Tuesday, 16 August 2011

TRAINS ARE GOOD and so are Subsidies. 
Thoughts on holistic view of political economy

Libertarian-Capitalism which got us into this mess, worries about state intervention, subsidy etc. Such adherents will be worried about the cost to the taxpayer. But don't be so worried: The economics of the left has a superior holistic perspective.

In reality money goes round in circles. Taxes, re-spent are taxed again, just as goods paid for - the money used goes to pay for other goods in a money go round. The libertarian-conservatives appears to believe in error - that taxation is a bonfire where your taxes go to be burnt.

But that isn't true. We want the flow of money in the economy to move in circles, to be fluid and as unbroken as possible: For the flow to continue with minimal leakage. Reduction in subsidy on rails will immediately reduce spends in the economy from the citizens as their disposable income takes a hit. But to the libertarian-capitalist - that is okay, because it implies a reduction in taxes. So it balance out...

..but of great holistic importance is that higher rail costs will result in greater use of the car - which is less fuel efficient. The increased use of petrol will expand our trade deficit - as that money that may have circulated in the uk economy will bleed faster from the body whole.

It is Energy Which drives the economy, not money. Without a supply of energy, whatever the level of money, whatever the method of production priorities - there will be no economy without energy. It is absolutely key, and yet in error, policy makers continue to use market centric thinking for energy policy.

Considering the wind power vs nuclear debate. The energy cost to build a wind farm is a fraction of the cost to build equiv power by nuclear - and yet, people look at the high capital cost of wind and become worried. Don't be worried - what matters is energy. Markets are transient and operate in error. We know markets fail all the time so we should Never govern the strategic parts of our economy upon short term market thinking.

Disqus for A New Red Dawn