My understanding (but feel free to challenge) was that the Norwegians spent their oil revenues on pensions for their ageing population. Or rather didn't spend them, but saved the money for the rainy day that was on its way. We spent ours on decking and 4x4s.
In a sense, Glidd, but only in the same sense which applies to all government expenditure. Every government is committed to various types of expenditure, both short-term and long-term, and every government's income from taxation is insecure - it can vary from year to year, and may decline unexpectedly. State retirement pensions are just one long-term commitment among many. Could a government accumulate a pot of resources from taxation receipts, not spend it now, but keep it back against prospective expenditure in future years? Would voters vote for such a policy? Would you? What sense would this make in any country where the government has a substantial national debt, accumulated over many years (which means most countries)? Parliaments do not bind their successors, and future parliaments have unlimited power. That includes power to renege on commitments, to breach contracts, to confiscate assets, etc etc. Whether commitments are honoured or breached is a political question at the time (e.g. see Greece at present). If there were a revolution, one thing we can be sure of is that the new revolutionary government would renege on all commitments as a matter of course. Those who call for revolution might bear that in mind. I spent 40 years earning a right to a pension, but I never really believed I would get it; I always thought it likely that catastrophic events would intervene, meaning my pension entitlement would be abolished at some point. Surprisingly, I am actually getting the pension now - so far. This comes from the good fortune of living in a stable and prosperous country like the UK in stable and prosperous times. Not everyone in the world is so lucky.
When private pension schemes (which people pay into) accumulate funds, what do you think the fund managers do with the money? Right, they invest in gilts. In other words, government debt = pension fund assets. So if a hypothetical government accumulated funds to provide for future pensions [which is unfeasible anyway for other reasons], what would they do with the money? Right, buy gilts, i.e. their own debts. And what is the Bank of England doing at the moment with its quantitative easing programme? Right again, buying gilts on a massive scale. So essentially what is being actually done in UK at the moment, is remarkably close to what you suggest ought to be done, isn't it, Glidd? Maybe not so stupid after all.
The Norwegians have the benefit of large oil reserves, a small population and good looking women. They have invested their oil revenues in sovereign wealth funds and specifically in large scale hydroelectric schemes and now export electricity in addition to oil and gas. Incidentally just prior to the discovery of North Sea Oil the ownership of mineral rights was decided by water depth, there is a deep water trench just off the Nowegian coast and therefore at that time what was to become the Norwegian oilfields were in British territory. As part of the (failed) negotiations at the time for a possible entry into what was to become the EU Britain along with other European nations decided by Treaty to split up the seabed down the median lines, with a bit of jiggery pokery around Germany and Denmark, thereby giving away massive, and at that time unknown, reserves.
Given their vast oil wealth and small (5 million) population, Norway was able to set up a sovereign wealth fund which now owns approx 1% of all the shares in the world. They also invested in a lot of bridges, harbours, roads, airports, dams, schools etc. Given that UK has ten times the population, that option was not feasible for us. But I agree with you that UK's oil windfall was largely used for current expenditure at the time, rather than for strategic infrastructure investments. I blame Margaret Thatcher for this, as it was orginally her decision. We are still living with the consequences.
Forget the State Pension, they bloody raided the private pensions too.....as did those paid to GROW the fund......My pension pot, when I reached 50, after 30 years of paying in, was worth £800 LESS than than I had paid in....how the fuck do you work THAT one out ? I'd have been better off keeping it under the mattress.....No tax relief, AND pay tax on the meagre amount I get now, AND the banker wankers FAILED in their duty of care to grow it as they told me it would when they SOLD it to me.....but wont have it that they mis sold it, oh no........
True. But statistics would have implied that you were more likely to get and benefit from your pension than not. Or it wouldn't be necessary to save for one. You may find that your life hit the sweet spot: avoided major wars and was lived through mainly stable times. The next generation may not be so lucky.
Sounds all quite fair to me. What if country size was suddenly decided by mountain height? That would surely be daft. You could also say, that quite apart from investing in guilts, you could use North Sea oil wealth, like the Norwegians did, to invest in infrastructure projects. The point of investment in such projects is that they are meant to provide a return in the future. It must be very hard to qualify what a bridge or a railway is going to bring you in economic terms in the future. All you can say is that it should bring something. (This is much like marketing expenditure - you can't pin down sales on any one bit of it.) But of course, it keeps your businesses at work and employs your people - so quite a wise way to spend cash. My understanding is that the Tory party monetarist credo, being obsessed with private enterprise, reckoned that if you gave the money away to consumers in the form of tax cuts, then they would spend to keep the economy moving. They probably did, but I suspect they bought an awful lot of German cars and Chinese goods, stuffed their faces with food and wine. And you end up with an ageing infrastructure which is like having an out of date factory for your production. So you are a sardine in the Tube, can't sit down on a train, get stuck in motorway traffic on a Friday night or Monday morning coming into London, and circle Heathrow for 20 minutes if you ever try to fly in. Or you spend half your life constrained by traffic cones as your roads crumble. If you want to see what a motorway should look like, go to France or Spain. (German autobahns are rubbish- totally overrated).
Imagine if they'd invested it all in property instead. How hard was that to work out? Claret or art would have been good bets too - and that's not too hard to work out either.
"... the value of investments can go down as well as up ..." Whether you (or your pension scheme) invest in houses, shares, gold, paintings, gilts, or vintage cars, their value may go up or it may go down. Investors gamble it will go up, and do not always win. Bears also shit in the woods. Do you really claim to be surprised by discovering this fundamental truth? If you have a government pension, there is no fund at all - just a political promise of future entitlement, and a hope (prayer?) that the promise will be honoured. If you have a private pension, there is a fund and you can hope its value will be maintained or increased, but there is no promise it won't go down or disappear. Fundamentally, we must all gamble with our pensions and there is no avoiding it. Next time you back a horse at William Hill, try telling them they have a duty of care to ensure you get winnings. The Equitable Life Assurance Society accepted certain investments on the basis that there would be a guaranteed fixed return (sic). The eventual and wholly predictable result was absolutely catastrophic, with the society descending into collapse and insolvency. Nobody is ever likely to offer guaranteed returns on investments again, unless they are amazingly stupid.
I don't disagree with you but equally it could be said that the Labour Party was obsessed with expanding the State and showering benefits on the poor in the belief that they could then spend the money to stimulate the economy to grow real jobs. But it didn't work, the poor were locked into a benefit culture that penalised them if they impoved their lot by their own endevours. Yeah France and Spain have excellent motorway systems but they also have massive debt and rising unemployment as the Eurozone teeters on the brink of collapse, the socialists in Brussels have run out of other people's money.
The closest thing to a guarantee is one backed by the government and when that guarantee is underwriten by punitive rates of tax on the productive elements of society, mainly, but I concede not entirely, the private sector, then it is a bit galling to see ones own pension pot and annuity rates dwindling whilst retired public sector workers have in effect a gold plated pension. Note I am not trying to start a flame war between the public and private sector and as you implied 'you pays yer money and takes yer chances' but I do believe that the expansion of the public sector, for very little real benefit, under Gordon Brown is a factor in the mess we are in.
I've never really understood what it is that the Spanish do. Sell you olives and fruit, sure (not that there is much cash in that). They're concreted over their coastline to cater for gruesome cheap holidays, and they've built a lot of empty golf courses in deserts. But you can't really found an economy on that. Interestingly, although the Spanish motorways are brilliant, they are also empty. All the heavy goods traffic goes on the A roads which are moving jam of lorries and cars - because they don't want to pay the motorway tolls. Doh! The problem with the French is that they are bolshy. They strike pour un oui pour un non, and never seem to want to get on with anything. They also have massive red tape and an unfeasible amount of people on the public payroll. I suspect that one of their problems is that they don't want to speak English. They think that speaking French is a matter of national pride. The Brits aren't any better at languages of course - probably worse. But everyone speaks English so they can get away with it.
Both the socialists and the capitalists spend and risk other peoples' money; that is what they have in common. The socialists are more susceptible to democratic control than the capitalists, while the communists and the fascists abolish democratic control entirely. On the whole I find the socialists the most acceptable for that reason. But that does not mean their economic policies are necessarily the most competent, or effective.
Well, that's quite enlightening. So so long as governments honour their promises, your pension as a gov't employee can't go down. Why don't they invest in the same schemes as the private sector? Bizarre. Naturally, there are investments that go down, but over 30 years, not that many, except for the stock market. Almost no companies are dominant for any length of time. They have their moment in the sun and then tastes, fashions, technologies change and they are has-beens. Propoerty in the right places has always been a good bet and wine gets better over time. If you are in a world economy where the rich are getting richer and there are more of them, then luxury goods are the way to go. Incidentally, I would say that if your pension has produced no gains over 30 years, what the fuck were the fund managers doing? 30 years of failure is an awful long time to fuck up.
Mai oui, je suis un Roz Biff et parl le Franglais tres mal. I had a fascinating conversation with an Englishman running a minibus company in a Frech ski resort last winter on the hurdles to be overcome and the social costs of employing people in France - unbelievable, no wonder they are heading down the pan.
I dont disagree with you Pete...but 2 things....ONE...growing a fund is what these wankers DO...they set themselves up as professional Fund GROWERS, and TWO, they CHARGE you for the privilige....and the shitty part about it, is that they STILL charge you their fees if they fuck up TOTALLY and reduce the value of your fund..and you CANNOT get the ( YOUR ) money back !!!! Now if YOU fucked up your job on such a scale, year in, year out, would you expect to keep it ? I think not.......
