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Furlough scheme and moral hazard

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NeilW
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Re: Furlough scheme and moral hazard

#330468

Postby NeilW » August 3rd, 2020, 8:11 am

Snorvey wrote:If there are no jobs, where exactly is the moral hazard here?


Middle class people on trust funds getting topped up so they can "retire". What you are doing is redirecting the output gap, not to poor people, but to middle class trust fund wannabes who don't fancy working.

UBI is just the retirement pension for everybody. Rather than having to spend a few years maintaining our inherited capital, improving it maybe and then passing it onto the next generation with the instructions of how to use it and improve it, you can just spend the seed corn now and damn the future.

The retirement pension is sustainable because the young can accept they have an inheritance and will work the extra hours to provide the surplus to fund the older worker because of what they have given them. The older worker has a moral call on the efforts of the young because of what they have done in the past.

The 18 year-old workshy middle class layabout has what moral right to the output of others?

If there are no jobs, then drop the retirement age to 50. Which also has the added advantage of giving those susceptible to Covid the option of keeping out of the way.

GoSeigen
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Re: Furlough scheme and moral hazard

#330470

Postby GoSeigen » August 3rd, 2020, 8:17 am

scotview wrote:My feeling is that we will very soon witness moral hazard if these schemes are extended.


My feeling is that we are already experiencing the moral hazard because the Tories suddenly realised they have discovered the magic money tree.


GS

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Re: Furlough scheme and moral hazard

#330476

Postby Adamski » August 3rd, 2020, 8:35 am

GoSeigen wrote:... because the Tories suddenly realised they have discovered the magic money tree.


Agreed! This concerns me. The belief is now that the money tree will kick start the economy. but the UK has structural problems, low productivity, a small and shrinking manufacturing base. the answer should be to specialise in economic activities that allow productivity and innovation to grow. This is why I'm pessimistic about investing in the uk. These structural problems predate CV19. However the UK still a great place to live and work just don't expect an economic miracle any time soon.

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Re: Furlough scheme and moral hazard

#330496

Postby dspp » August 3rd, 2020, 9:50 am

Adamski wrote:
GoSeigen wrote:... because the Tories suddenly realised they have discovered the magic money tree.


Agreed! This concerns me. The belief is now that the money tree will kick start the economy. but the UK has structural problems, low productivity, a small and shrinking manufacturing base. the answer should be to specialise in economic activities that allow productivity and innovation to grow. This is why I'm pessimistic about investing in the uk. These structural problems predate CV19. However the UK still a great place to live and work just don't expect an economic miracle any time soon.


oh, and a Brexit-driven brain drain

https://www.theguardian.com/world/2020/ ... -to-the-eu

- dspp

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Re: Furlough scheme and moral hazard

#330845

Postby anon155742 » August 4th, 2020, 1:28 pm

NeilW wrote:
Snorvey wrote:If there are no jobs, where exactly is the moral hazard here?


Middle class people on trust funds getting topped up so they can "retire". What you are doing is redirecting the output gap, not to poor people, but to middle class trust fund wannabes who don't fancy working.

UBI is just the retirement pension for everybody. Rather than having to spend a few years maintaining our inherited capital, improving it maybe and then passing it onto the next generation with the instructions of how to use it and improve it, you can just spend the seed corn now and damn the future.

The retirement pension is sustainable because the young can accept they have an inheritance and will work the extra hours to provide the surplus to fund the older worker because of what they have given them. The older worker has a moral call on the efforts of the young because of what they have done in the past.

The 18 year-old workshy middle class layabout has what moral right to the output of others?

If there are no jobs, then drop the retirement age to 50. Which also has the added advantage of giving those susceptible to Covid the option of keeping out of the way.


We are seeing this to a large extent with young men "dropping out" of society.

They are told that they are the source of all evil in the world, that they are the inferior sex and that their chance of building up a lifestyle comparable to their parents is impossible unless they are exceptional. TV programs denigrate the male figure and they often live their lives without a positive male role model. They usually accept a label (autism, ADHD, intelligent but lazy) and stop caring.

They choose to live at home or in a small flat, masturbate, have niche hobbies and play computer games all day.

From a societal point of view, they are consuming the capital of their parents generation without contributing to it.

https://www.huffpost.com/entry/men-opting-out_b_1375355
https://www.psychologytoday.com/us/blog ... ut-college
https://www.cbsnews.com/news/these-wome ... eable-men/
https://www.npr.org/2016/09/06/49284947 ... -workforce
https://nypost.com/2019/09/25/women-are ... s-they-do/
https://www.bbc.co.uk/news/magazine-23182523

Lootman
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Re: Furlough scheme and moral hazard

#330872

Postby Lootman » August 4th, 2020, 3:17 pm

Adamski wrote: I'm pessimistic about investing in the uk. These structural problems predate CV19. However the UK still a great place to live and work just don't expect an economic miracle any time soon.

Yes, that is my approach: Live in the UK; invest elsewhere. There is no reason why a dismal UK economy has to affect someone's quality and standard of living.

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Re: Furlough scheme and moral hazard

#330873

Postby didds » August 4th, 2020, 3:20 pm

Lootman wrote:A compromise solution could be to extend the payments, but make them a loan rather than an outright gift.

The loan would then be repaid to the government, over say 5 years, with the payments taken via PAYE or deducted from benefits.


this isnt a criticism but more a "holes" discussion...

what happens when

* people retire on state pension only? deductions from that level of income would potentially create hardship
* people retire early (especially) and live on savings (not that likely maybe :-)
* people move abroad
* ... potentially "for ever"

could be of course that these numbers would in reality be so low as to be "manageable".

didds

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Re: Furlough scheme and moral hazard

#330875

Postby Lootman » August 4th, 2020, 3:27 pm

didds wrote:
Lootman wrote:A compromise solution could be to extend the payments, but make them a loan rather than an outright gift.

The loan would then be repaid to the government, over say 5 years, with the payments taken via PAYE or deducted from benefits.

this isnt a criticism but more a "holes" discussion...

what happens when

* people retire on state pension only? deductions from that level of income would potentially create hardship
* people retire early (especially) and live on savings (not that likely maybe :-)
* people move abroad
* ... potentially "for ever"

could be of course that these numbers would in reality be so low as to be "manageable".

I guess it could be like student loans i.e. that they are only repaid if your income is above a certain level, and it is accepted that some of the loans will never be repaid.

didds
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Re: Furlough scheme and moral hazard

#330881

Postby didds » August 4th, 2020, 3:36 pm

Mike4 wrote:Now would be a good time to have a shake out, cancel the over-complicated benefits system and introduce universal income for everyone.

No need for furlough then, rely on your universal income. And find work that actually needs doing if you want more than that.



^^^^^^^^^^^
This.

removal of furlough could mean merely swapping a large amount of people from furlough to benefits. So just call it a minimal income level whether topped up from zero level (unemployment) or the difference from earnings (part time workers say).

now the furloughing and complex benefits dissapear.

One area beign purely selfish is some manner of "rent" benefits payable to parents of adult children effectively forced to live in the parental home, (or be homeless) whereby said parents are now facing expenses in later life they can never ever have expected or budgeted for. It seems crazy that my unemployed son and daughter could live next door and claim housing benefit, while next door's adult kids live at ours and claim housing benefit - but not if they lived at the respective familial homes. I dont know how you prevent abuse - but then again the situation I describe would be an abuse of the current situation too in reality.

didds

NeilW
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Re: Furlough scheme and moral hazard

#330900

Postby NeilW » August 4th, 2020, 5:04 pm

Lootman wrote:I guess it could be like student loans i.e. that they are only repaid if your income is above a certain level, and it is accepted that some of the loans will never be repaid.


Which is therefore operational just a list of people who pay a higher tax rate on certain conditions. ie exactly like every other tax rate.

Student loans don't really exist. If you look at the books of the SLC you'll find the loan assets don't pass the accounting test to be called assets. SLC is only solvent because it is propped up by the Department of Education.

We don't need the smoke and mirrors. If you want people to have less money in the future, tax them.

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Re: Furlough scheme and moral hazard

#330904

Postby dealtn » August 4th, 2020, 5:25 pm

NeilW wrote:
Lootman wrote:I guess it could be like student loans i.e. that they are only repaid if your income is above a certain level, and it is accepted that some of the loans will never be repaid.


Which is therefore operational just a list of people who pay a higher tax rate on certain conditions. ie exactly like every other tax rate.

Student loans don't really exist. If you look at the books of the SLC you'll find the loan assets don't pass the accounting test to be called assets. SLC is only solvent because it is propped up by the Department of Education.

We don't need the smoke and mirrors. If you want people to have less money in the future, tax them.


But you don't know now which ones you want to tax in the future until the future, and in the future you only want to tax the one's benefitting now.

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Re: Furlough scheme and moral hazard

#330905

Postby scotview » August 4th, 2020, 5:27 pm

Hi guys,

We are slightly digressing from my original thesis on the ethical grounds for the current furlough scheme.

I would be pleased to have your thoughts on the morality and risk of the current (and ever more benevolent) furlough scheme. Particularly, since in the last day or two, we are seeing a ROBUST argument by a Conservative government to retain and in all probability extend this theme.

Comments welcome on this SPECIFIC subject.

If anyone feels strongly enough to pursue a discussion on our lavish and politically expedient benefits system, including Universal Income, which I do not fully comprehend, then please start another thread............ That is another subject entirely.


S

NeilW
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Re: Furlough scheme and moral hazard

#330926

Postby NeilW » August 4th, 2020, 7:38 pm

scotview wrote:I would be pleased to have your thoughts on the morality and risk of the current (and ever more benevolent) furlough scheme. Particularly, since in the last day or two, we are seeing a ROBUST argument by a Conservative government to retain and in all probability extend this theme.
S


It’s a silly scheme that along with tax credits pays firms to prop up labour they don’t need.

The blanket 80% system is silly. 80% of the living wage isn’t enough to live on.

And it is of no use to those who have lost their job and drop down to a super low income.

The appropriate solution is to have a default payroll funded by the Way and Means account that pays the living wage to anybody not on another PAYE scheme.

The auto stabilisation effect pushes money out to the regions and the nations to be spent in the local area

Morally everybody needs a job so they can contribute their labour hours to the common good and earn a wage by doing so.


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