DoctorMo's Blog

Tomorrow will see the increase of the Value Added Tax (VAT) similar to the sales tax in the USA, it will go back up to 17.5% from a year low of 15%.

This low VAT rate was introduced in order to increase the amount of spending going on in the UK.

This would make sense, if the problem in the UK economy was that money was being hoarded by common folk with large fat savings accounts. The problem is that money is not being hoarded by the middle or lower classes, most of it has moved either to the ultra rich or overseas as the products consumed in the UK are predominantly made overseas.

So lets see, the logic of this is that most of the money of increased spending will remain in the country… cycling around. Don’t forget money is a reflection of work/value added, so it’s not like you can just print more money, that doesn’t do anything over than devalue existing currency. A bit like diluting juice more and more, you technically get more drink, but you don’t get the same strong taste.

If value is leaking away into Chine and other producing countries, what you don’t focus on is getting people service jobs. That’s about as short sighted and dumb as one could be. Sure it’ll solve a short term problem, but it will increase fragility of the whole system and ultimately lead to cardiac arrest in the economy.

It’s similar to the Halton Council, who persist in attracting even more super market chains to set up shop in Widnes. As if having 400 supermarket jobs will somehow solve job problems and generate wealth, when in fact it’s likely to just drain away the market in massive dilution of a single industry sector.

My economic New Year’s wish is that local and national government see sense and set up more funds, grands and subsidies for creative people who can prove that they spend their free time working on business plans, art, software, music, what ever takes your fancy. Cultivating a sense that the community will support you as you find your feet with your work is surely more useful than giving grants and tax breaks to the likes of Tesco or Wallmart/Asda.

Thoughts?

I know what the first reaction will be to the news I hear on the grape vine that VT are pushing for Open Source. VT isn’t a normal state, the people there are much more sensible than the rest of the country. After all they elected Bernie Sanders, a self declared socialist as Senator.

But I’d argue that schools up and down the USA are much like each other, facing the same problems and generally with the same kinds of pressures from parents, teachers, government and big businesses. So to see Burlington School District issue this information (as part of a general update) on Open Source was surprising:

Open Source:
This year we are beginning our large-scale testing of open source software. Both the City Council and the School Board have requested this as part of ways to save costs. In addition to our web services, which have been running open source for several years, we have moved our main storage and printing systems to an open source operatins system. On all replacement computers we are using Open Office instead of Microsoft Office, and Open Office is available on all district computers. Although this is a small step, it represents a saving of 10% per new computer, or about $20,000 this year. In addition, Open Office is freely available to any home that wants it, so all of our students can have it, which is a saving of over $200 per copy for the parents. Of course, the savings would be irrelevant if the software wasn’t useful, but Open Office has virtually all of the functionality of Word, Excel, and PowerPoint, and can open any of those Microsoft files (even docx). Stay tuned for more information on using OpenOffice.

If we read this right it means there is real local government preference for Open Source. Now right now they’re going into because of costs instead of control, but I think a taste of freedom tends to stick around once you’ve deployed a FOSS solution and it’ll be more difficult for Microsoft or even IBM, Novell etc to get back in without offering serious concessions.

I also like that they are informing people that students can take advantage of OpenOffice, because it’s free too and supports all the same formats. That’s very good news as it’s an aspect of Free Software in schools which is often overlooked (that what is taught can be taken home without pressuring poor students to buy expensive software).

I’ll keep my ears open for any other news, because they are looking at a whole bunch of things as part of the review.

Sometimes the problem with communicating important ideas just lack some identifying element. So when we say “such and such thing costs 4 billion dollars” all we really see is a number and we’re at a loss to put it into any sort of a scale or terms.

Some people have tried to compare large costs with consumer grade products such as Big Macs or Ford Cars. But that really isn’t that useful since it’s not honest, how many of us really understand what a product is worth or what it took to make.

So my rationale is that you have to consider that money is not actually real, but is simply a reflection of people’s work. If you have to spend billions of dollars on something, then at least spare a thought for all the people who will have to slave away in order to make that money make any sort of sense economically.

I will instead specify costs in terms of number of person income years¹ Which I will describe as the mean income of each householder over the age of 14 in a given country. I do this because if someone is not working in an economic sense, it’s likely that they are working in the shadow none monetary social services economy that serves those who do work. Treat the following as back of the envelope, playful and not serious or in depth, but just my way of experimenting with an idea, so forgive me if it’s totally illogical.

I will list out a few large, costly human endeavours using this to see if it helps my own understanding of what it cost our economy to achieve them and so this is in US median annual incomes per household persons in 2007 ($26,036):

• Red Hat Revenue – $111.1 million – 4.3 thousand people.
• NASA – $17.6 billion – 676 thousand people.
• Microsoft Revenue – $51.12 billion – 2 million people.
• USA Defence budge – $515.4 billion – 19.8 million people.
• USA Annual Increase in debt – $1035.1 billion – 39.8 million people.
• USA Health spending – $2.2 trillion – 84.5 million people.
• USA Gross Debt – $8.9 trillion – 344 million people.
• USA Total GDP – 14.2 trillion – 547.9 million people.¹

¹ Does this mean that 240 million people outside of the USA are working for the people who live in the USA? More likely this either points out massive debt or that my maths is bogus. I’ll go with the later, because I’m not an economist.