31 December 2011

Baillieu Government Cuts 3600 Public Service Jobs

"In the midst of negotiations over an industrial agreement, the Victorian government of Premier Ted Baillieu announced on December 15 that it will eliminate 3,600 public sector jobs over the next two years. This amounts to a 10 percent reduction in the public service."

Source: http://www.wsws.org/articles/2011/dec2011/vicp-d28.shtml

I am very happy with Ted for cutting 3600 jobs (about 10 per cent) from the Victorian public service. The job cuts will be achieved through voluntary redundancy packages that will effective dangle money in front of public servants, which they can take on the condition that they leave the public service. Some argue that this will remove all the high quality public servants, but I believe this will filter out the greedy public servants who are only in there for the money and power. The public servants who are passionate about their jobs will stay, the ones who are willing to keep working as public servants even though it pays less than an equivalent role in the private sector.

There are some who argue that a desire by the Baillieu government to maintain a surplus is silly given that debt can be good and that most households in Australia have a lot of debt. But this is a poor argument. Just because most households have significant debt it doesn't mean the State of Victoria should have debt. Households have high debt mainly because they need to buy houses to live in. Does the State of Victoria need a house to live in? The State and the individual are completely different. You cannot take the situations of personal finance and apply it to public finance.

In the realms of public finance, the ongoing problems in Europe show that governments should not go into too much debt. The problem with debt is that it creates an additional expense, namely interest expense. Money that could have gone to building hospitals or building roads or funding education is instead wasted because it is channeled instead to paying interest expenses, which doesn't benefit the people.

28 December 2011

The Benefits of Putting Everything on the Internet

My desktop computer is ruined. It started to play up a few days ago but now it doesn’t even boot up. Whenever I turn it on it just has a black screen. Luckily I was able to backup everything while it was playing up, and most of my important files are either on my external hard drive or on the internet. I think at the end of the day it is much better to have stuff on the internet because then you don’t have to worry about your computer stuffing up and having your files lost. It is always possible for e.g. Google or Facebook to fail one day and all your files stored with these companies will be lost, but I would imagine that the likelihood of Google or Facebook failing is much lower than the likelihood of my own desktop computer failing. I can rely on my desktop computer failing every few years, based on history. Furthermore, if there are really important files that you want to preserve, simply make copies of it and upload it to multiple websites. Even though my desktop computer is stuffed, I am able to write this because I am using my laptop.

$75,000 is Enough

They say that freedom from poverty is the ability to walk into a public square and feel no shame. I remember on Friday having lunch with friends from work and feeling ashamed because I earned less than they did. They also spoke about how inadequate they felt because they did not earn as much as others, but when these people reminded themselves that I earned less, they suddenly felt better about themselves.
The problem is that there is no objective definition of how much income is enough--until now. According to a Wall Street Journal article that cites a study by Daniel Kahneman, a Nobel prize winning economist, the perfect income is $75,000 per year.

My goal is to earn $75,000 by age 30 and $100,000 by 35. I am currently 27 and earn $60,000, consisting of approximately $55,000 salary and $5,000 investment income. It would be nice if I could get a promotion and earn more, but I am finding that I am just not good enough to get a promotion, which is disappointing. They say you should never give up on yourself, so I will keep trying to get a promotion, but my experience of modern capitalism is that hard work is not always rewarded in the workplace. In my opinion, this is a strong argument as to why you should aim to just have fun in life. If you work really hard and put off leisure, there is a risk that you will throw away your whole youth all for a higher salary that your employer may not even give you. Keeping this in mind, I believe it is essential that you diversify your sources of income. I have come to rely less on work to increase my income, now relying almost exclusively on my investments. My goal to getting $75,000 by 30 and $100,000 by 35 is entirely based on the pessimistic assumption that my employer will give me no promotions and I will remain on the same payscale forever.