An entirely unconvincing argument, it's more of a leftie luvvie rant than solid fact based journalism.
Why is that idiot Osbo continuing with austerity when we know it doesn't work?
That austerity doesn't make the economy grow, is one of those things we all know to be true. And yet we've also got a government insisting that a recession, when there's spare capacity and we'd really rather like the economy to grow, is a great time to be cutting government spending and thus instituting that austerity. This …
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Sunday 14th June 2015 08:30 GMT Mike Street
Another Example
Do we not have another example of Keynesian stimulus across the Atlantic?
Deficit spending in the USA created lots of jobs - though maybe not so many proportionately as 'austerity' did here in the UK. But the cost was enormous. At one time I worked out that it took $1m of stimulus to create each job.
Unless you have China willing and able (and, because of their surplus, almost being obliged to) underwrite this, I can't see how it is possible for any other country. It is not even sustainable for the USA.
Keynes' ideas seem not to work at a level which makes then anything other than interesting theories, not capable of application to the real world.
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Sunday 14th June 2015 14:20 GMT Anonymous Coward
Re: Another Example
"Deficit spending in the USA created lots of jobs - though maybe not so many proportionately as 'austerity' did here in the UK. But the cost was enormous. At one time I worked out that it took $1m of stimulus to create each job."
As well as being expensive for the US, it's not actually fixing the underlying problem; debt.
At least over here in the UK we seem to be heading towards being able to start paying off the national debt. Deficits are like chocolate; too many of them and they make you sick. The UK government decided not to risk a total bust. Thus far there seems to be no end to the US appetite. All that chocolate has to go somewhere someday...
The other thing I like is a law prohibiting deficit spending. It will be an unusual feeling for a population, one with the ultimate in political honesty. A government does well, tax can go down. A government does badly, tax has to go up to cover it. A government wouldn't be able to cover up inefficiencies by simply borrowing more; it would ultimately have to get the population to pay for those inefficiencies. And everyone would know why. Similarly if there's a grand national project, everyone would feel like they're investing in it.
Consequently it would become really important to pay attention to politics. Voting decisions would result in personal financial consequences quite quickly. That would be good for democracy.
In contrast, at the moment you have to wait for an economic cycle to reach a point of going bust to realise what poor political choices mean to one's own pocket. Consequently a careless or missed vote doesn't have a strong relationship to one's own income, so it's understandable that people don't really care.
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Sunday 14th June 2015 17:30 GMT Mark Wilson
Re: Another Example
I tend to favour the limiting of taxation and government taxation to a set percentage, during times where the economy does well they can get a surplus and invest for times of recession. Only in times of emergency should the government be able to whip out the nation's credit card. The fact that this year the Adam Smith Institute calculated Tax Freedom Day to be 31st May speaks volumes meaning that approx 5/12 of people's salaries will go on government spending.
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Monday 15th June 2015 17:41 GMT Gordon 11
Re: Another Example
The fact that this year the Adam Smith Institute calculated Tax Freedom Day to be 31st May speaks volumes meaning that approx 5/12 of people's salaries will go on government spending.
Assuming I live to be 84 (so I can deal in ℕ not ℚ) that means the government will tax me for 35 of them. Given that I was in education until 24, would (hopefully) receive a pension for 19 years and (again hopefully) be covered by the NHS for all 84 I reckon that's not a bad deal.People point out how much tax is paid, but not many bother to see what you get back for it.
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Monday 15th June 2015 19:19 GMT Mark Wilson
Re: Another Example
Taxation is far more than just income tax, even as a child you would have been paying VAT, that will continue into your retirement, as will fuel duty, road tax. Assuming you buy things from profitable companies, there will be corporation tax due on their profits, you may not be liable for that but is you who pays it. If you go on holiday by plane, you are taxed to use the airport. Depending on your value, you may even be taxed for your death. If you buy a house, there is stamp duty to deal with. Do you smoke or drink, don't forget the tax on that too.
After all that, the government still doesn't have enough money to pay for everything so since the early nineties governments have borrowed money, sold off the nations assets, etc... to fund the difference. Eventually we run out of assets to sell and max out the credit card, at that point you get the Greek situation. The reality is we need to look very carefully at the services government provides and get rid of some or improve the efficiency of others until we get to a point that we can afford.
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Monday 15th June 2015 18:51 GMT Cynic_999
Re: Another Example
"
A government wouldn't be able to cover up inefficiencies by simply borrowing more; it would ultimately have to get the population to pay for those inefficiencies. And everyone would know why.
"
No, people would *not* know why. The government would blame rising taxes on paedoterrorists or the Russians or the Chinese or global warming. Or maybe pretend that they have not really raised taxes at all, but simply changed the structure or withdrawn a government service that we now have to pay for. The things that governments are *really* good at is obfuscating the true facts and finding scapegoats to cover their mistakes.
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Wednesday 17th June 2015 22:03 GMT Tom 13
Re: Another Example
You'll get better responsiveness when everyone actually shares the burden of government equally. What we have instead is a system in which almost half the people bear no burden for government and that half insists that the half that does doesn't bear the burden.
While I admit the idea of prohibiting deficit spending, I believe it has to be there for true emergencies. The problem is, too many foreseeable expenditures keep getting classified as "emergencies". Until we have more honest pols there's no law that will get us out of our conundrum. Yeah, I know. They'll be selling ice water on all levels of Hell except the one that's looking for hot tea before that happens.
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Sunday 14th June 2015 22:41 GMT Adam 1
Re: Another Example
>At one time I worked out that it took $1m of stimulus to create each job.
Accepting your calculations at face value, I think there is an underlying assumption in your conclusion that you may want to consider.
How many billions was it worth to avoid a total collapse in jobs? Have you subtracted this from the cost of stimulus?
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Monday 15th June 2015 10:47 GMT Sir Runcible Spoon
Re: Another Example
If pretty much the whole developed world is in debt, who owns this debt? The banks?
Since the weeds that are choking the flowers is interest payments, perhaps we need a UN led initiative to allow a certain amount of 'recovery' time to re-stimulate the world economy.
E.g. An interest free year on national debt for ALL countries.
Obviously not going to happen, but perhaps it's time to start thinking of what can be done on a larger scale than trying to sort this out at a national level.
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Sunday 14th June 2015 09:59 GMT John H Woods
"Quite disappointed to find this sort of left wing clap trap in the register - reads more like something out of the socialist worker." --AC
Quite depressing that you and your upvoters think that simply calling something "claptrap" is an effective counter-argument. It also suggests you didn't quite read the article in its entirety, or at least that you didn't quite understand it.
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Wednesday 17th June 2015 22:13 GMT Tom 13
@John H Woods
It is actually all claptrap. Keynesian economics was shot dead with a double-barreled shotgun on the watch on one James Earle Carter. The signs and portends had been visible since one Richard Milhous Nixon famously proclaimed "We are all Keynsians now," but no one wanted to admit it. But with both unemployment and inflation headed for the stratosphere, Keynes' economic theory was quite, quite dead. it survives only because it gives leftists license to do things that can't be done in the real world, so they won't let it die. Chief amongst his lies is that government spending increases economic output and that's at the heart of everything Tim wrote here. So they keep propping him up like the Soviets propped up Lenin for 50 years after he was a corpse.
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Sunday 14th June 2015 09:26 GMT Mike Bell
Re: What the...?
Nice troll, BB. I'm not entirely sure where Gideon's hands are, but they're not on a steady tiller.
I wouldn't trust him to feed the cats when his wife is away. The thought of imposing austerity on defenceless creatures would surely be some kind of delicious temptation.
As I see it, we need to utterly destroy our financial system, hit a reset button and start again. STOP private corporations (banks) from creating money with a government license. IF you're going to dump oodles of cash into the system (QE) just write a cheque to the people who are actually likely to spend it and actually need it, rather than making bankers richer (you & me). STOP pretending that the economy isn't ENTIRELY dependant on debt, and acknowledge that almost ALL money in the money supply IS debt. And as for the minority of people to whom this massive debt is owed, tell them that their investment hasn't worked out, sorry.
Or something like that.
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Monday 15th June 2015 10:39 GMT LucreLout
Re: What the...?
STOP private corporations (banks) from creating money with a government license
This sort of nonsense has long been one of my red flags. Its observation tends to reveal an total lack of understanding of finance, economics, or taxation on behlaf of the poster.
And as for the minority of people to whom this massive debt is owed, tell them that their investment hasn't worked out, sorry.
And its always nice to be right, and have the poster deliver their own confirmation of said lack of understanding... Sorry Mike, but its back to the drawing board for you: your ideas, if implemented, would be economic armageddon and would impoverish the entire nation. Even Gordon Brown didn't quite manage that feat.
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Sunday 14th June 2015 09:36 GMT Graham Marsden
@BB- Re: What the...?
> England voted and chose steady hands
Howls of derisive laughter, Bruce!
Do you know how many more votes the Tories got this time than last? 600,000. That's it. Thanks to our broken electoral system hat's all it took to give the Tories a "majority", even though they only got 37% of the votes.
Meanwhile the SNP got 4.7% of the votes and got 56 seats, but UKIP got 12.6% and the Greens got 3.8% yet each only got *one* seat, whilst the Lib Dems got 7.9% and 8 seats.
So, no, BB, England (or rather, the United Kingdom) did *NOT* vote for Call me David and Gideon, 60% of them voted for something else entirely, yet still we got this bunch of idiots who think that kicking the poorest in society and giving their rich mates all the money is going to make things better.
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Sunday 14th June 2015 09:54 GMT Chris Miller
Re: @BB- What the...?
Our 'broken' electoral system did exactly what it's meant to do (with the occasional statistical fluke, like 2010) - deliver a working majority for the most popular party. People who hate FPTP never seem to specify precisely which system they think would be an improvement (perhaps some of them have read and understood Arrow's Impossibility Theorem, though I doubt it). But if we'd had absolute PR, we'd have a working coalition of Conservative, UKIP and Ulster Unionist MPs; whether or not you think that would be an improvement or have led to less austerity (except, presumably, in Northern Ireland) is a matter of taste.
At the insistence of the LibDems the electorate were offered an alternative to FPTP just a few years ago. They roundly booted it into touch, much to the consternation of our North London 'opinion formers'.
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Sunday 14th June 2015 10:31 GMT Graham Marsden
@Chris Miller - Re: @BB- What the...?
"Our 'broken' electoral system did exactly what it's meant to do [...] ensure that our two-party state system remains in place and ensures that people don't get a real choice"
FTFY.
> People who hate FPTP never seem to specify precisely which system they think would be an improvement
ORLY? I could have sworn I've seen many posts on exactly that, but perhaps some people just don't read them (or don't want to read them?)
Here, let me repeat mine (which I've posted before in these comments pages): Personally I think we should switch to a form of AV or STV system (like the one they use in Scotland!).
At the same time we switch to an elected House of Lords where the seats are apportioned to Parties according to the First Choice votes expressed by the electorate in the election of MPs.
That way we ensure that the MP in a constituency is actually chosen by a *majority* of the votes, rather than being the "least disliked" option, but the "revising house" represents the actual views of the population.
PS as I've said before (also in these pages) the AV Referendum was a complete stitch up. We did not get a *choice* of what FPTP was going to be replaced by, we were simply told "it's either FPTP or AV" which meant that those who wanted some form of Proportional system were forced to vote for either of two choices, neither of which they wanted.
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Sunday 14th June 2015 18:24 GMT Chris Miller
@Graham Marsden
So what would you have proposed for a referendum (apart from a single choice of 'Graham Marsden's guaranteed perfect voting system') - a list of 103 different and increasingly complex and swivel-eyed sixth form debating society solutions? At least then you could stand in the corner crying that the 'winning' result only got a minority of the votes cast and "it's so unfair" (© every stroppy teenager on the planet).
I really do suggest you read up on Arrow's Impossibility Theorem, though I doubt you'd ever be able to understand it. I'll even Google it for you.
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Sunday 14th June 2015 21:08 GMT Graham Marsden
@Chris Miller - Re: @Graham Marsden
Ah, there's nothing like reasoned and adult debate. Pity your post was nothing like reasoned and adult debate. Still, at least you don't call people by silly nicknames like Matt Bryant, so I suppose I should be thankful for small mercies.
As to the relevant parts of your post, yes, I'm aware that no voting system is ever going to completely and accurately reflect the wishes of *everyone*, but you appear to be arguing that since it's not possible we might as well stick with FPTP on the basis of "well, it is broke, but we can't find a perfect fix for it, so let's do nothing at all".
Naturally that suits the Tories and Labour fine because they know that they'll eventually get back in power by the principle of Buggin's Turn. Whether it's good for us, the people who they are supposed to be *serving* (not ruling) is another matter entirely.
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Tuesday 16th June 2015 16:31 GMT Alan Brown
Re: @BB- What the...?
> "At the insistence of the LibDems the electorate were offered an alternative to FPTP just a few years ago."
The "alternative" was "meet the new boss, just like the old boss" - seriously, the _least_ proportionally representative (on a national basis) and most prone to confusion of all the PR alternatives.
> "They roundly booted it into touch, much to the consternation of our North London 'opinion formers'."
The electorate didn't even bother showing up for the most part (abysmally low turnouts do not a 'round booting into touch' make). I voted no because it's arguably worse (and far more suceptable to abuse in real world implementations) than the FPP system in place at the moment.
It wasn't FPP vs Proportional Representation. It was FPP vs 1 variant of PR.
The question needs to be "FPP or PR?", then "Which type of PR?"
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Sunday 14th June 2015 11:14 GMT Steve Foster
Re: @BB- What the...?
Quoting the SNP vote as a percentage of the entire UK is disingenuous at best, since all of their candidates stood in Scotland, whereas the LibDems and UKIP were (generally) standing across the UK.
The SNP share of the vote outside Scotland was negligible (if not outright zero), and their seats outside Scotland reflect that.
The flip side is that the SNP result shows that the LibDems and UKIPs best options for increasing their seats is to persuade all of their voters to move into the same area, and then they'd win those seats.
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Monday 15th June 2015 09:13 GMT Naselus
Re: @BB- What the...?
"Quoting the SNP vote as a percentage of the entire UK is disingenuous at best, since all of their candidates stood in Scotland, whereas the LibDems and UKIP were (generally) standing across the UK."
Not really. They still received a disproportionately high share of the national parliament for their vote share. It took only 25000 votes to return an SNP MP at the last election; the Tories needed 32000, Labour 39000, the Lib Dems over 300,000 - and everyone else so many that it's beyond farce. 3.8 million Ukip votes for 1 MP? 1.1 million Green votes for 1MP...?
The SNP did very well at the election, and dominated in the seats they stood in, but those seats are lower population than many South of the border and so their populations receive disproportionately high influence. The flip side of that is the higher number of total seats in England, which means that Scotland tends to get ignored completely; our electoral system rewards Scotland higher influence per vote, but lower influence per seat. And it's the seats that actually matter.
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Sunday 14th June 2015 20:17 GMT Dave Bell
Re: @BB- What the...?
The SNP didn't put candidates into every constituency in the UK. so the 4.7% figure is very misleading. Round figures, Scotland is 1/12 of the total UK population, so that 4.7% of the total UK votes is around 55% of the Scotland total.
I'm wondering if I got that wrong now, there's a couple of reasons it's only a good guess. Checking for the Scotland results with the BBC, and the SNP got 50% of the Scots vote, a 30% swing in their favour, and 56 seats out of 59.
When I first saw the handwringing about the 4.7% it was from a Conservative. It was entangled with English Votes for English Laws. It's all part of the routine misleading use of statistics to score political points.
If that "Australian" voting system had been passed in that referendum, it wouldn't have made much difference, not when the SNP ended up with 50% of the vote in an FPTP system. Some SNP MPs would have been elected without second-choices even coming into play. And the low-ranked parties in Scots seats didn't generally get enough votes to make up the difference between the top 2 parties in a seat.
(People could have voted differently in a transferable vote system that sort of guesswork can lead to whatever result you want.)
If you want to look like an idiot, carry on talking about the 4.7& of the national vote that the SNP got.
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Sunday 14th June 2015 10:39 GMT nematoad
Re: What the...?
"England voted and chose steady hands and smart minds over vacuous left-wing ideas."
The trouble with that argument is twofold.
1) England is not the UK, and it was a UK election not an English one.
2) The total percentage of the votes cast in the recent election (39.6) to the Conservatives means that 60.4% did not vote for all this austerity.
As for the "steady hands and smart minds" a quick look at the recent "Vote yes in the EU referendum or get sacked" fiasco seems to show neither. Unless that is you think that a death grip on the rudder of a ship heading for the rocks is "steady"
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Sunday 14th June 2015 13:57 GMT chris 17
Re: What the...?
@nematoad "60.4% did not vote for all this austerity"
is it really so hard to understand that 60.4% of people voted for different parties with differing views & policies who did not want to join and form a coalition?
39.6% of voters did, however, vote for 1 party and their policies and views. Like it or not, that 39.6% of votes was enough to secure a majority Government in our electoral system. The country has spoken!!
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Monday 15th June 2015 18:01 GMT issue-taker
Re: What the...?
The country has at best mumbled drunkenly through a loo roll, ashamed to be heard in case its ideas might be inspected thoroughly and found to be baseless, incoherent and embarrassing.
Brits collectively panicked and went for something like a status quo, if they hadn't already completely flipped out and done something, *anything* to change the record (well done Scots). As has already been said, that majority was won by having only 600k more tory voters than in 2010. That's a .8% increase in their vote share in 2015 over 2010, and of percentage of the entire electorate, that's about a .5% increase.
The country has spoken!! In rounding errors, but it's burbling something. Are you paralysed by fear? Because the current establishment wants you to be.
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Monday 15th June 2015 10:51 GMT LucreLout
Re: What the...? @nematoad
England is not the UK
While being obviously true, it is also obviously incorrect. Democratically the UK very much is England. If all of Scotland, NI, and Wales voted one way, significantly less than half of England voting the other way would win the day, provided the remaining voters made other choices.
60.4% did not vote for all this austerity.
We've not really had austerity at all yet. I know the left have made much noise about it, but increasing spending below the level of inflation isn't really austerity. That, however, may be expected to change come July 9th, when it is highly likely we'll see front-loaded austerity to reduce the size of the state - which on any reasonable metric, has become far too large and inefficient.
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Monday 15th June 2015 18:01 GMT issue-taker
Re: What the...?
Furthermore, or should I say Worst-all -- turnout wasn't even two thirds. It went up 1% from 2010, to 66.1
Of the two-thirds of possible votes cast, 36.9 was the tory improvement to 2010's 36.1. Comparing that, perhaps unfairly (Arrow's abloobloo) to the 75.6% of people allowed to vote (electoral 100% - tory 36.1% * 66.1%) who at the very least Could Not Bring Themselves To Vote Tory really dampens claims of legitimacy or public endorsement.
One cannot and I shall not lay the blame for electoral disillusionment solely at the feet of tories (from the irish word for horse thief) the right (from aristocracy of the french revolution) or the man (from, like, patriarchy, man).
I will lay the blame for us having to squeeze inadequate conclusions about political feedback in this country from measly rounding errors on old people (they like the colour blue) and our crappy, melodramatic electoral system (what's that, more constituencies changed to the left than changed to the right? better return a more right wing govt). Having a referendum on fixing the latter is one of the infinite Godel natures for our outdated society.
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Monday 15th June 2015 16:22 GMT issue-taker
Re: What the...?
Odd that this article agitates the more emotionally motivated commenters. ~Tech~ as a cultural sphere is generally socially left ("reality has a well-known <s>liberal</s> <i>leftie</i> bias"). Sometimes economically centrist or right. That's two axes I'm discussing "wings" of political opinion on (politicalcompass.org)
Worstall can be self-servingly rightwing, economically at least. He can be as flimsily factless as Niall Ferguson if you pay close attention or if he hasn't given himself enough time for this weeks columns. He once tried to completely dismiss Piketty's "Capital" in a single update for this column. Cunningly, by alleviating anglo countries of the charge of inequality by redefining "poor people" as people with only 5K in shares and dividends etc. Suddenly the rich of the wealthiest 75-95 percentiles looked less stupendously encumbered.
And to fill space over at the FT, if I recall correctly, he sought to demonstrate that economic inequality, job instability and more rights for employer and corporation at the cost of the rights of the individual were good for an economy as a whole. Supposedly, Scandinavian countries, with their absence of a legally defined nationwide minimum wage and state-enforced employment contracts must be libertarian. He contrasted their economic performance with the supposedly "left-wing" romance, Mediterranean countries which aren't weathering the numismacide as well. Thus a victory for broadly right-wing, liberal (in the classical or non-usonian sense) policy, given scandis have healthier, longer-lived people, more productive economies, lower crime and unemployment yadda yadda.
Never mind that with a little more digging or a little less malignant misinformation he could have found these Mediterranean countries -- he focused on Italy -- are pretty much policy-wise on a par with us brits. And crucially, that scandis are ethereal elf-people super-socialists with their minimum wage set by yearly collective bargaining, so as not to be thwarted embarassingly by inflation on a regular basis, like below average earners are here. And that in fact they are the hardest employees to terminate in the world, because of more collective bargaining and a history or well-regulated unionism.
Job security and steady compensation make a happier, more productive workforce, but that was an inconvenient conclusion for Worstall and his FT readers to reach. After all, they regard themselves as the deserving, wryly fondleslab-perusing upper echelon of a splendidly isolationist technocracy. Fact me in my poverty spout oh yes.
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Wednesday 17th June 2015 22:15 GMT Tom 13
@BB
While I concur with your sentiment that England has finally chosen steady hands, it is obvious you don't read the comments here very often. El Reg is filled with exactly the sort of leftists who eat up this leftist claptrap. Especially when it comes from someone claiming to be right-wing but rational.
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Monday 15th June 2015 06:16 GMT JohnMurray
Re: What austerity?
Yep.
So what to cut..
They could cut the benefits paid to those working (£30 billion/yr+)
They could cut the amount paid to pensioners £75 billion/yr (plus assorted other benefits such as pension credit/housing benefit/council tax benefit)
Cut health spending? £103 billion
We could always cut the money to the unemployed...although JSA is only about £3 billion directly..
We could cut the £20/30/40 billion in corporate welfare spending....and we could cut the amount of money redirected by tax avoidance/evasion.
Tough decisions.
Piss-off the people (some)
Or piss-off your donors and supporters....
Although we should also look at the chancellor...who is not an economist (of any sort) but is intensely political....is doubtless planning for life after Call-Me-Dave has gone/been made gone...
But wait...
NHS is ringfenced
Pensioners are ringfenced.
Education is fenced...whether ring or barbed wire I do not know...
That puts Call-Me-Dave in direct opposition to Call-Me-What-You-Like-Gideon.
Things could get interesting soon....
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Tuesday 16th June 2015 16:48 GMT Alan Brown
Re: What austerity?
"They could cut the benefits paid to those working (£30 billion/yr+)"
If those are cut _and_ taxable income points are simultaneously raised you can have a paradoxical effect of not reducing what's in the pockets of those working whilst also saving a fair amount of money. This is achieved by laying off those in inland revenue who only exist to take in, handle and disburse those credits and is an ongoing year-upon-year savings.
There are two sides to taxation:
1: Gross amount taken
2: Net money available
The more complicated the tax structure is, the less ends up in #2 and conversely if the structures are simplified with loopholes eliminated, you can reduce #1 whilst simultaneously increasing #2.
This was done in New Zealand. 30% of the inland revenue department was made redundant over the following 5 years and staffing levels are now 1/3 what they were in 1984.
Some of this is down to increasing computerisation, but NZ had already been reducing its staffing levels under this model - unlike the UK which has been hiring more and more people to work for the inland revenue since computerising, whilst providing worse and worse service (Hint: the more people a manager has under them, the higher their position, which means more pay and higher retirement benefits. There's no real auditing of the usefulness of departments and their staff which in turn results in rampant "Featherbedding" across the civil services - other EU countries do it more blatently but the UK is still bad in terms of public sector inefficiency.)
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Sunday 14th June 2015 13:54 GMT Nick Kew
Re: Worstall? Lefty?
You've (perhaps inadvertently) given us a bit of a social experiment here. How many commentards read beyond the title and first paragraph or two before posting?
Well, OK, not a social experiment or result. Even if you'd designed it that way, posting it here on a Sunday and under your name means many (though evidently not all) of us have preconceptions. Just an illustrative example.
Anyway, now that Osborne proposes to outlaw running a deficit through a boom, maybe we'll finally see some real cuts in reckless government profligacy. Hmmm, dream on ....
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Sunday 14th June 2015 09:29 GMT a cynic writes...
It helps to actually read the article before commenting...
Unless I've just read a different article to the rest of you the title just summarises the position that the rest of it undermines. My reading:
1) Some economists put the argument in the title, saying that there is no alternative to spending vast wodges of cash...
2) But they forget monetary policy. QE has given us the room to cut.
3) Which we did in the 1920s when it worked like a charm. That time in wasn't QE but leaving the Gold Standard but the effect was much the same.
4) Meaning that whilst you can still advocate spending more, original argument that there is no alternative is a load of dingo's kidneys.
Hardly the lefty diatribe that some of you seem to think.
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Tuesday 16th June 2015 16:55 GMT Alan Brown
Re: It helps to actually read the article before commenting...
QE: printing extra money
QE by giving iot to banks or QE by paying people/companies to do things _should_ both achieve the same result from the financial point of view (more money in circulation with a lower overall intrinsic value per instrument)
However the fact that the banks have largely hoarded what was given to them has thoroughly blunted the intent of printing more money - which was to stimulate growth by encouraging economic activity and getting more money circulating. Someone forgot to give the banks the memo that if money's not actually circulating then the plan doesn't work and the govt might just as well have printed the money and stashed it at the royal mint.
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Sunday 14th June 2015 09:33 GMT Buzzword
What spare capacity?!
"a recession, when there's spare capacity"
Nothing like today then, with our 5% unemployment rate. Nor do we have factories lying idle, nor airports half-empty, nor any other possible indicator of spare capacity.
So whatever the lessons of this article, they aren't relevant to the present situation.
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Sunday 14th June 2015 09:46 GMT Richard 12
Re: What spare capacity?!
Productivity is way down, that's the spare capacity.
Fortunately, this time around most employers have realised that
sacking the workforcecost-saving measures actually have an extremely high price, and often severely damage the business as the skilled workers leave.So they're mostly holding onto their employees.
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Sunday 14th June 2015 17:44 GMT jonathanb
Re: What spare capacity?!
Productivity has stopped increasing, but I don't think it is "way down". In my field of business, productivity increased in the past due to the introduction of computers into the business, and people figuring out how to make the best use of them. I left college at the time when most of them were getting their first computers at the end of the 20th century. I'm not really seeing anything new coming onto the market now that would improve our productivity any further.
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Tuesday 16th June 2015 16:59 GMT Alan Brown
Re: What spare capacity?!
" I'm not really seeing anything new coming onto the market now that would improve our productivity any further."
The British Civil Service are by-and-large still using antiquated, outdated pre-computer methods and employing too many layers of management to be able to effectively run the organisation.
That makes it inefficient and ripe for cost savings, unless you're using it as a way of hiding real unemployment figures (arguably the case in many post-industrial areas where the govt has taken the place of t'mill or t'mine as the employer which brings money into the area from outside and everything else is support industry that takes money from civil servants and spreads it around.)
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Sunday 14th June 2015 09:34 GMT Boris the Cockroach
Spending money
does work.
But its has to be spent in the right way.
Blowing 10 billion quid into council budgets to fix potholes is liable to result in 1 billion being given to private sector contractors to do the cheapest job possible while the other 9 billion is spent on admin and multi-cultural lesbian single mother awareness campaigners* to make sure the contractors staff are aware of the issues.
Its better to use the money to invest in the economy, and given you cant very well tell where the best place is (unless you like forcing the unemployed to build autobhans), the money should be invested in education.
Need more doctors..... grants to medical students.
need more nurses . grants to nursing students.
need more engineers ... goes without saying really.
need more IT techs ... need more lobotomies..
(the last one is a joke btw)
The result would be the spending going into the economy as a general as no student I've known ever has any money.
"But spending would rise adding to the deficet" comes the wail from the right..
And 4 years down the line those same students are in jobs that have a 40% income tax rate attached to them.. plus we have well skilled people who can start their own businesses, and we dont have to import(actually steal) so many skilled people from abroad who are really needed in their home countries
thus reducing the housing pressure and house prices.
*substitute any council non-job here and we all know of them
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Tuesday 16th June 2015 17:18 GMT Alan Brown
Re: Spending money
> creating more students doesn't create more jobs requiring graduate qualifications
"I don't often talk to arts graduates, but when I do, I ask for mine with extra fries"
Students in the current environment take "soft" and "cheap" degrees. Those are the ones which have no real job market, but you get a "degree" attached to your name.
Hard sciences and vocationally-related jobs are still in demand. The problem is that graduates incur such high levels of debt that they may never be able to pay it off.
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Thursday 18th June 2015 17:26 GMT farnz
Re: Spending money
One of the issues here is that a university makes the same money from students whether it awards 10,000 degrees in Art Appreciation, or 10,000 degrees in Electrical Engineering.
If we adjusted university funding to depend on the tax paid by recent graduates, we'd see a change in places offered over time to those courses that (a) are likely to lead to a decent job, and (b) won't have you leave the UK ASAP.
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Sunday 14th June 2015 11:30 GMT albaleo
Re: Spending money
I'm not sure what you mean by "going into the economy". What difference does it make if money is spent by private contractors or multi-cultural lesbian single mother awareness campaigners? Isn't the point that as long as they spend the money, the economy grows? I can understand that you might prefer better roads to increased awareness, but is that not just a matter of personal taste? Others might prefer better pizzas. (So why not just increase welfare benefits for that matter?) These are honest questions. This economics stuff hurts my head.
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Tuesday 16th June 2015 15:00 GMT BinkyTheMagicPaperclip
Re: Spending money
Go on, I'll bite, on the grounds that you might actually be that stupid, and other people certainly are.
Supporting minorities or the disadvantaged is not because the council wants to be *nice*, it's because they think it will save them money in the long run, either by getting or keeping people in work, improving health or decreasing crime..
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Wednesday 17th June 2015 12:10 GMT TrishaD
Re: Spending money
"There is a benefit to the country from having decent roads over and above the money paid out to tarmac layers. There is no such benefit to be had from increased awareness of the existence of ethnic minority disabled lesbian single mothers."
If we ignore the cliches and the stereotyping, it's arguable that the benefit of such schemes lies in furthering the Public Good.
That may appear a somewhat quaint concept, but it does rather lie at the heart of whether the UK and its Government exist in order to serve the people of this country or whether they exist to serve the interests of the business community.
I'd be the first to accept that a healthy and successful business community contributes greatly to the Public Good but the concept of 'what's good for business is good for the country' seems to me to be a quite nonsensical one.
We affluent IT types can wibble on all we like about welfare dependancy and the evils of employee rights, but if we dont look after the vulnerable in society and provide checks and balances against the powerful exploiting the powerless, then I think we should be questioning why we have a government at all.
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Tuesday 16th June 2015 17:20 GMT Alan Brown
Re: Spending money
"What difference does it make if money is spent by private contractors or multi-cultural lesbian single mother awareness campaigners? "
In the one case you should get some hard infrastructure (and therefore long-term public benefit) for your money. In the other it's ephemeral.
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Sunday 14th June 2015 14:04 GMT Nick Kew
Re: Article idea
Don't forget the studies that show pay strongly correlated to height (so an average woman is paid more than an average man of her height). Not a particularly exciting result, but might just put a crack in the pedestal we tend to put under other equally-meaningless results.
Oh, and the I always put to those who count bums-on-seats (or pay gaps) and infer discrimination. What would you propose to do about the biggest inequality of all - namely the prison population? Shouldn't those who have a problem with inequality be making strenuous efforts to imprison more women?
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Sunday 14th June 2015 10:37 GMT Tony Haines
Cheques vs cash
//Sending out stimulus cheques in the US (George Bush essentially saying, send everyone cheques for dollars as a method of stimulus) did work. But it was noted that if people were sent one for a few hundred, or a reasonable portion of a thousand or so, then they would indeed save it, use it to pay down debt, and that's not stimulative activity.//
When I get a check it goes into my bank account as a matter of course. I might put it in savings while I'm at the bank.
Would it be more efficient to give out cash?
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Sunday 14th June 2015 11:48 GMT glen waverley
Re: Cheques vs cash
."Sending out stimulus cheques in the US (George Bush essentially saying, send everyone cheques for dollars as a method of stimulus) did work. But it was noted that if people were sent one for a few hundred, or a reasonable portion of a thousand or so, then they would indeed save it, use it to pay down debt"
Or a still running argument in Oz. The then govt gave an extra $ 900 tax refund when people put in their 2008 tax form. Coincidentally tax time was the same time as the GFC crash. The mantra was go hard go early go households. Allegedly everyone's $ 900 was spent on brand new TVs. Current govt is still whingeing about this. But weird that Oz seemed to avoid worst of the GFC.
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Monday 15th June 2015 03:37 GMT Adam 1
Re: Cheques vs cash
>But weird that Oz seemed to avoid worst of the GFC.
Only in the sense that we didn't have a recession and the economy actually grew during the quarter with the GFC.
The current government is right though. If only Rudd had spent less on stimulus and more on new NBN logos....
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Monday 15th June 2015 09:19 GMT Tony Haines
Re: Cheques vs cash
//If you mailed out cash, you'd certainly stimulate the criminal economy. Not sure if that's what the government really wants, however.//
Actually I had visions of emptying bags of loose notes out of skyscraper windows...
Hey, I think I've got it.
Who spends all their money?
Children.
Let's give them... say, 30 pence or so per day they go to school.
By my calculations this would drop about a million pounds into local economies per schoolday.
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Sunday 14th June 2015 10:37 GMT John Crisp
Reasoned debate is good to read whether I agree or not.
I generally enjoy your columns Tim, but please leave the hysterical headlines, political opinions and slagging off to the rags where it belongs. Stick to your economics as I am not interested in your political views.
Shame we can't down vote an article... -1 from me.
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Monday 15th June 2015 10:11 GMT Jason Bloomberg
I don't worry particularly about the politics on El Reg but it would be nice to see better balance with articles and contributions which counter Tim's particular point of view.
I think everyone would benefit from a comprehensive "why Tim's wrong" article even if they don't particularly agree with that perspective. We have had weeks of economic and political argument presented from a single viewpoint and that isn't healthy in my opinion nor good for El Reg.
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Sunday 14th June 2015 11:36 GMT Anonymous Coward
If we assume that a downtuurn is bound to come at some point in the next 5 years as part of the normal economic cycle then the government would definitely rather have it sooner so that the good times are rolling again by the time they're due for re-election. Whether or not that impacts their behavior I don't know, but it seems to me like it would.
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Sunday 14th June 2015 11:44 GMT David Kelly 2
"Stimulus" Does Not Work
So-called "stimulus" does not work because government is stupid. Keynes doesn't count value, only expenditures. Government is not smart enough to buy value, while individuals spending their own money shop hard for value.
If one didn't need value from one's CPU cycles then the greatest program in the world is "10 goto 10". This is what "stimulus" does. If government would leave money in the pockets of those who earned it then it will get spent as soon as something of value appears. If government spends they don't wait for something of value, they take the first pork project a favored politician asks for.
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Sunday 14th June 2015 13:51 GMT Steve Knox
Re: "Stimulus" Does Not Work
If one didn't need value from one's CPU cycles then the greatest program in the world is "10 goto 10". This is what "stimulus" does.
You just proved that you don't understand either programming or stimulus. "10 GOTO 10" would in fact use very few CPU cycles in a modern system, and for this to be a valid analogy, stimulus would have to be limited to taking money from one account and immediately putting it back into the same account.
The underlying problem with your argument is that you presume value to be something objective, or more to the point, you presume that value to those people who earned the money equates to value to society as a whole. (There is also the deeper unspoken assumption that those who earned that money owe nothing back to the society that created the infrastructure that enabled those earnings, but that's a much more complicated issue.)
Finally, "pork" is simply a useless term when attempting to discuss government spending in a districted political system. The only consistent definition of the term is "government spending that happens outside of my district." which is neither objective nor valuable in reconciling subjective differences.
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Sunday 14th June 2015 12:46 GMT graeme leggett
1930s
How much effect is there from the (re)-armament drive following the break with the Ten Year Rule* in 1932?
Eg the RAF expansion plans from 1934 onwards - creating 100 more squadrons putting 3000 more aircraft on the books (plus replacing existing ones).
*The assumption when it was first initiated in 1919 that another major war was not likely for ten years and therefore defence spending could be held at low levels. But then rolled over from year to year despite whatever was happening in technology and world politics.
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Sunday 14th June 2015 13:48 GMT Anonymous Coward
The reason why cuts work...
The only reason why cuts work is that the incompetent government (be it Tory or Labour) is spending less money on pet projects that are at best worthless and are at worst entirely counter productive and indeed harmful. It's doubly harmful when the spending is done sneakily by a paranoid, egocentric proto-sociopath chancellor - yes, I'm thinking PFI and Brown, surely one of the world's greatest fiscal idiots.
When the government spends less, the rest of the market (i.e. us) fill in the gaps, and even if our spending is short term, a new TV, a new car, it still increases liquidity with an agility that a limbering behemoth of a government simply can't manage.
Governments should never really be allowed to manage economies in the same way as the general public should never be allowed to police themselves.
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Sunday 14th June 2015 23:49 GMT FrankAlphaXII
Re: The reason why cuts work...
Well the first experiments with central banking were ended by a congress under a war-monger that manged to get most of Washington burned to the ground after having untrained rabble serving as militia attack civilians and civilian grain stores in Canada, and a jackass* that let the second attempt's term expire.
But no, it didn't work at all. Bank runs and financial crisis were both fairly normal over here. People got sick of it after the 1907 Bank Run, which followed bank runs in 1873, 20 years later in 1893, and again in 1907, but congress shammed something together and Wilson signed it.
Y'know, Its pretty sad when your country's had enough bank runs that they get titles like they're military campaigns.
*Andrew Jackson got called a Jackass by the Adams campaign, it became his symbol and eventually the entire Democratic party started using it and still uses it to a degree, though nowadays their official logo really sucks, it looks like a DC Metro line more than a political party's logo.
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Sunday 14th June 2015 14:10 GMT chris 17
Increased Government spend these days seems to go to either foreign owned companies or those that rely on off shoring jobs to provide the services for government. When increasing Government spending, the extra money should be staying in these shores not propping up another countries economy at our tax payers expense. Then and only then will the leftist view of increased government spending have some chance of abating a downturn.
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Monday 15th June 2015 02:29 GMT Yet Another Anonymous coward
If you gave more money to working people you would end up getting most of it back as vat and tax on cigs, booze and fuel. There is no point in stimulus spending that comes straight back to the government. And the rest they would spend on cheap chinese electronics.
By giving the money to the rich you can be sure that it won't come back as tax and they will use it to buy housing in London - which stays in the economy. In fact since hookers and drugs are now included in GDP - giving money direct to bankers is the most effective form of stimulus.
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Sunday 14th June 2015 14:28 GMT Anonymous Coward
I think Keynsian stimulus is fine, but...
You have to be able to afford it long term. The post-crisis U.S. had been running trillion-dollar deficits until a few years ago, and it helped steady things, but it didn't create even normal post-recession recovery growth rates.
The larger issue is running up the deficit. That's not a huge issue now, but I see it being a big issue in 10-20 years, as much of the quantitative easing money supply growth will still be in the system, plus the return to trillion-dollar deficit-induced money supply creation as retiree benefits crank up deficit financing. I'm worried about inflation and then a spike in interest rates as financiers of that deficit worry about their loans being inflated away in the face of an ongoing need for more deficit financing to keep Medicare, Medicaid and Social Security going.
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Sunday 14th June 2015 14:37 GMT Steve Davies 3
all you lefties and champagne socialists should...
Go and sign up to vote in the forthcoming Leaderership election for the Labour Party.
If only cost you the price of a Mocca Latter (£3.00) to get a vote in the election.
Then you cann elect the leader you want to fight the Tories in 2020.
My I humbly suggest Mr Corbyn as a viable candidate because he is well left of Centre.
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Monday 15th June 2015 12:24 GMT LucreLout
Re: all you lefties and champagne socialists should...
My I humbly suggest Mr Corbyn as a viable candidate because he is well left of Centre.
Chukka UrMunny would have been a viable candidate (I say this as a Tory voting former Labour voter), and Liz Kendal might have been had she any real world experience of anything.
The rest are poor choices. Yvette Cooper-Balls already helped knacker the economy once through her husband Ed, and really hasn't earned another chance. The other guy Burnham is a political nobody, already in hock to the unions. Corbyn won't even be on the ballot.
Labour is, sadly, doing this all wrong. First they need to understand why the country rejected them so strongly, then they need to work out their reason for existing, and only then should they be choosing the leader best equipped to take them on that journey. Doing it this way just means nothing changes and they ain't hit bottom yet. 2020 will be horrific for Labour without susbatntial change in outlook, policies, and yes, funding.
Big Len ain't electable, and nor are any of his puppets. Upsetting as that will be to some, it is no less a fact for that.
Does labour go to the left to pursue Scots, or to the right to attract Southerners? What has it learned about fiscal competency since Gordon bankrupted Britain? What actually is its immigration policy, and why? How does it propose to reform the public sector to get more for less, which is the only future it has under any government?
I never thought I'd say this, but with the impending vote on the EU possibly shooting the UKIP fox, and the SNP lockout of Scotland, it may be best for the UK as a whole if Labour disolved itself as a party and created space for new opposition to emerge.
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Monday 15th June 2015 14:29 GMT Jason Bloomberg
Re: all you lefties and champagne socialists should...
I say this as a Tory voting former Labour voter
It does seem the UK is relentlessly slipping to the right and the reason why deserves analysis. My feeling is it all comes down to encouragement and embracing of selfishness, tribalism and hatred. That can be evidenced by looking at the hate on social media and in news article comments.
I am a firm believer that Labour needs to steer to the left and educate the country as to why that is a good thing rather than moving to the right in the hope of chasing votes.
I would rather have a society which embraces all rather than one which seeks to divide and conquer, rewarding one faction at the expense of others.
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Monday 15th June 2015 14:48 GMT codejunky
Re: all you lefties and champagne socialists should...
@ Jason Bloomberg
"It does seem the UK is relentlessly slipping to the right and the reason why deserves analysis."
I would argue the opposite. From what I have seen the UK has been drifting left consistently until the crash, and then barely nudged right. People look to the boom over the labour reign as is it was a righty thing, which is true if you ignore everything labour did. Labour only allowed the market to run ahead because they needed more money to splurge. The public sector bloated quickly, private markets interfered with, competition ruled a bad thing, immigration for anyone, stealth tax went nuts and we only avoided the euro because Brown didnt get on with Blair.
Then we 'lurch' (laugh) right where we protect and ring fence budgets all over the place with the con/libs and now the tories. The problem with ring fencing though is that the damage cannot be spread, we are not all in it together. Instead of small cuts across the board we must have greater cuts to limited services which people are willing to sacrifice. During labours run we had a massive push to be dependent on the gov.
During the election we had a labour gov so far left they were unelectable outside of a socialist utopia (wasteland), a tory gov that looked and sounded like a labour gov and the nearest to a centre right wing small state party was UKIP.
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Monday 15th June 2015 15:06 GMT LucreLout
Re: all you lefties and champagne socialists should...
My feeling is it all comes down to encouragement and embracing of selfishness, tribalism and hatred
How strange. My view is that every single time Labour get their hands on the wheel, they crash the economy. Literally, every single time throughout their whole entire history. They just can't be trusted with the economy, and in a globalised world, the economy is far far too important to be left to failed lawyers and bolshy union reps.
That can be evidenced by looking at the hate on social media and in news article comments
In the run up to and immediate aftermath of the election, all of the bile was issueing forth from the left. To a greater extent, it still is. The behaviour of many with left wing views was disgusting and has not moved forward since the days of yelling "Scab" at people going to work and lobbing bricks at them. Not endearing, frankly.
I am a firm believer that Labour needs to steer to the left and educate the country as to why that is a good thing rather than moving to the right in the hope of chasing votes.
I hope they don't. That way lies indefinite opposition, which could only lead to a Conservative government lasting well beyond its sell by date.
I would rather have a society which embraces all rather than one which seeks to divide and conquer, rewarding one faction at the expense of others.
Me too, which is why I vote Conservative rather than Labour.
Have a virtual pint, because I thnk our motives align far more closely than our politics ever will.
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Monday 15th June 2015 20:53 GMT tojb
Re: all you lefties and champagne socialists should...
Its cos of globalisation, esp papers owned by Murdoch and the power that they showed when Kinnock threatened to require UK ownership of the press. RM has US citizenship precisely to avoid the same rule over there. It was the sun wot "won" it.
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Sunday 14th June 2015 14:57 GMT Peter Johnston 1
History is spun to suit the person writing it, then going down as fact for all time. It isn't real.
The first rule of science is to measure one thing at a time and ensure everything else is the same. In the 1930s we had a manufacturing based economy, so all sorts of stimuli produced different effects.
Consider inflation. In the 1930s, when the UK did well our factories sold more. The unions decided "we want some of that". So wages rose. Inflation was a measure of that process which could lead to a spiral of wage demands and price rises. A dose of austerity kept those wage demands in check and us as a nation competitive.
Now inflation is one of two things. Either a commodity has risen such as oil, or our exchange rate has risen, making our goods more expensive abroad. Both of these put a squeeze on our businesses and to keep us competitive, a loosening of fiscal control is necessary.
Because we still hark back to the 1930s we do the opposite, compounding the problem.
What is obvious here is that money - as Robert Maxwell always maintained - isn't real. It is just a promise and the likelihood of making that promise depends on confidence. Thus the trick is to deceive. When confidence rises, so does the value of the pound, making our businesses poorer, but enabling us to borrow more - we have to choose which is more important.
And, domestically, if we can fool people into believing they are richer, they'll spend more, so the economy rises, making it true. But in doing so they'll suck in more imports, giving us a higher deficit.
We're still stuck in the 1930s thinking that we control our own destiny. In a global market we have to look at much more complexity. Not just the EU and US, but the far eastern manufacturing economies still stuck in our 1930s model. We're in a world of unintended consequences which will get more and more unpredictable as these economies become a greater portion of the whole.
One thing you can be sure of - doing what we did in the 1930s cos a flawed source tells us it worked then is naive.
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Monday 15th June 2015 02:12 GMT Anonymous Coward
Re: Bots posting?
I think bots are indistinguishable from extremists on either side - they don't read articles, or understand them if they do, only fixating on keywords. Their posts don't criticize the content of the article, only what they perceive as its slant.
Don't assume someone has bothered to write a political bot when there are so many humans already willingly programmed to produce the same output.
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Sunday 14th June 2015 19:53 GMT Dave Stevens
Can you repeat the question?
Cutting spending is bad for the "economy". That's crystal clear. The "economy" is usually boiled down to a single number and public spending is right there in the equation.
However, you can only spend money you don't have for so long until you have to cut spending anyway. Go see how they're doing in Greece.
You can play the yo-yo game and borrow during recessions and pay it back during growth, but if you reach the stage where it's too painful to repay even when there is moderate growth, your debt is already too high.
You can always increase taxes instead. That's so popular.
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Monday 15th June 2015 08:14 GMT Anonymous Coward
I have a general economic rule of thumb...
...If Paul Krugman says it's so, it ain't so.
BTW the 'bullshit baffles brains' splurge of economic gobbledeygook about money and givernment and who should do what and how much boils down in the end - if you subtract the idea of money from all sides of the equations and instead think in terms of tangible wealth into a simple question...
Who is better at using wealth to create more wealth? Motivated individuals, corporations or a government?
Any fool who sets the rules can make money at the stroke of a pen or the touch of a keyboard. Creating wealth is far far harder.
Perhaps what we should be doing is rewarding people who make wealth, not money.
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Monday 15th June 2015 19:56 GMT issue-taker
Re: I have a general economic rule of thumb...
so your proposal is to turn this into about a cream pie fight to rank wealth-creators by wealth-creation? Oh but isn't that the standing rhetorical hard-right tactic? A tactic thoroughly rebutted elsewhere. ~Job creation~ is not the preserve of the wealth or the entrepreneur or the policy-maker, and it's not even the most useful task in a society, just one of the most obviously measured ones.
If wealth is used as a mathematically useful economic measure, it does not capture human capital, the effects of human health of various kinds, does not yet capture environmental stability, biodiversity and health, nor consumer confidence, so on and so forth...
If wealth is used as an economic measure that does capture all of the above, it's not going to be mathematically useful under currently envisioned methods.
I'm sure you can agree, especially in light of this, the concept of money is horribly flawed.
Perhaps you aren't proposing continued use of money in this sense at all. Perhaps you are saying literally rewarding, perhaps equally, anyone who makes any net contribution to collective long-term wealth however so widely defined. Because a reward is a reward and a contribution is a contribution, and at times like this anything would help, right? But then you'd be a filthy leftie loony marxist of the worst order to be found in this thread, like me.
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Monday 15th June 2015 08:28 GMT Olius
At risk of being flamed
You've changed your tune (Warstal). Previously, anyone who suggested that we couldn't "cut our way to growth" (and here's the historical precedents to prove it) was leftie commie crap.
I should be happy that the tides are a-turning and common sense appears to be starting to prevail...
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Monday 15th June 2015 09:34 GMT Graham Marsden
As always....
... cui bono?
The Independent Living Fund, which helps around 18,000 disabled people work and live in the community, is being wound down.
The NAO has said that more than half of Britain's councils risk falling into serious financial crisis and may not be able to provide services they are legally obliged to offer.
Her Majesty's Inspector of Constabulary (HMIC), has said that 17 out of the 43 police forces may "struggle to sustain themselves in the medium term in light of continued austerity".
Cuts to Legal Aid mean that many less well-off people are now excluded from the system and cannot "afford" to get justice.
Meanwhile the richest get a £100,000 a year tax cut, banker's bonuses (you know, the people who helped cause the crisis and the ones who have been fixing LIBOR rates etc) have risen, George has not "eliminated the public sector deficit by 2015" as he claimed he could (in fact he hasn't even managed to cut it in half) and British workers have had the longest decline in average wages since records began whilst minimum wage jobs and zero-hours contracts have risen "reducing" unemployment with near poverty level labour.
Cui bono? As always, not us...
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Monday 15th June 2015 10:23 GMT Robert D Bank
It's folly to compare the current economic situation with previous depressions. Today we have a much faster paced and more globalised economy with many more complex interdependencies, and local gov't policy is subject to many more outside forces than ever before. There's no real global governance to deal with the trans-national companies and the effects they can have operating globally. Even the 'threat' of capital flight can have a heavy influence on local gov't policy as one example, not to mention the unregulated lobbying, revolving doors between business and gov't etc. Much of the gov't policy is written by people from the business world and weighted purely in their favour.
QE is just crack for the banks and large corporations these days. Essentially free money to hypothicate to the 100th degree or more and pay virtually no tax on the profits in many cases. With QE now a lot of that money is spent by larger companies in doing share buy backs to artificially increase their stock values and therefore the bonuses the exec's and shareholders receive. This is not a true investment in the company like R&D, staff training or capital spending on equipment which does stimulate economic activity as would have happened in Keynes day. And much of the money these exec's and shareholders receive is made 'tax efficient' which further reduces any stimulus in the real local economy. Any 'risky' investment these days is instead dumped on taxpayers in the form of 'bail-outs', or by packaging up junk bonds etc and getting rating agencies to AAA them so that pension funds buy them and take the hit when it falls apart.
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Monday 15th June 2015 10:47 GMT Anonymous Coward
Human Action
Economics is strictly about human action. Human action is almost always devoted to the acquisition of something for the purposes of survival. One must remember that this lies at the bottom of all things economic. It is about acquiring the things you need to survive. It simply is not possible to spend one's way into prosperity outside the confines of a game of MONOPOLY(tm). Neither is it possible to borrow one's way into prosperity. There is no such thing as a free lunch. Pass the word to your favourite politician. Even the best of that lot needs to be reminded of the facts.
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Monday 15th June 2015 12:19 GMT Olius
Re: Human Action
" It simply is not possible to spend one's way into prosperity outside the confines of a game of MONOPOLY(tm). Neither is it possible to borrow one's way into prosperity."
Have you never got a loan to start a business? That is EXACTLY borrowing and spending in to prosperity.
The added advantage a govt has over you in this respect is that when it spends money, it gets a huge amount of it back via taxes.
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Monday 15th June 2015 12:01 GMT codejunky
My take
Government is like a house or a car. It is something we need but it is a liability in the purchase and ongoing cost. Governments can be large or small and can be thrifty or spend-happy. The bigger a government the more interfering, the more spend happy they are the more they are willing to spaff on our services and their pet projects. Governments will always have pet projects and people will always demand more services (and be unwilling to give any up) which pushes them towards large and spend-happy.
The restraining force however is finding people willing to pay for it, and it is always a person at the end who pays (either through loss of job, income, etc). Unfortunately with 13 yrs of labour splurging and the current bash the big earners rhetoric we risk vilifying the very people who provide jobs and pay for the services we want (as much as some people may wish to bleed them dry).
Boom and bust is necessary. It should be renamed to something like splurge and correction as the amount of money being spent on things is higher than the value of the item. A correction usually surprises the people when it happens. Having a large interfering gov throwing away money at that time is a bad idea. Just as having an over large and expensive house or car on credit during a crash will be painful, so it is with government.
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Monday 15th June 2015 13:42 GMT Olius
Re: My take
"Having a large interfering gov throwing away money at that time is a bad idea. Just as having an over large and expensive house or car on credit during a crash will be painful, so it is with government."
It is actually the opposite - the govt investing money in industries to plug gaps in market forces during a downturn (Or as you put it "throwing away money") can stop a recession in its tracks due to the simple fact that a "recession" is a slowing down of the speed of money movement in the mid to lower parts of the economy: therefore "injecting" money in to that part will enrich lives and speed up the movement again. Imagine the govt "buying" 1000 nurses, police and firefighters in an area. Now imagine how the local shops in that area are helped by that. Then all the local suppliers of those shops. And so on. And then extra businesses created and people employed to satisfy the new demand.
And then picture all the tax (Income tax, NI, VAT, Duty, to name just a few) that comes from that "investment" - which means it was actually an incredibly "cheap" investment for the country/govt.
If spent in the right way, govt spending is never "wasteful" because it is a closed ecosystem.
But the problems then start when you (as a govt) spend money in a part which isn't closed - huge consultancy fees to tax avoiders, for instance.
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Monday 15th June 2015 14:59 GMT codejunky
Re: My take
@ Olius
"If spent in the right way, govt spending is never "wasteful" because it is a closed ecosystem."
That is the big if. Regardless of the type of government this idea of stimulating the economy with more gov debt is generally accepted, but only if the spending is on the right things. A gov that throws money away in a big spendfest will have less money to play with as they have already spent it (look at the horror on the labour gov when the recession hit). If spent the right way any size gov should be able to keep the economy going, but that is thrifty. However a big gov has more people and so more likely to have spendy nutters in it throwing money on anything (not just porn and duck houses).
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Monday 15th June 2015 14:20 GMT chris 48
What recession?
We aren't in a recession. We haven't been in one for 6 years. There isn't even conflicting evidence: unemployment is low, gdp is growing, business investment is growing, I suppose that you could point to the fact that interest rates are having to stay low as evidence that the economy is still weaker than it could be but basically the economy is doing great.
So why do people assume that the economy is in a terrible state?
I think it's mostly because if you're a politician or journalist sypathising with your voters / readers about how hard it is to get on in this economy you come across as sympathetic. And regardless of how well the economy is doing, there will always be a large number of people having a hard time so that's what you do because it gets you votes / clicks, the alternative of actually looking at how the economy is really doing would just get you labelled as "out of touch with ordinary people".
It's also partially because everyone wants and feels they should have a bit more than they do. So when the world isn't delivering that, which it never will, they feel like there must be something wrong with the economy.
This self-delusion is of course the reason we have a big debt. Almost everyone agrees that we should save in the good times and spend in the bad. However, we're really quick to spot the bad times but only identify the booms in retrospect.
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Monday 15th June 2015 19:56 GMT issue-taker
Re: What recession?
briefly, standing wisdom is that we could be in a continuing boom right now, largely propelled by ~Tech~ if it wasn't for the <s>recession</s> numismacide, that is, deliberate culling of swathes of the global economy last decade. Anyone who isn't a predatory london merchant banker is well justified in complaining that their lives have been revalued downward, and demanding justice on those responsible. It's just words. Money is horrible.
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Monday 15th June 2015 15:08 GMT Anonymous Coward
"Ringfenced"
is probably one of those irregular nouns ...
Does it mean protected at the current level ? Protected at the current level *and* predicated to rise in line with inflation (in which case *whose* inflation ?). Also, will next years budget cover exactly the same as this years, or (mysteriously) be expected to cover more ?
But, people believed it and voted ....
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Tuesday 16th June 2015 02:13 GMT Martin Budden
Stimulus works
There was only one developed nation which didn't go into recession during the GFC: Australia. Why did we escape recession? Because the aussie government did massive stimulus. Billions of it. It was a close call, but it worked. We also got a lot of new school buildings too, which is a good thing: if you are going to spend, why not spend on improving the education of those who are the future.
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Tuesday 16th June 2015 08:11 GMT codejunky
@ Dick Pountain
"demolish the welfare state and employment rights"
Another way to word that could be to reduce dependency and the debilitating trap caused by the welfare state and to improve peoples productivity and prosperity. Which I expect greatly improves the conditions for balancing the budget.
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Biting the hand that feeds IT
