The chaos of Ed

[Colin L]

and/or c) just a lying politician desperate to hang onto power

 

[Greg]

This:
http://www.thepoke.co.uk/2015/04/01/politicians-faces-folded-truly-terrifying/

 

[Paul R]

It's not about sustainable growth, it's about supporting an economy under very specific circumstances in the aftermath of, in this case, a financial shock.

My concern is that if the act of supporting is also eroding the foundations then the transition back to self supporting is ever less viable. In the case of the UK the economy prior to 2008 was booming on debt, public and private.

Specifically:

-- There are significant unused resources in the economy (essentially a given after a major recession).

-- Private sector actors (households, businesses) are all constrained; in this case by balance sheets and a need to pay off debt.

-- Interest rates are at the zero lower bound meaning conventional monetary policy has no traction.

-- Fiscal Multipliers are > 1 (In fact substantially greater than 1 is more or less agreed by everyone now, at least in hindsight. See the IMF here for example https://www.imf.org/external/pubs/ft/wp/2013/wp1301.pdf)

The principle is obviously indisputable, is it so glibly applicable?

Your thermostat example is (obviously) problematic given that any effect would be unnoticeable. But lets say we can switch of heating in all government buildings and having employees wear extra clothing has no effect on productivity.

If the saving is £50m a year the power companies just lost £50m of income. If the fiscal multiplier is 1.3 the economy just lost £65m aggregate demand. Suppose the power company in response cancels some orders for new plant and this send the already struggling local supplier bankrupt? (i.e. hysteresis effects).

Obviously the ideal time to turn down the thermostat is in good times when productivity improvements and new markets are easier to find.

But let me put the question the other way.

Given all the above and the real terms negative cost of borrowing lets say Parliament has given you £5bn of stimulus spending. We know that simply spending that money will have economic benefits (see the success of the limited Obama stimulus) but can you think of things to do that might have longer term benefits as well?

Loads of them. But I disagree that simply spending gives an economic benefit, especially if it perpetuates inefficiencies. Stimulus could be buying new police cars, or it could be funding charging points for electric vehicles. I found the scrappage scheme deeply offensive on the ground of wastefulness, although it undoubtedly supported the car industry.

Paul

 

[packtech]

The Tory campaign message offers the electorate a stark choice:

David Cameron today, quoted in the Guardian:



Is anyone buying this?

I certainly don't associate decency and competence with the outgoing government. Tax cuts for high earners whilst imposing the bedroom tax. That's not decent. 49 deaths linked to benefit sanctions. That's not decent. The deficit: not eliminated as promised. A much vaunted economic recovery that is still stumbling and stuttering and is a hair's breadth from deflation and stagnation. So not exactly competent either when judged on their own terms.

Hey-ho. Not to worry. The alternative is the chaos of Ed. Project Fear has started.

Never forget the quote from the outgoing Labour party "there's no money left ha ha"..

 

[Brian]

Never forget the quote from the outgoing Labour party "there's no money left ha ha"..

.. thanks to propping up private sector banks.

We'll never know how events would have unfolded had the tory position at the time of letting the banks fail actually been the reality. I do suspect they took that position either because they had no idea what to do, or simply because it was the opposite of what Labour opted for. No doubt if Labour had gone down the tory route they would be castigated for it by tories when it failed.

The lack of honesty over this subject is staggering. Political point scoring and preserving their individual position on the gravy train is all important.

 

[TPA]

A very British revolution:

'What do we want?'

'We're not entirely sure!'

'When do we want it?'

'Whenever's convenient, really. There's no rush'.

You only get a revolution when enough people have got nothing to lose.

I doubt any Poles and other Europeans working in the UK will be joining in either, they're too busy taking advantage of what's on offer. And good luck to them.

I think I'm becoming more supportive of open immigration by the day, they seem to be the hungry bunnies of today.

So yes, I think you're right, our Britishness has reached a new level of lethargy.

 

[russel]

The best way to reduce the budget deficit is not austerity alone. This is being done by the Tories purely for political dogma. The way to reduce the deficit is to grow the economy, the opposite of austerity. .

Yes and if growth is not coming from the private sector then government stimulus is the only other option, the alternative is to write off the debt, which would crash the economy as it did on the 30s in a lot of places the USA being one. Why anyone would want to re run the thirties is beyond me.

 

[Mullardman]

You only get a revolution when enough people have got nothing to lose.

I doubt any Poles and other Europeans working in the UK will be joining in either, they're too busy taking advantage of what's on offer. And good luck to them.

I think I'm becoming more supportive of open immigration by the day, they seem to be the hungry bunnies of today.

So yes, I think you're right, our Britishness has reached a new level of lethargy.

You woke me up to tell me that?

 

[Mullardman]

.. thanks to propping up private sector banks.

We'll never know how events would have unfolded had the tory position at the time of letting the banks fail actually been the reality. I do suspect they took that position either because they had no idea what to do, or simply because it was the opposite of what Labour opted for. No doubt if Labour had gone down the tory route they would be castigated for it by tories when it failed.

The lack of honesty over this subject is staggering. Political point scoring and preserving their individual position on the gravy train is all important.

I was and remain staggered that the only person on the debate tonight to even mention the role of the banks in the 'crash' was the Welsh woman.

Ed even admitted Lab failings over regulation whilst pointing out that Tories wanted more. Ideal point at which to say whatever the regs its was BANKS who transgressed. But he blew it.

Mull

 

[matthewr]

My concern is that if the act of supporting is also eroding the foundations then the transition back to self supporting is ever less viable.

Ah good old Creative Destruction like the 1930s never happened.

In the case of the UK the economy prior to 2008 was booming on debt, public and private.

But the economy still produced all that GDP. The idea that we should lose all those resources because we were in a debt fueled bubble is bizarre.

The principle is obviously indisputable, is it so glibly applicable?

I don't think the suggestion is glib at all given the amount of support, both theory and practical, it has. It's also clearly not nearly as glib as ignoring all this and doing th eopposite, at a massive cost just because "I reckon" and a single paper based o a dodgy Excel spreadsheet.