Guess the cuts !

David

Pardon my French, but this thread is so tight that if you stuck a lump of coal up its ass, in two weeks you'd have a diamond.

ADGS

And once we sold all those diamonds, our deficit worries would be over!

Emma

I'm not buying anyone's bum diamond.

ADGS

People say that about conflict diamonds too, but they still sell somehow.

andy

In 1930, the Republican-controlled House of Representatives, in an effort to alleviate the effects of the the Great Depression, passed the Hawley-Smoot Tariff Act. Which raised tariffs, in an effort to collect more revenue for the federal government. Did it work?

It did not work, and the United States sank deeper into the Great Depression. Today we have a similar debate over this. Anyone know what this is? The Laffer Curve. It says that at this point on the revenue curve, you will get exactly the same amount of revenue as at this point. This is very controversial. Does anyone know what Vice President Bush called this in 1980? Anyone? Something-d-o-o economics. "Voodoo" economics.

Siolae

Excuse my potential naivete, but how is it we were virtually bankrupt at the end of WW2 and have only just paid off that loan a couple of years ago but were able to set up the Welfare State? Any reason why we can't just style out the debt now for a few decades and not consign a good proportion of the population: namely he sick , old and poor to a life of misery? Or am I just being really thick?

ADGS

Well, obviously as a way of kickstarting the economy tariffs are going to be massively counterproductive. That one should have been self-evident at any point after the Industrial Revolution (which happened in Britain first largely because, unsually for Europe at the time, we didn't have internal tariffs).

David

The question isn't "what are we going to do," the question is "what aren't we going to do?"

WillM

@Papa L
"But our actual UK public sector has spent a decade getting more and more heavily overblown and wasting money. Just because they are pro-public spending, Keynes' theories do not mean wasting money is good."

Depends what your goal is. Where (as in the Great Depression) the private sector doesn't create growth (e.g. because companies and consumers wanted to save money rather than spend it, because they're scared of less income in the future), only public spending can turn the dynamic around. It can be useful public investment (e.g. Hoover Dam) or it can be painting trees (obviously the former is a better idea), but it's the only way to bring back significant growth in a short time.

Now, there's room for debate whether we're in this situation, but whether or not you think public spending is in some way inefficient (e.g. would a private sector police force be better at catching criminals, or be more like nightclub bouncers? and who would pay them?), the desired size of the state over the long-run is pretty irrelevant to how much public spending an economy needs to escape a massive recession.

ADGS

According to Mark Gatiss on BBC4 last week, some of the early Hammer films painted trees so as to make richer use of colour cinematography. So it can have its uses. Or could if we still had much of a film industry.

Arkady

I'd like to attempt further relevant contributions to this thread, but I can't stop laughing at "I'm not buying anyone's bum diamond."

Ali

Notice today’s Observer is claiming the London Clearances are about to start with London Councils moving housing benefit people to where they can afford it ie Hastings ! Not many jobs there I believe ! I guess the dice has been thrown and there is not much we can do about it. I just hope the government doesn’t last too long and we get some sense in economic policy. Saw somewhere that Lynne Featherstone is fully behind all this. Bang goes my vote in that direction. Emigrate, that is what happened during the Highland Clearances !

andy

It's on European socialism. I mean, really, what's the point? I'm not European. I don't plan on being European. So who gives a crap if they're socialists? They could be fascist anarchists, it still doesn't change the fact that I don't own a car.

Ian

@Andy Life moves pretty fast. If you don't stop and look around once in a while, you could miss it. (someone had to comment on where you were trying to take this)

dion

@Siolae - inflation eroded the value of the debt. People who suffered were the holders of our sovereign debt and people with fixed incomes i.e. pensioners, and people without inflation proof assets, i.e. poor people. Oh, and future generations, i.e. us.

Papa

@WillM I'm not arguing against public spending itself, I'm pointing out continuing to waste money with our current public spending model to continue a dying consumer boom is not really a viable long-term solution to being in loads of debt because we wasted a load of money on a consumer boom. As I said, I think the public sector is the only way to provide many things. And in Britain successive governments have decided we aren't willing to pay enough direct tax to deliver honest funding of a big state, happy country. Painting trees appears to be the solution being offered by a large section of the anti-cuts lobby. If that lobby was suggesting we used some money to embark on a substantial improvement of the railways, pinpointing the three industries the UK excels at and spending on boosting those, resurfacing roads to fill in the bloody potholes properly, or just a project to make sure every seven year old knows all their times tables, I'd be supportive. Increasing public spending is not the only way to give an economy a recessionary shot in the arm and increase growth in a short time - you've also got quantitative easing, which did exactly that. But in my view there's significant growth (a short term massaging) and there's meaningful growth (a long term benefit) and neither wasting more money or printing it delivers the latter. On a lighter note, I'd love it if Kanye West found out those diamonds he replaced his teeth with came from someone's bum.

WillM

@PapaL - quantitative easing can work, you're right. It works, as I'm sure you're aware, by creating money and spending it on assets and hoping it has a knock-on effect.

That being the case, I'm surprised that you're concerned about 'wasting' money - if we can just create it under QE, who cares if the spending of it in some way 'wastes' something? After all, even 'wasted' money still goes to aggregate demand, so the economy is still stimulated.

I hope you don't mind if I finish off with a question or two - in what sense did we 'waste' money in a dying consumer boom? What did the public sector spend money on that was related to a boom in consumer spending beyond being the result of the revenues from that boom? If you mean that the spending exacerbated the boom, in what ways?

andy

Thank you Ian. Here is your prize.

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Ali

Just walked past Alan Johnson on his way past Scotland Yard looking quite chirpy !

Ali

An interesting view <http://www.publicfinance.co.uk/features/2010/09/there-is-an-alternative/>;

ADGS

Especially worthy of consideration given recent revelations that Osborne himself uses tax loopholes to dodge an estimated million quid plus in liabilities.

miss annie

So, the British and French governments have just signed the joint defence agreement. SG.org speculation was correct - we will be sharing aircraft carriers.

Arkady

Yes I've been a tad smug about that today.

miss annie

I can just imagine the smirking that was going on under the trilby!

sincers

...it not really news though. A bit like prisoners getting the vote. You could see it a mile off.

Arkady

Not everyone it seems. With both policies I think we're seeing an interesting link between Lib Dem ideology and Tory pragmatism. Interesting.

Siolae

The issue of prisoners' votes has been coming for a long time. It was meant to be sorted out under the last government, who shelved it in the run up to the election to avoid the inevitable grief and headlines it would instigate. The reality about this is that the government has absolutely no option - unless they want to be seen handing compensation money to "murderers" etc for denying them their right to vote. Nothing to do with coalition policy, I'm afraid.

sincers

Did anyone see Britain's Trillion Pound Horror on Channel 4 this evening?

Ali

Here is an excellent article from Johann Hari in todays Independent <http://www.independent.co.uk/opinion/commentators/johann-hari/johann-hari-clegg-ndash-the-man-who-betrayed-us-all-2131652.html>;

Ali

Interesting how it looks like the UK will have to pay out £7B to bail out Ireland. According to the LibCons the UK cupboard is bare and we have to have austerity for the UK with everything we have already know about. How can we afford this? Surely if the argument being used by the Government for the UK cuts means anything this must mean even further cuts in the UK. It probably just helps to illustrate the whole facade behind the LibCons arguments !