General politics discussion thread

[Loki]

Even aside from that, consider this - everyone who works in the public sector is effectively not bringing in money into the economy.

 

Schools teach the people who go on to run businesses. Roads and railways help private sector workers get to work. Hospitals help people get better to they can return to working for companies. Police help increase the chances people actually get to work rather than being stabbed or blown up.

 

Yes, but in the business analogy they're still running costs.

 

Think of a solicitors firm - I'm sure there are a few people here who work for one. The support staff (secretaries, receptionists, IT, HR) are of course vital for the running of the firm, and all play their part, but it's only the fee earners, the solicitors, who actually bring money in to the company.

 

If you have too many support staff, the income generated by the solicitors doesn't cover the costs of employing everyone and the firm goes out of business. So it is with any country - if the cost of running the public services is too high we run out of money!

 

Having had a chance to consider Carbomb's article a bit more, I'd say this - the concept of public spending to get yourself out of a recession is all very well, but it relies on having built up reserves during the good times to defray some of that extra cost. That's why, when the Tories accuse Brown of not mending the roof when the sun was shining, they are indeed correct. Rather than cutting back on public expenditure during the boom and building up a reserve through modest tax increases, he actually cut taxes and increased public spending.

 

So now that the lean times are here again, there's nothing in the cupboard.

[Ronnie]

Any economists on here who disagree? Please go ahead and present counters and whatnot.

I suppose I'm likely to be the nearest thing to an economist here. (I started my PhD in economics several years after completing my MSc; I was quickly reminded how much I dislike the subject shortly after starting, so resigned after a year. Blame it on Freakonomics for tricking me into thinking that it would be fun.)

 

It's not a case of being able to disagree with what was written so much as simply having a different opinion. It's rather like religion in that way, where some people will decry another's when there's ultimately nothing by way of proof to justify one's holding of one belief over some other.

 

The article that you quoted is big on Keynesian arguments, but it's worth bearing in mind that there are other schools of thought. (Keynesian economics (roughly "governments should spend their way out of a recession") became outmoded decades ago, as the monetarist school of thought (roughly "manipulate the stock of money to resolve recessions", which we've seen with quantitative easing) became the dominant one. Since then there have been "Real Business Cyclists", "New Keynesians" and so forth.)

 

Nobody can say what the "correct" approach happens to be, or even confirm when one approach has done better than another might have. For example, FDR is commonly lauded for his mastery of the economy during the Great Depression, where he implemented Keynesian policies. However, I read a book called "FDR's Folly" where he was blamed for exacerbating the Depression, and where the author was meticulous in indicating what he did wrong, the damage each action caused, and why a monetarist approach would have worked. And Ben Bernanke, head of the Fed, said in the recent past to monetarist pioneers Milton Friedman and Anna Schwartz "Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you [for introducing the monetarist theories], we won't do it again."

 

When Nobel Prize-winning economists are bickering between themselves on this very subject, then how can any of us expect to credibly tie our flags to the mast and say whether we support or refute Krugman's words? We couldn't and shouldn't.

[Mr.Showtime]

Loki is right in the points he/she was bringing up on the last page. We've not had a coalition government in so long, and now it looks as though really the Lib Dems didn't push for as much as they wanted. The thing that does my head in the most though, is that almost everybody apart from die-hard Labour supporters dismissed the Labour stance on things up til the election. As soon as the election is done and dusted and the new coalition get a few months doing their biz, all of a sudden the same old idiots who we ousted - Balls, Andy Burnham, Darling, Douglas Alexander, Jim Murphy - are ALL on the television telling us, the public, that they are in the right and the new folks are wrong! If a party gets chucked from being large and in charge, why would you keep ANY of them in the frontline? At least Darling decided to take somewhat of a backseat. Ed Balls, thanks to his past, is now totally ineffectual to me and a hindrance to the Edward Milibandwagon.

 

But yeah, Loki's right.

[Bashar]

That's why, when the Tories accuse Brown of not mending the roof when the sun was shining, they are indeed correct. Rather than cutting back on public expenditure during the boom and building up a reserve through modest tax increases, he actually cut taxes and increased public spending.

 

So now that the lean times are here again, there's nothing in the cupboard.

 

This is true, but David Cameron was broadly supportive of these levels of spending at the time. And as for Ben Bernanke:

 

As a Member of the Board of Governors of the Federal Reserve System on February 20, 2004, Bernanke gave a speech: The Great Moderation, where he postulated that we are in a new era, where modern macroeconomic policy has decreased the volatility of the business cycle to the point that it should no longer be a central issue in economics.

 

Before 'deficit denial', there was an seemingly universal belief that economic cycles had been transcended. So basically anyone who was involved monetary/fiscal policy in the last few years is tainted, including much of the Tory-lead frontbench.

[Happ Hazzard]

The Tories were just saying what people wanted to hear. Given a choice between a party who say good times are here forever, and a party who foresee upcoming economic doom, which do you think people will be inclined to vote for?

[David]

The Tories were just saying what people wanted to hear. Given a choice between a party who say good times are here forever, and a party who foresee upcoming economic doom, which do you think people will be inclined to vote for?

So they just bullshit us in order to get our vote? I think the majority of people know that this is what politicians do, but you aren't trying to justify such tactics surely?

[Happ Hazzard]

The Tories were just saying what people wanted to hear. Given a choice between a party who say good times are here forever, and a party who foresee upcoming economic doom, which do you think people will be inclined to vote for?

So they just bullshit us in order to get our vote? I think the majority of people know that this is what politicians do, but you aren't trying to justify such tactics surely?

I don't think it needs to be justified. It's just part of politics. Part of life in general really.

[Yoghurt]

His favourite politician was just put in jail for lying in court over and over again and he trots that out.

[Happ Hazzard]

His favourite politician was just put in jail for lying in court over and over again and he trots that out.

Who is my favourite politician?

[Loki]

I think he means David and Tommy "convicted liar" Sheridan.

[Bashar]

The Tories were just saying what people wanted to hear.

 

I'm not convinced - I think Cameron basically did believe, like Brown and Bernanke, in the 'Great Moderation'. I don't buy into the idea that 5 years ago Cameron was intent on smashing the state. Much of what is actually happening now in government is minister-lead - Andrew Lansley told him that Health was his department and he'll run it as he sees fit. Other ministers have said similar things to him.

[Happ Hazzard]

"Smashing the state"? Do you mean "running the country in a way we can afford"?

 

I can't beleive the delusions of grandeur some people have about Britain, not to mention the ridiculous sense of entitlement. The welfare state is basically a failed experiment at this point. It has been a massive negative to Britain, and has prevented us from moving forward into the post-industrial age. As a result, we've fallen far down the pecking order in the last 65 years, and will continue to fall until people get it into their heads that the government is not responsible for providing for them from cradle to grave.

[Bashar]

"Smashing the state"? Do you mean "running the country in a way we can afford"?

 

I can't beleive the delusions of grandeur some people have about Britain, not to mention the ridiculous sense of entitlement. The welfare state is basically a failed experiment at this point. It has been a massive negative to Britain, and has prevented us from moving forward into the post-industrial age. As a result, we've fallen far down the pecking order in the last 65 years, and will continue to fall until people get it into their heads that the government is not responsible for providing for them from cradle to grave.

 

Smashing the state is a term that anarcho-capitalists use frequently enough, it's just plain weird for you to use that as a basis for going on some strange rant utilising the usual right-wing waffle.

[Van Dammer]

"Smashing the state"? Do you mean "running the country in a way we can afford"?

 

I can't beleive the delusions of grandeur some people have about Britain, not to mention the ridiculous sense of entitlement. The welfare state is basically a failed experiment at this point. It has been a massive negative to Britain, and has prevented us from moving forward into the post-industrial age. As a result, we've fallen far down the pecking order in the last 65 years, and will continue to fall until people get it into their heads that the government is not responsible for providing for them from cradle to grave.

 

Quite right and it cant and wont work with a rising and ageing population which is what we have. Welfare states are meant to be run for the exceptions to the rules, not for the vast majority.

[Bashar]

"Smashing the state"? Do you mean "running the country in a way we can afford"?

 

I can't beleive the delusions of grandeur some people have about Britain, not to mention the ridiculous sense of entitlement. The welfare state is basically a failed experiment at this point. It has been a massive negative to Britain, and has prevented us from moving forward into the post-industrial age. As a result, we've fallen far down the pecking order in the last 65 years, and will continue to fall until people get it into their heads that the government is not responsible for providing for them from cradle to grave.

 

Quite right and it cant and wont work with a rising and ageing population which is what we have. Welfare states are meant to be run for the exceptions to the rules, not for the vast majority.

 

Do you consider the state pension to be welfare? The NHS? Primary and Secondary education?