Budget Cuts don't work?
Discussion
For the sake of argument.
Lots of people on PH have applauded the current governments approach to making significant cuts to public spending in order to reduced the budget deficit. Could this be counter productive a lead to a further downturn in the economy?
Ireland was in a similar position to the UK and significantly cut public spending but the results don't seem that positive.
"Ireland's struggling economy suffered a fresh blow after growth contracted in the second quarter, heigthening the risk that the indebted nation could suffer a double-dip recession.
The Irish economy shrank by 1.2pc between April and June compared with the first three months of 2010, the Central Statistics Office said.
This followed a rise of 2.2pc in the first quarter - the first gain since 2007.
Thursday's data came as a shock as most economists had expected a further quarter of growth to show the country was building on its recovery. Some commentators said it called into question the EU and IMF strategy to deal with the European debt crisis.
Ireland has done all that has been asked of it, imposing harsh austerity measures in an effort to slash its huge budget deficit following a property crash that triggered a deep recession and a massive bank bailout."
source
Does this indicate that the UK is on the wrong path, Gordon was right all along and the best way out for Ireland, Greece and the rest is a default?
Lots of people on PH have applauded the current governments approach to making significant cuts to public spending in order to reduced the budget deficit. Could this be counter productive a lead to a further downturn in the economy?
Ireland was in a similar position to the UK and significantly cut public spending but the results don't seem that positive.
"Ireland's struggling economy suffered a fresh blow after growth contracted in the second quarter, heigthening the risk that the indebted nation could suffer a double-dip recession.
The Irish economy shrank by 1.2pc between April and June compared with the first three months of 2010, the Central Statistics Office said.
This followed a rise of 2.2pc in the first quarter - the first gain since 2007.
Thursday's data came as a shock as most economists had expected a further quarter of growth to show the country was building on its recovery. Some commentators said it called into question the EU and IMF strategy to deal with the European debt crisis.
Ireland has done all that has been asked of it, imposing harsh austerity measures in an effort to slash its huge budget deficit following a property crash that triggered a deep recession and a massive bank bailout."
source
Does this indicate that the UK is on the wrong path, Gordon was right all along and the best way out for Ireland, Greece and the rest is a default?
Fittster said:
For the sake of argument.
Lots of people on PH have applauded the current governments approach to making significant cuts to public spending in order to reduced the budget deficit. Could this be counter productive a lead to a further downturn in the economy?
Ireland was in a similar position to the UK and significantly cut public spending but the results don't seem that positive.
"Ireland's struggling economy suffered a fresh blow after growth contracted in the second quarter, heigthening the risk that the indebted nation could suffer a double-dip recession.
The Irish economy shrank by 1.2pc between April and June compared with the first three months of 2010, the Central Statistics Office said.
This followed a rise of 2.2pc in the first quarter - the first gain since 2007.
Thursday's data came as a shock as most economists had expected a further quarter of growth to show the country was building on its recovery. Some commentators said it called into question the EU and IMF strategy to deal with the European debt crisis.
Ireland has done all that has been asked of it, imposing harsh austerity measures in an effort to slash its huge budget deficit following a property crash that triggered a deep recession and a massive bank bailout."
source
Does this indicate that the UK is on the wrong path, Gordon was right all along and the best way out for Ireland, Greece and the rest is a default?
Surely it's more dependant on WHAT is slashed isn't it? If they slashed benefits for all these feckless chavs we're breeding, that won't equal a reduction in jobs. If they (had the balls) to slash or scrap, for a few years, the over seas aid, again that would not impact on UK jobs (much).Lots of people on PH have applauded the current governments approach to making significant cuts to public spending in order to reduced the budget deficit. Could this be counter productive a lead to a further downturn in the economy?
Ireland was in a similar position to the UK and significantly cut public spending but the results don't seem that positive.
"Ireland's struggling economy suffered a fresh blow after growth contracted in the second quarter, heigthening the risk that the indebted nation could suffer a double-dip recession.
The Irish economy shrank by 1.2pc between April and June compared with the first three months of 2010, the Central Statistics Office said.
This followed a rise of 2.2pc in the first quarter - the first gain since 2007.
Thursday's data came as a shock as most economists had expected a further quarter of growth to show the country was building on its recovery. Some commentators said it called into question the EU and IMF strategy to deal with the European debt crisis.
Ireland has done all that has been asked of it, imposing harsh austerity measures in an effort to slash its huge budget deficit following a property crash that triggered a deep recession and a massive bank bailout."
source
Does this indicate that the UK is on the wrong path, Gordon was right all along and the best way out for Ireland, Greece and the rest is a default?
They need to reduce the NHS budget, so that theNHS is forced to be more efficient. Ban hospitals from hiring staff from agencies, and ensure that they pay the nurses what the agencies pay them. Why pay 3x a salary for the same person, it's ludicrous?
Education, well, if figures are to be believed (which I don't), then our education system is fantastic, every year there are more A-Level passes and degree passes, so why does it need more money? Schools that are falling down? Well, if they were managed and maintained properly in the first place, instead of waiting for the buildings to be condemned. An expensive shiny new school wouln't be required. There are plenty of buildings in this country which have remained operational because they're properly maintained.
Finally, they should stop throwing money away chasing the myth that is MMGW.
All in my humble opinion of course.
12gauge said:
Fittster said:
Does this indicate that the UK is on the wrong path, Gordon was right all along and the best way out for Ireland, Greece and the rest is a default?
When did Gordon say the best way out is a 'default'?Fittster said:
12gauge said:
Fittster said:
Does this indicate that the UK is on the wrong path, Gordon was right all along and the best way out for Ireland, Greece and the rest is a default?
When did Gordon say the best way out is a 'default'?In short, either way we're screwed. Getting poorer is the only way out, via either taxes, cuts or inflation. Unless they allowed bank (and maybe sovereign) defaults to occur. We've reached a saturation point where people cant take on more debt, even at near zero % interest. Gordon was wrong to force people to take on more debt, Cameron is wrong to cut while ignoring the basic cause, of the money supply year after year exceeding growth and earnings. Past wrongs need to be corrected, debts need to be defaulted on.
Though id question the premise of a 'double dip'. Given the govt is borrowing >10% of GDP to deliver 1 or 2% growth, thats suggestive of the private sector still contracting by 8% or so a year, it never recovered, so it cant be a 'double' dip.
The only answer i can give is that nothing aside from abandoning our current system will "work". Gordon was an idiot for constantly putting off the inevitable, Cameron isnt much better for his window dressing approach without attacking the root of the problem. The system is inherently unsustainable, and its reached the end of the road.
Slashing public spending is madness when you are trying to exit a recession. Even if you don't give a monkey's about the destruction of peoples' jobs in the public sector, you still have to agree that there is a direct knock-on effect on private sector businesses, which will be crippled by cuts.
This problem needs to be dealt with gradually and over a long term (10 years+)
This problem needs to be dealt with gradually and over a long term (10 years+)
The gubberment will shortly QE again, to pay its own bills, they dont care about normal peoples problems , the political establishment have indexed linked pensions and above inflation pay rises etc, dont get me started on expenses. The upper end of the public sector, share these same benefits.
So they can borrow money and print money to pay themselves handsomely and buy a paid for voting base. Bargain!. But private sector workers have... well we all know really, less of everything. Its now a two tier country.
So they can borrow money and print money to pay themselves handsomely and buy a paid for voting base. Bargain!. But private sector workers have... well we all know really, less of everything. Its now a two tier country.
The private sector is not dependent on public sector non-jobs, though parts are dependent on public sector spending. Provided the cuts are accurately targeted, and I realise that middle sector management will try to get the front line sacked for maximum effect, there need not be a huge knock-on.
What is massively dependent on public sector non-jobs is Labour's voter base, and they deserve what Gordon has done to the country.
What is massively dependent on public sector non-jobs is Labour's voter base, and they deserve what Gordon has done to the country.
Fittster said:
For the sake of argument.
Lots of people on PH have applauded the current governments approach to making significant cuts to public spending in order to reduced the budget deficit. Could this be counter productive a lead to a further downturn in the economy?
Ireland was in a similar position to the UK and significantly cut public spending but the results don't seem that positive.
"Ireland's struggling economy suffered a fresh blow after growth contracted in the second quarter, heigthening the risk that the indebted nation could suffer a double-dip recession.
The Irish economy shrank by 1.2pc between April and June compared with the first three months of 2010, the Central Statistics Office said.
This followed a rise of 2.2pc in the first quarter - the first gain since 2007.
Thursday's data came as a shock as most economists had expected a further quarter of growth to show the country was building on its recovery. Some commentators said it called into question the EU and IMF strategy to deal with the European debt crisis.
Ireland has done all that has been asked of it, imposing harsh austerity measures in an effort to slash its huge budget deficit following a property crash that triggered a deep recession and a massive bank bailout."
source
Does this indicate that the UK is on the wrong path, Gordon was right all along and the best way out for Ireland, Greece and the rest is a default?
What is the formula for GDP?Lots of people on PH have applauded the current governments approach to making significant cuts to public spending in order to reduced the budget deficit. Could this be counter productive a lead to a further downturn in the economy?
Ireland was in a similar position to the UK and significantly cut public spending but the results don't seem that positive.
"Ireland's struggling economy suffered a fresh blow after growth contracted in the second quarter, heigthening the risk that the indebted nation could suffer a double-dip recession.
The Irish economy shrank by 1.2pc between April and June compared with the first three months of 2010, the Central Statistics Office said.
This followed a rise of 2.2pc in the first quarter - the first gain since 2007.
Thursday's data came as a shock as most economists had expected a further quarter of growth to show the country was building on its recovery. Some commentators said it called into question the EU and IMF strategy to deal with the European debt crisis.
Ireland has done all that has been asked of it, imposing harsh austerity measures in an effort to slash its huge budget deficit following a property crash that triggered a deep recession and a massive bank bailout."
source
Does this indicate that the UK is on the wrong path, Gordon was right all along and the best way out for Ireland, Greece and the rest is a default?
The best plan would have been not massively inflating the state in the first place, but it's too late for that.
The other good plan would've been running surpluses in good times so this wouldn't be an issue, but it's too late for that too.
Not cutting the size of state spending is beyond argument, it's just a matter of timing now.
The other good plan would've been running surpluses in good times so this wouldn't be an issue, but it's too late for that too.
Not cutting the size of state spending is beyond argument, it's just a matter of timing now.
Just goes to show how little the "official" figures are linked to the "actual" situation. If the "recovery" is funded by borrowing and printing money (with the subsequent effect on inflation) it is not a recovery the country is still in recession and the figures are being massaged up. I would cut whole grades out of the civil service (all EOs HEOs or "band 5s to 7s") - reduce the number of MPs by half and cancel all payments to the EU until their books are signed off. That's just the start.
BOR said:
Slashing public spending is madness when you are trying to exit a recession. Even if you don't give a monkey's about the destruction of peoples' jobs in the public sector, you still have to agree that there is a direct knock-on effect on private sector businesses, which will be crippled by cuts.
This problem needs to be dealt with gradually and over a long term (10 years+)
Deficit cut n Germany. Growing economy. Go figure?This problem needs to be dealt with gradually and over a long term (10 years+)
Comparing UK to Ireland to Germany is folly. They are different economies.
Given a choice of a government taxing me more to make up for their reckless spending on things I probably don't agree with or cutting budgets left right and centre and taxing me the same or less I'll pick the budget cuts every time.
The issue is though what ought to be cut? A lot of quangos are being abolished and in some cases that will be good, but in many cases they just need to be run properly without the staff going on OTT junkets and charging ridiculous sums for dinner & hotels when putting the expense system on a par with middle management of blue chip companies would be perfectly fair and a lot more reasonable on cost.
To me the bloated system of benefits needs streamlining - for example if you changed the tax structure so that a married couple with 2 kids earnt the same after benefits were eliminated for them there would be no loss in income to the family but the cost of administration would drop. So we need these sorts of efficiencies.
I think the problem has been that the budget cuts haven't been severe enough, and people are paying so much in tax that they're unable to boost the economy sufficiently at present.
The issue is though what ought to be cut? A lot of quangos are being abolished and in some cases that will be good, but in many cases they just need to be run properly without the staff going on OTT junkets and charging ridiculous sums for dinner & hotels when putting the expense system on a par with middle management of blue chip companies would be perfectly fair and a lot more reasonable on cost.
To me the bloated system of benefits needs streamlining - for example if you changed the tax structure so that a married couple with 2 kids earnt the same after benefits were eliminated for them there would be no loss in income to the family but the cost of administration would drop. So we need these sorts of efficiencies.
I think the problem has been that the budget cuts haven't been severe enough, and people are paying so much in tax that they're unable to boost the economy sufficiently at present.
BOR said:
Slashing public spending is madness when you are trying to exit a recession. Even if you don't give a monkey's about the destruction of peoples' jobs in the public sector, you still have to agree that there is a direct knock-on effect on private sector businesses, which will be crippled by cuts.
This problem needs to be dealt with gradually and over a long term (10 years+)
I doubt you've ever heard of compound interest.This problem needs to be dealt with gradually and over a long term (10 years+)
I think one of the problems here is that of using GDP to measure 'growth'. If the Govt goes out and borrows a load of money it can't afford to repay and then spends it on really stupid things, that counts towards GDP growth. If the Govt holds interest rates down and individuals go out and borrow money they can't afford to repay, and use it to buy Chinese flat screen TVs that last about two weeks longer than the warranty, that also counts towards GDP growth. So you can create a fairly substantial amount of 'growth' without anyone doing any actual work, which is what the UK and Ireland have been doing for most of the last 20 years.
Unwind that situation by cutting debt-fuelled spending on stupid things, as Ireland is trying to do, and the GDP figures will look pretty sickly. The problem isn't the policy, it's the way the results are measured. The only way to long term prosperity is to create more wealth than we consume, and creating wealth is one thing that governments don't do.
Unwind that situation by cutting debt-fuelled spending on stupid things, as Ireland is trying to do, and the GDP figures will look pretty sickly. The problem isn't the policy, it's the way the results are measured. The only way to long term prosperity is to create more wealth than we consume, and creating wealth is one thing that governments don't do.
230TE said:
The only way to long term prosperity is to create more wealth than we consume, and creating wealth is one thing that governments don't do.
So subsidising companies or industry that long term make a profit (ie Bank Bailouts), driving economic policy to attract investment and retain business, trade treaties etc don't generate wealth?Bing o said:
230TE said:
The only way to long term prosperity is to create more wealth than we consume, and creating wealth is one thing that governments don't do.
So subsidising companies or industry that long term make a profit (ie Bank Bailouts), driving economic policy to attract investment and retain business, trade treaties etc don't generate wealth?Bing o said:
230TE said:
The only way to long term prosperity is to create more wealth than we consume, and creating wealth is one thing that governments don't do.
So subsidising companies or industry that long term make a profit (ie Bank Bailouts), driving economic policy to attract investment and retain business, trade treaties etc don't generate wealth?Gassing Station | News, Politics & Economics | Top of Page | What's New | My Stuff