigrants towards 2024.   

 

We have to add that Hans Kornø Rasmussen reduced his proposal concerning the inrush of foreigners to Denmark to twice the actual number (the number was about 18,000 in 2000). Perhaps he has had some personal experiences. Nothing else in his former premisses has changed. 

 

One way out of the morass:

The Keynesian way of thinking turns things upside down. The earth is actually turning the other way round of what the Keynesian imagine. You does not start e.g. with the labour force and the employment, you actually start in the market for economic goods. Thereafter you turn to the division of labour, and continues with planning of production and the consumption of resources, and you end with the labour force and the employment.

Businesses do not invest when their expected margins of profit do not condition the production or an altered production. The difference between the costs and the expected revenue (price multiplied by the amount of sales) that these costs demand per produced unit by unit, is too small. If it is possible to make an adequate difference or margin be realized at a lower level of production, it will perhaps be carried through at this lower level, also what concerns employment, if the best of other alternatives is worse. It is not, if you look at Danish relations. That is the reason why the purchasing-power is canalised into private capital outside the production or out of the country:

https://danmark.wordpress.com/wp-admin/post.php?action=edit&post=108

Business investments are not based on price-margins, but entirely on a basis of profit-yielding price/cost-margins. The problem is not one-dimensional but at least two, or more often multi-dimensional. It has been said that Keynesians are not able to think in more than one dimension. If it is true, you may not wonder that the economic reporters abroad are rather one-dimensional. There does not exist any Danish anymore.

The economic reality is the producers who drive the economy forward, savings must be looked upon as the fuel in this process. 

What the consumers demand and buy does not start the economy, but it just maintains the production machinery. An increased consumption, e.g. a public initiated increase of consumption neither has and never will kick-start any economy, as it usually and very often has been expressed by the Keynesian for the last 70 years. Sometimes you hear the economic reporters say that the expenditures for private consumption amount to some percent of the total demand. You also hear some nonsense about consumer expectations. To give the reader an expression of the reality that is quite different, rather opposite: In the late 1920s private US-consumption was accounted to about 8.5 p.c. of the producers’ expenditures on factors of production and other producer goods. This means that the consumption of capital goods was about 12 times larger than the private consumption.

The production process consists of a vast number of complex stages. It follows from this that the total combined expenditures on all those stages have to exceed the expenditures on consumption rather considerable. As an illustration you can imagine the total invested capital turned to final consumption. This must take some years; here 12. What is being used on consumption originates certainly from production, while production originates from the capital (included factors of production) that in the first link originates from savings. Therefore, the more savings the more real capital are created and accumulated. The result is that production rises, and the consumption can be risen too.

You could accept the following facts: government expenditures and private consumption do not stimulate, but they drain the economy. This is the truth, even though you find these expenditures just. 

In Denmark you find the following needed changes :

Wages have to be reduced by a least 30 p.c. The income taxation must be altered to the kind-of-source-taxation, i.e. wages must be taxed directly, proportional and final at the source, primarily to avoid the taxation control. The yield of the wage-tax has to be reduced by an amount

at least corresponding that the disposable wage actually increases by 2-3 p.c. The company taxation has to be reduced to the Irish level.

The different contributions at the wage pay slip are to be gathered after a reduction of at least 50 p.c. into one single contribution to the education-fund, entirely used for education, directly and individually.    

The result is a 2-3 times larger saleable production that will draw the labour force into employment and create the purchasing-power

for so-called welfare to quite a reduced number of receivers. By following the way the earth is turning in space that will be the outcome per automatic.

Knowledge and competences in front:

If Denmark should take a chance in these years of outsourcing, we have to invest whole-hearted, relevant and consequent in knowledge and competences that can bring us in front. The labour force to do the jobs of welfare service caused by an increasing part of elderly will never become a problem. The second most dangerous development we have experienced for almost two generations now is the reproduction of the gymnasium-teachers’ own irrelevant competences. Most of these competences are certainly not business-relevant, if we have to survive as a civilized nation. The Folkschool is certainly not better. Here we have to invest in Danish, English, German, Match, Biology, Economics, Data and History, and we have to realize that we cannot replace a great deal of teachers, and at the same time find an exchange that carry the development towards new aims I such a way that it will break the mould. Some known kind management to achieve the new aims have to be established. 

The means to correct the course within 2-3 years we have to follow our comparative advantages that should have been followed from the start in 1960 instead of letting young ignorant people decide for themselves with help from the teachers in the gymnasiums, where we all were meant to go on the account of others. We have to import education systems and textbooks (eventually translated) from Ireland, Holland, England, Germany and USA, and eventually get some teacher from those nations to work in key positions in Denmark for some time.

USA started to tackle the globalization-political questions action-oriented already primo the 1980s: Dollar-Fall. England did the same. Ireland produced half the Danish production in 1970, today Ireland produces 10 p.c. more per inhabitant than Denmark.

The universities are a greater matter; they have to handled within the same 2-3 years.

The Muddling through continues to the end:

How a country with 67 p.c. of voters employed by government or sent on transfer payments meet its finale in latest 15 years is difficult to imagine. It shall certainly not be a nice view.

Recommend: Two generation of welfare

Joern E. Vig

M. Sc. (Economics)

Information of Denmark


[1] That taxes e.g. may rise wages, even wages in realterms, and at last stop private initiatives, not entirely based on monopoly in the last link of production-sales-chain.

[2] The Danish government’s Commission of Welfare: The welfare of the future does comes from itself. Page 24. And we could add: I is created entirely out of wealth.

[3] Notice, that growing percent is accounted from an even growing basic. In this case it was made possible, because both men and women was drawn into labour market as taxes rose further.

[4] Notice, a growing percent is accounted from an even growing basic. You could

explain in this way: 14 p.c. of 384,6 bill. and 44 p.c. of 384,6 bill. plus 65 p.c. of the growth from 384,6 bill. 1995-dkr. to 1.188 bill. 1995-dkr.

[5] Notice, a growing percent is accounted from an even growing basic.

[6] Notice, a growing percent is accounted from an even growing basic.

[7] A member of the one of Danish government’s think tanks.

[8] The period ’Social Forskning’ no. 1 1998 and EUROSTAT no. 6 1996.

[9] Almost all UN-members gave this comment to the ambigitious U-90 (Education 1990) in the 1970s: You must certainly be able to afford it.

Ny Rekord under WM

Filed under: Culture, Immigrants, Justice — Tags: , , , — Jørn @ 09:49

Ny rekord – for tidsånden og trenden 

12.700 nye nordmenn ifjor (90 pct. ikke vestlige); og det er ny rekord med 600 flere end i sidste rekordår 1997. Og det er løgn på præcis samme måde, som når begrebsforvirringen bevidst tages i brug i Danmark for at tiljuble nationernes undergang.

I Danmark nåede vi kun 10.197 tildelte danske statsborgerskaber i 2005 mod 14.976 i 2004, til gengæld steg tilstrømningen, selvom vi måske nok troede de rejste hjem netto i stor stil sidste sommer. Det var så sjov. Men Danmark er altså bagefter – absolut eller relativt? Uha, nu bliver det kompliceret. Ny rekord, hvad siger du så? WM-VOV!

Der er ikke lighedstegn mellem norske og danske statsborgere på den ene side og det at være nordmann og være dansker på den anden. Og, tænk det er kun tonen, der bliver forkert (i følge T. Seidenfaden) , når jeg nævner det, fordi lovgivningen er nemlig endnu ikke blevet internationaliseret, så det ville være endnu værre fat med sandheden.

Nu har nordmennene en chance for at følge oplysningerne lige op til halvårsrapporteringen om det glædelige budskab, at nu rejser de hjem, og netop følge op på budskabet, der let kan være løgn. Vi fik det sidste år den 9. august i Danmark. De etniske danskere er nu nok dummere end de etniske nordmenn – det må man godt skrive, og så er det ikke en gang racisme, tror jeg; der er simpelthen mere frisk luft i Norge – så den med at de rejser hjem i stor stil tør de nok ikke give dem i Norge; de etniske nordmenn, altså.

Havde nordmennene imidlertid ikke fået 12.700 nye nordmenn i 2005 – nej, nye 12.700 med tildelt norsk statsborgerskab -, og nu de er i gang endnu flere i det første halvår af 2006, så ville de ikke være rejst hjem. Havde man ikke tilsendt disse 12.700 i 2005 og måske 6.000 flere i første halvår af 2006 et brev med oplysningen om, at de nu er at betragte som norske statsborgere – ikke nordmenn, for det er fortsat noget andet – , så ville de stadig have befundet sig i Norge, går jeg ud fra, og da ville de være blevet optalt som udenlandske statsborgere.

Vil det sige, at de rejser hjem, når de får et brev om, at de er velkomne til at blive endog med den nye status som norsk statsborger og det samme med deres børn efterfølgende. Kun officiøst.

Nej, de rejser end ikke hjem, når de får et brev om, at de ikke kan blive i Norge. De rejser slet ikke hjem i det store og hele. Vi holder bare op med at tælle dem. Og får de flere børn uanset brevet, er disse børn også norske statsborgere, og de er heller ikke rejst hjem. De er bare ikke optalt som andet end Nordmenn; selvom de altså er noget ganske andet.

Grundtvig var den første formand for det, der i dag er benævnt indfødsretsudvalget i Danmark. Den første tildeling på årsbasis viste 5 tildelte danske statsborgerskaber ved lov, til tre tyskere, et til en hollænder og et til en svensker.

Det er i Norge præcis som i Danmark – jo flere der tages ind desto flere breve sendes der, og hvis der sendes flere breve end antallet, der kommer ind, “så rejser de hjem”, samtidig med de strømmer ind i landet (netto)

Og det er løgn over løgn. WM-VOV!?

Tilstrømningen til Danmark i 2005: https://danmark.wordpress.com/2006/05/25/indvandringen-tiltog-i-2005/