Double-dip!

[city diehard]

Running a deficit is more then healthy for a country as long as it's sustainable, and still would of been post the bust. One country has run a surplus and its Norway, the Golden rule which Gordon Brown formulated was one which was sustainable with current spending being financed by govt revenue and capital spending by borrowing. The idea that Labour's reckless handing of the economy is close to criminal is just plain wrong, a international banking crisis may have had to have something to do with it. The response also would of been very different and the outcome worse if Labour didn't promote the return of discretionary demand management policies. The only failure was the mismanagement of the balance of our economy, and our over reliance on financial services which consequently left use even more vulnerable, however I would attribute that more to the Reaganomics in the 80's that Thatcher so brutally enforced.

I note you have conspicuously failed to answer my question.

I dont think he has answered a question at all

Just one big long political broadcast for the Labour Party

Political broadcast? The opinions I advocate are that of a Nobel Prize winning economist who says that the current government austerity measures will not work, simple as. If there is inadequate demand because everybody is tightening their belts where does the recovery come from. I advocate policies which are the best way, the current governments policies, who you prop up, has delivered us a double dip recession, youth unemployment of over a million and unfortunately a 'lost' generation; which is criminal.

The reason austerity doesn't work to quickly fix the problem is that, when the economy is already struggling, and you cut government spending, you also further damage the economy. And when you further damage the economy, you further reduce tax revenue, which has already been clobbered by the stumbling economy. And when you further reduce tax revenue, you increase the deficit and create the need for more austerity. And that even further clobbers the economy and tax revenue. And so on. Puts it nicely.

It's not party political and it shouldn't be, it's the best way to recover, so for you to pass it off as part political is pathetic and try and contrast the two methods and see the results from history. and come to your conclusion.

--------------------------

Responsible Keynesianism
To oppose the surplus is to will the debt
Mar 9th 2011, 18:16 by M.S.

EARLIER this week I noted Tyler Cowen's New York Times op-ed arguing that the government has been unable to pursue responsible, effective Keynesian policies because it has proven politically impossible to run the surpluses Keynes advocated during the years at the top of the business cycle, in order to save up for the rainy days of recessions. There's a reason for that, and Mr Cowen should have been more specific about what that reason is. When the government runs a surplus, conservatives insist it give the money back in tax cuts. Remember 2001, when the Heritage Foundation was saying stuff like this?

In the end, given the sheer size of the projected surplus over the next 10 years, the only responsible course of action for the federal government is to return the surplus tax revenues to the taxpayers who paid them in the first place.
Which is exactly what happened. Plenty of the people who were responsible for eliminating the surplus in 2001, and scrapping the Clinton administration's plans to pay down the national debt, are still in Congress today, whining about the size of the debt they helped create. Here's what Orrin Hatch had to say about the 2001 Bush tax cuts that made that surplus disappear:

“With a bourgeoning surplus, Utah's families deserve to have more of their money back in their own pockets instead of in the hands of Washington bureaucrats."
Just think out the reasoning process here. At the bottom of the business cycle, the government runs a deficit. At the top of the business cycle, when the government runs a surplus, it must immediately return that surplus to taxpayers. What exactly did these people expect this model would lead to?

I find it hard to watch the same people who ten years ago were desperate to avoid the supposed dangers of government budget surpluses now trying to zero out Teach for America and the United States Institute for Peace, in order to scratch together a few pennies for interest payments on the debt they helped create by cutting taxes. But the most disturbing part is that, then as now, they try to present themselves as "responsible".




In answer to GDM about running a surplus in good times, this is an interesting argument which I intend to agree with and that the notion of 'saving for a rainy day' is difficult as you don't know when that 'Minsky Moment' will occur, so politically it is very difficult to attain. So therefore a medium between the two in what Brown formulated by the Golden Rule is the best option due to the politics which is why the policies implemented are somewhat restricted. Logical? No, Political? Yes, but the average Joe would elect the person who's going to put money in the backpocket rather than the other candidate who is prophesying about a rainy day.

 

[Rascal]

Just one big long political broadcast for the Labour Party

He is my current favorite poster :)

 

[andyhinch]

This post is not what I imagined :(

 

[gordondaviesmoustache]

.

 

[ElanJo]

Even if Keynes was correct (which I don't really accept) Keynesianism is probably unworkable.

It was evident before the counter reformation by the likes of Friedman, which was only partly sucessful. It appeals to politicians and vested interests of all types who are predominantly concerned with buying votes (usually at the expense of the unborn and usually through "public works" which, economically speaking, amount to digging ditches or smashing windows). In the longer term Keynesianism will lead to an overburdening State and less freedom. It is also the Bankers best friend.

To me a decent indication of the validity of a theory or claim is how good it is as a predictor. In this regard, when it came to the recent collapse, it was the Hayekians, not the Keynsians or the Monetarists, who were the biggest 'whistleblowers'

 

[W12]

So if you take over a company in the black and thirteen years later leave it one and a half trillion in the red that is a good polcy is it.

Oh and its all Thatchers fault.

 

[BrianW]

Keynesianism is only a theory like anything else. But I would argue that during the period between 1945 and (circa) 1975, the democratic West produced the best type of society that has been known in the world, ever. I would describe it as regulated capitalism with a mixed economy, the mix of the economy (between the state and private sectors) being varied to taste.

The reason I believe it was a better society than we have now was that it was designed around the needs of the whole community, not just international plutocrats. Ordinary people had more security.

Unbridled capitalism has had its day, and has failed just as clearly as state capitalism (AKA so-called Communism) did a few years back. Now it's time to draw a line and write a new chapter.

 

[gordondaviesmoustache]

I note you have conspicuously failed to answer my question.

I dont think he has answered a question at all

Just one big long political broadcast for the Labour Party

Political broadcast? The opinions I advocate are that of a Nobel Prize winning economist who says that the current government austerity measures will not work, simple as. If there is inadequate demand because everybody is tightening their belts where does the recovery come from. I advocate policies which are the best way, the current governments policies, who you prop up, has delivered us a double dip recession, youth unemployment of over a million and unfortunately a 'lost' generation; which is criminal.

The reason austerity doesn't work to quickly fix the problem is that, when the economy is already struggling, and you cut government spending, you also further damage the economy. And when you further damage the economy, you further reduce tax revenue, which has already been clobbered by the stumbling economy. And when you further reduce tax revenue, you increase the deficit and create the need for more austerity. And that even further clobbers the economy and tax revenue. And so on. Puts it nicely.

It's not party political and it shouldn't be, it's the best way to recover, so for you to pass it off as part political is pathetic and try and contrast the two methods and see the results from history. and come to your conclusion.

--------------------------

Responsible Keynesianism
To oppose the surplus is to will the debt
Mar 9th 2011, 18:16 by M.S.

EARLIER this week I noted Tyler Cowen's New York Times op-ed arguing that the government has been unable to pursue responsible, effective Keynesian policies because it has proven politically impossible to run the surpluses Keynes advocated during the years at the top of the business cycle, in order to save up for the rainy days of recessions. There's a reason for that, and Mr Cowen should have been more specific about what that reason is. When the government runs a surplus, conservatives insist it give the money back in tax cuts. Remember 2001, when the Heritage Foundation was saying stuff like this?

In the end, given the sheer size of the projected surplus over the next 10 years, the only responsible course of action for the federal government is to return the surplus tax revenues to the taxpayers who paid them in the first place.
Which is exactly what happened. Plenty of the people who were responsible for eliminating the surplus in 2001, and scrapping the Clinton administration's plans to pay down the national debt, are still in Congress today, whining about the size of the debt they helped create. Here's what Orrin Hatch had to say about the 2001 Bush tax cuts that made that surplus disappear:

“With a bourgeoning surplus, Utah's families deserve to have more of their money back in their own pockets instead of in the hands of Washington bureaucrats."
Just think out the reasoning process here. At the bottom of the business cycle, the government runs a deficit. At the top of the business cycle, when the government runs a surplus, it must immediately return that surplus to taxpayers. What exactly did these people expect this model would lead to?

I find it hard to watch the same people who ten years ago were desperate to avoid the supposed dangers of government budget surpluses now trying to zero out Teach for America and the United States Institute for Peace, in order to scratch together a few pennies for interest payments on the debt they helped create by cutting taxes. But the most disturbing part is that, then as now, they try to present themselves as "responsible".




In answer to GDM about running a surplus in good times, this is an interesting argument which I intend to agree with and that the notion of 'saving for a rainy day' is difficult as you don't know when that 'Minsky Moment' will occur, so politically it is very difficult to attain. So therefore a medium between the two in what Brown formulated by the Golden Rule is the best option due to the politics which is why the policies implemented are somewhat restricted. Logical? No, Political? Yes, but the average Joe would elect the person who's going to put money in the backpocket rather than the other candidate who is prophesying about a rainy day.

Thanks for finally replying to my question ;-) I must have posted something last night, hence the dot above. I'd had a few beers so I imagine it wasn't exactly the Gettysburg Address!

The point that I make repeatedly on this matter is that if we weren't even working towards a surplus after fifteen years of consecutive growth, then it was never going to happen, at least while Gordon Brown was around (as PM or Chancellor). I also accept your point that Realpolitik plays a part and let us not forget that the Tories were all for matching Labour's spending prior to the credit-crunch, although I suspect under a little duress in order to get elected.

The state was too small when Labour came to power in 1997 and it was too big when they left office in 2010. Returning to your previous point, both of these situations were brought about by political ideology.

The article you posted adds little to the debate imo as it is clearly lifted from US publication. Also disagreeing with a Nobel Prize winner doesn't mean you're wrong, especially if they are an economist. As it happens I predicted this downturn would last at least a decade when the shit hit the fan in 2008, which was contrary to what most economists thought at the time. Does that make me a genius? No - just a lucky guess probably, which is what most economics actually is: guesswork, where a lucky guess can give you the status of a prophet. I think they're all full of shit, so waving a Nobel Prize around the thread isn't going to win me over.

 

[ChicagoBlue]

Any theory that depends on the rationality of man is doomed to failure. Ergo, economic theory is more art than science, with the artist being the prevailing entrenched political ideology.

As Obama is finding out, sometimes there is simply neither enough time between political elections to fix the deep, structural failings of the last Administration, nor the political will to effect the needed change, and failed systems have the chance to reinvent themselves, while brushing history aside. After all, if we learned ANYTHING from the great Depression, it appears we have long since forgotten it!

Here's hoping the republicans lose the House and a few more seats in the Senate, so that come January 1, 2013, a second Obama Administration can REALLY go to work changing the United States for good!

 

[ElanJo]

Any theory that depends on the rationality of man is doomed to failure. Ergo, economic theory is more art than science, with the artist being the prevailing entrenched political ideology.

As Obama is finding out, sometimes there is simply neither enough time between political elections to fix the deep, structural failings of the last Administration, nor the political will to effect the needed change, and failed systems have the chance to reinvent themselves, while brushing history aside. After all, if we learned ANYTHING from the great Depression, it appears we have long since forgotten it!

Here's hoping the republicans lose the House and a few more seats in the Senate, so that come January 1, 2013, a second Obama Administration can REALLY go to work changing the United States for good!

Deluded. Obama is 'owned' by Wall St.