UKH

• Labour announce an extra £150 billion of borrowing on top the £250 billion already announced and the £195 billion for the renationalisation programme, equivalent to £9,000 for every person in the UK. Thus taking borrowing back to levels not seen since the 1960's when we were still paying off war debt. According to the IFS they can't actually spend money that fast.
• Tom Watson throws in the towel, hounded out of the party by the hard left, thus removing the last obstacle to Corbyn's ideological purge of the party moderates.
• Ian Austin, Labour party member for 34 years, steps down as MP and encourages his constituents to vote for Boris Johnson saying    "There are only two people who can be prime minister on 13 December: Jeremy Corbyn or Boris Johnson and I think Jeremy Corbyn is completely unfit to lead our country, completely unfit to lead the Labour Party" https://www.independent.co.uk/news/uk/politics/general-election-latest-bori...

"Tom Watson throws in the towel"

Keir Starmer probably has an extra spring in his step this morning.

- Sajid Javid looking to take capital investment out of borrowing figures in very "Gordon Brown" like way.

- Johnson's purge already completed by day one so he's outpurged Jeremy Stalin on that one.

- Ian Austin, who campaigned for migrants to go to the bottom of housing lists finally realises he's in the wrong party.

- James Cleverly replaced as Party Chairman by actual chair after it outperforms him in interview with Kay Burley.

Okay, the last one might not be true.

Where are your figures on your first bullet point coming from?

Tough choice isn't it.

A party which has comprehensively proven itself unable to run the country over the past nine years, or one which shows all signs of being unable to.

Let me stop you there:

"The Confederation of British Industry has admitted it exaggerated the “eye-watering” £196bn price tag that it claimed Labour’s nationalisation plans would cost."

https://www.theguardian.com/business/2019/oct/16/cbi-admits-error-in-196bn-...

But it is true. The chair didn't say anything stupid, or behave stupidly.

Always seems a bit odd when borrowing figures are presented like this as though they are costs. Few would bat an eyelid at the idea of borrowing many times more than this per person in order to buy a house, knowing that by doing so, despite the very substantial mortgage interest payments, they would be saving themselves the burden of paying very high rent, while usually enjoying greater freedom to modify their home the way they choose.

It isn't the value of the borrowing that's most important, it's how you plan to pay the interest and what you do with the borrowed funds - which is a different issue entirely.

Better sticking to the party of sound economic management then...

https://www.theguardian.com/politics/2019/oct/29/uk-treasury-on-course-to-e...

Already feeling ill from seeing the intentionally bad design on all the tory banners and logos.  Clearly the work of the Aussie outfit brought in to do what they did down under.  Its a thing apparently to use bad fonts and bad design to appeal to a populist demographic whether ironic or not.  Fecking awful and the hand of Cummings and co at work.  

Ian Austin, what a total utter prick!

F*ck off and enjoy your retirement.

Ha Ha using the Tory representations to frighten people again, what a ridiculous statistic to use. Trying to make out we'll all be paying £9k is like Jonson saying he the only honest politician.

Hardly hounded, if you read his letter, it was for personal reasons. But obviously you may believe what you like.

Is this the same beacon of enlightenment who suggested immigrants go to the bottom of the housing list, they same one who while condemning anti-Semitism is promoting voting for the most overtly racist PM we've probably ever had ( and a party not facing up to it's own allegations of racism), the same bloke that had "irregularities" in his expenses, Who voted against Yvette Cooper's amendment to prevent no deal Brexit, and the same bloke who managed to turn a 17,000 majority into something like 22.

He jumped before he was humiliated by HIS constituents, and any ex-Labour party MP suggesting they vote for the Tories, can be seen as nothing more than a traitor, no matter what he thinks of Corbyn (which were all well aware of) suggesting the Tories will look after the people who need help the most is simply bonkers.

* sorry just realise I repeated some of the above here, but it probably deserves repeating to be honest.

Interesting! Do you have a link?

I'm not a Tory fan at all but like looking at discordant fonts/designs.

Also I just read this which echoes back to the rise of the third reich.

"Hitler...puts no limit on what can be done by propaganda; people will believe anything, provided they are told it often enough and emphatically enough, and that contradicters are either silenced or smothered in calumny."

https://en.wikipedia.org/wiki/Propaganda

Some things don't change and now is a dangerous/shameful time in UK's history.

Some basic fact checks on BJs speech

https://www.bbc.co.uk/news/uk-politics-50317404?SThisFB&fbclid=IwAR2l3z...

You forgot that Ian was working for the government since July as trade envoy to Isreal.

I didn't even know that, already taken his 5 pieces of silver then?

Have we mentioned the delightful Tory candidate for Broadland yet? The one who said:

"I think women need to be more aware of a man's sexual desire, that when you're in that position that you are about to engage in sexual activity, there's a huge amount of energy in the male body, there's a huge amount of will and intent, and it's very difficult for many men to say no when they are whipped up into a bit of a storm. It's the old adage about if you yank a dog's tail then don't be surprised when it bites you."

It had to be done

Have you read his Wiki page?  The guy's a rabid Tory!  Adios Ian.

Similar situation to 1997. Years of Tory cuts run down public services and labour have to spend to restore and improve them.

Except in 1997 Labour were not led by an economically illiterate cretin...

Vote a proven racist liar as PM for the next 5 years then?
Good choice!

This is over ten tears. The green new deal is a brilliant regenerative idea that could give the UK a huge boost in expertise and marketable products and services, while decarbonising our infrastructure - it should have been done years ago.

Public services need money spending on them or they end up getting worse - as the tories have proved outstandingly.

Renationalisation of strategic industries like power generation and distribution, water supply etc are also sensible. Publicly owned industries can be run just as efficiently as private ones - possibly more so when there are statutory duties put on them and no shareholders to pay.

Labour were going to get my tactical vote anyway, the more policy I see the less tactical it becomes.

It's not to be ironic. It's so that opponents will unintentionally amplify the Tory propaganda around their social media circles because when you say let's all have a laugh at this terrible type face you are actually getting people to read the Tory lies. Don't fall into that trap.

Ha, ha! The chair behaved relatively cleverly!

Maybe it's time that we all got smarter and stopped supporting the shambolic charade of party politics?

They all take us for fools and party supporters of all shades fall for it time after time.

I won't be voting for that cretin either....

All aboard the No Deal express with BJ and his mad ERG passengers

or 

Book yourself on the Bankrupt train with Jezza and his fellow momentum nutcases

No thanks to either...

Surely, it's the chancellor that does the budgetary calculations, it might be useful if you could support you case that Labour's plans are illiterate.

Better than Cleverly.

At least it'll be a nationalised train and not a privatised one.

And by not voting, you're giving the Tories a better chance of staying in power.

As a progressive centrist the only way I can see to get there is to vote to get a minority Labour government where Corbyn is neutered and the parties involved are forced to cooperate. Even for traditional 'wet' style tories the implications of what Boris is doing to their party must be horrifying (why the likes of Mathew Parris has joined the Lib Dems). I can see a realignment of both main parties back to the centre if Boris loses (as a minority amounts to a defeat for Corbyn as well). If Boris wins I can only see division and extremism increasing in the UK.

Heres the info about the team.

https://www.theguardian.com/politics/2019/oct/23/tories-hire-facebook-propa...

Just keep an eye out for the podium graphics which will change every day - no coherent identity (again, on purpose). 

Aye - its ok, its my trade.  And no fear of spreading it apart from highlighting it here... no more Facebook for me anymore.

Yes, and I, perhaps opotimistically, think this is the most likely outcome, hopefully leading to a second refernedum as the only way to break the Brexit impasse and then perhaps a second GE to decide on a government. Trying to decide them both with one GE is clearly absurd.

Welcome on board to the middle of the road centrists, there are quite a few of us on UKC.

they're still better at sums than the Tories, here's Matt Hancock

"If you take away 21,432 police officers and add back 20,000 police officers, how many police officers do you have?"

Matt Hancock, "20,000 more"

"No, you don't"

MH, "yes, you do, that's more"

https://www.facebook.com/watch/?v=548497539245640

Must have been getting maths lessons from Dianne Abbott!

Strangely enough, this seems to have generated little comment, which is strange

Ian Austin, 1 year as a junior minister at DCLG, says he won't vote for Labour. Wall-to-wall coverage.

Ken Clarke, 9 years as Secretary of State, including as Chancellor, says he won't vote for the Conservatives.

Silence.

Balanced election coverage?

Diane Abbott isn't Secretary of State for Health and Social Care

Sexual entitlement eh? A rapists charter.

She would like to be Home Secretary in 6 weeks though!

She'd make a better one than Priti Patel.

Can't think where you could have got that from

https://twitter.com/HackneyAbbott/status/1192389402531704833?s=20

At least the Tories are right on one topic ...
https://www.theguardian.com/business/2019/oct/16/northern-rail-should-be-re...

Both are terrible.....much like the two leaders.

You need to stop fixating on the leaders.
Corbyn's not the next Stalin who'll be shipping out all the Tories to gulags in the bad lands of Scotland on December 13th.

He'll be gone in a few years time anyway.  You need to look at what the Labour Party as a whole will do to improve the UK.  Look at the state we are in now, and who's been in power for the last nine years?

What a relief!  As as long as that's this case he gets my vote.

Blimey, whatever next?!

It's worse than that as we have automated and directed amplification of lies now

Well I think his sidekick is even worse....I have seen their policies and think they are nuts. McDonnell's 'we will just borrow more' to fund everything as though this is not a problem in the slightest is like 'student union politics'.

Admittedly I am naturally right of centre but cannot stand BJ either and his cabinet largely repulses me....I'd be more drawn to their domestic policies but am a Remainer and really fear a No Deal exit at the end of 2020.

I'm voting LibDem....

LibDems are dead in the water.
By vowing to revoke A50 on day one, they're instantly losing half the electorate.

What happens if your mp is the new speaker? Presumably whatever right you thought you had to being represented in parliament is instantly stuffed

Have you considered thinking about policy?

And by the way I am not a tribal Labour voter.

That is just tough luck. I sympathize.

Debt has value and can be bought and sold. Government debt is special and commands a premium.

Why is it any worse than an entrepreneur borrowing to fund a profit making venture?

How about the cost of servicing that debt?

As an example

As of Q1 (the first quarter of) 2018, UK debt amounted to £1.78 trillion, or 86.58% of total GDP, at which time the annual cost of servicing (paying the interest) the public debt amounted to around £48 billion (which is roughly 4% of GDP or 8% of UK government tax income).

Because the UK is still balls deep in debt, it's not running an annual surplus, recession is creeping up on much of Europe and the USA.  It won't take much of a down turn for even more debt to be crippling and global confidence in the UK to repay say £3 trillion plus in debt in the future might decline and rates will rise. 

That'll do you a lot of good in Wakefield

He does come across as a decent bloke, if he sticks to his vow of giving the back benchers a voice, your views might still be heard, not just the cabinet and it's shadow. 

True but at least i'll feel clean when I leave the polling station... 

Do you mean interest rates? That have been close to zero for ten years, as they have been across the whole Western world.

It's not just us.

Yep, and the Tories plans to increase borrowing is mad imo....just not as crazy as those of Labour's. 

As a matter of interest, is that the best tactical anti Brexit vote in your constituency?

Absolutely not its a Lab/Con marginal...Morley and Outwood. 

My mp ISN'T the speaker. Up until yesterday it was Ken Clarke, no idea about the woman they've parachuted in. Not local and i think a bit brexity but apart from that...

This racist?

https://www.newstatesman.com/politics/uk/2019/07/labours-institutional-raci...

Shouldn't you credit Diane Abbott if you're going to copy and paste from her?

Anyway, time for a fact check because she's talking b*llocks (as usual)

https://fullfact.org/news/abbott-media-bias/

did anyone see Rishi Sunak, a treasury minister, being interviewed on the beeb this morning? He said that it was a good thing to borrow in order to spend because interest rates were so low.....which is fine, except that he also claimed that interest rates were so low because the economy was so strong because of the rebuiding job the tories have done on public finances over the last 9 years, and that it had nothing to do with structural weakness that requires low interest rates in order to persuade people to borrow.....

He's Chief Secretary to the Treasury, fer chrissake........

Hahaha, nice try, not going to rise to that one.
Krikoman has comprehensively covered that subject already.
If I could be arsed, I could trawl up numerous links to Tory racism, but what's the f*cking point, we all know already.

And in the latest installment of day 2 Ian Austin is joined by another ex Labour MP John Woodcock

https://www.independent.co.uk/news/uk/politics/general-election-john-woodco...

Another spineless shit.
I vaguely remember his grovelling after he got elected a couple of years ago.
Un-principled light weights, good riddance to them

Shacked up with the editor of The Spectator, guilty of misuse of party assets, accused of sexual harassment. I'd choose your champions more carefully.

Is he the one who resigned last year and went independent? Gobshite. 

Then I recommend you vote Labour.

And cutting encourages growth? And rates are going to rise? I doubt both of those.

For god's sake. The government is not a household. Bretton Woods ended in 1971 and since just after then we have run on a fiat currency -- literally "let it be done".

At this risk of being called a lunatic leftist, our real constrains are person-power, resources and training. Money is not scarce. The bank bail out in 2008 should have taught everybody that, but for some reason we all swallowed the austerity myth, and now here we are, arguing about bullshit 10 years down the line.

The plan of renationalising natural monopolies is a good idea. The money spent by the government is not lost, as many are often lead to believe, it buys assets. Those assets have value, and, if they're run for society, rather than for a few shareholders, then society should see more benefit from said natural monopolies. Why do you think there's resistance to letting these services leave private ownership? It's not because they make a loss.

The green new deal and investment in public services is vital at this moment in time. £ price really should be a secondary consideration after dealing with the climate crisis and [for want of a better phrase] the welfare crisis (until we have things back under control). 

Just to finish - the UK government doesn't need to borrow to fund things. But there is a line of thought which says that the government has a duty to be the borrower of last resort. The government does need to tax however, although not to fund its expenditure, but to cool the economy where required, to ratify the value of its currency, to encourage/discourage various behaviours and to encourage political engagement.

And to finish, finish - have a think about where the government money which is spent into the economy via workers goes. It doesn't disappear into a black hole. A lot of it comes back as -- wait for it -- tax revenue!

In before Weimar/Zimbabwe/Venezuela. (although thinking about it, if we capitulate to the US, we could easily end up like that...)

As ever, awaiting the dislikes...

Total nonsense... 

Corbyn has turned Labour into the nasty party, an institutionally racist, neo Marxist cult and all you can do is shoot the messenger.

https://pbs.twimg.com/media/EIxIYZ4WsAEqjzh.jpg

F*cking hell, Cicero, that's him told.

Hahahahaha, you're just taking the piss now.
Imagine, if you can, you choose a career in politics, presumably that one has a hard core belief in your party's core policies and a truly heartfelt dislike for the oppositions' ideals and then you do a 180 degree turn.

To repeat, empty spineless shits. They've had their day of fame.
Tomorrow ...... who?

Why use a thousand words when two will suffice... 

Its not Austin and Woodcock who've done the 180 turn though is it. Its the Labour party who changed from a reasonably sensible, centrist, credible party of government into the nasty party under the "leadership" of a Britain hating, terrorist sympathising, anti-semitic Marxist.

That would be the 80% of Labour MPs who voted no confidence in Corbyn (172 to 40 remember) and have stood by as he destroys their party but haven't had the balls to do anything about it.

I’m a labour voter and don’t care which way Brexit goes, but any Cnut that is trying to buy my vote with that debt can go away/) 

Ah, I think we've arrived at an insurmountable impasse here.

To me, nationalized utilities, hundreds of thousands of cheap social housing, to name two; sound like perfectly reasonable options to me. But what the f*ck do I know, being a Jew hating Marxist!

Sorry for the repetition, what has nine years of Toryism given us?
It's getting late, I'll save your brain power ... One f*cked up country.

There is a difference between borrowing to invest and borrowing just to spend on political ideals. 

It's not scarce, the UK has tons of debt.

The UK barely had austerity. You want austerity look at Greece, or Spain's youth unemployment etc.. 

You know many of those shareholders are people's pensions are..  It's not just money that disappears into mystical funds. 

The reality is if you want better health, education and fight climate change everyone needs to be financially poorer. 

If all you had to do was to borrow and spend, Greece, Spain, Italy, Ireland, Cyprus etc would have had the best economies in the world. 

And those two sentences sum it up; borrowing to invest is definitely not what Greece and Spain did. Spain especially borrowed to fund regional vanity projects (Valencia has 2 international airports, one of which has had zero international air traffic, and also has 2 F1 standard tracks, one of which is no longer in use (the semi-street circuit). Greece borrowed to fund a current account deficit, which eventually bit them on the backside when they lost the ability to devalue the Drachma).

You should care very much whether Brexit goes ahead.  Brexit will have a massive detriment to the economy

An economy that's no longer on the edge of an abyss, unlike the one they inherited from Labour. Although in fairness, if that Labour government had won in 2010 they might have done the same because they were promising cuts along the same line as the Conservatives and Lib Dems for that matter.

Remember?

https://www.theguardian.com/politics/2010/mar/25/alistair-darling-cut-deepe...

Oh come on do you really think that, or are you just trying to raise the stakes in some kind of bullshit poker game.

That's why Labour's plans seem a lot more honest than the Tories.

Again, nice try. Another hypothetical.

I notice that Osborne is in there, doom mongering, the same Osborne that was planning the Apocalyptic saving, post Brexit Autumn budget

In a positive or negative way ? How do you know? It’s never happened before?

A massive negative effect.  I know because working for a wide range of large manufacturing companies I have a good understanding of how their prosperity, future investment and employment of a large skilled  well paid workforce depends on seamless integrated supply chains across the EU

Ooh look, another former Labour MP Tom Harris has backed the call to vote for the Conservatives, the third today!

When will it end?

https://www.thetimes.co.uk/article/vote-tory-urges-former-labour-mp-ian-aus...

None of them seem to have made any substantive comments about Labour Party policy.

Are they all just chewing on sour grapes?

Haven't we done him earlier? Anyway, another spineless shit gone

Perhaps they wouldn’t have targeted the most vulnerable to balance the books.

Plus do you really think we aren’t on the edge of an abyss now? 

I think that is something to do with being a climber, which is all about balance. We spend a lot of our time (outside climbing) following a complex horizontal arete that sometimes seems perilously narrow, with an abyss of extremism on our left and our right.

Good stuff. The abyss looks scarier when the weather takes an unexpectedly turn  for the worse but panic is never a good response.

Unfortunately he is right. The interest rates that govt pay is linked to the Uks excellent credit rating and the money markets view of the economy. 

It is why Greece or Argentina pay such a high rate as a counter example 

Nationalisation of the railways could be done at low cost. You just take over the franchise  when they run out.

The others cost a lot more as they will have to be bought at market price and you wonder if it is good value when the same money could be directed  to schools or hospitals or roads instead.

whether the govt will then be able to afford to continue to invest in those nationalised industries is debatable. Past experience suggests not. 

When you combine spending plans with the economic effects of brexit the parties are little different in cost but the Labour spending generates assets. Spending when the ecomony is struggling (iit still is) and interest rates are low is good Keynsian economics. 

The boris brexit plan is estimated to cost about £70 billion (apologies for the marxist Corbyn biased link

https://politicshome.com/news/uk/economy/economic-growth/news/107648/boris-...

You mean Hoyle.  The son of Doug Hoyle former MP for Warrington North. Another example of nepotism in safe seats. 

Point 2 - re. interest rates - interest rates being low is great for immediate borrowing cost, but means you can't 'disappear' your old debts via inflation so there are pros and cons to high/low interest rates.

You will have a tough time convincing me that the Tories have a strong grip of econonomics bases on the last decadeish. They actually strike me as extremely naive on this account

They were deliberately run down under Thatcher before the fire sale of national assets.

I wasn't suggesting not investing; health, education, rail, fibre /4g all have some catching up to do in global terms.

The debate is do you need to own an asset long term and carry out it's day to day management. Government and civil servants don't have a great track record. Costs usually rise, efficiency declines etc. McCluskey will be knocking on Corbyns door every day pushing for pay rises.

People will cite east coast mainline but it was very short term, it's over time the problems will arise. 

It might be better for the Government to progressively become major share or stakeholders in more critical assets, but not to the scale where it discourage private investment and expertise. 

Most industries were under invested in from the 60s onwards. Union power meant they were entirely focused on volume of the work force, not the costs and efficiency of their given role. They avoided modernisation whilst the rest of the world advanced.

You should read about Michael edwardes who turned around BL. 

Here's his own words, slightly different from Abbott's quote I'll give you, but that all depends on where they are in relation to his opinion on where they moved to on the right-wing scale!

"I'm not voting for some crazy right-wing nationalist organisation calling themselves a Tory government, but that I think is laying it on a bit, I don't think that will be where we wind up."

It was actually thirty pieces of silver. This was the reputed amount that Judas received to betray Jesus Christ. Not a helpful metaphor to use here in the context of antisemitism, labour, Israel etc. Has been an antisemitic trope over the Jewish treatment of Christians overt he centuries. 

Yet these days most public sector organisations are run by independant management,  not directly under the civil service. Problems will arise under any mangement thats why you need management but most feel the East Coast main line was much better under the public sector and twice, even some tories.

I note you ignore the similar projected overall costs of both main parties proposals and the fact the tories are wishing for future benefits of their planned brexit while holding much less real assets for their expenditure and additional costs.

I'd agree. Yet working with a pretty nasty right wing zionist government, who's leader is accused of corruption, is a big step for an ex Labour MP to make.

If that is what you believe then nothing will change your mind. In all honesty its not the past that counts it is what happens in the future.

If it was me I would not spend the money on capital projects ( we went through that just before 2008). I would spend it on maintenance and repairs.Better return on investment, faster improvements.Its just it does not appeal to vanity seeking politicians.

I also laugh at this idea there is no investment going on in for example the North West. Anybody driven on all the new by passes.?Anybody seen what is going on in Manchester?Anybody driven on the M6.What about Manchester Airport- £ 1 bn being invested there already.

Its not as though its low at the moment.

No he isn't. The reason interest rates are lowered in a weak economy (like much of the world at the moment) is to try to persuade people to invest their cash to get a return rather than to just hold it on deposit. The low interest rates over the last years have been one of the drivers of the levels of Quantitative Easing we have seen - once interest rates are so low it is ineffective to lower any further, pumping new money into the economy is one of the few means of providing a stimulus.

the base rate in Greece is 0%, https://tradingeconomics.com/greece/interest-rate.

the base rate in Argentina is 67.03%. Those two countries are facing very different issues.

and the uk's credit rating is not excellent

https://tradingeconomics.com/united-kingdom/rating

Well that went well for BL, didn't it...........

Uk s credit rating has been mixed, but there is no guarantee that this will continue, and it is has a direct bearing on the interest we pay.

There is this wild assumption that there is almost no cost to borrowing, it is just not true, just because interest rates are low. You only have to look at how much we already pay in interest to figure this out. Its a huge amount and even a tiny change costs billions in extra money. This has to come from somewhere. It comes from money which could easily go to social security, pensions etc and the day to day running costs.

The amount of interest we cuurently pay a year is openly available ( its a huge amount) . It sucks money away from other government services.If people think its near zero then they are in for a big shock.

£48 billion in 2018( Wikipedia).That is in the current low interest market on current national debt.

.£48 billion which could have gone to social security for example.

Lets not kid ourselves that there is no cost.

The Uk's credit rating has traditionally been excellent (AAA and all that), but has been downgraded in recent years (from 2015) by all 3 of the credit rating agency's, and it currently has a negative outlook with 2 of the 3. https://tradingeconomics.com/united-kingdom/rating

You seem to be mixing up types of borrowing. The borrowing of the government, that has been growing as a result of our current account deficit has led to the £48bn annual interest payment, has nothing to do with low interest rates. We as a nation seem happy to buy more than we sell; our economy does generate the funds to service the debt, but it cant go on for ever. The way to get out of this is either sell more than you buy, or raise further funds through taxation. The UK is a very low tax country compared to pretty well all other developed nations, but we expect our public services to be at least as good as everyone else's. this is simply not sustainable. 

A low base rate has nothing to do with national debt, or the interest payable thereon. Borrowing money to invest because it is cheap, or diverting money away from deposits and into securities (of whichever kind) does not increase the nations debt service cost. It helps stimulate the economy, and (hopefully) generates tax revenue paid as a result of the increased economic activity, which will help reduce the deficit (and hopefully as a corollary the overall level of debt) and hence the debt service cost.

Understand all that, it really is nothing new.

If you want a better perspective go back to Vince Cable and ask him the effect of a marginal interest rate change on how much it costs the govt to service the debt and where it come from..Paranoia envelopes the Treasury over these issue, and it is wise not to make the same mistakes as in previous govts( both Labour and Cons).

Hammond has done  goodt job of getting these figures to manageable levels. Its now like kids in a sweetie shop on both sides.Anybody who steps back and has a hard think about it will be able to figure out it will come back to haunt us if its a free for all on this.Great for the first few years.

Crazy on both sides.

Indeed its not; your posts however showed / inferred strongly that you did not understand it.........

such as this when he argued for more borrowing to stimulate growth (albeit very targeted). I've had a quick google for what you referred to but couldn't find anything.........can you point me towards it. And apologies for the Torygraph link..

https://www.telegraph.co.uk/finance/economics/9914520/Vince-Cable-calls-for...

Agree - its election time, and its "we'll do more than they will, only much better". They are all talking shit. At least labour are honest (ish) about their shit. If the tories actually believe what they say and carry it out, we are all deep in it.

Not wrong there.....

Well we agree

So let us not have to goggle repetitive articles proving a point.

Smiles.

I wasn't suggesting the Tory model was right. The lib Dem proposal of putting up tax to fund services better Is more my thinking. A politician has to one day say you get the services you pay for and can't keep kicking the can down the road. 

Yet the only choices at present seem to be a tory majority or a Labour minority government, where Labour's plans will have to be modified to get through Parliament. The key difference will be made in about 40 Labour marginals in the north and midlands where Lib Dems are usually too far behind to count. For anyone who wants a return to centrist politics, without the severe damage to our economy the hard brexit will cause, it seems to me the Labour minority is a necessary step on the way.

John Crace's take on all this is always interesting:

https://www.theguardian.com/uk-news/2019/nov/08/parliament-dissolves-to-mak...

I always thought that Cable would have been a much better chancellor than osborne (mind you, i'd have probably been better than Osborne......) - similar in outlook to Darling, who had steered a very careful course through unbelievably choppy waters from 2007 on. Osborne really was the start of the decline, and the point we find ourselves at now.

Still would be interested in that Cable link - not getting at anyone, but interested in his thoughts over that period. At least it proves he is very much the pragmatic businessman who accepts that sometimes you have to change your view, rather than the dogmatic politician.

Osborne was ahead of the curve politically. He was advocating a drive into the Labour heartlands when in power and had really grapsed the nettle of the Northern Powerhouse concept.Against the wishes of Labour Ho local Labour policiticans took on board his interest in the North and worked with him.

It is why in manchester etc there has been new road developments etc, all of which were started years ago in his time.

He should have stayed in politics.

I appreciate you have a diiferent view.

Are there any economists out there who can clear this up for me as I only have what I think is a basic grasp of it. Labour(John McDonnell) announces £400 billion in 'investment. Plus Re-nationalisation cost. McDonnell argues that borrowing for capital investment then becomes an asset which balances what you have built/made/spent. Up to a point makes this  sense but if you take it to its logical ad absurdem  conclusion the government could borrow to buy us all gold plated bath taps which McDonnell would say  would be an asset so the books would balance -so there must be a limit to this. My commonsense suggests it would depend on whether that asset has real value to the economy  e.g. a new transport link which boosts the local economy which then produces growth/tax etc. A lovely new old people's home-no matter how decent or reasonable seems to me less of a national book keeping asset to the economy  then say a new transport link.  Under Mcdonnell's argument they would equally add to  national assets. In addition there is of course the risk that there are  interest rates which everyone seems to think will stay low. But some kind of Brexit or uncertainty could lower the pound, borrowing pressure could increase interest rates, plus investors actions (rightly or wrongly) on a labour victory could cause a run on sterling-all causing borrowing costs to rise. I am a labour party member but the scale of these borrowing promises scares me somewhat. I do understand that they are partly making up for the austerity years. Thank you.

It's close to a 'pipe dream' as there is currently only a very small chance they can get a majority and no minority government would get support for that level of extra spending. In contrast just the cost of Boris' s brexit is estimated at £70billion over a decade and brings in no assets, they have big spending plans too, and a Boris majority is quite likely (just a bit less than a Labour minority government in my view). If you must worry its best to focus on the most likely outcomes.

The counterview is put forward by the Economist along the lines of the cost of Brexit pales when compared the disaters of the economic masterplan of the Labour Party.Neither option being at all palatable.

They have swung behind the Liberals.

The limit is the risk of causing high inflation because the debt of a soverign government is the same thing as printing money. If the economy continues to grow then that increased money supply can be spent in more items so no inflation. If the economy contracts then there is less to spread the increased money supply on so inflation occurs.

Keeping citizens fit and healthy helps grow the economy just as new transport does.

I have no faith in Labour's plans but they can only happen if elected with a clear majority and that looks like a tiny possibiliy. When you are forced into fghting off a bear you don't worry that there is a 2% chance that a storm might come later.

so a group of people who "know what they are talking about" - experts to you and me, have dismissed both the Tories brexit dream and labours outspend / outinvest (delete as applicable) plans as both being pretty much equally disastrous. You probably think labours is more disastrous, I would say the tories is worse, but clearly they are both , err, "not optimal". Up until the point that Gove comes out (he's been a bit quiet of late, hasn't he?) and dismisses them as mere experts, with no common sense (Trademark JR-M, Nov 19), we have the best option according to the economist as being the lib dems stay where we are , and do relatively little to the economy.

Who'd have thought it? When will the extremists learn........

Both bad....as I have said all along in previous earlier posts.

Disasters waiting to happen.Unpalatable.

That’s rather faint praise!

Latest .... Boris doesn't even understand his own deal (or is maybe lying about it to avoid complaints?)

https://www.theguardian.com/politics/2019/nov/08/boris-johnson-goods-from-n...

Surely what we should do is put up taxes to pay for extra borrowing?

We need substantial upfront investment to transform the economy for the zero carbon age - if we had a hypothecated tax (national investment tax) to pay off the borrowing we need to make then it might be a good way to manage the situation.

How much borrowing does a penny on income tax let us make?

Good question. 1p on income tax will raise £6-7bn. Based on the ratio between our current national debt and money needed to service that debt (interest and repayment), it would support £110-120bn of debt. That of course ignores any economy growth and tax receipts generated through that investment, which is the more interesting, but more difficult to answer question.

Here’s my thought experiment on a new green deal, that £6-7 billion per year raised by an income tax increase of 1p would pay for investment in solar, tidal, geothermal, air source, and offshore wind generation. The knowledge gained would make the U.K. a world leader in what is going to be a growth market and also insulate us from price shocks in fossil fuels.

We really really should have started on this path twenty years ago. It’s been a massive missed opportunity.

Similar intelligent investment in other progressive engineering fields will pay dividends.

I like the fact that the Labour Party are even suggesting these progressive policies, implementing them is, of course, a different matter. But unless a government is given a chance to try to do something clever how will we ever know if it’s possible, a good idea or an effective policy.

Not enough. 

Some economists estimate just for the nhs to keep pace with population longevity, expensive equipment, bigger battles like diabetes it needs a 3% increase on the base rate alone. That leaves, improving education, infra structure, green projects etc. Before you even consider eating away at any natuonal debt. 

It would be a world leader if it did it 30 years ago. 

Tidal is the only one not fully developed and there already are multiple research projects off the top of Scotland  

Precisely. Perhaps better to further target carbon capture and existing fusion projects. 

No. Because they are reactionary policies. Better to start late and proceed with intent than to be sidetracked.

No point researching what folk have been using elsewhere for decades, it's just reinventing the wheel  .. just buy the finished developed product from them and focus your r&d money on the challenges of the future.  

Edit.. It's not side tracked. There are prototype fusion power units in the UK which part of an international project are being scaled up in France. It's not a distraction, it's real science. 

So is Hinkley Point. Is this the centralised, risky, massively front loaded (and expensive) way we should go?

And yes the renewable tech is mature in many areas but not properly integrated in national policies on house building, public & private transport infrastructure, national grid infrastructure etc, this is where the opportunity for innovation lies. 

I said buy proven tech. We all know that reactor types isn't proven. 

Maybe in the UK. Many countries have been using it on a local and national level for decades. It's only the UK that gets all excited when somebody isn't heating their home with a gas powered high temp wall mounted radiator system. 

Tell me which specific areas globally require future innovation so that the UK can become global leaders in? 

They can be sure of the 6 million who signed the Revoke Article 50 petition and the two lots of one million who marched through London though. I don't think Brexiters understand how angry and alarmed Remainers are. Of the half of those who voted Leave (not half the electorate) a lot are now dead and a large number are saying things like "you can't trust any of them, I'll never vote again".

An awful lot of Labour voters are going over to the Liberal Democrats. 

It is worth stepping back and looking at the wider implications..That same money can also be used to pay for the day to day running costs of the gov. This includes social care costs , NHS, pensions and so on. I have seen numbers banded around of an extra £40 bn year needed on these .

so on your numbers before you start capital investment you need 6/ 7 p which is one hell of a big increase for the tax paying working population.

Which is why the second question is more interesting!

Well growth is not on a par with China or India. We are a mature economy. It’s limited no matter what we do it’s probably never going to be beyond 2/3 %. 

The hard truth is that most political parties hands are tied about what they can do economically.  

Even increasing corporation tax or higher tax on the top earners only raises a few billion

Sorry I'm a bit late to reply. Been busy.

Yes, I agree. But you've skirted around the fact the the government does not have to borrow to fund government spending. The UK has a fiat currency, controlled by the government (through the "independent" central bank). This fact is important. I'll add the possibly controversial and counter intuitive statement that government spend comes first, tax comes second. Not the other way around.

Yes, and surprisingly we're still doing ok on the surface. In fact hasn't government debt increased massively under the last couple of governments. Mostly for the pursuit of political ideals. My understanding of the situation is also that much of the debt is now private debt, which is good for company profits and bad for the individuals. But this misses the point (which I possibly didn't make earlier) that government debt /= private sector debt. My understanding is that government debt = private sector surplus.

I disagree with this use of "we've not got it bad because these guys have got it worse" method of dismissing an issue. The PIGS countries have got it very bad, and in fact that would be one reason I would consider leaving the EU, but let's not get into that right now. If you want to tell me that a reduction in pretty much all public services and public safety nets, to the point that many seem to be close to failing is barely austerity, go ahead. But it runs counter to even the government's own narrative from 9 - 4 years ago.

Point accepted. I'm just not sure why pension wealth has to be made specifically through profit maximisation to the detriment of the working population and the pensioners themselves. I guess the question I'm asking is why would renationalising natural monopoly services undermine pensions? If the value remains, why would the pensions collapse? Or are you implying that government run services have intrinsically reduced value?

Just to clarify, I am not advocating for nationalisation of everything. Just natural monopolies. After all, free market economics cannot work if there is no scope for competition.

I don't actually believe this, because if you employ people to do the jobs to provide improved health and education, and to build infrastructure to combat climate change, the economy grows. But regardless, I would accept higher taxation in return for better health, education and to fight climate change (although, I would rather that the tax breaks for the rich were reversed first). In fact I don't really see how there is much of a choice around this, particularly with climate change.

No, because they all use the Euro. Which is controlled by a central European bank. Which is not under the control of those countries' governments'. This is the main point I was trying to make, and is pretty much the central argument for abolishing the Euro (not the EU, I must hasten to add). In the current set up, G,S,I,I,C are all effectively large local authorities. Austerity -> problems in local authorities who's finance is controlled centrally. Not a million miles from what we're seeing regarding local constituencies in the UK at the moment (well a few moments ago, election takes up air time now.)

[Once again, bracing for dislikes]

It would be nice if you explained why it's total nonsense.

Thank you cm . You managed much more eloquently to say what I was trying to say.

... blah blah, mostly made up and will fully misrepresented bollocks blah.

None of this, the false bits and guesswork or the true fragments, matters a jot. Labour have near as damnit zero chance of majority government in 2019, probably not for the foreseeable future under this electoral system and with the SNP dominating Scotland.

This is a straight up brexit election.

Tory majority: bad or likely worse brexit, which depends on the specific Tory MPs returned.

Anything else: More deadlock and brinkmanship then one of three options: an accident forces brexit, another referendum or a spring election.

Labour can do nothing radical until it resolves brexit then will be deeply constrained by minority government thereafter . Or, more likely (assuming the current leadership and survives and Momentum remains muscular) in the event of a 2021 remain vote Labour will trigger another election to seek a clearer mandate for their social economic policies, likely losing power re-starting the brexit merry-go-round.

jk

Bonkers! The UK can't just " borrow", they borrow from lenders who set the interest rates and in the end the pound is saddled with long-term debt the UK can't service so you devalue. What exactly haven't you learnt from the Wilson government's fiasco? You know, 20% inflation, externally imposed austerity (at a level the current generation couldn't comprehend) and all that wonderful socialist experience.

Paul Friedman explains how it works in his very accessible book, End This Depression Now.

Bond rates are actually lower than inflation just now by the way.

Between 2008 and 2016 British Government's gave the magic money tree a shake and found £435bn from nowhere, they used this to buy government bonds. Did this cause runaway inflation, no it had a small desired inflationary affect at a time when the main worry was deflation. Other bastions of socialism like the USA did the same.

I literally haven't said anywhere that the UK can "just borrow". We have a government which controls the production of a fiat currency, which is a very different thing to "just borrowing". See post from The New NickB above regarding QE. I feel I'm back to the same argument -> government finances /= household finances.

But again, I take your point, and I will admit that I am too young to remember that far back. Could you please elaborate a little further?

To clarify: I'm not advocating infinite spending, I'm advocating spending on specific projects to put people into meaningful work. This is on the assumption that *money* is not a scarce commodity and is government controlled. Scarcity is in [people/resources/training], as outlined previously. Obviously, throwing too much money at a scarce commodity will result in inflation, but this doesn't mean that money is the constricting element.

Not from me, a very good post.

As far as I can tell we had a very privileged position within Europe anyway. Our own currency and various opt-outs negotiated by Cameron and his predecessors.

How many women candidates have had to step aside with this FPTP system and general weird confrontationalsim of the right wingers? Change the political culture and the system.How many greens would have won under a different system? How much faster could we have introduced environmental policies if we  had shifted from FPTP system earlier?

Well the concept that the government controls the production of the pound is kinda stretching things, they can print what ever they like but the value is decided elsewhere. Or is the 20% drop in value since the Brexit vote a deliberate government policy?

In a nutshell after Wilsons devaluation of the pound in 1967 things continued to go downhill and the hard-left took over the Labour party, Wilson was dumped and Callaghan was forced to borrow first from the US and then the IMF to protect the pound from another devaluation.  The IMF conditions were cuts in the government budget and a cut-back in social programs.

I'm not strong on economics but as a voter, I can only look at the intelligent approach generally of the candidates and their honesty or dissemblance as to their policies. So far I certainly have seen the incompetent judgement of the Conservatives and backtracking on project none- fracking which means confused policy. They wasted huge amounts of public money pursuing their intransigent agenda on Brexit and will waste more, given a chance.

Your timeline is a little off, you seem to be forgetting the 1970-74 Heath government, that Wilson wasn’t dumped, he retired. Neither Wilson or Callaghan were on the left of the party and Callaghan was very much a reformer.

I don't see your point because that devaluation wasn't due to inflation caused by excessive borrowing. It was a deliberate policy choice to counter a trade defecit inherited by Labour after yet another example of Tory economic incompetence.

There's more than one way of looking at this. In 2015, the last normal election we had greens secured 3.8% of the vote, in a strictly proportional system that would have secured ~24 MPs. We could argue whether people feel free to vote Green as protest because they know FPTP means they get something else (inflating the 'extremist' vote share) or whether people feel compelled to vote tactically against something more than for it or dissuaded from voting for minor parties which 'can't win' under FPTP deflating their vote share until the cows come home. I'm inclined toward the latter interpretation personally. An alternative approach would be to look at comparable countries with fairer more direct electoral systems, Germany for example has ~10% green MPs.

jk

The point is the value of a currency isn´t set by a government but by market forces. External pressure forced Callaghan to borrow money to protect the pound and the conditions of that borrowing (including government economic policy) were set by other countries.

Yes , I think it has to be treated as a straight Brexit election. Scotland is an enigma because I see absolutely no local interest in a 2nd referendum and none of the enthusiasm on the streets I saw a few years ago. 

As I see it Scotland almost certainly gets another vote either way now, either as the price of support for an unlikely minority government or as the backlash against a Tory brexit carelessly imposed upon Scotland. The differences are the economic context in which that vote occurs and whether the UK government consents, both of which seem likely to have a strong bearing on the result and what subsequently flows from it.

The UK as we've known it is ruined, the irony, too sad to enjoy, is it has been undone by ardent Unionists both sides of the Irish Sea.

jk

Yes, I can see that would happen if the Remain vote splits.

These two statements are contradictory

This is confusion between creation and value.

I'm sure the 20% drop wasn't deliberate government policy, but Brexit was. £ value seems to be dictated more by government policy than government spend.

But before we head off down the Weimar/Zimbabwe/Venezuela route, please remember I specifically said:

"I'm not advocating infinite spending, I'm advocating spending on specific projects to put people into meaningful work. This is on the assumption that *money* is not a scarce commodity and is government controlled. Scarcity is in [people/resources/training], as outlined previously. Obviously, throwing too much money at a scarce commodity will result in inflation, but this doesn't mean that money is the constricting element."

Infinite production of money will obviously reduce the value of that currency to 0. Paying people to carry out useful work, which would not otherwise be done, does not (should not) cause significant inflation. I return to my original point that the government is not a household, it can direct resources by paying for the resources to do the things it wants. Money is not the limiting factor, resources are.

Again, I have to hold my hand up and say I don't know enough about this period. I'm reading, but there's a lot of stuff to go through and a lot of conflicting narratives.

However, I'd like to draw attention to your quoted date (1967) which is before 1971. 1971 is important, because that is the year within which US and U.K. currencies were taken off of the gold standard and became fiat currencies. Fiat "sovereign" currencies being what I have been banging on about this whole time.

Well, I take my political polls from our Highland shop! Not a word from anyone, and cards are kept very close to the chest and if that is so, it means they are considering not voting SNP but don't want the judgement of contemporaries!!! I think Jo Swinson has appeal.

Bretton-Woods was already creaking at seams long before the official end of the US gold standard, that sterling was vastly overvalued was clear and lead to its devaluation.

I think we agree on this . Wasn't sterling initially pegged at something daft like £4 something to the dollar?

Well I agree that keeping citizens healthy benefits the economy. But the eg I used was an old people's home. Definitely worthwhile expenditure but a drain not a benefit to the economy. 

https://www.businessinsider.com/boris-johnson-blocked-report-naming-tory-do...

Boris Johnson's Conservative party has received cash from 9 Russian donors named in a suppressed intelligence report

https://www.businessinsider.com/boris-johnson-blocked-report-naming-tory-do...

https://www.thetimes.co.uk/edition/news/russian-tory-donors-named-in-secret...

pretty damning except that in this new age we are damned to be ruled by the damned

True but in 1976 a particular set of economic and political circumstances, that don't apply today, caused him to choose to borrow in foreign currency which comes with conditions. One of those circumstances was the political desire to do exactly that - set the value of the pound.

He could have borrowed from the British private sector or central bank in Sterling, the currency he can control the supply of, with no conditions which is what would happen today.

Providing adult social care benefits the economy by providing direct employment and use of goods and services in the wider supply chain. It also stimulates economic activity by allowing people to stay employed that would otherwise have to give up employment to provide care to their families. Done well there is the less tangible benefit that comes with a healthier, less stressed society.

^^ This

Interesting g view point. What’s the alternative. Compulsory euthanasia as people become unproductive?

Not sure where your thoughts are going on this ?

I think GimmerGimmer is just attempting to understand the economic argument in favour of borrowing which is fair because this is another area where our establishment media have let us all down by spreading Tory propaganda likening government spending to a household budget. A lie which suits their austerity agenda.

Even at the household level though people can understand that you invest if you can in order to make your economic conditions better, e.g. in a house, or a car to get to work, or maybe a place for your mam in a good old folks home so you don't have to reduce your hours to look after her.

Try telling a business that wants to grow not to invest when both borrowing and prices are cheap and you will soon be told where to go. 

For a sovereign government not to borrow to invest in those same circumstances, when there is no risk to borrowing for a government that controls it's own money supply, is economic vandalism which is what the Tories have been carrying out at the cost of the slowest recovery from a recession in history.

On the constitutional question of FPTP, I'm inclined to think people vote tactically but fail to vote for "minor" parties at all as they feel it is an unviable action. After a few elections of "protesting" voting patterns to try and influence policy of other parties, the incentive ebbs away - I think that is why there is such a low political culture and interest developed over time - the give up and don't give an interest attitude.

Having lived in 3 countries, England Australia and Scotland I can definitely say the Scottish Parliament and Australian system gave real weight to a vote and encouraged further interest in politics. It seemed more vital in Australia and Scotland than in England and I can only put it down to the encouraging systems. The Scottish Parliament has provided an opportunity in the way it counts your vote to realistically see representation. I think it has encouraged a vital political culture here.

Hope it will be remembered and used by the opposition parties.

Boris Johnson has said, on numerous occasions, that the Labour Party have tried to delay Brexit and he is going to 'Get Brexit Done'

However, late last month Parliament voted in favour of Johnson's deal. The last three weeks or so have been wasted because Boris wasn't willing to allow scrutiny of a deal he told us was good.

Dave 

I think you have completely misunderstood my point. I was replying to a post by Johang that implied borrowing to spend always added to the level of national wealth/gdp/gnp etc. The left wing view via John Mcdonnel et al was that all spending is affordable because it adds to GNP via jobs, goods, services etc.whuch Johang seems to support.I was questioning this view. I said spending money on older people is the right thing to do in my post (which I am not sure you have read properly) . However most societies see an ageing population as a financial cost rather than as a financial benefit (even if more Drs, nurses, care workers etc are employed). Nothing to do with euthanasia but a discussion on how we asess investment. 

Only borrowing to spend on activities that increase economic activity is safe. Your gold plated bath taps example would take money out of the economy, sinking it into bath taps, so would not be beneficial.

Your old folks home example is investing to mitigate the economic impact of an ageing society by allowing economic activity to continue to take place, so is beneficial.

Your other concern was about what would happen if interest rates were to rise in the future. Well it wouldn't matter because the government would have already borrowed the money and agreed to pay it back at today's rate. If the rate rises in the future that only matters to a government who wants to borrow at that time.

So clarifying your argument- if government borrowing to invest is a good thing particularly when interest rates are low-which i'm clarifying, not necessarily disagreeing with-are there no limits to this. If not then we should borrow more than labour is suggesting as there are always good things to spend money on. 

Classic socialist short-termism. Governments borrow for fixed periods, 10, 20, 30 years for example. If the normal pattern persists that debt in advanced economies is never paid down, but rather rolled over, then the very same government needs to re-finance that debt at an unknown and potentially much higher rate of interest in the future.

Only if the borrowing has proved so virtuous as to drastically improve the economy to the extent that no rollover of debt is required would this risk not be borne. But that’s a complete unknown and the record of history is not encouraging. And no matter how many times you assert it without on any occasion providing any evidence for your claim, well informed folk will doubt your glib assertion.

The experience of France and the explosion of unemployment under socialist anti-austerity Hollande should be a warning to anyone. The gilets jaunes protests are an expression of those wasted years far more than a refusal of fuel tax rises. It’s particularly notable that since a moderate right wing orthodoxy reasserted itself under Macron, the economy has started to show considerable improvement.

In other words, nothing is simple and you cannot be certain that borrowing will solve what you maintain is the problem without building a bigger crisis in the form of an expanded deficit just at the moment when we have finally got on top of it.

None of the above is intended as a rejection of government borrowing nor of Modern Monetary Theory. It’s just that the jury is out while you claim a certain verdict.

Thanks everyone for their informative replies. The more I learn the more baffled I get.

BnB- I don't understand how the debt gets 'rolled over' but I understand your reticence to support glib over-borrowing. If the government sells fixed rate bonds to finance something e.g. a new housing estate surely after the period-say 10 years the bond will be redeemed  with the interest. How is that 'rolled over?'. Do you mean the houses cost more than they thought so more bonds were issued at the end of the period . or do they borrow more to pay back the bond?Underestimate of costs seems endemic in private and public sector. As far as I can see -if too many bonds are issued then the government will have to entice lenders with higher interest rates which dampens the economy. Or if there is a government fuelled  boom in economy then people owning bonds will sell them to get better returns elsewhere. Cost of bonds goes down and interest rates goes up which dampens the economy. If there is a crisis in the future, government will need to issue more bonds but there will be fewer takers so interest rates have to rise-which will depress borrowing and the economy.

“Rollover” is the process that usually results when a bond matures and must be repaid in full. When, as in 99 out of 100 cases, often by design, the advertised benefits of the original loan have not been sufficient to generate the cash to repay the debt, a new loan is taken out to repay the original debt. This proceeds at whatever interest rate prevails at the time.

Which explosion was that? When Hollande took office in May 2012, unemployment stood at 9.7%. It reached a high of 10.6% in May 2015, and declined to 9.5% when he left office in May 2017. Still high, and higher than in the UK and Germany, for example, but hardly an explosion. 

A 10% increase in unemployment four years after the crash and during a period when one of their closest rivals (and austerity-focused counterfactuals) experienced no corresponding increase isn’t a startling statistic?

I’m not arguing that we should continue with austerity. Simply that it might have had its benefits in recent history.

Indeed, completely within normal variance, and in fact did better than than the rest of the eurozone during that period.
 

A sovereign government never dies so there is absolutely no need to to ever completely pay the debt down, just don't let it get out of hand. What a government should do is smooth out the fluctuations in the economy by increasing debt to stimulate the economy when times are bad, which happily coincides with low rates of borrowing, and reduce the ratio of debt to GDP in the times when the economy is going well and borrowing rates are high.

You ask for some corroboration, here is a good blog.

https://mainlymacro.blogspot.com/2017/12/government-debt-phobias-and-possib...

The problem with this is that at least 90% of the time the political left is arguing that the times are bad and the economy must be stimulated. Can you give an example of Labour not only arguing for austerity (budget neutrality) but for actual surplus to pay off part of the debt? 

PS I am not against investing and higher government spending on public services, I just think it should be paid for by higher taxes.

PS2. In my view the stimulating the economy in bad times makes most sense when umemployment is high. It is a waste to have a large part of the population sitting at home. The most useful investment is providing them with further education.

Here's an article about the effect of Macron's reforms on the labour market. There's a chart comparing France's unemployment rate with the UK, Germany and the EU over the last decade. As you know, it is standard practice to treat unemployment as a lagging indicator of the success of economic policies.

https://on.ft.com/376ZurT

France, which vies with the UK as the world's 5th largest economy, did not do better than the Eurozone over the period from 2012. It has under-performed disastrously. Note that the divergence begins one year into Hollande's administration, a point at which unemployment starts to fall dramatically everywhere except France, where it continues to rise for another 2 years and stays stubbornly high thereafter.

What is interesting about the article is the focus on a skills mismatch which ties into HansStuttgart's point about education being the most important investment, an argument which I fully support.

No, this is just you making up a story after the fact. This just what we call the narrative fallacy. 

I have nothing against Macron and his policies (In fact I'm financially supporting his party to the maximum I am legally allowed to), but if I'm honest the "Macron effect" on the employment market has more to do with the popularity of the president and the psychological effect amongst business leaders and investors than any actual policy changes.

Education is extremely important for many other reasons but if we use it as a way to create skills needed for employers we are setting up ourselves for total failure. I'm already seeing the damages of that.

Skills learned on year 0 are completely useless or replaced by automation on year +1  so no frankly I don't see how the education system is going to be able to train people for skills needed in ten years time when we don't even know what they are. The education system should teach people mental agility and how to learn things by themselves, the rest is not really important.
 

There is no theoretical limit, as long as investments grow the economy there is no risk of hyperinflation. The UK had a debt:gdp ratio of 250% in the 1950's, Japan is at 230% now. The limit is political and a Labour government would follow a fiscal credibility rule where public sector net worth (the net of debt and assets) is to be rising in value over the parliament.

There hasn't been any stimulus since 2010 though so for 100% of the time since then the left have been entirely right. Debt is only one side of the balance sheet and Labour's fiscal credibility rule will do what you're saying by ensuring that public sector net worth is rising in value over the term of a parliament.

Labour will be providing that most useful of investments, creating a free at the point of use National Education Service to move towards cradle-to-grave investment in developing people's skills and capabilities.

QE was stimulus, the UK QE spend to 2016 is detailed here.

https://en.m.wikipedia.org/wiki/Quantitative_easing

QE was pissing money away.

PQE was stimulus.

Comparatively high French unemployment is a political choice. Trade high job security and employee's rights for higher unemployment numbers, those in work have proper jobs they keep and those that don't have benefits to live off. Elsewhere, like here for example we have a different culture and regulatory regime that has resulted in low unemployment numbers but at the expense of employees in poor, insecure jobs. Looks better as a headline but since poor zero-hours work keeps you out of the benefits system without actually supporting a life it's not necessarily better for those caught in the bottom of the employment market.

Fair enough, trends in those figures do reflect domestic policy changes and wider economic changes but the headline numbers are not directly comparable, different countries take quite different approaches to the much same end, efficiently keeping the populace alive, productive and placid.

jk

I know the French job market quite well (I guess having worked in France and in the UK helps). And in my opinion, you’ve totally nailed it with this comment.

Personally I prefer the U.K. approach to the job market, it suits me best, but it’s clear that there are also big downsides for many people.

The Scandinavians seem to have struck the best balance with their « flexible security », although what I know about it is not first hand. 

Macron is going in this direction however it’s very questionable as to whether any meaningful changes in that direction have been made. But I guess what matters to the job creators is future expectations, so simply having someone in government saying he will do those reforms is enough in itself to give some extra confidence for employers to hire more.

If you're charitable you might think it was intended as stimulus but gone wrong but if that was the intention it was a massive policy failure as we are still in the midst of the slowest economic recovery ever. If you're uncharitable you might see it as a deliberate transfer of wealth from the poor to the rich.

It certainly didn't stimulate the productive economy, instead it propped up the failed banking system allowing it to carry on with its unproductive casino capitalism without any increase in lending to productive businesses.

40% of the benefit of QE went to the richest 5% of households who take their winnings out of the economy. I believe there was a steep increase in the price of super yauchts and Rembrandt's in that period. QE was more akin to gimmergimmer's gold plated bathtaps example than his investment in transport or social care example.

https://www.theguardian.com/business/2012/aug/23/britains-richest-gained-qu...

It's a very good point you make regarding the divergence of domestic philosophies and thank you for acknowledging the impact of Hollande's agenda, as measured by job creation, clearly visible in the chart.

In a move which echoes Labour's current vilification of the private sector, Hollande took an aggressive anti-business stance with, for example, the introduction of a super tax on income of 75%. This sent out a broad message to mobile capital that France was not the place to build your business and caused established entrepreneurs to reduce their investment, and in some cases, actually remove it. Famously, Bernard Arnault, Europe's richest man and owner of a vast array of iconic French fashion and luxury brands, upped sticks to Belgium. Now his company, comprising Luis Vuitton, Moet, Hennessy, Dior etc is as big as Shell. He didn't/couldn't relocate all that business activity overnight, of course. But he sure altered his gaze, to France's cost.

Macron ultimately delivered the killer blow, describing France as "Cuba without the sun".

I wouldn't wish to get into speculation over specific causes of observable trends in French employment numbers, likely they are not simple and I certainly don't understand them clearly so I deliberately steered clear of specifics.

jk

Since the thrust of your post was to pick out some genuine cultural differences which almost certainly had some bearing on the figures I thought that was entirely reasonable on your part

I simply don't know enough about Hollande's specific policies (eg the top band tax you mention) or the changes to them over time to speculate about correlations between them and unemployment figures though I'd be surprised if there were none. Establishing causation is a further step!

Jk

Sorry, this completely slipped me by.

Please, stop misrepresenting what I have said. I have never said that borrowing to spend always adds to the level of national wealth. In fact I thought I had been careful to point out that where and how the money was spent was just as, if not more than, as important as the magnitude of the government spend. If you throw money at activities which are already at full capacity, you get inflation. Do it too much and bad things happen.

Also, please, stop inserting "borrow" for "government spend". They are not necessarily the same. QE is a perfect example of government spend which is emphatically NOT borrowing. From the horses mouth so to say -> https://www.bankofengland.co.uk/monetary-policy/quantitative-easing

I don't want to be arsey, as it's a difficult set of concepts to wrap your head around, but the devil is in the detail. If the wrong words are used in the wrong place, then the meaning is wrong.

In regards to the spending on old person's home. It looks as though you support such an activity. I would agree, and say that there is an obligation to provide care to the elderly. After all, they produced the wealth and commodities the rest of us used when we were growing up, so it's only fair they're supported by those of us who are economically active now. I guess it's a tricky one if you look at it purely through the lens of a balance book, but if you decide to drop the idea that government books must be balanced (within a government which spends in its own sovereign currency) then it becomes more of an ethical question.

[Do we have people who are willing and able to look after our elderly? Yes -> do it. (And pay the carers a decent wage).]

Argh. France uses the Euro. MMT doesn't apply. 

I think CM and others have covered pretty much everything else.

I never said it did apply to France. In fact the idea has only gained wider currency in the last year or so. I used the term in response to CM's advocacy for a shift in emphasis in the UK. The direction of the thread seemed to open a window for a discussion of the subject. which might have been interesting. But at that point other posters thought it more pressing to question my take on Hollande's handling of the French economy. But such is UKC.

Fair enough. Although bringing France into the discussion kind of implies that you think that the two countries' funding options are similar, so hopefully you can understand my comment .

Helpfully, France is a good example of a country which has government spend actually constrained by tax take and can *only* borrow to invest beyond that. In those conditions, I would agree with much of what you said above, but I do not agree that they apply in the UK.

To reiterate, the whole reason I brought up the MMT principle is that we need to get beyond (tax & borrow) and spend in the UK.

I feel like we're all close to agreement but talking at slightly crossed purposes. I've kind of lost the thread now if I'm honest, lol.

I can't really contribute regarding Hollande I'm afraid :