homepage
  roll on christmas  
click here to find out more about ship of fools click here to sign up for the ship of fools newsletter click here to support ship of fools
community the mystery worshipper gadgets for god caption competition foolishness features ship stuff
discussion boards live chat cafe avatars frequently-asked questions the ten commandments gallery private boards register for the boards
 
Ship of Fools


Post new thread  Post a reply
My profile login | Register | Directory | Search | FAQs | Board home
   - Printer-friendly view Next oldest thread   Next newest thread
» Ship of Fools   » Community discussion   » Purgatory   » Is there a money-tree? Have we looked hard enough? (Page 2)

 - Email this page to a friend or enemy.  
Pages in this thread: 1  2  3 
 
Source: (consider it) Thread: Is there a money-tree? Have we looked hard enough?
Doc Tor
Deepest Red
# 9748

 - Posted      Profile for Doc Tor     Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Enoch:
quote:
Originally posted by Doc Tor:
... "Trickle down" hasn't, doesn't, and never will, work. It doesn't feed the hungry or clothe the poor or heal the sick. Everything good about this country, we've wrested, sometimes violently, from the hands of the rich and powerful. The mere idea that they'd let some it simply slip through their fingers is nonsense on a stick.

But that's just as much a statement of political or economic faith as the opposite view.
Except I have evidence on my side, and all you have is lots of rich dudes getting richer telling you not to believe me.

Seriously, this is case closed. It doesn't work.

--------------------
Forward the New Republic

Posts: 8842 | From: Ultima Thule | Registered: Jul 2005  |  IP: Logged
lilBuddha
Shipmate
# 14333

 - Posted      Profile for lilBuddha     Send new private message       Edit/delete post   Reply with quote 
Since the 1970's, the birth period of "trickle down", the disparity between rich and poor has greatly increased. The gap has narrowed a bit recently, but this is mainly to benefit of pensioners. And the very rich, often not included in the charts, continue to get even richer.
Oh, things trickle down alright, but they aren't money.

--------------------
So goodnight moon, I want the sun
If it's not here soon, I might be done
No it won't be too soon 'til I say goodnight moon

- A. N. Parsley, D. Mcvinni

Posts: 16934 | From: the round earth's imagined corners | Registered: Dec 2008  |  IP: Logged
Doc Tor
Deepest Red
# 9748

 - Posted      Profile for Doc Tor     Send new private message       Edit/delete post   Reply with quote 
1890s, according to wiki.

--------------------
Forward the New Republic

Posts: 8842 | From: Ultima Thule | Registered: Jul 2005  |  IP: Logged
alienfromzog

Ship's Alien
# 5327

 - Posted      Profile for alienfromzog   Email alienfromzog   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by PaulTH*:
quote:
Originally posted by alienfronzog:
Given that a body economists supported it as in-line with mainstream economics and it contained no mention of unilateral disarmament and indeed committed to renewing trident, what on earth are you talking about?

I mentioned unilateral nuclear disarmament because Alan suggested the Green Party as a possibility. When taking advice from economists, we must remember that there are as many different opinions as there are economists. I don't think hiking taxes to levels not seen since the 1940's is mainstream economics. As canfirmed by the IFS.
It's amazing how when the IFS was laying out the effects of the Budgets in each year from 2010 to 2017 they were basically ignored or derided but as soon as they say something about Labour, they are quoted and requoted and indeed misunderstood and misquoted.

I find fault with the IFS analysis here and I'll come to that but first let's deal with the specific issue of the tax burden.

The tax burden is simply a measure of the proportion of the national GDP that is taken in taxes. It does not reflect in any way where the taxes are falling - on corporations, on individuals in direct taxes, on households in indirect taxation. Hence out-of-context it does not necessarily mean what people think it means. What I am getting at here, is that increasing the tax-take as a proportion of GDP does not necessarily mean that your taxes are going up. It might mean only the highest earners and corporations taxes are going up.

The UK tax burden as a percentage of GDP is low by international standards and hence 'highest since 1940s' sounds radical but it really isn't. We'll still talking about less than many comparable countries (look it up!). Furthermore given that we pay for out healthcare by direct taxation whilst other countries fund healthcare in other ways, logically UK taxation should be higher than comparable countries, all other things being equal in macroeconomic terms. (Healthcare costs are potentially a drag on economic growth regardless of whether you pay a tax for it or a preminum for it).

So even if the IFS is right, it's still not out of the box. But I think they're wrong because they have deliberately excluded any macroeconomic effects of Labour's policy. They do this for a reason - they focus on fiscal effects only. However when you're talking about the effects of policy, ignoring any effects in the wider economy means your sums will be wrong. Labour's plan would inevitably have some effect on output. More government spending will result in more economic activity both directly and indirectly resulting in an overall increase in GDP. This is partly offset by a potential reduction from the taxation. In an economy with significant spare capacity this effect will result in economic growth. (This is the mainstream economics bit).

Even modest estimates of this effect would make the IFS's assessment very wrong. Which I find disappointing because in terms of fiscal effects, the IFS has done an amazing and much ignored job the past 8 years.

Here's a real economist explaining
this better than me. Also here, a using some basic macro economics (I'm told) is an estimate that overall the economy would be 1% bigger under Labour.

AFZ

--------------------
Everyone is entitled to his own opinion, but not his own facts.
[Sen. D.P.Moynihan]

An Alien's View of Earth - my blog (or vanity exercise...)

Posts: 2099 | From: Zog, obviously! Straight past Alpha Centauri, 2nd planet on the left... | Registered: Dec 2003  |  IP: Logged
lilBuddha
Shipmate
# 14333

 - Posted      Profile for lilBuddha     Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Doc Tor:
1890s, according to wiki.

My bad. I was referring to the supply-side economics of Thatcher and Reagan. Demonstrable failures for any class but the rich.

--------------------
So goodnight moon, I want the sun
If it's not here soon, I might be done
No it won't be too soon 'til I say goodnight moon

- A. N. Parsley, D. Mcvinni

Posts: 16934 | From: the round earth's imagined corners | Registered: Dec 2008  |  IP: Logged
Sarah G
Shipmate
# 11669

 - Posted      Profile for Sarah G     Send new private message       Edit/delete post   Reply with quote 
I have to say, there's a lot to be learned from this thread!
quote:
Originally posted by Doc Tor:
Given that total public sector employment is around 1/5th private sector employment, you've a better case in arguing for private sector wage controls to put a break on inflation.

How does that sound?

Thanks for the reply (and Dafyd). My question goes further than public sector pay.

JC is planning to spend a lot of money on a lot of different things, of which public sector pay is but one. Is it generally accepted in economics that this will have a significant effect on the inflation rate?

Posts: 514 | Registered: Jul 2006  |  IP: Logged
alienfromzog

Ship's Alien
# 5327

 - Posted      Profile for alienfromzog   Email alienfromzog   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Sarah G:
I have to say, there's a lot to be learned from this thread!
quote:
Originally posted by Doc Tor:
Given that total public sector employment is around 1/5th private sector employment, you've a better case in arguing for private sector wage controls to put a break on inflation.

How does that sound?

Thanks for the reply (and Dafyd). My question goes further than public sector pay.

JC is planning to spend a lot of money on a lot of different things, of which public sector pay is but one. Is it generally accepted in economics that this will have a significant effect on the inflation rate?

The short answer is that it depends.
And then you have to talk about how moderate inflation has both good and bad consequences for most people.

I haven't seen any specific analysis on this point, I'll have a look, but the short answer I suspect is that if there was an inflationary effect it could easily be offset by slow increases in interest rates which would be a good thing because then interest rates can be cut when the next slowdown occurs to stimulate activity. One of the great fears is that when the next shock occurs (i.e. Brexit) there are no good levers for the government to pull to stop a recession sliding into something worse.

AFZ

--------------------
Everyone is entitled to his own opinion, but not his own facts.
[Sen. D.P.Moynihan]

An Alien's View of Earth - my blog (or vanity exercise...)

Posts: 2099 | From: Zog, obviously! Straight past Alpha Centauri, 2nd planet on the left... | Registered: Dec 2003  |  IP: Logged
anteater

Ship's pest-controller
# 11435

 - Posted      Profile for anteater   Email anteater   Send new private message       Edit/delete post   Reply with quote 
SarahG:
quote:
JC is planning to spend a lot of money on a lot of different things, of which public sector pay is but one. Is it generally accepted in economics that this will have a significant effect on the inflation rate?
Yes it depends, but Labour's problem is that it is widely accepted by Joe Public.

My own view is that a stimulus package would do good if it is handled wisely but here is a bit caveat. And I have noted by experience on NPfIT to show that having money sloshing around can result is huge waste. And that's before you get to EU funded airports with runway too short to take planes.

However, UK Athletics has shown that strong direction and allocation of funds can produce stunningly good results. And it is entirely possible that this could be the result of a Labour Administration.

But is it probable?

I think in the end, decision will be made on more subjective grounds. We've had three farcical budgets in the last 4 years, cutbacks on flood defences (and we know what happened there) etc etc as nauseam and that's before brexit.

Could it get worse? Actually yes, but it could get a lot better. John McDonnell in an interview rather disarmingly admitted there was a risk. And that's as certain as you get.

But as has been said many times, if I was poor or young I'd vote Corbyn without hesitation, 'cause I've less to lose and would take the risk.

--------------------
Schnuffle schnuffle.

Posts: 2527 | From: UK | Registered: May 2006  |  IP: Logged
Alan Cresswell

Mad Scientist 先生
# 31

 - Posted      Profile for Alan Cresswell   Email Alan Cresswell   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by PaulTH*:
quote:
Originally posted by alienfronzog:
Given that a body economists supported it as in-line with mainstream economics and it contained no mention of unilateral disarmament and indeed committed to renewing trident, what on earth are you talking about?

I mentioned unilateral nuclear disarmament because Alan suggested the Green Party as a possibility.
Though, it's not particularly relevant to whether or not there is a money tree - renewal of Trident (or not) is about how we spend the fruit of the money tree, not how we get more fruit from the money tree.

It could be argued that spending on Trident will create work in various sectors of the UK economy, and hence be an investment that will pay off in retaining engineering skills etc. But, if you want to make that argument then you need to ask whether the same benefit could be gained at lower cost by investing in developing low carbon energy technology (lots of engineering expertise retained through developing off-shore wind or wave power technology, for example).

--------------------
Don't Brexit if you haven't a scooby how to fix it.

Posts: 32121 | From: East Kilbride (Scotland) or 福島 | Registered: May 2001  |  IP: Logged
chris stiles
Shipmate
# 12641

 - Posted      Profile for chris stiles   Email chris stiles   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by anteater:

I think in the end, decision will be made on more subjective grounds. We've had three farcical budgets in the last 4 years, cutbacks on flood defences (and we know what happened there) etc etc as nauseam and that's before brexit.

and in fact, cuts of this nature (see also lack of road maintenance, putting off planned build outs of national infrastructure to cope with population movements) are very much a case of 'borrowing from the future' to make short term political capital.
Posts: 3834 | From: Berkshire | Registered: May 2007  |  IP: Logged
Russ
Old salt
# 120

 - Posted      Profile for Russ   Author's homepage     Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Alan Cresswell:
households borrow, in fact they borrow quite a lot. Indeed, the government almost encourages it. And, in many cases that borrowing is entirely reasonable and logical. We borrow to buy a house, and then often pay less in mortgage repayments than rent (and, even if renting was cheaper we retain the asset in a house we've bought). We borrow to buy a new car, enabling us to get to a wider range of jobs and other such freedoms. We borrow to send our children to university (especially those not in Scotland who have to pay extortionate tuition fees). We borrow for replacement windows, new boilers, to refit the kitchen and bathroom. The household finances analogy would say that there's nothing wrong with borrowing, especially when there's a likely payback on that. Yet those using the analogy want us to believe the nation shouldn't borrow.

Micro-economics is easier than macro-.

At the household level, we can distinguish three types of borrowing:

- investment (borrowing to secure a future stream of income or cost savings, such as buying a car that costs less to run). That's a good thing to do.

- having-it-now (borrowing for capital spend on consumption, such as a new TV, and paying back over a fixed period, instead of saving up). That's neutral - it's a valid choice that costs more in the long term but gives the benefit sooner.

- living beyond your means (borrowing ever-greater amounts to plug the gap between income and revenue outgoings). That's unsustainable.

Seems to me that the onus is on those who think this doesn't apply at the macro level to explain why.

--------------------
Wish everyone well; the enemy is not people, the enemy is wrong ideas

Posts: 3029 | From: rural Ireland | Registered: May 2001  |  IP: Logged
MarsmanTJ
Shipmate
# 8689

 - Posted      Profile for MarsmanTJ   Email MarsmanTJ   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Russ:
Micro-economics is easier than macro-.

At the household level, we can distinguish three types of borrowing:

- investment (borrowing to secure a future stream of income or cost savings, such as buying a car that costs less to run). That's a good thing to do.

- having-it-now (borrowing for capital spend on consumption, such as a new TV, and paying back over a fixed period, instead of saving up). That's neutral - it's a valid choice that costs more in the long term but gives the benefit sooner.

- living beyond your means (borrowing ever-greater amounts to plug the gap between income and revenue outgoings). That's unsustainable.

Seems to me that the onus is on those who think this doesn't apply at the macro level to explain why.

Let's take a look back at the 2007 budget, before the 2008 crisis, shall we? Let's assume that in a crisis situation caused by global financial trends, the government has different priorities.

2007 Budget: tax take £553 bil. Budget: £587. Total borrowing: £34 bil, or 6.3%. Total Capital Spending (that comes under columns A and B of your 'micro-economic plan') was £44 bil.

Explain to me again how that Labour government was bad with money and grossly overspent?

Posts: 238 | Registered: Oct 2004  |  IP: Logged
alienfromzog

Ship's Alien
# 5327

 - Posted      Profile for alienfromzog   Email alienfromzog   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Russ:
Seems to me that the onus is on those who think this doesn't apply at the macro level to explain why.

The short answer is because it doesn't. I'm not being facetious here, what I mean is that it is simply true that government spending doesn't work like this. Even if we can't explain the reasons, it doesn't change the fact.

There are literally thousands of examples of this is other fields: it was known before Einstein that the Newtonian model broke down but it was only when Einstein worked out relativity that we knew why. Medicine is full of examples of diseases being described long before the pathophysiology is understood.

Anyway, government spending is not at all like a household budget because the government itself is a big part of the economy and thus reductions in spending create reductions in income in a way that would never be true of a household. The key concept here is Fiscal multipliers

Some types of government spending tend to have positive multipliers (greater than 1) - investment or even everyday expenditure if it increases employment and decreases the welfare bill. In a situation where interest rates are at the zero-lower bound (interest rates can't normally go negative) the evidence (from the IMF among others) is that the multipliers are far bigger than normal.

This was my attempt at an analogy that explains this.

AFZ

--------------------
Everyone is entitled to his own opinion, but not his own facts.
[Sen. D.P.Moynihan]

An Alien's View of Earth - my blog (or vanity exercise...)

Posts: 2099 | From: Zog, obviously! Straight past Alpha Centauri, 2nd planet on the left... | Registered: Dec 2003  |  IP: Logged
chris stiles
Shipmate
# 12641

 - Posted      Profile for chris stiles   Email chris stiles   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Russ:

Seems to me that the onus is on those who think this doesn't apply at the macro level to explain why.

I think the onus on anyone who wants to support austerity is to point to a simple case where it has actually worked.
Posts: 3834 | From: Berkshire | Registered: May 2007  |  IP: Logged
Dafyd
Shipmate
# 5549

 - Posted      Profile for Dafyd   Email Dafyd   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Russ:
Seems to me that the onus is on those who think this doesn't apply at the macro level to explain why.

Do you think it applies to banks? A household cannot lend out more money than it takes in. A bank usually can unless it abuses the ability. Every time it does that it creates money out of nothing.

The government is like banks in that it can actually create money. It shouldn't create too much money; how much is too much is a macro-economic question.

Another thing to note about the government is that very little of its spending falls into the category of day-to-day consumption (your category c). (Heating bills for government buildings maybe.) Most of it has some kind of investment benefit. The police maintain economic activity. The health service keeps people economically active. Education is investment. Roads and maintenance are investment. The government doesn't make a profit.

--------------------
we remain, thanks to original sin, much in love with talking about, rather than with, one another. Rowan Williams

Posts: 10375 | From: Edinburgh | Registered: Feb 2004  |  IP: Logged
MarsmanTJ
Shipmate
# 8689

 - Posted      Profile for MarsmanTJ   Email MarsmanTJ   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Dafyd:
The government doesn't make a profit.

Or if they do, there are serious questions raised about whether they are doing their job adequately. See the RBKC Council which has a fairly significant budget surplus and serious questions are being raised about 'why' right now.
Posts: 238 | Registered: Oct 2004  |  IP: Logged
Russ
Old salt
# 120

 - Posted      Profile for Russ   Author's homepage     Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Alan Cresswell:
Spend money to boost the economy, then that will be recouped through increased tax revenue...
...Invest in education, so that we have a workforce able to do the jobs required. Invest in healthcare, so our workers aren't off sick. Invest in public transport so workers can get to work efficiently with minimal fuss. Invest in developing new technologies to meet the future demands of society. Of course it takes skill and expertise to identify where to invest, but without it there will be no money tree.

Whether these are good investments in strictly financial terms - whether the revenue stream would actually be sufficient to pay off the debt incurred to make the investment - is an empirical question.

Economics being what it is, we can guess that the answer is "it depends". That some people, if you'll forgive me putting it bluntly, are good investments and some aren't.

If what the skill and expertise tells us is that this sort of investment will grow the economy enough to cover its costs in theseparts of the country but not those, would you go along with that advice ?

Or is this talk of "investment" and "economic growth" just spin for a programme of spending that you'd do anyway for ideological reasons ?

--------------------
Wish everyone well; the enemy is not people, the enemy is wrong ideas

Posts: 3029 | From: rural Ireland | Registered: May 2001  |  IP: Logged
Alan Cresswell

Mad Scientist 先生
# 31

 - Posted      Profile for Alan Cresswell   Email Alan Cresswell   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by MarsmanTJ:
quote:
Originally posted by Dafyd:
The government doesn't make a profit.

Or if they do, there are serious questions raised about whether they are doing their job adequately. See the RBKC Council which has a fairly significant budget surplus and serious questions are being raised about 'why' right now.
It depends on how you define "profit". If the government spend £1b on a new bridge taking a motorway across a river, and the improved access results in new and expanding businesses boosting the economy and generating £100m extra tax revenue per year then after a decade the government is in profit.

[ 18. June 2017, 14:19: Message edited by: Alan Cresswell ]

--------------------
Don't Brexit if you haven't a scooby how to fix it.

Posts: 32121 | From: East Kilbride (Scotland) or 福島 | Registered: May 2001  |  IP: Logged
ThunderBunk

Stone cold idiot
# 15579

 - Posted      Profile for ThunderBunk   Email ThunderBunk   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Alan Cresswell:
quote:
Originally posted by MarsmanTJ:
quote:
Originally posted by Dafyd:
The government doesn't make a profit.

Or if they do, there are serious questions raised about whether they are doing their job adequately. See the RBKC Council which has a fairly significant budget surplus and serious questions are being raised about 'why' right now.
It depends on how you define "profit". If the government spend £1b on a new bridge taking a motorway across a river, and the improved access results in new and expanding businesses boosting the economy and generating £100m extra tax revenue per year then after a decade the government is in profit.
The other way of looking at that is that the surplus starts from the first year, in that if the tax take is 10% of the total economic impact, bearing in mind that taxes are (hopefully) paid by all economically active parties. The government does not itself need to make a profit, or even break even, because it is not entirely distinct from the society on whose behalf it functions.

--------------------
Currently mostly furious, and occasionally foolish. Normal service may resume eventually. Or it may not. And remember children, "feiern ist wichtig".

Foolish, potentially deranged witterings

Posts: 2134 | From: Norwich | Registered: Apr 2010  |  IP: Logged
anteater

Ship's pest-controller
# 11435

 - Posted      Profile for anteater   Email anteater   Send new private message       Edit/delete post   Reply with quote 
MarsmanTJ:
quote:
Explain to me again how that Labour government was bad with money and grossly overspent
Well I'm having to face up to the fact that the "Labour left the country bankrupt" meme may well be bullshit.

If this is the case, how did they make such a lousy job of countering it? The Lib Dems kept on repeating it and most of Labour seemed on the austerity bandwagon. Was is just the case that Brown's campaign rivalled May's for crapiness? After all Dave got to a hung parliament following a 60 majority, not 18.

Is that why Lefties hate the Old Guard? Or does it show the difficulty of putting the arguments across? I. e. That Labour knew they would lose the argument so felt they had to go along with the story that everyone believed?

Whatever happened to the guy that wrote the "Sorry, there's no money left?

--------------------
Schnuffle schnuffle.

Posts: 2527 | From: UK | Registered: May 2006  |  IP: Logged
Dafyd
Shipmate
# 5549

 - Posted      Profile for Dafyd   Email Dafyd   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by anteater:
Well I'm having to face up to the fact that the "Labour left the country bankrupt" meme may well be bullshit.

If this is the case, how did they make such a lousy job of countering it?

Brown was a famously poor public performer. Also it did happen on his watch; saying it wasn't his fault would have looked irresponsible. Finally, they were trying to put forward the message that the deficit would need paying off after the economy had recovered, which was easily spun as agreeing that the deficit needed paying off.

Miliband decided to distance himself from Brown and Blair and not to campaign on Labour's record, which allowed the Tories to continue to define it.

--------------------
we remain, thanks to original sin, much in love with talking about, rather than with, one another. Rowan Williams

Posts: 10375 | From: Edinburgh | Registered: Feb 2004  |  IP: Logged
lilBuddha
Shipmate
# 14333

 - Posted      Profile for lilBuddha     Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by MarsmanTJ:
quote:
Originally posted by Dafyd:
The government doesn't make a profit.

Or if they do, there are serious questions raised about whether they are doing their job adequately. See the RBKC Council which has a fairly significant budget surplus and serious questions are being raised about 'why' right now.
Not defending RBCK, but here is the dilemma for any institution tasked with serving its constituents: Balancing conserving resources v. serving said people. A surplus in itself is not wrong. The hows and whys can be, but merely having one even if all current needs are not met is not inherently wrong or bad.

--------------------
So goodnight moon, I want the sun
If it's not here soon, I might be done
No it won't be too soon 'til I say goodnight moon

- A. N. Parsley, D. Mcvinni

Posts: 16934 | From: the round earth's imagined corners | Registered: Dec 2008  |  IP: Logged
chris stiles
Shipmate
# 12641

 - Posted      Profile for chris stiles   Email chris stiles   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Dafyd:
Brown was a famously poor public performer. Also it did happen on his watch; saying it wasn't his fault would have looked irresponsible. Finally, they were trying to put forward the message that the deficit would need paying off after the economy had recovered, which was easily spun as agreeing that the deficit needed paying off.

The other factor was that they - rather unwisely - had talked about the end to boom and bust and had also bought into the model of low regulation, and it would have been hard for the Blairites/Brownites to admit that these particular factors were at fault.

At the time, the example of Greece served as the easy narrative for the media to adopt and map onto any financial crisis - after feebly trying to resist, they tended to go along with the descriptions of the commentariat.

In retrospect there was a slight overspend (under 1%) in 2006/2007 but this was excusable because of how the economy looked like at the time. The real issues started when the GFC kicked in in earnest, automatic stabilisers came into effect and then the financial sector needed a bailout.

Posts: 3834 | From: Berkshire | Registered: May 2007  |  IP: Logged
alienfromzog

Ship's Alien
# 5327

 - Posted      Profile for alienfromzog   Email alienfromzog   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Dafyd:
quote:
Originally posted by anteater:
Well I'm having to face up to the fact that the "Labour left the country bankrupt" meme may well be bullshit.

If this is the case, how did they make such a lousy job of countering it?

Brown was a famously poor public performer. Also it did happen on his watch; saying it wasn't his fault would have looked irresponsible. Finally, they were trying to put forward the message that the deficit would need paying off after the economy had recovered, which was easily spun as agreeing that the deficit needed paying off.

Miliband decided to distance himself from Brown and Blair and not to campaign on Labour's record, which allowed the Tories to continue to define it.

This is the key. For me there are 3 factors:
1) the political opportunism of Cameron and Osborne. Of course the austerity narrative also fits their pre-existing prejudices (government bad, private sector good and Conservatives always have to mop up Labour's mess)
2) Our incredibly ignorant and agenda-driven print media coupled with the BBC's false - the earth may be flat or round, opinions vary - form of balance made it very hard for anyone who opposed the narrative to actually be heard. (Miliband being shouted down by a BBC audience member who was totally wrong in 2015 debate, for instance)
3) The Lib Dems. The reason I can't stand Clegg and Cable is that they did a complete 180 and supported austerity post the 2010 election. The past two years have shown that the Lib Dems did restrain Cameron from the worst excesses of the foolishness that is today's Tory party but for all that they are still Tory enablers. A Tory minority government could not have done so much damage or so controlled the media narrative in my view.

I guess the missing 4th aspect is Labour's failure to counter any of this but I think it important to appreciate how big a challenge it was. Miliband's Labour tried to be anti-austerity on the quiet (2015 manifesto was a good start to countering the damage done but they didn't want to shout about it).

I wrote 2 years ago that the reason the Tories should fear Corbyn was because he would call them out on the austerity myth and the reason they didn't was because they believed they could discredit and demonise him effectively enough (with the help of their sympathetic media) that no one would listen. At this point, I'll call that one a high-scoring draw...

I apologise that I've said this before but I do think it bears repeating: history will be very kind to Gordon Brown. He managed the crisis exceptionally well, along with Darling. It's always difficult to be sure, but Brown's action on the world stage almost certainly prevented a worldwide banking crisis. Experience in the 30s shows how horrific that I could be and I would postulate that in a modern, essentially cash free economy if the banks literally stopped, even for a day or two, it would be catastrophic. Try to imagine, no one being paid, no one able to pay for anything...

It is true that Brown could have extracted more from the banks in return but actually the UK turned a profit on insurancing the banks and would have done well out if RBS and Lloyds if Osborne hadn't sold them cheap.

What is so frustrating to me is that the Conservative economic policy is not just not great, it is the very opposite of what we should be doing and they have managed to win one and a two half elections on a platform of economic competence. Which I suspect is why Martin Wolf of the FT described it as insane economics.

The magic money tree is a great soundbite but is just another example of effective propaganda. Anyone who uses it either doesn't know what they're talking about or is lying to you.

AFZ

--------------------
Everyone is entitled to his own opinion, but not his own facts.
[Sen. D.P.Moynihan]

An Alien's View of Earth - my blog (or vanity exercise...)

Posts: 2099 | From: Zog, obviously! Straight past Alpha Centauri, 2nd planet on the left... | Registered: Dec 2003  |  IP: Logged
Sarah G
Shipmate
# 11669

 - Posted      Profile for Sarah G     Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by alienfromzog:
quote:
Originally posted by Sarah G:
JC is planning to spend a lot of money on a lot of different things, of which public sector pay is but one. Is it generally accepted in economics that this will have a significant effect on the inflation rate?

The short answer is that it depends.

I would be interested in a longer answer, if possible.
quote:

And then you have to talk about how moderate inflation has both good and bad consequences for most people.

I did a little bit of rooting around to learn more on this point, and I arrived top article here, which seems to be free of politics AFAICS, but is behind a paywall if you've already used your freebies.

To summarise, these are the effects they mention:

1) Financial instruments change their attractiveness up or down
2) Drivers lose out
3) Pensioners lose out
4) Workers lose out if Brexit hits
5) The housing market slows

I'm struggling to see the positives, and the last three are a bit worrying.

Posts: 514 | Registered: Jul 2006  |  IP: Logged
alienfromzog

Ship's Alien
# 5327

 - Posted      Profile for alienfromzog   Email alienfromzog   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Sarah G:
quote:
Originally posted by alienfromzog:
quote:
Originally posted by Sarah G:
JC is planning to spend a lot of money on a lot of different things, of which public sector pay is but one. Is it generally accepted in economics that this will have a significant effect on the inflation rate?

The short answer is that it depends.

I would be interested in a longer answer, if possible.
quote:

And then you have to talk about how moderate inflation has both good and bad consequences for most people.

I did a little bit of rooting around to learn more on this point, and I arrived top article here, which seems to be free of politics AFAICS, but is behind a paywall if you've already used your freebies.

To summarise, these are the effects they mention:

1) Financial instruments change their attractiveness up or down
2) Drivers lose out
3) Pensioners lose out
4) Workers lose out if Brexit hits
5) The housing market slows

I'm struggling to see the positives, and the last three are a bit worrying.

Positives for you:
1) Deflation (which was a real risk back in 2011-12) is really bad for an economy. Although to be fair, I don't think it a big risk at the moment.
2) Inflation is good for reducing debt in real terms. Moderate inflation (c.f. v.low inflation) means that debts are significantly smaller.
3) Moderate inflation makes non-productive assets (i.e. gold) less attractive and hence encourages more investment in productive parts of the economy - such as business lending.

I'll have a look and see if anyone's done the empirical work on this specific point.

AFZ

--------------------
Everyone is entitled to his own opinion, but not his own facts.
[Sen. D.P.Moynihan]

An Alien's View of Earth - my blog (or vanity exercise...)

Posts: 2099 | From: Zog, obviously! Straight past Alpha Centauri, 2nd planet on the left... | Registered: Dec 2003  |  IP: Logged
alienfromzog

Ship's Alien
# 5327

 - Posted      Profile for alienfromzog   Email alienfromzog   Send new private message       Edit/delete post   Reply with quote 
I haven't found any empirical data but the principal is that increases in public sector spending would not cause inflation whilst there's spare capacity in the economy. Furthermore current inflation drivers are the cost of oil and imports because of the weak pound.

It's important to separate out wage inflation and price inflation. If wage increases keep pace with prices then most of us are not worse off at all. It's only people on a fixed income that suffer. Inflationary cycles whereby high inflation expectation drives spiralling wages and prices are very damaging but that's not what we're looking at.

I think that the Labour plans wouldn't drive inflation and if they did then this would be of the 'normal' level and could be effectively managed with conventional means (interest rates). But you need a real expert to check that out. Either way is a much smaller risk than the risk of further austerity which we know is making things worse.

AFZ

--------------------
Everyone is entitled to his own opinion, but not his own facts.
[Sen. D.P.Moynihan]

An Alien's View of Earth - my blog (or vanity exercise...)

Posts: 2099 | From: Zog, obviously! Straight past Alpha Centauri, 2nd planet on the left... | Registered: Dec 2003  |  IP: Logged
anteater

Ship's pest-controller
# 11435

 - Posted      Profile for anteater   Email anteater   Send new private message       Edit/delete post   Reply with quote 
I have just got to the bit in Mark Blyth's book where he explains why the Eurozone is actually condemned to perpetual austerity, and outcome he views as unredeemably shitty. And it's scary, and makes you wonder about those who supported the Euro.

I had already had Euro-skepticism (a sadly amibuous term - we need that plus EU-skepticism - I was a remainer) confirmed by Joseph Stiglitz' book but Blyth's description of it as a monetary domesday weapon is truly worrying. Read the book but here's the summary, a lot of which I didn't know.

So a key difference between US and Eurozone is that the US banks were too big to fail but not too big to bail, painful though that was and still is. So now, roughly, the top six banks have assets equal to about 60% of US GDP, so any one failing would have a really serious effect, of up to ten percent of GDP.

By contrast, the top THREE French banks have assets up around 350% of French GDP, and so are not only too big to fail but too big to bail. There is no way the French government can clean out the stables as the Fed did in the US. Other Eurozone countries are similarly placed, France being just the worse one.

If you compared the assets in the banks to the Eurozone GDP a different answer may emerge, but the ECB is not equipped to do the bail out. This means the only way to get back into order is to progressively deflate until all the countries become like Germany, who is the only beneficiary of the Euro (to be fair Blyth is not sure that even Germany is a beneficiary, but he is certain that it is the only candidate for this privilege).

So what about UK? Our exposure is about as bad as France, but we do have our own currency. I really don't know what that means.

Now all this was written about 2 years ago but it's still worrying.

--------------------
Schnuffle schnuffle.

Posts: 2527 | From: UK | Registered: May 2006  |  IP: Logged
Alan Cresswell

Mad Scientist 先生
# 31

 - Posted      Profile for Alan Cresswell   Email Alan Cresswell   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by anteater:
a key difference between US and Eurozone is that the US banks were too big to fail but not too big to bail, painful though that was and still is. So now, roughly, the top six banks have assets equal to about 60% of US GDP, so any one failing would have a really serious effect, of up to ten percent of GDP.

By contrast, the top THREE French banks have assets up around 350% of French GDP, and so are not only too big to fail but too big to bail.

Can you explain how this relates to the Euro? Surely if France still used the Franc then that wouldn't affect the comparison between the assets of the banks and the French GDP? Also, are those assets limited to within each nation, or is it a reflection of French banks holding significant assets outside France and US banks being largely limited to the US?

--------------------
Don't Brexit if you haven't a scooby how to fix it.

Posts: 32121 | From: East Kilbride (Scotland) or 福島 | Registered: May 2001  |  IP: Logged
chris stiles
Shipmate
# 12641

 - Posted      Profile for chris stiles   Email chris stiles   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Alan Cresswell:

Can you explain how this relates to the Euro? Surely if France still used the Franc then that wouldn't affect the comparison between the assets of the banks and the French GDP?

Because the ECB doesn't act as a lender of last resort for the Euro. As the Greeks found out, in the final analysis the Germans don't want to bail out anyone else.

quote:

Also, are those assets limited to within each nation, or is it a reflection of French banks holding significant assets outside France and US banks being largely limited to the US?

It reflects both sets of banks holding significant amounts of bad assets (and yes most of the assets held by French banks are foreign in the sense of being foreign to France).
Posts: 3834 | From: Berkshire | Registered: May 2007  |  IP: Logged
Enoch
Shipmate
# 14322

 - Posted      Profile for Enoch   Email Enoch   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by anteater:
I have just got to the bit in Mark Blyth's book where he explains why the Eurozone is actually condemned to perpetual austerity, and outcome he views as unredeemably shitty. And it's scary, and makes you wonder about those who supported the Euro. ...

I shouldn't worry too much about it Anteater. I'm sure you can find someone else of equal or greater credibility who will say something completely different. And alarmism both sells and gets you interviews on chat shows.

--------------------
Brexit wrexit - Sir Graham Watson

Posts: 7320 | From: Bristol UK(was European Green Capital 2015, now Ljubljana) | Registered: Nov 2008  |  IP: Logged
Alan Cresswell

Mad Scientist 先生
# 31

 - Posted      Profile for Alan Cresswell   Email Alan Cresswell   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by chris stiles:
quote:
Originally posted by Alan Cresswell:

Can you explain how this relates to the Euro? Surely if France still used the Franc then that wouldn't affect the comparison between the assets of the banks and the French GDP?

Because the ECB doesn't act as a lender of last resort for the Euro. As the Greeks found out, in the final analysis the Germans don't want to bail out anyone else.
Which doesn't change the maths - assuming there is a lender of last resort for banks with assets significantly in excess of GDP then that lender will have severe difficulties bailing out a failing bank, regardless of whether they're using Euros, Francs or doubloons.

Besides, isn't the ECB lender of last resort for the banking sector, but not for government bonds? I may have that wrong though.

--------------------
Don't Brexit if you haven't a scooby how to fix it.

Posts: 32121 | From: East Kilbride (Scotland) or 福島 | Registered: May 2001  |  IP: Logged
alienfromzog

Ship's Alien
# 5327

 - Posted      Profile for alienfromzog   Email alienfromzog   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Enoch:
quote:
Originally posted by anteater:
I have just got to the bit in Mark Blyth's book where he explains why the Eurozone is actually condemned to perpetual austerity, and outcome he views as unredeemably shitty. And it's scary, and makes you wonder about those who supported the Euro. ...

I shouldn't worry too much about it Anteater. I'm sure you can find someone else of equal or greater credibility who will say something completely different. And alarmism both sells and gets you interviews on chat shows.
Go on then! Lazy anti-intellectualism adds nothing to the debate.

I can find lots of people who will tell you that vaccines are dangerous. They're still wrong. I know this because this is my field and I know the data.

AFZ

--------------------
Everyone is entitled to his own opinion, but not his own facts.
[Sen. D.P.Moynihan]

An Alien's View of Earth - my blog (or vanity exercise...)

Posts: 2099 | From: Zog, obviously! Straight past Alpha Centauri, 2nd planet on the left... | Registered: Dec 2003  |  IP: Logged
chris stiles
Shipmate
# 12641

 - Posted      Profile for chris stiles   Email chris stiles   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Enoch:
I shouldn't worry too much about it Anteater. I'm sure you can find someone else of equal or greater credibility who will say something completely different.

No. I think this silly and ultimately a counsel of defeat - basically it amounts to throwing up our hands and saying 'no one can know anything and what do those experts know anyway'.

I think you can give salience to different views by their explanatory power - and this explanation has a fairly good track record in explaining the behaviors of the various actors before and (crucially) after the crisis.

Some things are just facts, the amount on the balance sheets of banks are facts, as are their leverage ratios.

Posts: 3834 | From: Berkshire | Registered: May 2007  |  IP: Logged
Sarah G
Shipmate
# 11669

 - Posted      Profile for Sarah G     Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by alienfromzog:
I haven't found any empirical data but the principal is that increases in public sector spending would not cause inflation whilst there's spare capacity in the economy. Furthermore current inflation drivers are the cost of oil and imports because of the weak pound...

I think that the Labour plans wouldn't drive inflation and if they did then this would be of the 'normal' level and could be effectively managed with conventional means (interest rates). But you need a real expert to check that out.

Thanks for the info! Very helpful.

Am I right in thinking that by 'capacity in the economy' you mean unemployment? If so, surely JCs aim would be to remove that sharpish, presumably meaning that public spending will have an inflationary effect?

I don't see the pound strengthening much anytime soon, meaning the underlying oil/import inflation you mention will remain. Can high inflation be brought down by interest rates effectively? What effect would that have on investment?

A little bit of Googling suggests that the EU and US inflation rates are about 2%. If we're at 3% and rising, it feels like a problem to me.

quote:

Either way is a much smaller risk than the risk of further austerity which we know is making things worse.

But surely the choice isn't only between Osborne austerity and Corbyn magic money tree levels of spending. He's put a lot of expensive commitments out there. I suspect that a controlled turning on of the tap would be a better plan.
Posts: 514 | Registered: Jul 2006  |  IP: Logged
alienfromzog

Ship's Alien
# 5327

 - Posted      Profile for alienfromzog   Email alienfromzog   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Sarah G:
quote:
Originally posted by alienfromzog:
I haven't found any empirical data but the principal is that increases in public sector spending would not cause inflation whilst there's spare capacity in the economy. Furthermore current inflation drivers are the cost of oil and imports because of the weak pound...

I think that the Labour plans wouldn't drive inflation and if they did then this would be of the 'normal' level and could be effectively managed with conventional means (interest rates). But you need a real expert to check that out.

Thanks for the info! Very helpful.

Am I right in thinking that by 'capacity in the economy' you mean unemployment? If so, surely JCs aim would be to remove that sharpish, presumably meaning that public spending will have an inflationary effect?

I don't see the pound strengthening much anytime soon, meaning the underlying oil/import inflation you mention will remain. Can high inflation be brought down by interest rates effectively? What effect would that have on investment?

A little bit of Googling suggests that the EU and US inflation rates are about 2%. If we're at 3% and rising, it feels like a problem to me.

quote:

Either way is a much smaller risk than the risk of further austerity which we know is making things worse.

But surely the choice isn't only between Osborne austerity and Corbyn magic money tree levels of spending. He's put a lot of expensive commitments out there. I suspect that a controlled turning on of the tap would be a better plan.

Inflation is specifically a comparison of prices (&/or wages) to a year ago. The effect of the weak pound has meant a rise in prices. If the pound doesn't fall further, then in 12 months time this effect will disappear. Conversely because of Brexit, I think it will but the appropriate response to that is to strengthen the fundamentals of the economy by investment.

Spare capacity does indeed refer to unemployment but also underemployment (people wanting full time work but only being able to find part time employment). Danny Blanchflower, former member of the Bank of England monetary committee tried to calculate an estimate of this. It's not easy.

But the big one with the UK is the productivity gap:
Guardian article. The point is that when wages rise faster than prices, standards of living improve.

We can be fairly certain that there is significant spare capacity because the trend growth since 1945 is very consistent. After each recession bar one, the economy grew faster than the trend rate and made up the lost ground (this is the definition of a recovery). Care to guess which one?

This is the really worrying aspect though, that austerity might be harming the UK'S longterm growth potential. This would cost us all more than any short term costs. And it is a real concern. If people are unemployed for a prolonged period it harms their lifetime earning potential and their children's educational attainment is affected as well. Cutting the education support allowance was another example of a stupid idea. It cost peanuts. It only has to have a tiny effect on the educational outcomes of the poorest to easily pay for itself several times over. We don't (AFAIK) have the data yet but I'm betting it has quite a large effect on those who benefitting from it.

There is no magic money tree, it's just basic macroeconomics. The limitations are when governments can't borrow anymore and then their room for manoeuvre is limited. But the UK is currently paying effectively negative interest rates (that is in real terms, investors are paying the UK to look after their money!) So that's not an issue. The scary scenario is that austerity weakens the economy and piles on the debt (as we have seen in the past 7 years) and makes us all poorer and debt with reach 100% GDP or more with no gains. Borrow now, spend countercyclically and the economy will grow faster and the debt will take care of itself.

Austerity remains good politics and terrible economics.

This is now two years old but gives you some numbers to explain what we're talking about.

AFZ

--------------------
Everyone is entitled to his own opinion, but not his own facts.
[Sen. D.P.Moynihan]

An Alien's View of Earth - my blog (or vanity exercise...)

Posts: 2099 | From: Zog, obviously! Straight past Alpha Centauri, 2nd planet on the left... | Registered: Dec 2003  |  IP: Logged
anteater

Ship's pest-controller
# 11435

 - Posted      Profile for anteater   Email anteater   Send new private message       Edit/delete post   Reply with quote 
Alan:
quote:
Which doesn't change the maths - assuming there is a lender of last resort for banks with assets significantly in excess of GDP then that lender will have severe difficulties bailing out a failing bank, regardless of whether they're using Euros, Francs or doubloons.
I would reply thus. In the US case, huge though the amount of X-rated shit on the bank balance sheets was, it was still capable of being bought and switched by the Fed, due to the large US GDP. If all the banks had been headquartered in Iowa and any bail-out had to be done by Iowa, your point would probably apply.

Plus they can print money - and how!

I'm still trying to grasp all this, and unfortunately it is highly technical. But the videos on YouTube are really good and I think you'd like him. Moderate left wing, thinks austerity is demonstrably on a par with leeching, and even come from the right side of the border! [Smile]

--------------------
Schnuffle schnuffle.

Posts: 2527 | From: UK | Registered: May 2006  |  IP: Logged
Russ
Old salt
# 120

 - Posted      Profile for Russ   Author's homepage     Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by alienfromzog:
Borrow now, spend countercyclically and the economy will grow faster and the debt will take care of itself.

Keynesian countercyclical policy makes perfect sense. AIUI it means borrowing to spend on capital works during the (roughly one-third of the) time that the economy is in a (relative) trough and paying the money back during the (roughly one-third of the) time that the economy is doing relatively well.

Politicians seem to find the second half of the prescription really difficult to follow.

I commend to you Alan Cresswell's qualifier that skill & expertise are needed to identify those projects which will make a real substantial difference to economic growth.

It's not true that any old borrow-and-spend will do.

--------------------
Wish everyone well; the enemy is not people, the enemy is wrong ideas

Posts: 3029 | From: rural Ireland | Registered: May 2001  |  IP: Logged
Crœsos
Shipmate
# 238

 - Posted      Profile for Crœsos     Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Russ:
Keynesian countercyclical policy makes perfect sense. AIUI it means borrowing to spend on capital works during the (roughly one-third of the) time that the economy is in a (relative) trough and paying the money back during the (roughly one-third of the) time that the economy is doing relatively well.

Politicians seem to find the second half of the prescription really difficult to follow.

Actual experience with austerity seems to indicate that it's really the first half of the prescription that politicians find difficult to follow. I've pointed out that, contrary to conventional wisdom, politicians seem to find it very easy to "take away the punch bowl".

quote:
Originally posted by Russ:
I commend to you Alan Cresswell's qualifier that skill & expertise are needed to identify those projects which will make a real substantial difference to economic growth.

It's not true that any old borrow-and-spend will do.

Actually it is. The main point is not to get a return on investment but to get enough money circulating in the general economy again to overcome the paradox of thrift. If you can do that while also funding projects that have later value so much the better, but that's not a necessary component of Keynesian counter-cyclical spending. Keynes himself once came up with a thought exercise about money being injected into the economy by burying bank notes in bottles.

quote:
If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.
This was in part a response to those who were in theory in favor of government deficit spending during recessions but always found some reason why the projects were impractical. Keynes noted that even impractical projects can boost the economy under the right conditions. (This was also an oblique attack on the gold standard, the idea that money can only come from digging up gold and then re-burying it in bank vaults.)

[ 20. June 2017, 20:31: Message edited by: Crœsos ]

--------------------
Humani nil a me alienum puto

Posts: 10438 | From: Sardis, Lydia | Registered: May 2001  |  IP: Logged
Sarah G
Shipmate
# 11669

 - Posted      Profile for Sarah G     Send new private message       Edit/delete post   Reply with quote 
If JCs policies would be so good for the economy, why do the financial markets not like them?
Posts: 514 | Registered: Jul 2006  |  IP: Logged
Alan Cresswell

Mad Scientist 先生
# 31

 - Posted      Profile for Alan Cresswell   Email Alan Cresswell   Send new private message       Edit/delete post   Reply with quote 
Financial markets are just part of the economy, that part which is concerned with finance and in particular turning as big a profit as possible. What's good for the economy as a whole may not result in the biggest profits for the financial markets.

--------------------
Don't Brexit if you haven't a scooby how to fix it.

Posts: 32121 | From: East Kilbride (Scotland) or 福島 | Registered: May 2001  |  IP: Logged
Dafyd
Shipmate
# 5549

 - Posted      Profile for Dafyd   Email Dafyd   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Alan Cresswell:
Financial markets are just part of the economy, that part which is concerned with finance and in particular turning as big a profit as possible. What's good for the economy as a whole may not result in the biggest profits for the financial markets.

Also of course the people who work in financial markets are as likely to adhere to popular economic fallacies as anybody else.

--------------------
we remain, thanks to original sin, much in love with talking about, rather than with, one another. Rowan Williams

Posts: 10375 | From: Edinburgh | Registered: Feb 2004  |  IP: Logged
Sioni Sais
Shipmate
# 5713

 - Posted      Profile for Sioni Sais   Email Sioni Sais   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Sarah G:
If JCs policies would be so good for the economy, why do the financial markets not like them?

Jeremy Corbyn isn't opposed to the markets, even the financial markets, but he does think the markets should serve man, not the other way round.
Posts: 24001 | From: Newport, Wales | Registered: Apr 2004  |  IP: Logged
alienfromzog

Ship's Alien
# 5327

 - Posted      Profile for alienfromzog   Email alienfromzog   Send new private message       Edit/delete post   Reply with quote 
Simon Wren-Lewis addressing some of the points we talked about earlier.

He also refers in this post to the work by Blanchflower on underemployment.

There is a danger that I (and others?) will just link to Wren-Lewis's blog continually but I have found he makes complex macroeconomics very accessible.

AFZ

Posts: 2099 | From: Zog, obviously! Straight past Alpha Centauri, 2nd planet on the left... | Registered: Dec 2003  |  IP: Logged
Leorning Cniht
Shipmate
# 17564

 - Posted      Profile for Leorning Cniht   Email Leorning Cniht   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by alienfromzog:

There is a danger that I (and others?) will just link to Wren-Lewis's blog continually but I have found he makes complex macroeconomics very accessible.

I don't agree with him very often when he strays into politics as opposed to economics (when he does, he comes over as far more collectivist than I am comfortable with), but I find his economic presentation both clear and, as far as I can judge, generally correct.
Posts: 4841 | From: USA | Registered: Feb 2013  |  IP: Logged
Sarah G
Shipmate
# 11669

 - Posted      Profile for Sarah G     Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Dafyd:
quote:
Originally posted by Alan Cresswell:
Financial markets are just part of the economy, that part which is concerned with finance and in particular turning as big a profit as possible. What's good for the economy as a whole may not result in the biggest profits for the financial markets.

Also of course the people who work in financial markets are as likely to adhere to popular economic fallacies as anybody else.
I thought they all had many very expensive economists employed specifically to avoid that sort of thing happening. If everyone is heading in one direction, but you head in the other and get it right, you make a killing. But if you follow everyone else and it's wrong, you're dead.

They may be trying to turn a big profit, but they're doing it by betting on what would be most effective route for the British economy.

Posts: 514 | Registered: Jul 2006  |  IP: Logged
chris stiles
Shipmate
# 12641

 - Posted      Profile for chris stiles   Email chris stiles   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Sarah G:
I thought they all had many very expensive economists employed specifically to avoid that sort of thing happening. If everyone is heading in one direction, but you head in the other and get it right, you make a killing. But if you follow everyone else and it's wrong, you're dead.

If you really believe this then I give you all the alleged ten sigma events that have happened in the last 50 years.

Besides, the markets can stay insane for longer than you can remain solvent, and generally it's hard not to follow the herd.

[ 21. June 2017, 20:53: Message edited by: chris stiles ]

Posts: 3834 | From: Berkshire | Registered: May 2007  |  IP: Logged
Sarah G
Shipmate
# 11669

 - Posted      Profile for Sarah G     Send new private message       Edit/delete post   Reply with quote 
By 'ten sigma event', I assume you're referring to probability/statistical distribution mathematics to denote an event extremely unlikely to occur. If so, I'm not sure what your point would be here. Some unpacking would be helpful.

My musing is that investment firms have very well paid economists on board who are being asked inter alia to predict the likely outcomes of Labour versus Tory governments to the health of the economy. These firms make money by getting it right. If they invest in sectors tied to the health of the UK economy, and it goes wrong, they lose money. Or make money if it goes right.

These people seem to be saying that a Labour government would be significantly worse than a Tory one. When Tony Blair was elected in 1997, the stock market soared. The opposite view seems to be taken to a JC government.

There's got to be much more to it than 'JC would be bad for the economy because that's what the Telegraph says'. I wonder what...

Posts: 514 | Registered: Jul 2006  |  IP: Logged
chris stiles
Shipmate
# 12641

 - Posted      Profile for chris stiles   Email chris stiles   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Sarah G:

There's got to be much more to it than 'JC would be bad for the economy because that's what the Telegraph says'. I wonder what...

If 'everyone knows' that such and such would make the pound fall, then it becomes a self fulfilling prophecy - at least in the short term. Note that in all cases the impact was to short term instruments, gilt rates hardly budged.
Posts: 3834 | From: Berkshire | Registered: May 2007  |  IP: Logged
lilBuddha
Shipmate
# 14333

 - Posted      Profile for lilBuddha     Send new private message       Edit/delete post   Reply with quote 
Good for the economy. What that means depends on how one looks at it. Short-term v. long term. Good for rich v. good for poor. The economy can do well whilst the average person is not.
I think you will find that investment firms were not employing amateur economists on the run up to the great recession.

--------------------
So goodnight moon, I want the sun
If it's not here soon, I might be done
No it won't be too soon 'til I say goodnight moon

- A. N. Parsley, D. Mcvinni

Posts: 16934 | From: the round earth's imagined corners | Registered: Dec 2008  |  IP: Logged



Pages in this thread: 1  2  3 
 
Post new thread  Post a reply Close thread   Feature thread   Move thread   Delete thread Next oldest thread   Next newest thread
 - Printer-friendly view
Go to:

Contact us | Ship of Fools | Privacy statement

© Ship of Fools 2016

Powered by Infopop Corporation
UBB.classicTM 6.5.0

 
Check out Reform magazine
sip of fools mugs from your favourite nautical website
 
  ship of fools