Now that we finally have an election in UK

[D_Tully Tunnelrat]

Another simple measure for me, because we don't have a constant against which to measure relativity, is if inflation is more than the interest you receive on your savings, then you are deflating, if your house isn't going up as much as inflation, then you are deflating, if your GDP growth is less than inflation, then you are deflating.

More relevant, and concise than most "professional" analytical metrics. Congrats, now you're an economist, but you probably don't want the guilt by association. :wink:

I was reading more about the UK economy last night, and was aghast to find that it's borrowing 25% of every pound spent in the public sector. The public sector now accounts for over 50% of all spending!?! That's only slightly better than Greece, and worse such economic power houses as Bulgaria, Bosnia, and Swaziland.

The Audacious Epigone: Government spending as a percentage of GDP by country

If that is correct, the data's from '07, so it may actually be worse, then even the most austere budget plan from Cameron, assuming his plan is more disciplined than Brown's, won't be stringent enough to right the ship of state. It would appear that Labour has been more a friend to creditors and the rich, than to the UK working person. This would appear to be as pivotal an election as '79.

 

[dandelion]

I was reading more about the UK economy last night, and was aghast to find that it's borrowing 25% of every pound spent in the public sector. The public sector now accounts for over 50% of all spending!?! That's only slightly better than Greece, and worse such economic power houses as Bulgaria, Bosnia, and Swaziland.

If that is correct, the data's from '07, so it may actually be worse, then even the most austere budget plan from Cameron, assuming his plan is more disciplined than Brown's, won't be stringent enough to right the ship of state. It would appear that Labour has been more a friend to creditors and the rich, than to the UK working person. This would appear to be as pivotal an election as '79.

The state finances were rattling along on a reasonable basis as agreed by both lab and con before the world recession. Now, neither lab or con would agree the analysis you just made. Neither has any stated plans to deal with such a crisis, and quite frankly no politician speaks about the issue in this way. Id agree, the Uk finances do not seem to be so very different to Greece. The main difference may be that the UK has more credibility and thus the bankers will keep handing over money for longer. The question is whether anyone will use this expensively bought time to fix things.

The main proposal so far seems to be that if the government keeps spending then the economy will recover to previous levels and the crisis will go away. Honestly, I have no idea if this is reasonable, or not.

 

[TomCat84]

Easy!

You need a group of people with political power who are not dependent upon being elected but instead can debate issues without worrying about media soundbites and instant popularity. You need a system of selecting these people which is basically random, though you do need to make sure they are reasonably educated and have links with the fabric of society.

It is called an aristocracy, and fits alongside a constitutional monarchy. It is the UK system before Labour meddled with it, and the system works. The beauty of it is that it is not fair and not representative - so it acts as a counterweight to a supposedly fair and representative commons.

I'm sure the UK could help the USA with such a system. We have a long tradition of being happy to share our Queen and our aristocrats. Right now in the UK (and Canada and Australia and many other countries) the Queen is an enormously popular head of state around whom countries can unite. Presidential systems seem to feel they are doing well if only half the population actively hate the present incumbent.

Oh hell no. For all of of republics' faults- and there are many- there is a reason why the United States is a super power and the UK is not anymore. A wise man once said "Democracy is the worst form of government ever devised by men- except for all the others."

You can take your snobby British aristocracy and undemocratic monarchy and stuff it. We like our democratic system. Americans unite around our Constitution (ostensibly), and dont need a queen/king to feel good about ourselves.

 

[dandelion]

Oh hell no. For all of of republics' faults- and there are many- there is a reason why the United States is a super power and the UK is not anymore. A wise man once said "Democracy is the worst form of government ever devised by men- except for all the others."

You dont think its because the US has 6x the population and 20 times the land area?

 

[Jason]

The main proposal so far seems to be that if the government keeps spending then the economy will recover to previous levels and the crisis will go away. Honestly, I have no idea if this is reasonable, or not.

Labour keeps repeating this and can doubtless find some economists to back the idea. But you can find some economists to back any idea.

The fundamental concepts are pretty basic economics. The world got it wrong in the Great Depression because as things went wrong governments started trying to make savings and made it all much worse. By contrast the sort of economics associated with Keynes says that in a recession governments should spend to stimulate a recovery. It is sound stuff. But the level of spending a government should do must be prudent. Governments should spend the money they put aside in the good times and may engage in some modest borrowing. But that's it. Over-spending (spending money a country just doesn't have and shouldn't borrow) may give a very short term bounce, but causes dire medium and long term problems.

In the present state of the UK economy the levels of spending we presently have are beyond any possible justification. It will definitely harm the economy. We've got an odd pre-election calm where the markets won't actually run against Britain because they thing we might have a government on 7th May that begins to take the necessary steps.

Austerity will hurt far more than people imagine. The options of increasing taxes are few (maybe VAT - but really we need to nudge corporation and income tax downwards). Cutting public sector employment is a problem. The area that absolutely has to be cut is benefits, simply because there is no alternative. Is it any wonder that no-one wants to talk about it?

In as much as Labour has a policy it is to keep spending and call in the EU/IMF in about two years. Brown, Darling et al are well aware of the inevitability of failure of their policies. This situation would bind the UK to a socialist Europe forevermore.

The Conservative policy is to get elected then make the necessary cuts.

 

[B_crackoff]

Austerity will hurt far more than people imagine. The options of increasing taxes are few (maybe VAT - but really we need to nudge corporation and income tax downwards). Cutting public sector employment is a problem. The area that absolutely has to be cut is benefits, simply because there is no alternative. Is it any wonder that no-one wants to talk about it?

In as much as Labour has a policy it is to keep spending and call in the EU/IMF in about two years. Brown, Darling et al are well aware of the inevitability of failure of their policies. This situation would bind the UK to a socialist Europe forevermore.

The Conservative policy is to get elected then make the necessary cuts.

What people don't realise is that the £200Bn created went to the banks at practically 0%, which they then lent back via buying Treasury bonds @ about 5% - risk free = £10Bn free from you & I the tax payer into the execs bonuses - lovely!

That's Labour for you. The Tories would have done the same for their buddies too.

Because of the money printed, interest rates will have to rise. The only reason house prices rose was because of the artificial creation of credit (no bank lends money for a mortgage - your signature on the mortgage document borrows it into existence!).

More money chasing the same goods creates sector inflation. General inflation is a form of taxation. We only have general inflation due to the creation of fiat money(legally created out of thin air), & the interest charged on it, which means more money(debt) has to be created to pay off the interest. It's perpetual debt. All assets in the economic model eventually go to those creating the credit.

When interest rates rise, we will have a personal debt crisis & another housing crisis.

We ain't seen nothing yet. It's staggering how few people remember even the recent past & austerity budgets.

There will be strikes by most Govt departments, unrest etc.

You look at the PFI committed debt, the unpaid pension obligations (it was only 2 years ago the Govt realised that anyone reaching 60 would live on ave to 88, not 80!), & the fact that 50% of the population goes to Uni, leaving with an ave. £25K debt, which on ave. they'll be paying back over 10 years @ 10% of their income!

When 50% of everyone aged 21-31 is paying 10% of their income to banks, how are house prices going to rise, how are State employee pensions going to be paid, & how is the standard of living going to go up?

Why are we giving £8Bn in Overseas Development Aid when we're £180Bn in deficit each year? Bonkers.

Huge cuts are required, but all we will have is political expediency.

I wish they could all be voted out.

 

[superbot]

Oh hell no. For all of of republics' faults- and there are many- there is a reason why the United States is a super power and the UK is not anymore. A wise man once said "Democracy is the worst form of government ever devised by men- except for all the others."

You can take your snobby British aristocracy and undemocratic monarchy and stuff it. We like our democratic system. Americans unite around our Constitution (ostensibly), and dont need a queen/king to feel good about ourselves.

Superpower eh?......

 

[dandelion]

Originally Posted by dandelion http://www.lpsg.org/images/buttons/viewpost.gif
The main proposal so far seems to be that if the government keeps spending then the economy will recover to previous levels and the crisis will go away. Honestly, I have no idea if this is reasonable, or not.

Labour keeps repeating this and can doubtless find some economists to back the idea. But you can find some economists to back any idea.

There you go again. Nice complaint, but the difference between lab and con is negligible compared to the size of the problem, and if aything the conservatives have the worse position, because they are planning to cut taxation and thereby increase government debt.

The fundamental concepts are pretty basic economics. The world got it wrong in the Great Depression because as things went wrong governments started trying to make savings and made it all much worse. By contrast the sort of economics associated with Keynes says that in a recession governments should spend to stimulate a recovery. It is sound stuff. But the level of spending a government should do must be prudent. Governments should spend the money they put aside in the good times and may engage in some modest borrowing. But that's it. Over-spending (spending money a country just doesn't have and shouldn't borrow) may give a very short term bounce, but causes dire medium and long term problems.

Well you said it. There is no difference between the labour and conservative budget plans, except the conservatives have announced more tax cuts. I seem to remember Nigel Lawson, as conservative chancellor going on about the need for prudence way before Brown. Both parties have behaved exactly the same in government. There has been no government in 50 years which saved up money against future hard times. This simply does not happen under our system of government where governments always operate on the edge of the maximum they can tax and spend. The most fiscally conservative are the liberals, so i suggest you vote for them.

We've got an odd pre-election calm where the markets won't actually run against Britain because they thing we might have a government on 7th May that begins to take the necessary steps.

No, because they think we are one of the better bets for making money. Dont forget it isnt just us in trouble. Money has to go somewhere and there is a lot of it swilling around. Are they going to stack it up in a vault? We dont have to be a good bet, just better than, er, Greece.

Austerity will hurt far more than people imagine. The options of increasing taxes are few (maybe VAT - but really we need to nudge corporation and income tax downwards).

This is simply a matter of proportionality. I hope you would agree that the proper course for a government is to redress the power inequality between employees and employers, and force employers to hand over more of their profits. This is no more than the free market in action, as expressed by governments controlled by workers to exercise leverage over companies which would otherwise only act in their own narrow self interest. This is no longer acceptable. The only excuse for allowing anyone to amass a personal fortune is that some social good will come from the collected capital. Unless you tax that capital, however, there is no social good. We are not going back to the workhouse. Just about everyone agrees the proper course is a middle path where government restrains the actions of private individuals by regulation and taxation.

Th present furore over conservatives cutting NI exactly illustrates this. You have argued that NI is counter-productive in that it is a tax on jobs and destroys employment. Clearly the conservatives do not believe this. Otherwise they would be proposing to abolish it, not just make a 10% cut. They too believe in taxation and its just a matter of fiddling with a bit here or a bit there.

Cutting public sector employment is a problem. The area that absolutely has to be cut is benefits, simply because there is no alternative. Is it any wonder that no-one wants to talk about it?

Cutting benefits IS cutting public sector employment. People are basically employed to do nothing, because we'd rather they did nothing than go out and steal what they need to live. Someone said that burglary has halved in recent years, because there is little worth stealing. Houses are bulging with stuff, but there is no market for it because everyone has enough money to buy their own. You want to reverse this trend?

In as much as Labour has a policy it is to keep spending and call in the EU/IMF in about two years.

Nail on head: this is also conservative policy! Why do you think they are performing so dismally when you'd think they ought to have every opportunity to trash labour?

The Conservative policy is to get elected then make the necessary cuts.

What they've said is their policy is to get elected and then make tax cuts.

 

[Sergeant_Torpedo]

I wish people would stop parroting what they have heard on the Today programme or read in the Telegraph, and thought for themselves. But that seems impossible for party political members. You were taken in by Thatcher and Blair so you silly buggers deserve everything you get.

 

[TomCat84]

You dont think its because the US has 6x the population and 20 times the land area?

Russia has a huge land area/population too, and it isnt exactly a super power.

 

[Jason]

I hope you would agree that the proper course for a government is to redress the power inequality between employees and employers, and force employers to hand over more of their profits.

Of course not.

Profits have two primary functions:
1) They enable employers to invest, in the business ensuring that their business remains a success, and
2) It is a reward to investors who have taken the risk of supporting the company.

Without (1) every company would become uncompetitive and close down. Without (2) companies could not get started and could not grow.

Handing over a share of profits to employees is an interesting idea in as much as it may motivate employees to work harder, more flexibly, better. There is a place for it. But it is very much in the margins.

Companies where all profits are handed to employees rarely work and rarely survive. Yes there are exceptions - the co-operative movement has shown this - but the idea that the majority of businesses could make this model work has been demonstrated not to work. The biggest problem with socialism as an idea is that it does not work; rather it inevitably leads to poverty and misery.

The specific model of Anglo-Saxon capitalism is clearly under strain. But a form of market-led capitalism is the only social, political and economic system that has ever been shown to work. The betrayal of the people by socialism is that it meddles in markets and inevitably hurts the poorest most. At the end (I hope!) of 13 years of Labour government in Britain we have a situation where the gap between rich and poor has grown, and where between parliaments - 2005-2010 - the UK has actually got poorer with the majority of pain carried by the poorest. This isn't some strange blip; it is the inevitable consequence of a failed concept. Under Thatcher the gap between richest and poorest diminished and the whole country became richer. (Yes I know there were horrible problems too, but Thatcher came to power after the 1970s financial crises).

Employers should be permitted and encouraged to make profits. Management of the economy will ensure that everyone can benefit from this, but in the first place employers should make it.

 

[dandelion]

Russia has a huge land area/population too, and it isnt exactly a super power.

Funny, I thought it was traditionally considered one of only two world superpowers.

 

[dandelion]

Originally Posted by dandelion
I hope you would agree that the proper course for a government is to redress the power inequality between employees and employers, and force employers to hand over more of their profits.

Of course not.

You seem to take a very narrow view of sharing profits. every tax imposed on a business or its employees is effectively taking a share of the profits made by that company. It is foolish of you to suggest that businessmen will not continue to be businessmen just because they have to pay taxes. Thats like saying because it costs money to set up a busines and you have to then pay wages, no one will do it. It is always a question of the balance you strike.

The betrayal of the people by socialism is that it meddles in markets and inevitably hurts the poorest most.

A government makes a law which says I may not steal the money you have stuffed into your mattress. How is that not meddling in markets? The government is preventing me from exercising my natural right, because I am bigger than you, of taking what I want. Every law ever made meddles in markets. The natural law is that the strong prevail. As a society we have decided not to do it that way. You can not claim special privilege for one individual to hold more than any other. The only justification for a law which says you can keep your big pile of money is if I somehow benefit in a way which compensates. You say I may benefit because you kindly give me a job peeling potatoes and allow me to live in a mud hut belonging to you. I say Ill happily peel your potatoes, but only if I get a reasonable cut of the profits being made by your catering supplies firm which sells on the potatoes I just peeled. That is what tax is about in modern society. Fairness.

At the end (I hope!) of 13 years of Labour government in Britain we have a situation where the gap between rich and poor has grown,

My understanding is that this is false. Yes, the gap has grown but the poor in absolute terms also became richer. You are right, we should take steps to close this gap, which means taxing the rich and redistributing this money to the poor. However, I dont think this is conservative policy?

and where between parliaments - 2005-2010 - the UK has actually got poorer with the majority of pain carried by the poorest.

So yet again you blame the labour party for the world recessions originating in dodgy property deals by american banks. Would you respect the views of anyone who made such a claim with a straight face?

Under Thatcher the gap between richest and poorest diminished and the whole country became richer. (Yes I know there were horrible problems too, but Thatcher came to power after the 1970s financial crises).

we need some statistics to support that assertion too.

should be permitted and encouraged to make profits.

Of course. But they should not be allowed to keep more than their fair share, and quite honestly very few are motivated simply by money in building up businesses.

 

[123scotty]

just like to throw another point here. what if the hung westminster parliament was dependent on the s.n.p and not the lib dems. could prove interesting and could happen ?

 

[Jason]

just like to throw another point here. what if the hung westminster parliament was dependent on the s.n.p and not the lib dems. could prove interesting and could happen ?

Yes it could well happen.

Assuming Conservatives are the largest party but a few seats short of a majority I think they would be prepared to make a pragmatic deal with the SNP. I think the deal would be that SNP agree not to vote on issues which wholly affect England (a solution of sorts to the West Lothian question and intrinsically fair) and to support the Conservatives in certain pre-agreed UK issues (basically a budget) in return for an agreed date for a referendum on Scottish independence. I don't think Conservatives would have a fundamental problem with the idea of a referendum, though of course Conservatives favour the Union. Maybe a deal could include PC as well as SNP, and perhaps an agreement could be made with DUP. UUP - now called UCP - is of course in an alliance with the Conservatives already.

I don't think Labour would agree to a referendum in Scotland. After all if Scotland really does go its own way Labour in the UK are mockered. Though I do think Brown would consider a deal with anyone to stay in power.

 

[dandelion]

the snp promised a referendum but the consensus opinion seems to be that they would lose: people would vote to stay within the UK. WHich begs the question of whether the SNP would in reality ask to have one. The hung position of the scottish parliament allows them to sidestep this problems and be defeated on having one. Who says hung parliaments are bad?

I dont quite see why the cons would want the SNP to abstain on english issues, unless you reckon under the principle above this would then allow them to lose gracefully on, say, NHS cuts?

 

[Jason]

The Scottish parliament has limited powers within a small nation, and a design which permits coalitions to work. The UK parliament has much wider powers in a larger nation and is designed so that it only works properly with two parties, a government and an opposition.

Yes SNP are in a bind. The run up to an independence referendum would include sorting out the split of assets and liabilities between Scotland and the new UK of B+NI, which would be done with UN help. The Scottish people would take one look at the UN's figures and say no thank you. Actually I think most in Scotland like the present level of devolution. Conservatives would like a referendum and a no vote to put the issue to bed for another generation. I don't really see how SNP can argue against a referendum however - their whole raison d'etre is to have such a referendum. But the canny folk o' Scotland ken better than til vote fae an independent cuntry of their ain wilst th'economy of the warald is all gan agley. I suppose the reality is that a Con-SNP deal would be difficult - but if I were David Cameron I would sure want someone to sound them out and see what they would want. The win-win would be to float the concept of the Isles with the four home countries, Ireland, Man, Channel Islands and Gibraltar all under a new body and with greater independence to each part. But I dream, it won't happen.

 

[dandelion]

The Scottish parliament has limited powers within a small nation, and a design which permits coalitions to work. The UK parliament has much wider powers in a larger nation and is designed so that it only works properly with two parties, a government and an opposition.

I dont understand what you are saying. There is nothing intrinsic in the UK system which requires there to be two main parties. The only thing which encourages two parties is the archaic voting system, where in most constituencies the result is a forgone conclusion and in the rest a vote for your preferred party has no effect. For most of UK history we did not have a two party system:It is a post-WW2 invention and arguably a consequence of the coming of the labour party which polarised politics. This distinction between the party of the rich and the party of the poor no longer applies.

The prime minister is supposed to be the queens representative in parliament, not the leader of the biggest party. So, for example, if Clegg could run an administration on a vote by vote basis, he would be a good choice for the next prime minister as leader of the third largest party and able to broke deals between the other two.

I suppose the reality is that a Con-SNP deal would be difficult - but if I were David Cameron I would sure want someone to sound them out and see what they would want.

I suspect that in light of the successful experience of the devolved parliaments, they would choose not to have a permanent coalition but to take matters vote by vote. If they did do a deal it would not be about a referendum but more money for scotland.

 

[Jason]

If they did do a deal it would not be about a referendum but more money for scotland.

What a wonderful thought! Give them whatever they want.

 

[dandelion]

What a wonderful thought! Give them whatever they want.

well now, 300 years ago England thought Scotland sufficiently valuable to bribe the country into agreeing to become part of the unitd kingdom. It seems though that the Tories opposed whig plans for the takeover. So maybe positions havnt moved much in 300 years? You know as well as I do that the conservatives had no problems about Scotland so long as it was returning a decent number of conservative MPs.