Cracker: Another Capital Idea...
285 Responses
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chris, in reply to
we aren’t sympathetic enough that you can’t wipe your arse with fifty dollar notes every time you take a shit.
youch!
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BenWilson, in reply to
You seem to be mildly complaining because we aren't sympathetic enough that you can't wipe your arse with fifty dollar notes every time you take a shit.
That's a harsh take on what Rik's been saying. It seems to me more like he's complaining about being equated with considerable wealth on account of income, without actually having a lifestyle that looks or feels like considerable wealth at all. I'm in the same boat, although I'm not "complaining" about it, but rather simply saying how incongruous it feels. You would not look at my lifestyle, and the one of the Samoan truck driver next door, who lives in an identical house, plays with a nicer boat, drinks just as much of the same kind of beer, sends his kids to the same school, has plenty of luxury electronics, has done numerous extensions to his property, etc. I expect he is able to do this from being wiser with his money, or having inherited a big piece of his house, or something, but the simple fact of the matter is that he lives the same life as I do, on the strength of something it takes about 3 months to learn how to do (driving a large truck), which I doubt earns him half what I earn. He did not spend 5 years training carefully towards a career that is highly paid, nor follow the life that involves the hard hours, working through the night, dealing intensely with a wide range of people that you often don't like, innovating, thinking about it after hours, etc, etc. So it can feel pretty fucking weird to be considered way wealthier than him. I have other friends in the same position, various tradies who never spent did any tertiary training, do easy work that they're reasonably well paid for, but have 10 times as much assets as me, none of which they've paid a fucking cent of tax on, and they pay considerably less income tax. I don't grudge them it, but when they suggest I'm a rich prick when they hear how much I earn, it's...just....odd.
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Danielle, in reply to
That's a harsh take on what Rik's been saying.
FFS Ben, it's an expression of frustration at this yucky entitled argument, not a *literal* take. Fifty dollar notes don't even come in two-ply, for one thing.
(Side note: I don't think tradespeople necessarily do 'easy work', either. I would find it very difficult, because I'm not practical. Horses for courses.)
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As the son of a tradesperson, I'm going to have to say bollocks to the idea that it's easy. Or that the fact that his formal education finished when he was 14 somehow entitles him to less money.
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When I was about 30 or so, I compared notes with a mate who's a highly skilled fitter/welder. He used to get megabucks doing things like working on the Huntly power station annual shutdown/refurb.
One of the things about working in manual trades is that by the time you get into your 5os, a reasonable proportion of your colleagues are missing fingers or worse. What they make as skilled workers with dangerous tools partly reflects the risk of being maimed.
Another thing he said to me is that when on a break, tradesmen rarely or never reflect on what they do as something to look back on. It's great to keep a power station running, but you don't generally look back on a bunch of welding, or drain laying, or wiring, or toilet unblocking, the way that you might in more cerebral professions. You do your day's work, thank Christ that it's over, and look forward to when you don't have to do another one.
Another interesting thing is that he started earning large money at a younger age than me. I'd say I peaked in terms f hourly rate in my early 30s, he'd peaked at a lower but still large rate in his 20s. Compound interest has easily kept him in parity with me.
I talk to my daughter about what she might want to do for a living. It's not clear to me that university education, in particular graduate level education, is worth it unless you actually love the subject.
On another note, appearances can be deceiving. Neighbour dude might be buying all that shit on credit and saving nothing.
Finally, I come back to the idea that wealth is really about assets. If I have enough assets that I can pay for a room and power and groceries until I die, without further work, I'd say I'm rich compared to most people I know (I don't, yet). It is impossible to judge people's level of assets from observation. Often people living large have a net worth of nothing, people in rags own heaps. I'm not sure personally about where taxation fairness lies between big earners and careful savers.
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BenWilson, in reply to
FFS Ben, it's an expression of frustration at this yucky entitled argument, not a *literal* take.
Yes, I got that. But even if it's yucky, it's still an issue with some complexity.
As the son of a tradesperson, I'm going to have to say bollocks to the idea that it's easy.
In the easy cases I'm referring to, that is how they refer to it, with considerable smugness, and with descriptions of work that does actually sound pretty easy. But in those cases I think they haven't factored in the danger side of their jobs - dealing with dangerous chemicals, and driving around a lot might strike them as easy only up until the day they have a terrible accident, or some horrible toxin related sickness.
tradesmen rarely or never reflect on what they do as something to look back on.
Does depend on the trade a bit. But for things that don't require much forethought, I'd say that's right. It's hard to know if that's a good or bad thing about that kind of work. Not many people of any stripe look back on their lives and deeply regret not spending more time in the office.
Often people living large have a net worth of nothing, people in rags own heaps. I'm not sure personally about where taxation fairness lies between big earners and careful savers.
Neither do I. I think big earners should pay more tax. But people with a lot of property assets do quite possibly have the same or more money to just use for less basic needs. I don't have a solution for that. 2 people in identical jobs with identical pay will pay near identical tax, but one of them might be a lot richer than the other, keeping or spending far more money for/on themselves. On the one hand, it seems that saving is it's own reward and should not be unfairly taxed. But the exact same argument could apply to investing in one's training.
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BenWilson, in reply to
But the exact same argument could apply to investing in one's training.
And the latter would seem to me as widely regarded as better for the economy. I'm actually undecided about whether this is true, whether we have an unrealistic fixation on skilling up via tertiary education as the savior of the economy, that skills learned on the job are more economically valuable. I think increased tertiary training is a good for reasons that are less about economics, and much more about widening the scope of the lives of people who engage in it.
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Rik, in reply to
It seems to me more like he's complaining about being equated with considerable wealth on account of income, without actually having a lifestyle that looks or feels like considerable wealth at all.
Ben, you had me at It.
Yep, you're one the money - except for the complaining bit, I was actually just trying to make a point. In fact I think you have a far better idea of what I was on about than I do. Whatever it was.
My only real concern for my personal future is not so much anything related to taxation - I've paid much higher rates in the past - it's more that I will lose my ability to earn a reasonable living as IT guys become redundant as Cloud Computing takes hold. But I am hopeful there will always be some sort of work for clapped out old IT guys that don't like working more than 30 hours/week.
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Damian Christie, in reply to
By the way, Damian, as far as I can see, the media is still talking about this a week after it was leaked (on purpose), so you owe Russell
Well, given that some Labour MPs have been complaining their announcement was deliberately overshadowed by Hone's oath stunt (they're blaming National, for Lockwood's action), I'd argue the toss on that one. The point was whether they've had as much time explaining their position as their opponents had over the past week. Again, I'd say no, but whether he's buying or I am, I'm always happy to have a beer with Russ.
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By the way, having just caught up with this thread, I'll make a couple of observations about Rik vs The World...
- just as the definition of 'rich' might differ, so might the definition of 'struggle'. If my bank account got down to $100, or my credit card was within cooee of its limit, I'd be feeling uncomfortable. I have a couple of friends who I often shout lunch or dinner when I hear they've been eating 2 minute noodles for the past few meals. I understand the difference, it doesn't mean that on $100k combined income, Rik doesn't feel like things are tight. I don't think he's pretending that the power's about to be cut off, or that the belt couldn't be tightened further if necessary, right Rik?
- I understand accounting, I used to do my GST, but I don't have the spare time to do it these days, because I'm working 6-7 days a week. While it's all very grand to do your own accounts, there's a reason we pay other people to do stuff. I could probably learn to fix my car too, or learn plumbing, or carpentry, but again it's a better use of my time to DO MY JOB and then use the money to pay someone to DO THEIR JOB. Apparently good for the economy too, but let's not get into that debate.
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BenWilson, in reply to
Yep, you're one the money - except for the complaining bit
OK then, fair enough. I'm sure both of our points here can look like complaining, and that's probably worth addressing. Most certainly I have heard many a person in my situation complaining about progressive taxation. I don't have a complaint, per se, but simply a point that income is not identical to wealth, and the equating of the two can be a source of quite suboptimal outcomes if you actually have a generally progressive attitude about economics.
The most stark example of this is companies that manage to avoid tax altogether because of near complete reinvestment strategy that turns all of their profit into capital. Anyone can see that owning an enormous factory is a sign of large wealth, and yet the only people paying a whole bunch of tax in the organization are the workers, and the most highly skilled ones, who typically have spent the most time investing in their own training, are paying the most tax of all. That can be a very strange outcome indeed, that people who have done without any income for a lengthy period, often incurring significant debt during that time for both training costs and living costs, are in a financial position that is worse than the workers who, as Marx might have put it, "bring nothing except their hands".
Strange, rather than wrong or bad. The advantages of having done that training are several - they get a lot more choice about the work they do, and might take higher satisfaction from it as a result. They will do things within the organization that have much greater influence, probably rising within the management structures. And if they're careful, within some period of time should be rapidly overtaking the financial position of people who didn't train.
That "if they're careful" part is quite important. If they're careful, the workers who never trained can quite easily be quite well off, comfortably middle-class themselves. This is actually a good outcome, since it means mobility is possible for anyone that wants it. Workers in anything that requires a modicum of brainpower will soon be quite well trained themselves, and have direct access to the same potentials as those who undertook formal training. If they're not careful, then they'll be doing the same old dull tasks, and spending everything they earned, and sitting on the breadline, powerless, afraid of redundancy. The exact same position can be found by people on much higher incomes, just eating more expensive food, drinking more expensive alcohol, maybe living in a nicer apartment or house.
This lack of care is the biggest problem with the capitalist system, as I see it. While suffering the consequences of actions is one way to encourage people to take more care, the fact remains that many people just don't - across all class boundaries. And a purely capitalist system will punish this quite harshly.
Far better, IMHO, is to institutionalize good money management. I don't just mean by everyone paying heaps of tax and letting the government decide what to do with it. That would actively discourage the good money management that some people naturally have. I think the best system I've encountered is to force people to save. So I advocate compulsory superannuation at the very least, and I think other schemes could be easily devised. It seems to me one of the most compelling things about real estate as an investment is not that it's an especially good asset class, but rather than it tends to enforce a form of saving. That is the biggest factor in the ridiculous amounts of money tied up in property compared to other asset classes in this and many other countries. And it was also a big factor in the recent GFC, that the saving side of the equation was ignored, so people were given interest only loans, and very low equity loans, both of which are focusing almost entirely on the speculative side of the investment equation.
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giovanni tiso, in reply to
but again it's a better use of my time to DO MY JOB and then use the money to pay someone to DO THEIR JOB
So long as you can afford to, yes.
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giovanni tiso, in reply to
Well, given that some Labour MPs have been complaining their announcement was deliberately overshadowed by Hone's oath stunt (they're blaming National, for Lockwood's action), I'd argue the toss on that one.
I wouldn't let the positively epic sense of entitlement of many people within Labour to interfere with reality, however.
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bmk, in reply to
The most stark example of this is companies that manage to avoid tax altogether because of near complete reinvestment strategy that turns all of their profit into capital.
Well they must by lying about it and falsely claiming it as repairs and maintenance. Because profits being turned into capital get taxed exactly the same as if they were paid out in dividends. I actually think it would be better if they weren't. Say a company invests in new plant/productive machinery - this will help the economy. Whereas if they pay dividends to their shareholders - this money will most likely be consumed on less productive items (and quite likely a large portion will go offshore - be it on overseas holidays, imported cars etc).
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Wrong – between 3-5 even with ECE one kids costs $4,200 for 3 days a week. And that is short days – full days are more expensive.
You need to shop around with your childcare. I pay about a third of that for two full days a week.
And once you start buying money sinks like boats and cars to tow them, you're starting to get into luxury spending that you shoudn't complain about.
I don’t understand what your point is, dude. You seem to be mildly complaining because we aren’t sympathetic enough that you can’t wipe your arse with fifty dollar notes every time you take a shit.
+ ...50.
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Rik, in reply to
I think the best system I've encountered is to force people to save. So I advocate compulsory superannuation at the very least, and I think other schemes could be easily devised.
This is an interesting one - I'm not all that familiar with the Australian system, however how does it work out if you have someone on a low income putting 9% of their salary into compulsory super vs someone on a high income putting 9% of their much higher income into compulsory super? At retirement age the higher income earner is going to have a way larger stockpile of savings and I would assume a much higher income in retirement? Or does the government top the lower retirement income up?
There's something nice and egalitarian about the current NZ system with everyone getting the same level of base superannuation, kind of like a pat on the back for doing your bit and paying your taxes during your working life. But then - if the country can't afford it, somethings gotta give.
You need to shop around with your childcare. I pay about a third of that for two full days a week.
Kyle - like I said in my response - we did shop around in our larger neighbourhood and while there was a small variance they were all roughly the same. And realistically you can only commute the kids so far. In the end we managed to get into the nicest place I could imagine being for a year or two before you head off to school and are very happy with the arrangement. Like I have repeated - I'm not actually complaining, looks like nearly everyone missed that bit, I must have not done a good job trying to get my point across.
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Hilary Stace, in reply to
By the time this comes out next Thursday, the media conversation will be over, and Labour will have lost another opportunity. CGT will be “that thing John Key told us was bad.” If I’m wrong, I’ll buy you a beer Russ :)
Sorry, Damian, you can't change the terms after the event. John Key did indeed try to tell everyone it was bad, but even mainstream media people such as John Armstrong noticed he was floundering on this one. And the Nation and your Q and A programme this weekend featured interviews with Labour MPs (Parker and Cunliffe respectively) with commentators asked to respond to it, and they weren't entirely hostile. Personally, I consider that shows both that the media conversation is continuing, and that the idea of a CGT is not dead.
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BenWilson, in reply to
Definitely it means people retire with different amounts of money. But that's a good thing about it, that retirement incomes are proportional to working ones, so people retire in the manner to which they have become accustomed. It's not some horrible shock to their lifestyle, dreaded to the extent that people will refuse to ever retire. There's still a pension for those who lose it all or never had much. Mostly the money stays invested in funds, and people live off the dividends, but there's no rule saying retirees can't go sick with their money. They'll just be living on a pension from then on if they do.
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giovanni tiso, in reply to
There's still a pension for those who lose it all or never had much.
The important thing is to save people from the horrible shock of having their lifestyle actually improved in their old age.
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BenWilson, in reply to
The important thing is to save people from the horrible shock of having their lifestyle actually improved in their old age.
Yes, that's nowhere near as crazy as it sounds. Having sudden access to a large fund when you've never had more than 10k in your bank account could easily lead to crazy wastage - people could gamble the lot away in a weekend, for instance, or go on drug and alcohol fueled bender for 6 months, the way so many winners of lotteries have done. I presume there are statistics on how many people do this in, for example, Australia. But people like that would also have done the same with their money if they hadn't saved it, so at least they get that one wild ride in their lives, if they are so inclined. It was their money, after all, that they saved. I'm pretty sure most people actually just spend a big chunk on some things that they want, then invest the rest and live comfortably.
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If the retirement age absolutely has to be raised, then a split retirement age makes sense. It wouldn’t be a big issue for IT pros, scientists, and accountants. But for manual workers who suffer physical deterioration with age, and airline pilots who are required by health & safety law to retire at 60, it’s most certainly a biggie.
It takes a lot to rattle John Key, and the CGT announcement seems to have pulled it off because it’s whistled more than a few dogs. It’s exposed the rift between the productive sector and the speculative sector, just as Brash’s Orewa speech did the same with liberal left and conservative left elements.
And even louder opponents of the CGT like David Whitburn have come across as rather sour-grapeish – good on him if he decamps to the Sunshine Coast, it’s people like him who’ve cartellised the housing market for the rest of us.
Yes, that's nowhere near as crazy as it sounds. Having sudden access to a large fund when you've never had more than 10k in your bank account could easily lead to crazy wastage - people could gamble the lot away in a weekend, for instance, or go on drug and alcohol fueled bender for 6 months, the way so many winners of lotteries have done. I presume there are statistics on how many people do this in, for example, Australia. But people like that would also have done the same with their money if they hadn't saved it, so at least they get that one wild ride in their lives, if they are so inclined.
A fool and his new money are soon parted. (Surgeon General's Warning: this link may be hazardous to your productivity.)
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Danielle, in reply to
The important thing is to save people from the horrible shock of having their lifestyle actually improved in their old age.
Yes, wouldn't that be dreadful. Happy old folk who don't have to eat cat food.
I think it's more likely that people end up with far less money than they need than otherwise (although I'd frankly love to see some pill-popping grannies wearing posh clothes and blowing all their money on stuff. Bugger the moralisers). Circumstances change. I should note that if, for example, you were divorced in middle age and ended up in dire financial straits, with a much larger mortgage than you thought you would - which happens to quite a number of people, mostly women - then retiring and trying to live solely on the pension is, well, probably a bit of a mission. It's not as if women who worked inside the home for a decade or more can count on their giant retirement savings.
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giovanni tiso, in reply to
Yes, that's nowhere near as crazy as it sounds. Having sudden access to a large fund when you've never had more than 10k in your bank account could easily lead to crazy wastage - people could gamble the lot away in a weekend, for instance, or go on drug and alcohol fueled bender for 6 months, the way so many winners of lotteries have done
This may be the most fantastic rationalisation of economic disparity I've come across in the last several years. Much as I'd like to call bollocks to the whole idea and be done with it, may I humbly suggest that if all citizens got decent pensions paid into their account fortnightly or monthly, they'd be less likely to blow them in the way that you describe?
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BenWilson, in reply to
It wouldn’t be a big issue for IT pros
To me it seems like a young man's game, so I wouldn't be too sure. The constant movement of technology ages IT people's skills pretty damned fast.
Much as I'd like to call bollocks to the whole idea and be done with it, may I humbly suggest that if all citizens got decent pensions paid into their account fortnightly or monthly, they'd be less likely to blow them in the way that you describe?
It would be quite literally impossible. And I don't object to "decent" pensions, depending what you mean by that. Therein lies the problem, it means different things to different people.
which happens to quite a number of people, mostly women - then retiring and trying to live solely on the pension is, well, probably a bit of a mission. It's not as if women who worked inside the home for a decade or more can count on their giant retirement savings.
Yet another reason for super funds that are administered by the government - it makes good sense that these are split down the middle in a divorce, unless there is a pre-nuptial agreement to the contrary. It would protect housewives/husbands.
This may be the most fantastic rationalisation of economic disparity I've come across in the last several years.
Not sure what you mean. People have been known to go crazy with money when they get it suddenly, which is one way it can be given out at the maturation of a superannuation fund. It's certainly a social problem worthy of consideration.
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Hilary Stace, in reply to
For some people, particularly women who have done a lot of child rearing and husband looking after, getting National Super is the first time they have had independent money of their own since the end of the family benefit by Bolger's government in th 1990s. So suddenly, they have economic freedom and that leads to the possibility of other freedoms.
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