What do Labour mean by a "growth strategy"?
Discussion
Johnnytheboy said:
Listening to Ed Balls waffling on about the urgent need for measures to promote "growth and jobs" on the radio, I realised that I really didn't appreciate what these growth measures were.
How would he, or most of the Labour front bench know how to create growth - they are all career politicians.None of them have really had to work for a private company, few of them have had to make a payroll (from a non public sector company, and running a firm of solicitors does not count), and so forth.
They think that they understand business, yet haven't a clue. So the only growth they know is how to grow the public sector.
12gauge said:
This is the problem. Our ONLY salvation can come from export led growth.
Why export led? There's nothing wrong with exports, but they're no holy grail either. Politicians targeting things like exports is a really bad idea, as they will take it as a cue to muck around with the currency and things when they realy shouldn't.
Johnnytheboy said:
My broad understanding is that infrastructural investment would have a positive effect on economic activity. But I suspect that this isn't what Labour mean - judging by their record in power.
Indeed! Labour went for the creation of lots of non jobs instead whilst our roads crumbled and rail services stayed in private hands and became prohibitively expensive. Only at the end of their tenure when the economy was totally knackered, did they start to invest in some new read schemes.Add the hundreds of billions spent on wars, plus the money spent on the current Olympic 'jolly', makes it impossible to remotely countenance voting for the incompetent shower!
This austerity experiment is a very recent economic ideology, in the past UK has actually had relatively bigger deficits. For a developed country with their own currency like the UK or America or Japan, running a massive deficit is perfectly possible. The time to reduce it isn't when the economy is in sustained stagnation.
We are looking increasingly exposed and isolated by slavishly sticking with this austerity policy, which by now everyone can see isn't working.
The public sector might not directly produce wealth but all the employees are buying stuff and spending their money and more importantly not being paid rafts of benefits. They are having kids that in turn also want to work and contribute to society. I think we'll really suffer in the longterm from making so many public sector workers and tax payers unemployed. Many of these people will be permanently out of work. The resultant social decay in some areas will have massive implications on the country for decades to come. Much bigger problems than having a deficit does anyway.
We are looking increasingly exposed and isolated by slavishly sticking with this austerity policy, which by now everyone can see isn't working.
The public sector might not directly produce wealth but all the employees are buying stuff and spending their money and more importantly not being paid rafts of benefits. They are having kids that in turn also want to work and contribute to society. I think we'll really suffer in the longterm from making so many public sector workers and tax payers unemployed. Many of these people will be permanently out of work. The resultant social decay in some areas will have massive implications on the country for decades to come. Much bigger problems than having a deficit does anyway.
Edited by el stovey on Wednesday 23 May 06:42
AJS- said:
Why export led?
There's nothing wrong with exports, but they're no holy grail either. Politicians targeting things like exports is a really bad idea, as they will take it as a cue to muck around with the currency and things when they realy shouldn't.
Try saying that in Germany and see what response you get !There's nothing wrong with exports, but they're no holy grail either. Politicians targeting things like exports is a really bad idea, as they will take it as a cue to muck around with the currency and things when they realy shouldn't.
martin84 said:
Its well and good to criticise Ed Balls for not having a growth plan but the more important fact is the actual Government doesn't have one either.
The IMF have essentially told us we need a coherant growth plan which doesnt involve spending money, slowing down cuts or scaring any banks and markets, which is a bit like trying to perform eye surgery wearing one of those American sports foam fingers.
Of course there's a strategy. Cut cost, reduce the deficit, reduce taxes both corporate and personal and growth will follow. The IMF have essentially told us we need a coherant growth plan which doesnt involve spending money, slowing down cuts or scaring any banks and markets, which is a bit like trying to perform eye surgery wearing one of those American sports foam fingers.
Why do people need to obvious spelling out?
For me the only thing wrong is that they aren't hitting costs hard enough in terms of cutting the public sector and reducing benefits to a scroungers.
DSM2 said:
Of course there's a strategy. Cut cost, reduce the deficit, reduce taxes both corporate and personal and growth will follow.
Why do people need to obvious spelling out?
For me the only thing wrong is that they aren't hitting costs hard enough in terms of cutting the public sector and reducing benefits to a scroungers.
Because it's clearly not working. Why do people need to obvious spelling out?
For me the only thing wrong is that they aren't hitting costs hard enough in terms of cutting the public sector and reducing benefits to a scroungers.
Even the government are starting to echo the French socialist leaders (and everyone else's) rejection of austerity policies. You're never going to encourage economic growth by making thousands of people unemployed and putting them on benefits then banging on about cuts and reducing spending.
RichardD said:
AJS- said:
Why export led?
There's nothing wrong with exports, but they're no holy grail either. Politicians targeting things like exports is a really bad idea, as they will take it as a cue to muck around with the currency and things when they realy shouldn't.
Try saying that in Germany and see what response you get !There's nothing wrong with exports, but they're no holy grail either. Politicians targeting things like exports is a really bad idea, as they will take it as a cue to muck around with the currency and things when they realy shouldn't.
el stovey said:
Because it's clearly not working.
Even the government are starting to echo the French socialist leaders (and everyone else's) rejection of austerity policies. You're never going to encourage economic growth by making thousands of people unemployed and putting them on benefits then banging on about cuts and reducing spending.
Why not take that further, just borrow until no one is unemployed. Even if that means employing hundreds of thousands of people as nothing other than "beer testers" in Wetherspoons all day?Even the government are starting to echo the French socialist leaders (and everyone else's) rejection of austerity policies. You're never going to encourage economic growth by making thousands of people unemployed and putting them on benefits then banging on about cuts and reducing spending.
How sustainable is that?
Borrowing money to give jobs seems a good idea short term because some of that money comes back in the form of tax which can be used to pay the interest on the debt, but after a while the debt builds until it is bigger than whatever you get back....
anonymous said:
[redacted]
This.Cutting taxes and allowing the public sector to expand will not ease the flow of investment capital from lenders. Lenders are only going to start releasing capital once the correction required has largely taken place. That correction won't have taken place until the exposure levels carried by the lenders are at acceptable levels.
Following 13 years of free-for-all worry about tomorrow tomorrow politics and economics, the very last thing we need to do now is fall back into that trap.
Instead of wanting the economy to bounce back tomorrow or sooner, we should want the economy to bounce back when it's safe and proper for it to do so- and not before.
I think the problem we have is the wrong political party in power at the wrong time.
In good times (say late 90s to early/mid 00s) if we had thrift then, people would not have noticed it (as the economy was growing, times were "good" etc.) and we could have run a very low (or even no) deficit. Then when times are tough, we can get cheap loans to pay for growth "enablers" (such as large road building schemes, sorting out jams, new/updated train/plane projects etc.) that can make use of the rising unemployed but in creating something that will help growth in the future. n.b. what it doesn't mean is loads more public sector workers!
What we have is the other way round, borrowing ourselves into trouble in the good times when we didn't need to and then little spending, although this is a misnomer as there is still massive spending going on, hardly "savage" (LOL) cuts, when we are in trouble.
So maybe the coalition aren't exactly taking us "out" of trouble but that's a far better option than digging ourselves further into trouble, especially if "growth" doesn't happen.
What Labour (and the rest for that matter) don't seem to realise is the the public sector CANNOT create growth. It can "enable" it (road building, cutting red tape, lower tax etc.) for sure but it's can't create it. Only the private sector can do that.
What the government need to do (whether or not they want to reduce the deficit/debt) is really re-evaluate where the money is spent. Lets have lots more spent on roads (new and repairs), fibre to cab/home for ALL, lower taxation.
Someone mentioned borrowing over a few years for a car, this can make sense as it pays for itself in that you can get to work reliably and effectively pays for itself. On the other hand, borrowing for a holiday, TV etc. is madness.
The other aspect is this - people (politicians/media) are saying "times are hard, how can we fix this?", well news is that we can't "fix" it (no politician would ever admit it) and times WILL have to be hard for a while so we just had to man up and ride through it.
Well, that's my opinion anyway, I'm no economist. That said, most economists don't seem to know or have a solution either...
In good times (say late 90s to early/mid 00s) if we had thrift then, people would not have noticed it (as the economy was growing, times were "good" etc.) and we could have run a very low (or even no) deficit. Then when times are tough, we can get cheap loans to pay for growth "enablers" (such as large road building schemes, sorting out jams, new/updated train/plane projects etc.) that can make use of the rising unemployed but in creating something that will help growth in the future. n.b. what it doesn't mean is loads more public sector workers!
What we have is the other way round, borrowing ourselves into trouble in the good times when we didn't need to and then little spending, although this is a misnomer as there is still massive spending going on, hardly "savage" (LOL) cuts, when we are in trouble.
So maybe the coalition aren't exactly taking us "out" of trouble but that's a far better option than digging ourselves further into trouble, especially if "growth" doesn't happen.
What Labour (and the rest for that matter) don't seem to realise is the the public sector CANNOT create growth. It can "enable" it (road building, cutting red tape, lower tax etc.) for sure but it's can't create it. Only the private sector can do that.
What the government need to do (whether or not they want to reduce the deficit/debt) is really re-evaluate where the money is spent. Lets have lots more spent on roads (new and repairs), fibre to cab/home for ALL, lower taxation.
Someone mentioned borrowing over a few years for a car, this can make sense as it pays for itself in that you can get to work reliably and effectively pays for itself. On the other hand, borrowing for a holiday, TV etc. is madness.
The other aspect is this - people (politicians/media) are saying "times are hard, how can we fix this?", well news is that we can't "fix" it (no politician would ever admit it) and times WILL have to be hard for a while so we just had to man up and ride through it.
Well, that's my opinion anyway, I'm no economist. That said, most economists don't seem to know or have a solution either...
Edited by Dracoro on Wednesday 23 May 10:13
el stovey said:
DSM2 said:
Of course there's a strategy. Cut cost, reduce the deficit, reduce taxes both corporate and personal and growth will follow.
Why do people need to obvious spelling out?
For me the only thing wrong is that they aren't hitting costs hard enough in terms of cutting the public sector and reducing benefits to a scroungers.
Because it's clearly not working. Why do people need to obvious spelling out?
For me the only thing wrong is that they aren't hitting costs hard enough in terms of cutting the public sector and reducing benefits to a scroungers.
Even the government are starting to echo the French socialist leaders (and everyone else's) rejection of austerity policies. You're never going to encourage economic growth by making thousands of people unemployed and putting them on benefits then banging on about cuts and reducing spending.
el stovey said:
Because it's clearly not working.
Even the government are starting to echo the French socialist leaders (and everyone else's) rejection of austerity policies. You're never going to encourage economic growth by making thousands of people unemployed and putting them on benefits then banging on about cuts and reducing spending.
It's not working because the coalition is not actually making any cuts. They need to cut harder and faster, and cut tax.Even the government are starting to echo the French socialist leaders (and everyone else's) rejection of austerity policies. You're never going to encourage economic growth by making thousands of people unemployed and putting them on benefits then banging on about cuts and reducing spending.
Johnnytheboy said:
What do Labour mean by a "growth strategy"?
Max out the credit card then let the "evil" tories sort the mess out, cast them as the bad guy for "cuts", win the next election, max out the credit card, let the "evil" tories sort the mess out, cast them as the bad guy for "cuts", win the next election, max out the credit card, let the "evil" tories sort the mess out, cast them as the bad guy for "cuts", win the next election, max out the credit card, let the "evil" tories sort the mess out, cast them as the bad guy for "cuts", win the next election, max out the credit card, let the "evil" tories sort the mess out, cast them as the bad guy for "cuts", win the next election, max out the credit card, let the "evil" tories sort the mess out, cast them as the bad guy for "cuts", win the next election, max out the credit card, let the "evil" tories sort the mess out, cast them as the bad guy for "cuts", win the next election, max out the credit card, let the "evil" tories sort the mess out, cast them as the bad guy for "cuts", win the next election.Is that about it?
Mr GrimNasty said:
Christine Lagarde(IMF):
"...you see the gain that resulted from the fiscal consolidation that was decided on 2 years ago has been that result, the credibility of the UK government and it's ability to borrow at extremely favourable rates."
"And when I think back myself to May 2010, when the UK deficit was at 11% and I try to imagine what the situation would be like today if no such fiscal consolidation programme had been decided... I shiver."
In those few words you have the confirmation of New Labour's incompetence, and the confirmation of the fact that DC and the Tories have achieved a minor miracle so far.
She appears to be a rare beast - a politician who actually knows more than zero about the subject of conversation."...you see the gain that resulted from the fiscal consolidation that was decided on 2 years ago has been that result, the credibility of the UK government and it's ability to borrow at extremely favourable rates."
"And when I think back myself to May 2010, when the UK deficit was at 11% and I try to imagine what the situation would be like today if no such fiscal consolidation programme had been decided... I shiver."
In those few words you have the confirmation of New Labour's incompetence, and the confirmation of the fact that DC and the Tories have achieved a minor miracle so far.
Asterix said:
She appears to be a rare beast - a politician who actually knows more than zero about the subject of conversation.
Er...not sure about that. Reading between the lines of the IMF report it seemed to suggest that the government should borrow more and cut interest rates!From Stephanie Flanders:
"...Here the fund was pretty explicit - the Treasury should buy private bonds to help ease the credit constraints on UK businesses (something Mr Osborne and even Chancellor Darling talked about - but has still not happened). It should also exploit the current low cost of government borrowing in support of more private investment.
A tighter squeeze on public sector pay, in exchange for greater investment in public infrastructure, is another thing the fund says the government should try..."
el stovey said:
This austerity experiment is a very recent economic ideology, in the past UK has actually had relatively bigger deficits. For a developed country with their own currency like the UK or America or Japan, running a massive deficit is perfectly possible. The time to reduce it isn't when the economy is in sustained stagnation.
We are looking increasingly exposed and isolated by slavishly sticking with this austerity policy, which by now everyone can see isn't working.
The public sector might not directly produce wealth but all the employees are buying stuff and spending their money and more importantly not being paid rafts of benefits. They are having kids that in turn also want to work and contribute to society. I think we'll really suffer in the longterm from making so many public sector workers and tax payers unemployed. Many of these people will be permanently out of work. The resultant social decay in some areas will have massive implications on the country for decades to come. Much bigger problems than having a deficit does anyway.
Austerity is by no means a recent economic ideology.We are looking increasingly exposed and isolated by slavishly sticking with this austerity policy, which by now everyone can see isn't working.
The public sector might not directly produce wealth but all the employees are buying stuff and spending their money and more importantly not being paid rafts of benefits. They are having kids that in turn also want to work and contribute to society. I think we'll really suffer in the longterm from making so many public sector workers and tax payers unemployed. Many of these people will be permanently out of work. The resultant social decay in some areas will have massive implications on the country for decades to come. Much bigger problems than having a deficit does anyway.
Edited by el stovey on Wednesday 23 May 06:42
The last time the UK had a deficit as bad as it was 2yrs ago was WW2.
Whilst running a "massive deficit" is possible, it is neither beneficial or sustainable. Whether you have a sovereign currency or not.
The UK austerity policy actually means we are borrowing at a slightly reduced rate than we were 2 years ago. We are still planning to spend well over £700 billion this year, whilst projected receipts are £591 - so whilst the deficit has been reduced by a quarter in 2yrs, it's still over 8% of GDP (Maastricht criteria is 3%...).
Many hundreds of thousands of private sector jobs have gone over the past 4yrs. It's a recession - that happens. I'm lost as to how you imagine that we could sustain an already bloated public sector with the resultant loss in tax receipts that occured as a consequence of the recession?
anonymous said:
[redacted]
True. I read it in the Graun and the SWP as well, so it must be plausible.Over in Septic land the riposte went a bit like this http://www.youtube.com/watch?v=661pi6K-8WQ
Gassing Station | News, Politics & Economics | Top of Page | What's New | My Stuff