Home – New Forums Starting your journey Mindset and not just the interest rate alone will help lower unemployment

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  • #991078
    checkvault
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    Hello everyone,

    This is a topic that has been on my mind for a while. At the start of the year, the employment figures came out and the 12 year high unemployment rate of 6.4% and slowing economy immediately put pressure on the Reserve Bank to lower interest rates. And they have cutting it by 25 basis points.

    But I don’t think interest rates alone are going to be only solution in combating unemployment. In my opinion, it is also education and our mindset.

    I have just started reading the book called ‘Rich Dad Poor Dad’. The author in the book mentions that the education given in schools is to study hard so that we can do well in our jobs. Even in university, the main goal of studying was so that on achieving good grades one could join a large company and secure their incomes. But I hardly noticed much discussion where groups of students talked about starting a business which would then help employ other people and not just themselves.

    And at home, I was appreciated more when I secured a job at a company rather than when I suggested an idea to start my own company. I understand that as a member of the family I have to contribute towards the expenses and hence have a dependable source of income and a job is more dependable than starting a new business.

    But then if everyone starts thinking the same way, then we’re going to be left with a society of educated people who know how to be good employees, but not how to run a business which can employ other good employees.

    By lowering the interest rate, someone can take out a loan to start a business which can employ himself or others. But if most of the people haven’t been brought up with a business mindset, are we putting money into the hands of people at a risk? And this money they’ll have to pay back.

    So in my opinion, starting businesses or growing existing businesses will help lower unemployment. The lower interest rate is a tool that helps bring spending forward to help this. But in order to know how to start a business, the mindset of educated people has to change from studying so that one day they’ll be able to fill a spot of an employee in a company, to studying so that one day they’ll be able to start a business which creates spots for other people to work.

    Your thoughts would be appreciated.

    #1179838
    arrowwise
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    You would need thousands of new successful sustainable small businesses Australia wide to start up and quickly grow with direct staff and contractors to make an impact on the current economy and improve unemployment conditions.

    Yes in school we are taught to be good 9-5 operators, follow the rules, make excellent workers and value add to your boss. Universities mould students into this to be attractive graduates to the companies they serve. Granted they do offer entrepreneurial courses now too, but they are few and far between.

    The game is changing more rapidly than ever now, and most so called experts can’t predict too well where the economy is spinning and heading through.

    #1179839
    checkvault
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    arrowwise, post: 209701 wrote:
    You would need thousands of new successful sustainable small businesses Australia wide to start up and quickly grow with direct staff and contractors to make an impact on the current economy and improve unemployment conditions.

    Hi there,

    Yes you’re right. But then would you agree that because of the way we’re taught in school, we have thousands of capable and educated graduates who can work but have no idea how to make work at least for themselves and then for others? They expect there to be jobs ready once they finish studying. And when they’re not, they don’t have enough knowledge or practice of creating work themselves.

    There are entrepreneurial courses available in University, but they’re optional and taken up by few. So wouldn’t it serve to have these skills taught in the mainstream education and right from the grassroots education. Children should be taught how to make profit on a service or a product along with their arithmetic, history, sciences and language.

    I remember a scene from Richie Rich where in school, the teacher was asking students to solve a business problem. The comedic take was that the student then tells the teacher that he’ll get his secretary to get back, but I liked the point it was making. Business families understand the importance of these learnings and hence make their children understand these principles from an early age.

    And I don’t think it’s a question of capability. Students from non-business families can and will understand these concepts just as easily.

    Glad to discuss this further.

    #1179840
    bb1
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    arrowwise, post: 209701 wrote:
    You would need thousands of new successful sustainable small businesses Australia wide to start up and quickly grow with direct staff and contractors to make an impact on the current economy and improve unemployment conditions.

    .

    Just one new small business takes another potential (not guaranteed) person of unemployment.

    But it is not just small business, big business’s can also employ more.

    Its the big picture,

    #1179841
    checkvault
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    bb1, post: 209708 wrote:
    Just one new small business takes another potential (not guaranteed) person of unemployment.

    But it is not just small business, big business’s can also employ more.

    Its the big picture,

    But if you think about it this way –

    That one small business has self-employed one person (at least) and possibly one other. So had that business not started, two positions in the workforce pool would have been occupied but are now free for other people.

    Expecting big businesses to be the saviours and have enough employment for everyone is one point I particularly wanted to highlight. Given the consumers they serve, yes they do have a social responsibility to then give back to these consumers in the form of full-time secure employment. But it’s the dependency on these for many that worry me.

    Case in point, a family friend’s mother recently started feeling insecure because she heard that the large government organisation where she works was going to become private. The mindset that without large corporations to employ us we can’t have meaningful and sustainable income is where the problem was for her. Her education was probably never the kind where entrepreneurial ventures or working for yourself were taught and made available to apply in the real world.

    Ten or twenty years down the line when graduates are in their 40’s or 50’s would we want them to feel the same insecurity or would we want them to have a fallback which they can rely on in their education and entrepreneurial skill set to still make a living without depending on the availability of employment.

    #1179842
    ThexArm
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    checkvault, post: 209712 wrote:
    The mindset that without large corporations to employ us we can’t have meaningful and sustainable income is where the problem was for her. Her education was probably never the kind where entrepreneurial ventures or working for yourself were taught and made available to apply in the real world.

    Ten or twenty years down the line when graduates are in their 40’s or 50’s would we want them to feel the same insecurity or would we want them to have a fallback which they can rely on in their education and entrepreneurial skill set to still make a living without depending on the availability of employment.

    Although a lot of people start up businesses only few succeed and out of those few even smaller percentage go on to make it anything substantial out of their business. So, fear of failure is what contribute a lot of people to look for secure employment.

    Many people start up businesses because of of many reasons other than just to make money. For some people it is their passion, some others like to help others and some others it could be work/life balance etc.

    Lowering interest rates allows people to have more disposable income that allows people to spend more money that generates more taxes to the government. I am not convinced that lowering interest rates really add more jobs/employment. But, lowering interest rates provide boost to the growing economy.

    Mindset is important but it alone doesn’t make a person successful in starting and running a business. There are some learned skills as well as certain traits you ought to born with. Risk taking, perseverance and resilience are some of the features of entrepreneurship and these are difficult to be taught.

    At the end of the day people who start businesses have a safety net in the form of money or family or family asset. As you may be aware, hierarchy of needs by Maslow tells you that you need to be comfortable both physically and psychologically before you try to look at “esteem” needs.

    To conclude there need to be a lot of things in order to be a successful entrepreneur. You don’t need as much to be an employee.

    #1179843
    bb1
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    checkvault, post: 209712 wrote:
    But if you think about it this way –

    That one small business has self-employed one person (at least) and possibly one other. So had that business not started, two positions in the workforce pool would have been occupied but are now free for other people.

    .

    Thought thats what I said

    #1179844
    bluepenguin
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    I feel that regardless of education and training, innate personality plays a big role.

    For example, some people want to be the authority, others like to submit to authority, and then others just like to do their own thing. In a similar way, some people are wired to take risks, and some are not.

    Obviously someone that is naturally very assertive and a risk taker is much more likely to start a small business than someone who craves stability and leadership.

    Sure, education and other ‘nurture’ factors can make a difference, but I think the way we are wired has much more of an influence.

    #1179845
    checkvault
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    ThexArm, post: 209715 wrote:
    Lowering interest rates allows people to have more disposable income that allows people to spend more money that generates more taxes to the government. I am not convinced that lowering interest rates really add more jobs/employment. But, lowering interest rates provide boost to the growing economy.

    This is an article on SBS news today – http://www.sbs.com.au/news/article/2015/03/09/job-ads-rise

    A line in the article – ANZ said with unemployment expected to rise, the Reserve Bank of Australia was likely to cut interest rates in March, chief economist Warren Hogan said.

    The banks seem to think that lowering the interest rate is a solution to the problem of rising unemployment. Is it because it puts money into the hands of people at a lower cost of paying back, thus pushing spending forward, driving economic activity and hence giving confidence for businesses to employ more people?

    But isn’t that a short term solution? Or is it because it is the easy way out?

    #1179846
    arrowwise
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    Fair points made, however those wanting a safe traditional salary job face much darker times if more and more business owners are adopting similar ideas about how and who they hire. Some of the red tape genuinely does protect workers against being scammed, exploited and ripped off. How far should boss’s be able to push such limits, while still being fair and reasonable?

    Without such safe guards reliable dignified jobs which are the foundation of our economy and way of life will be eroded away. It really will be the survival of the fittest in the job market more than ever. Too many complex issues to mention.

    #1179847
    My Guy
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    Please note I haven’t read anyone else comments here!

    I know that for a fact 60% of people I know that I have a close relationship with since I was a kid have started a business in some sort of way.

    – Hobby
    – Got an ABN and sells / auctions ebay items
    – Consults to other companies / businesses
    – Started a sole trading business and work for them selves.
    – Started a company and they have 2-8 employees.
    – Started a company and have 50 – 100 employees.

    We don’t want too many people out there being successful and competing all in similar markets.

    We are seeing this with Woolworths, Coles, IGA etc etc.

    They are screwing their suppliers to the max so they can make $1 profit on one item…

    When shit goes bad they loose a couple of Million dollars but it doesn’t matter. they have the market monopolized.

    The suppliers are businesses too, beggars can’t be choosers.

    First of all I think there are plenty of business out there already

    By the banks dropping rates this makes investors spend their money.

    When you have $1,000,000 in your account earning you 9% a year you don’t need to work…

    When you have $1,000,000 in your account earning you 2.1 – 4% your sitting at home thinking of selling something or biting your nails going “how long will this go for….”

    What happens… well they get on a plane, go to seminars and start opening their wallets…

    This is when businesses that are in prime potion can grow overnight if they are looking for a silent cash injection fund to get them to the main stage.

    If they have a product that can be sold in other markets or shops etc then everyone else also makes money and the economy starts to move again.

    We can’t live in a world where banks can be giving out 9-10% saving or term deposit accounts for years and years.

    I mean 90% of people that have more than $1,000,000 can live a comfortable life without lifting a finger.

    There are too many people out there that cannot be business owners and run a successful business.

    Mindset on poverty and businesses failing, no money in the system…. I will agree a lot has to do with mindset.

    For example, someone said, James your getting paid on Friday $3000 and we won’t be able to pay you $3000 again for 10 weeks because we are running out of work.

    What are you going to do?, your going to do everything in your power to make that $3000 last 10 weeks.

    Now mindset shows me this affect would happen….

    – You’ll ring around or go somewhere to do some extra working hours in a week with someone else to get some extra cash flow in.

    – 80% of people would go oh…. oh well… bake beans on toast for 10 weeks it in and download movies off the internet and stay home every night, ask the parents for some extra dinner nights at theirs.

    – Some people will quit the job or start finding a new job, in the middle of all this all hell breaks loose and things don’t work out.

    It all started because the boss of the company told the employee that they were running out of work… well their mindset is ‘OH WE ARE F***ED!’ I better move on before we get run off.

    The media are very powerful and business owners don’t get time to watch the news or see whats going on in the world, because they are busy making their own world be the way they want it.

    I have people (not business owners, or once were) come up to me every day and tell me how bad the building industry is going… OH&S is forcing businesses out of business bla bla bla….

    They tell me my business won’t succeed because of no work and falling economy, people are loosing jobs.

    I say to them…. where have you been the last week?

    They say ‘oh I’ve been at home watching the news and reading the paper’

    Then I say ‘Oh right…’ *walk away*



    The world will always have wars….

    The world will always have the rich…..

    The world will always have the poor….

    The world will always have criminals….

    The world will always have governments…..

    The world will always have banks…..

    ***The world WILL NOT ALWAYS HAVE CASH!***

    In the next 20 years from now we are going to see a major shift in the economy in regards to money laundering and the poor people wheeling and dealing in cash.

    It will become to a point where if you want to extract $100 out of the bank it’s going to cost you $10 – $30 penalty fee.

    This is when we are going to see major changes…

    Be ready for it, be prepared…

    The changes are going be perfect for Governments because they are going to be able to keep track of funds 90% easier than the way they are now.

    How this affects our economy I have no idea…. I feel confident that over the year’s we may see a decrease in tax we pay each year.

    But cash does help those who dodge the system and let them blow or buy something without it really costing them the full amount…

    I am sure some of you have done this before?

    a tank of fuel costs $100

    But it doesn’t cost you $100

    It actually costs you $135 or more (depending on your tax bracket)

    for anyone who doesn’t know this, for you to earn $100 cash you had to gross $135 or more in your pay, so you can pay your taxes first..

    #1179848
    bb1
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    My Guy, post: 210215 wrote:
    I am sure some of you have done this before?

    a tank of fuel costs $100

    But it doesn’t cost you $100

    It actually costs you $135 or more (depending on your tax bracket)

    for anyone who doesn’t know this, for you to earn $100 cash you had to gross $135 or more in your pay, so you can pay your taxes first..

    possibly true if your income is well over $100K..

    #1179849
    checkvault
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    Victory, post: 0 wrote:
    The single most important point of all Robert Kiyosaki’s books that I’ve incorporated into my life is: If you earn a “wage”, you pay income tax first and are then left with the nett after tax amount to pay all expenses… If you both structure and run your life as a company, you earn, THEN pay expenses, then pay tax on what is left… Think home electricity bill is (say) 200/month? It’s actually costing you 350 (or more) out of your gross. Get your head around this and decide to do something about it and life’s financial equation changes favourably forever.

    Have nearly 100% fully implemented this ideology, just about to sell my house. Such a strategy results in a completely different financial outcome for my future, one where I still have a great lifestyle on a salary so low I can even further claim low income tax-break… I don’t even personally own a car any more, why anyone would go to work for three months of the year (or more in some cases) just to pay for a car to drive to work in is now (thankfully) completely beyond me.

    Laws were created BY wealthy people FOR wealthy people, not FOR the working class, but indeed to FACILITATE the working class subsidising wealthier thinking people… There is no justice in income tax law, merely determinations to keep the working class right where they are –> working and paying the lion’s share of taxes with such inequitable rules such as, (generally) not even employees travel to and from work is tax deductible. Even the GST is paid only by the end user and besides collection and accountancy costs, it has no negative impact on businesses.

    Have a long hard think about why and how Google, E-bay/Gumtree and the like contribute absolutely no GST and hardly any income tax to this country and yet, even alongside the politically hot-potato discussion about the possibility of raising the GST percentage even further, the sheep herd mentality continues to throw money at these under-contributing international companies. Go figure.

    In my industry (earthmoving and mechanical repairs of such), I’m seeing a huge shift in employment policy amongst my peers due to ever-increasingly ridiculous OH&S and Industrial relations laws, especially since the introduction of the stupid, stupid, STUPID parental leave scheme and noose around the neck un-fair dismissal laws…

    This shift is resulting in earthmoving companies AND related business becoming more and more inclined to hire contractors/sub-contractors in preference to employees, and whilst the ATO tries desperately to introduce more layers of reporting to slow or even stop this being done, modern software and other technologies make it easier to comply with rules designed to negate the occurrence.

    Here in Western Australia I get so many (particularly ex-mining) people through my door who have completely distorted expectations about the requirement for “productivity” what is and is not okay to do as an employee. A couple of examples are:
    1) Arriving to work for a 0700 start at 7.10 and then getting dressed for work to maybe be ready to start work twenty minutes later, yet expecting it’s okay to book from 7am,
    2) Waste time my company pays for checking their emails and text messages throughout the day as and when they please (even sometimes expecting me to wait for them to complete that before offering me their attention for discussion about work related matters).

    Recently my sister’s bookkeeping company (that own a beauty salon) was taken to unfair dismissal for some ridiculously frivolous reason where the applicant didn’t even bother to front for the hearing. After winning the case and with an $8k legal bill, my sister vocalized the same decision that I and many of both her and my clients have also decided, which is to never, ever, ever again hire any employees on wages or even sole trader/partnership businesses.

    My earthmoving business clients, some of which have 40 machines, now have no direct employees and only hire “workers” as either companies in their own right, or through labour hire companies. I now does the same thing, I tee up and organize the work, hire short term casual contractors to complete the work in batches or projects, then dismiss that costs after completion ..

    Hi Victory,

    I can see how your thoughts align with the topic. Hiring contractors instead of employees does have a negative impact.

    Here is an article on Linkedin which talks about the same topic. Although the topic is ‘India-centric’, the thoughts mentioned aren’t too different in other places of the world.

    https://www.linkedin.com/pulse/more-than-jobs-india-must-churn-out-job-creators-ravi-venkatesan

    #1179850
    checkvault
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    My Guy, post: 210215 wrote:

    First of all I think there are plenty of business out there already

    Are there? Okay there may be plenty of businesses out there, but in comparison to the demand of full time jobs and the available skill, are there enough? And this demand is only going to increase. All the students at university, in school, they’re going to need jobs one day. Here’s certain points which I think we must consider –

    1. Number of students graduating with skills is increasing every year
    2. The retirement age is being increased.
    3. Global markets are more and more competitive
    4. Increasing automation is replacing human labour with mechanical or computerised labour.

    Now if you see these points in isolation, they look alright.

    1. It’s good to see that more and more students are being educated and graduating every year.
    2. With modern healthcare and medicines, the people in the developed worlds are leading more healthier lives. And hence can work for longer. (This is a debatable issue, so I won’t ponder on this much).
    3. Competition is good. It encourages innovation and keeps prices in check.
    4. Automation throughout history has allowed humans to leave manual and circular labour to mechanised energy or computerised minds thus leaving more time for learning and improving living standards.

    But then if you combine these together, they don’t create a good mix.

    1. With the rate of people entering the work force increasing and the rate of people leaving the workforce decreasing, simple arithmetics will tell that if the number of jobs is kept the same, not everyone entering the work force will have a job.
    2. Competition is good, but with complex global economies like in this modern era, competition is driving prices so low that it causes economies where labour is expensive to shut down. This can be seen in the Australian automobile industry. With international prices and pressure from global auto companies, coupled with the high costs of doing business in Australia, the numbers won’t add up and hence companies cannot run. Thus leading to an even lower availability of work.
    3. Automation isn’t as mainstream yet, but that doesn’t mean it is a while away. The video on youtube called ‘Humans need not apply’ is very good in explaining this. So, eventually, the availability of jobs will decrease even further being replaced by automated machines.

    But history has enough evidence to show that similar environments have happened in the past. In some cases, history can tell us that things don’t end well (World Wars I and II), but in other cases it shows that these environments forced us to tap into newer ideas and thus crease better livelihoods and new jobs – Some of the job roles available today were not available 10 years ago.

    So the last point there is what I feel is most important. Do we want to wait till it’s absolutely necessary to think out of the box and innovate. I’m not saying innovation isn’t happening. It is. A lot of it. But I feel it isn’t as common. I don’t see students at school being taught ways to be innovative. I don’t see them being tested in business environments and making a product work or sell. I don’t see university students studying to solve world problems.

    So this is what I meant by mindset. Every boy, girl, man, woman should feel that even if there is no work available, I will be able to work for myself and still make a living.

    #1179851
    Craig.Smith
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    I am all for reducing the number and amount of taxes we pay.

    Watch this interesting video with a US economist around tax reform
    Dr Arthur Laffer Interview.

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