Gordon Browns Economic Miracle?

[tbaldwin]

I seem to remember a certain poster on here, not a million miles away from the posts above going absolutely ape during a thread in which I gently suggested that he, and the hypothetical "working man in the street" he is so fond of claiming to speak for, might just be a little influenced by the right wing media

Apparently now it is only the liberal media who have any influence and right wing views are acquired naturally (or are not actually right wing at all, but by some stange alchemical process become "left wing" if popular enough )

Added - that thread in all its glory -
the other thread

Oh dear another person with a major problem in telling the truth.
The exchange we had on that thread was after you accused me of just coming out with views from the Sun and Mail and i pointed out i read neither and was an Internationalist who favoured a massive redistribution of wealth and power.

I have never said that anybody was immune from the influence of the media.
But a lot of people on U75 are so influenced by the liberal media and their feelings of superiority that they think that all problems would be solved if everyone was as nice and as educated as them.
And that is why i get slated so much as "man of the people etc" because i have the cheek to question "the enlightened ones".

 

[tbaldwin]

I'm saying that policies can only mitigate recessions (although mitigation is often enough for "the man on the Clapham Omnibus"), no economy has the power to avoid recession.
As for "boom and bust", again, you can smooth the peaks and troughs, but you can't "avoid" them because the factors that cause them are outside of direct control.

Policy CAN have significant effects to mitigate economic problems, but it has to be the right policy(s) applied at the right time, or else the effect won't be what was wished for.

er What are these forces outside of "direct control" all sounds a bit sci fi to me.

 

[tbaldwin]

I agree also with previous posters who pointed out that job creation has been a public sector affair and that travel costs have increased also. Our serious lack of investment in hard capital is skated around by the North Sea still managing to pump a little oil and gas out but this issue also has to faced upto.

In short this is a stop gap chancellor, stalling for time and putting off the inveitable, using fortune to place a mirrage of prosperity and prudence and developing an economic basis which has no stability.

As for the rest of the thread, there has been too much talk by one psoter of "middle class liberals/lefties/scum/etc and this user should try and mend their damaged reputation by telling us firstly who these horible people are and how he/she is so very different from them.

Well yes there has been a huge increase under this Labour govt in public spending. But unlike previous Lbaour govts they made sure they had some money first before going on a spending spree.
Not that the "middle class liberal leftie scum etc would ever want to give them credit for that.

As for your last paragraph i really have no idea who your talking about.
But just suppose it was me. Id say not too worried about a "damaged reputation" on Urban 75.
The people are "all the scum who just want to scapegoat politicians" instead of doing something more positive.
I meet them too often thru work the type of person in a position to see that all the extra money that goes to help disadvantaged people is well spent and wastes it on useless bureacracy, to ensure those the money was intended to help get hardly any benefit from it.
Im different enough from these people on here and thru my work to be disliked and mistrusted by them.

 

[ViolentPanda]

er What are these forces outside of "direct control" all sounds a bit sci fi to me.

Capital flows, a weakly-regulated financial market, that sort of thing. Such forces place large parts of the economy outside of control or even influence by the treasury.

I'm sorry mate, but if you don't understand the basics (and we are talking GCSE-level stuff here) how the bugger can you pontificate or even comment about Brown's policies?

 

[tbaldwin]

Capital flows, a weakly-regulated financial market, that sort of thing. Such forces place large parts of the economy outside of control or even influence by the treasury.

I'm sorry mate, but if you don't understand the basics (and we are talking GCSE-level stuff here) how the bugger can you pontificate or even comment about Brown's policies?

Yeah sorry VP, Im really not very clever.
Perhaps you can explain further, Capital flows? a weakly regulated financial market they lead to reccesions do they?.
Er how?
And do govt policies not effect this?
Can you give me more details to explain why the reccesion of the 80s for example was caused by forces out of the direct control of politicians?

 

[ViolentPanda]

Yeah sorry VP, Im really not very clever.

Disingenuous bollocks.

Perhaps you can explain further, Capital flows? a weakly regulated financial market they lead to reccesions do they?.
Er how?

A recession is (roughly speaking) the manifest effect of poor or negative growth in the economy. Growth is affected by a number of factors, including inward investment. Capital flows are no longer regulated, which has increasingly meant that investment is outward and short-term rather than inward and medium/long-term, whch contributes to less overall econoic stability, more "peaks and troughs" in the economy, and an overall easier slide into recession
As for weakly regulated financial markets, while they don't directly lead to recessions they encourage the sort of economic short-termism that contributes to instability.

And do govt policies not effect this?

Yes, they affect recessions, but as I said earlier, they affect it to various degrees depending on how much and when action is taken.

Can you give me more details to explain why the reccesion of the 80s for example was caused by forces out of the direct control of politicians?

Rather than give you more details, I suggest you read a few non-political histories of the economy in that period and ascertain how much control politicians would have been able to exercise.

Answer me this question. Who or what forces control the economy of a country?

 

[Fledgling]

Well it is hard to say decisively but I don't think that there is necessarily high ability to control as my first post on this thread made. I think that politicians are not the only people to blame, after all look at the fall in savings and the rise of consumption contribution to the economic growth, the government did not make it easier for people to choose these options. AND I stated that outside influences have an effect which no one can really control for, New Labour has been lucky but that outside luck is not as strong as previously.

tBaldwin, you are correct, you were the poster I was referring to and have answered my questions in the later paragraphs. But can you really disagree that the government borrowing situation is unsustainable as this IS a conscious decision taken by the government.


Outside forces are not necessarily forces no one can control, a mythical misty hazewhich float in form time to time. They are changes no one country is responsible for and no one group of people can affect. But governments can repsond to such forces to an extent and I am arguing that the current government is not facing outside challenges just as it is not responsible for the last 8 years of relative growth, this is a riding the wave government.

 

[Mungy]

minimum wage would give me working 35 hours a week something like £10,000. the govt take their 22% leaving about £7,800. currently my rent is about £2,000 pa. so that leaves me £5,800. Council tax for me is something like £900 pa, leaving me £4,900. water rates and energy bills probably weigh in at about £1,000 pa, leaving £3,900. which leaves me with £75 per week or £300 per month to buy food and other luxuries

 

[ska invita]

Im no economist, but I ownder if someone knows about this:

Doesn't the fact that this current "boom" is taking place for practicaly the first time within the new globalised economy mean that the dynamic is different from previous models?

The growth in exporting of production to poorer parts means that there is a much reduced strata of production jobs in the UK , which would have been (I am guessing) worst effected by any signs of a "bust" (?) - as mentioned before there is a huge rise in state payed labour - maybe someone could explain this dynamic a bit better.

I'm pretty certain that globalisation will have some sort of effect, and from my very crude understanding of economics, I would imagine it would provide stability for the UK and increased instability for satellite producers.

Anyone really know about that?

 

[Stanley Edwards]

What success?

Retail sales are at a 22 year low. Inflation is rising. We have the highest ever debt/person levels (well beyond relative inflation). Unemployment is rising. House prices have reached crazy levels...

Don't know about the boom bust cycle but, it's all looking very familiar. 22 years ago - 1983.

 

[ViolentPanda]

What success?

Retail sales are at a 22 year low.

There was an interesting interview on "You and Yours" on Radio 4 yesterday (in case you want to go to the website and have a listen) with some retail honcho. The interviewer basically accused the retail sector of having unrealistic growth expectations off the back of consumer credit and that the switch that has been noticed from spending to saving in the last financial quarter has wrong-footed retailers. The retail honcho blathered a lot, but couldn't deny that basically the sector had shot themselves in the foot by projecting constant growth. Dickheads.

Inflation is rising.

I'm not sure that inflation is going to surge though, because at the moment there are specific factors that may change (fuel prices for example) that are affecting it.

We have the highest ever debt/person levels (well beyond relative inflation). Unemployment is rising.

And, as usual, is actually rising higher than the figures given out by DfEE tell us.

House prices have reached crazy levels...

...and are a big contributor to the massive personal indebtedness you mentioned. More and more people are having to take on monstrous mortgages because they literally have no other way of being housed.

Don't know about the boom bust cycle but, it's all looking very familiar. 22 years ago - 1983.

I hope not, I really do.

 

[redsquirrel]

There was an interesting interview on "You and Yours" .

 

[tbaldwin]

Disingenuous bollocks.

A recession is (roughly speaking) the manifest effect of poor or negative growth in the economy. Growth is affected by a number of factors, including inward investment. Capital flows are no longer regulated, which has increasingly meant that investment is outward and short-term rather than inward and medium/long-term, whch contributes to less overall econoic stability, more "peaks and troughs" in the economy, and an overall easier slide into recession
As for weakly regulated financial markets, while they don't directly lead to recessions they encourage the sort of economic short-termism that contributes to instability.

Yes, they affect recessions, but as I said earlier, they affect it to various degrees depending on how much and when action is taken.

Rather than give you more details, I suggest you read a few non-political histories of the economy in that period and ascertain how much control politicians would have been able to exercise.

Answer me this question. Who or what forces control the economy of a country?

So do you think govt spending can help a country out of a recession?
And world wide recesions would you argue that they are caused by a general lack of consumer confidence? Or something else?

Your question i would struggle to answer but id guess the people who hold the most power and wealth in the country.
What would you say?

 

[ViolentPanda]

So do you think govt spending can help a country out of a recession?

Do I believe that the Keynesian approach works? Yes, in limited circumstances targeted spending and demand stimulation can help nudge a country into growth.

And world wide recesions would you argue that they are caused by a general lack of consumer confidence? Or something else?

They're caused by lots of things including a lack of consumer confidence

Your question i would struggle to answer but id guess the people who hold the most power and wealth in the country.
What would you say?

I'd say that if you add "institutions" to your answer you'd be on the right track. That's why government policy will only ever have a limited effect on recessions; too much power to control the economy is in hands that don't have to obey government policy. If they don't like something they move elsewhere (they also use that threat as leverage for securing favourable treatment but that's another story).

 

[ViolentPanda]

It had to happen sooner or later!

 

[audiotech]

Heard a radio report which stated that most of the UK's major top companies are recording healthy profits and the stock market is rather buoyant at the moment. Whether this can be sustained is another matter.

 

[the B]

You do not have to buy into any 'conspiracy' to know that a private bank with a total monopoly controls the economy by setting interest rates which then dictate the amount of money in circulation, and thus whether the money supply and so the economy is expanding or contracting.

Debt is a problem when it is at £1.1 trillion and when every new loan creates money which didn't exist before out of thin air. This then devalues the currency and falsely boosts the economy.

Because the link between money supply and growth is so perfect.

Is there actually any real incentive for a bank to screw up the economy? No. Didn't think so either.

£1.1 trillion debt - but also £1.1 trillion credit!!! Rest of that paragraph is a display of ignorance.

 

[the B]

Look at economic history, compare the peaks and troughs of cycles and then ask yourself "is a crash more likely than less likely to happen?"

Bear in mind it isn't the chancellor who in the end controls the economy, it's "the market".

Actually, macroeconomic history has taken a huge turn since the development of macroeconomics.

As fuck ups happen, lessons are learnt.

1929 may well have been the biggest stock market crash (85% off the DJIA) and saw a great depression.

2000 saw the second biggest (40% off the DJIA) and while it's a little recent to be sure, seems like there was just 1 or maybe 2 quarters of negative GDP growth (in the USA, none in the UK).

 

[the B]

I'm saying that policies can only mitigate recessions (although mitigation is often enough for "the man on the Clapham Omnibus"), no economy has the power to avoid recession.
As for "boom and bust", again, you can smooth the peaks and troughs, but you can't "avoid" them because the factors that cause them are outside of direct control.

Policy CAN have significant effects to mitigate economic problems, but it has to be the right policy(s) applied at the right time, or else the effect won't be what was wished for.

Economists have predicted 9 of the last 5 recessions?

When you can see them coming, you can avoid them - and there are ways to smooth out many aspects of the business cycle.

There are 'shocks' to systems (war, disasters, etc) which you can't deal with really. I mean, is economic policy meant to deal with an earthquake or something?

 

[the B]

As far as the original title of the thread asks I would say that fortune has played a great part in the last 8 years of Brown's reign of the purse. The Labour party inherited an already growing economy which had recovered from the early 90's recession and had a surplus to fall back on. We have relied for much of our growth and prosperity on house price booms, decreases in savings, a growth in private credit card companies and cheaper imports from countries such as China. Oil prices hit a low in 1999 and have not until recently really challenged our confidences (2000 can be read as a exceptional blip). The Chancellor has also built up public borrowing to levels which concern private eoconimsts while government economists only appear to beleive that this borrowing has been acceptable as it has not been as bad as the rest of Europe. In fact comparisons are possibly the only thing the gpvernment can now use to "prove" that our eoconmy is robust. But who do we compare to? Germany and the Eurozone.

The prosperity has I think been fuelled by consumer spending, not a good way to ensure continued growth because it is so fickle and dependednt on my original idea, fortune. I agree also with previous posters who pointed out that job creation has been a public sector affair and that travel costs have increased also. Our serious lack of investment in hard capital is skated around by the North Sea still managing to pump a little oil and gas out but this issue also has to faced upto.

In short this is a stop gap chancellor, stalling for time and putting off the inveitable, using fortune to place a mirrage of prosperity and prudence and developing an economic basis which has no stability.

As for the rest of the thread, there has been too much talk by one psoter of "middle class liberals/lefties/scum/etc and this user should try and mend their damaged reputation by telling us firstly who these horible people are and how he/she is so very different from them.

As the Japan experience tells us (and Germany long before), confidence is pretty much everything.

 

[the B]

Disingenuous bollocks.

A recession is (roughly speaking) the manifest effect of poor or negative growth in the economy. Growth is affected by a number of factors, including inward investment. Capital flows are no longer regulated, which has increasingly meant that investment is outward and short-term rather than inward and medium/long-term, whch contributes to less overall econoic stability, more "peaks and troughs" in the economy, and an overall easier slide into recession

Most investment in the OECD countries is internally occuring.

FDI counts for fairly little but is noted because it is seen as being highly beneficial and a sign of good health.

As for weakly regulated financial markets, while they don't directly lead to recessions they encourage the sort of economic short-termism that contributes to instability.

They have been weakly regulated since, well, the 17th century when they started? They are probably more regulated now than ever post Enron/WorldCom etc...

Answer me this question. Who or what forces control the economy of a country?

In a market economy, there are two of them, supply and demand

 

[the B]

Im no economist, but I ownder if someone knows about this:

Doesn't the fact that this current "boom" is taking place for practicaly the first time within the new globalised economy mean that the dynamic is different from previous models?

"You've never had it so good" post WW2 (til the 70s) looks pretty similar to how we've had it of late.

The growth in exporting of production to poorer parts means that there is a much reduced strata of production jobs in the UK , which would have been (I am guessing) worst effected by any signs of a "bust" (?) - as mentioned before there is a huge rise in state payed labour - maybe someone could explain this dynamic a bit better.

You don't need manufacturing. Did you ever see Hong Kong falling to pieces because it couldn't produce physical goods?

London and New York don't make much physically either but they get by and other parts of the world/respective countries aren't refusing to business with them because they don't make something tangible.

Specialisation (which is what outsourcing boils down to) tends to be a good idea.

I'm pretty certain that globalisation will have some sort of effect, and from my very crude understanding of economics, I would imagine it would provide stability for the UK and increased instability for satellite producers.

We're in a sort of second wave of globalisation. First time round, it was pre-WW1 and down to a massive fall in transport costs (time costs too).

Now it's the ability to transmit information instantly that makes it even more possible to globalise.

Globalisation (and international trade) is still very much a preserve of the richer countries. They're the only ones who are really trading in massive amounts. It provides stability in the sense that there is a larger market to sell into/buy from... but there are instabilities arising from being specialised (ie. what happens when your main export turns out valueless, or in the case of agriculture goods, increasingly less valuable).

 

[the B]

What success?

Retail sales are at a 22 year low. Inflation is rising. We have the highest ever debt/person levels (well beyond relative inflation). Unemployment is rising. House prices have reached crazy levels...

Don't know about the boom bust cycle but, it's all looking very familiar. 22 years ago - 1983.

Retail sale growth is at a low. Retail sales are at a high.

Inflation is rising from very low to, not quite so very low but still low.

As I said before, debt is not automatically a problem. We have record credit levels around, why not bang on about that?

If the debt can be financed, what's the problem? I don't see anyone gagging to cause a credit crunch nor any sensible policy maker allowing it to happen. Just flood the market with all needed liquidity to prevent an Asia 1997/8 etc.

Unemployment has risen from very low to not quite so very low.

As for house prices, why does that matter?

If they're too high, go do something else with the money! If you think they are too high (and let us say they are too high) the mechanism would appear to be working.

And things now are very different from 1983.