Is Brexit actually going to happen?

[DexterTCN]

... What if growth is stimulated by tax cuts?...

What? Trickle-down?

 

[SpookyFrank]

i didn't say either of those things. i pointed out that economic shocks - the sort that takes of chunk out of GDP - always result in slashing of public services and the NHS is dependant on a certain level of economic growth. economic growth = greater government income and vise versa.
And no "staying on and seeing what happens" is not going to solve problems or contradictions - its just somewhat less shit than the alternative - an outcome where a neo-liberal shit hole under the likes of rees mogg is a far more likely than a move towards greater equality and less poverty.
Brexit fucks the economy - the only debate is by how much. How that leads to better pay, less poverty or a well funded NHS is a total fucking mystery to me. please enlighten.

Why aim for the least-worst outcome when you can be ideologically pure instead?

You can eat ideology right?

 

[mauvais]

What? Trickle-down?

I'm not suggesting it's a good idea. But you can certainly increase GDP whilst simultaneously reducing treasury revenues, or indeed vice versa.

 

[SpookyFrank]

Brexit fucks the economy - the only debate is by how much.

Another issue is how bad the trade deals we make with the US and others will be. This is likely to relate directly to what kind of relationship with the EU. If we have no deal with the EU and everyone knows we're in a position where we'll sign any old shit just to stay in business, any old shit is what we will get.

 

[HoratioCuthbert]

Why aim for the least-worst outcome when you can be ideologically pure instead?

You can eat ideology right?

Hey, come on. Take the economics TED Talk on tour, do the food banks. They will tell you what the value of the pound tastes like

 

[HoratioCuthbert]

Regardless of what you think of strategy right now I think it needs saying that we are currently standing here looking at people all over the world making a decision that they have had as much as “least worst” as they are prepared to take. That horse has bolted.

 

[SpackleFrog]

i didn't say either of those things. i pointed out that economic shocks - the sort that takes of chunk out of GDP - always result in slashing of public services and the NHS is dependant on a certain level of economic growth. economic growth = greater government income and vise versa.
And no "staying on and seeing what happens" is not going to solve problems or contradictions - its just somewhat less shit than the alternative - an outcome where a neo-liberal shit hole under the likes of rees mogg is a far more likely than a move towards greater equality and less poverty.
Brexit fucks the economy - the only debate is by how much. How that leads to better pay, less poverty or a well funded NHS is a total fucking mystery to me. please enlighten.

You've missed the point mate. Don't worry though, you're not the only one.

 

[free spirit]

So, I've been having a think about what Corbyn's strategy is on Brexit and his thinking about a potential upside to it.

In my view Brexit with the tories in charge of it will be an absolute disaster for the UK both economically and in many other ways, particularly if they respond to the inevitable chaos and recession with further budget cuts and austerity. I suspect that most Brexit supporters on here would agree on that.

But it probably actually is possible to do Brexit in a way that doesn't cause that economic damage / offsets that damage even if we were to take a relatively hard brexit option.

This could be possible if Labour were in control of it, and they recognised the inevitable economic shock of Brexit and were prepared to make a massive state investment in infrastructure projects and social projects across the country, particularly the hardest hit areas of it, with a full buy British policy on procurement for it, and upfront investment in the manufacturing capacity that's needed to replace vital goods / components that currently aren't made in the UK.

Essentially a massive keynsian (possibly stepping over into state capitalism) type response to the economic shock of Brexit, to temporarily replace the lost GDP from trade with government spending to replace the lost markets and to make 'buying british' an actual possibility in the many areas where we have negligible or not capacity.

I'm usually a critic of the MMT approach (printing money to pay for government spending), but at this specific point when there'd otherwise be a big economic shock occurring, it probably would be possible to actually run a quantitative easing for infrastructure type recession busting scheme to create £billions of new money to fund part or all of this without that causing the problems of high inflation etc that could be caused by it at other points in an economic cycle. Or it could just be funded from borrowing (or I guess if they wanted to do the QE side of things on the sly, then borrowing followed by QE to buy the gilts back).

Corbyn and McDonnell have discussed this sort of approach in the past under the term 'people's quantitative easing', and it fits reasonably with the main thrust of their economic policy, even their 'fiscal credibility rule' on balancing the books allows them to borrow to invest, just not borrow to fund day to day spending.

At the last election Corbyn / McDonnell were able to spring a well worked out manifesto on the country at short notice because they'd been working on it in the background. I'd be surprised if they weren't doing the same thing with Brexit, and the lack of anything substantial from them on Brexit at the moment is because they're keeping their powder dry for a possible pre-Brexit election.

As Green / environmentalist I'd hope that this investment was largely on Green infrastructure so that we'd also end up with a rapid transition to a low carbon economy as a happy byproduct of Brexit

Were there to end up being a general election before Brexit, and were something along these lines to turn out to be Corbyn's masterplan for it, then that would give me and probably a lot of remain supporters from the left / green side of things something significant to think about.

I also suspect he'd win that general election by a significant margin with that sort of approach, or at least to the point where he could form a government, particularly if the right wing brexiteers split the recent tory vote between the tories and UKIP.

Anyway that's what I've been pondering on lately. Does this sound plausible / likely scenario for what Labour's version of dealing with the Brexit economic fall out could look like / could it work / are Labour preparing for a possible pre-brexit election etc... thoughts?

 

[free spirit]

ps I just remembered that post is essentially a continuation of a post I made 15 months ago suggesting a big Green New Deal style investment in Green infrastructure as a method of offsetting the economic impact of Brexit.

I'd probably miss elements of being in the EU, but if the government spending to offset the economic shock of Brexit resulted in Leeds getting an underground rail system, integrated cycle network, not having to sit in massive traffic jams every day, and a rapid transition to a low carbon energy system in the next few years then I could probably live with the not being in the EU thing a lot better than under current proposals.

The bit about there being lots of well paid UK construction, engineering and manufacturing jobs secured by it as well would also be a big plus.

 

[kebabking]

The only potential issue would be at what kind of rate the UK would be able to borrow at - I'm not some apocalyptic fool who thinks that the dead will pave the streets, but Brexit, in whatever form, will be an uncertain process/event, and uncertainty means higher interest rates...

Personally I think the above is both the right thing to do and a good electoral plan - I rather take the view that the reason Corbyn did so well in the 2017 GE was that after the electorate took the big, scary step of voting for brexit, they decided they wanted to grasp at something ambitious and hopeful rather the cautiousness of May...

 

[teuchter]

So, I've been having a think about what Corbyn's strategy is on Brexit and his thinking about a potential upside to it.

In my view Brexit with the tories in charge of it will be an absolute disaster for the UK both economically and in many other ways, particularly if they respond to the inevitable chaos and recession with further budget cuts and austerity. I suspect that most Brexit supporters on here would agree on that.

But it probably actually is possible to do Brexit in a way that doesn't cause that economic damage / offsets that damage even if we were to take a relatively hard brexit option.

This could be possible if Labour were in control of it, and they recognised the inevitable economic shock of Brexit and were prepared to make a massive state investment in infrastructure projects and social projects across the country, particularly the hardest hit areas of it, with a full buy British policy on procurement for it, and upfront investment in the manufacturing capacity that's needed to replace vital goods / components that currently aren't made in the UK.

Essentially a massive keynsian (possibly stepping over into state capitalism) type response to the economic shock of Brexit, to temporarily replace the lost GDP from trade with government spending to replace the lost markets and to make 'buying british' an actual possibility in the many areas where we have negligible or not capacity.

I'm usually a critic of the MMT approach (printing money to pay for government spending), but at this specific point when there'd otherwise be a big economic shock occurring, it probably would be possible to actually run a quantitative easing for infrastructure type recession busting scheme to create £billions of new money to fund part or all of this without that causing the problems of high inflation etc that could be caused by it at other points in an economic cycle. Or it could just be funded from borrowing (or I guess if they wanted to do the QE side of things on the sly, then borrowing followed by QE to buy the gilts back).

Corbyn and McDonnell have discussed this sort of approach in the past under the term 'people's quantitative easing', and it fits reasonably with the main thrust of their economic policy, even their 'fiscal credibility rule' on balancing the books allows them to borrow to invest, just not borrow to fund day to day spending.

At the last election Corbyn / McDonnell were able to spring a well worked out manifesto on the country at short notice because they'd been working on it in the background. I'd be surprised if they weren't doing the same thing with Brexit, and the lack of anything substantial from them on Brexit at the moment is because they're keeping their powder dry for a possible pre-Brexit election.

As Green / environmentalist I'd hope that this investment was largely on Green infrastructure so that we'd also end up with a rapid transition to a low carbon economy as a happy byproduct of Brexit

Were there to end up being a general election before Brexit, and were something along these lines to turn out to be Corbyn's masterplan for it, then that would give me and probably a lot of remain supporters from the left / green side of things something significant to think about.

I also suspect he'd win that general election by a significant margin with that sort of approach, or at least to the point where he could form a government, particularly if the right wing brexiteers split the recent tory vote between the tories and UKIP.

Anyway that's what I've been pondering on lately. Does this sound plausible / likely scenario for what Labour's version of dealing with the Brexit economic fall out could look like / could it work / are Labour preparing for a possible pre-brexit election etc... thoughts?

Is there a reason that Brexit has to happen for them to do all that stuff? Couldn't they just do it anyway? Or do you think a post-Brexit Britain will make such an administration more electable?

 

[free spirit]

Is there a reason that Brexit has to happen for them to do all that stuff? Couldn't they just do it anyway? Or do you think a post-Brexit Britain will make such an administration more electable?

The post brexit economic crash that would almost certainly happen without something like that sort of stimulus package would create a justification for that stimulus package to happen that wouldn't be there with out it.

Tbf Labour's manifesto already included policies along these lines, but Brexit would create an economic imperative to bring those plans forward and boost them significantly. Assuming they can win the argument about the wrongheadedness of austerity (particularly slashing infrastructure spending) as a response to an economic crisis.

Without the backdrop of an economic downturn as well, printing any significant level of money to spend on infrastructure could cause problems with inflation, value of the GBP etc. as the financial system would be able to take that money and use it as reserves to back up many multiples of those reserves in lending. At a time of economic crisis this isn't as likely to be a major issue / could well actually be a significant benefit in terms of preventing runs on the banks / ensuring there was enough liquidity in the financial system etc. The same benefits they used as justification for QE mark 1, but done this way we get to build lots of useful things as a useful byproduct rather than just causing a stock market / housing market bubble and inflation for the rest of us.

Basically investment that occurs during a down turn in the economic cycle has much bigger positive impacts on the economy than investment that happens at other points in the cycle, so it makes the more sense to do it to stave off an economic crash than it does to do it during better economic times. In crude terms, if done with borrowing, then when it's done to offset a recession it can / should result in several multiples of that borrowing in GDP increases, so the actual debt to GDP ratio improves as a result of that borrowing rather than getting worse... which ultimately is the bare faced lie at the heart of austerity economics nonsense about household budgets etc.

 

[redsquirrel]

I just think its magical thinking that brexit will open up opportunities for a more leftist economy - it will lead to an increasingly isolated UK, with a weaker economy,

(my emphasis) What do these terms mean? Is today's economy weaker /more leftist than the one in the 90s? What about the one in the 70s?

i didn't say either of those things. i pointed out that economic shocks - the sort that takes of chunk out of GDP - always result in slashing of public services and the NHS is dependant on a certain level of economic growth. economic growth = greater government income and vise versa.

Do you realise that your insistence on constant growth puts you to the right of the Observer's economics editor? By going down the rabbit hole of economics you have ended up alongside Mark Carney.

history very clearly shows that every recession and economic hit since forever - and certainly over the last 50 years - has resulted in slashing of public spending, unemployment and wage squeezes.

Has it?

(from here) There's no decrease in spending in 73/74, 80/81 or 08. I hesitate to go down this route because by even engaging in this argument the political ideology that is economics is being reinforced. But you are (like economists always do) claiming an ideological position as an inviolate truth, yet one after another of these "truths" has been proven to be nonsense.

EDIT: You think of yourself as a socialist right? And you are now building castles who's foundations rest on the very ideology that you oppose don't you see the problem in that?

 

[DexterTCN]

Can you put some comparative charts from other EU countries on it or it means nothing, cheers.

 

[free spirit]

but I also support doing it regardless of Brexit, just without such an immediate urgency to do as much as quickly. Apart from anything else, we've not really recovered from the last recession in many ways (eg household disposable income), and the country is massively in need of significant investment in a wide range of areas from housing to energy to public transport after nearly a decade of austerity.

 

[MightyTibberton]

What you've outlined there isn't far off what Grace Blakeley spoke about in the video I posted earlier today - massive redirection of the economy towards green industries with investment in the "left behind" areas which are struggling after the death of heavy industries. She's talking about keeping capital in the UK and directing it within the UK as a means of financing this.

 

[free spirit]

What you've outlined there isn't far off what Grace Blakeley spoke about in the video I posted earlier today - massive redirection of the economy towards green industries with investment in the "left behind" areas which are struggling after the death of heavy industries. She's talking about keeping capital in the UK and directing it within the UK as a means of financing this.

I'd prefer to keep a good proportion of capital in the UK by taxing it with an enforcement regime to prevent it from escaping from that tax - basically to make up for the massive levels of lost tax revenue from the last decade or more combined with getting back the bulk of the QE money that went into the stock market bubble that caused the ultra rich to become massively more ultra rich.

Then spending the proceeds in the areas with the greatest need of economic stimulus and infrastructure investment.

ps My view is that higher levels of corporation tax combined with higher levels of capital tax allowances are the best way of stimulating business owners to invest significantly into their business. Low corporation tax rates merely encourage them to take the profits out from the business and spend it on well whatever it is that rich people spend their wads of cash on / hoard it / invest it in the stock market.

 

[MightyTibberton]

I should have added an:

I'M NOT EXACTLY AN ECONOMIC GENIUS AND I DIDN'T TAKE NOTES ON THE DISCUSSION

disclaimer to what I said, which is very brief. I'm sure she would recommend lots of taxing too. . . Her original exposition will be much better than my paraphrasing in any case. . . If you have the time. . .

 

[Kaka Tim]

quick note on those graphs - government spending goes up after economic shocks because they have to pay more in things like dole and housing benefit. But spending on other stuff gets squeezed. And yeah - you can take the approach of borrowing and investing to boost the economy - but its still better not to have the economic shock in the first place.

And yes - i take the point that the economy does not have to be tied to the constant search for growth - but that is not how our economy is set up. Maybe after some serious investment in social good and useful manufacturing (i.e. renewables) , reducing the strangle hold that the financial sector has over the economy - then brexit potentially becomes a viable option - but do it now is going to ruin lives, imporversish people and fuck public services and leaves us open to a bleak future as a privatised, low wage, tax haven playground for cunts.

 

[redsquirrel]

So we've already gone from

every time there has been that sort of blow to the economy - from the 70s oil crisis to the 2008 financial crash - it has resulted in slashing of public spending,

history very clearly shows that every recession and economic hit since forever - and certainly over the last 50 years - has resulted in slashing of public spending,

To

quick note on those graphs - government spending goes up after economic shocks because they have to pay more in things like dole and housing benefit.

And yes - i take the point that the economy does not have to be tied to the constant search for growth - but that is not how our economy is set up. Maybe after some serious investment in social good and useful manufacturing (i.e. renewables) , reducing the strangle hold that the financial sector has over the economy - then brexit potentially becomes a viable option - but do it now is going to ruin lives, imporversish people and fuck public services and leaves us open to a bleak future as a privatised, low wage, tax haven playground for cunts.

You couldn't have a better example of where economics leads to, the only option is neo-liberalism - economics are the method, the object is to change the soul.

 

[DexterTCN]

He's going full jehovah's witness now.

 

[Kaka Tim]

So we've already gone from


To


You couldn't have a better example of where economics leads to, the only option is neo-liberalism - economics are the method, the object is to change the soul.

nope - im seeing neither the inconsistency nor how whats written leads to that conclusion. Gov spending can go up after economic shocks - to deal with the effect of the shock - and it also results in cut backs to services.


Remember - Callaghans labour government ended up introducing monetarist policies at the behest of the IMF in response to the economy struggling post oil shock. Corbyn would be under exactly the same pressure - and he would have the counter push of a strong union movement that 70s labour did

 

[DexterTCN]

You mean wouldn't?

Don't go Trump on me.

 

[SpookyFrank]

The only potential issue would be at what kind of rate the UK would be able to borrow at - I'm not some apocalyptic fool who thinks that the dead will pave the streets, but Brexit, in whatever form, will be an uncertain process/event, and uncertainty means higher interest rates...

Personally I think the above is both the right thing to do and a good electoral plan - I rather take the view that the reason Corbyn did so well in the 2017 GE was that after the electorate took the big, scary step of voting for brexit, they decided they wanted to grasp at something ambitious and hopeful rather the cautiousness of May...

May's not been cautious. State borrowing has continued to rise on her watch, with little to show for it in terms of services or infrastructure. She has continued to unravel the NHS and has presided over the effective collapse of other privatised services such as social care and probation. She pissed an even billion up the wall to keep hold of power.

As home secretary May spent eye-watering sums of money on charter deportation flights, sometimes to remove a single individual. She pursued mass detention of migrants at vast cost and with no discernible benefit to anyone but Serco and G4S.

I'm not trying to paint you as a May supporter here, it just pisses me off how we get fed this idea of sensible, rational, frugal Tories so often that we forget what's in front of our eyes: namely a shower of nasty, incompetent clowns who would sell the whole country down the river in a heartbeat.

 

[redsquirrel]

nope - im seeing neither the inconsistency nor how whats written leads to that conclusion. Gov spending can go up after economic shocks

Yet your original claim was the opposite.
And your insistence on a growth in GDP puts you in the same basket as the BoE, Carney, Obsourne, the IMF, etc, the only option allowed to you is more of the same of the last 30 years.

Remember - Callaghans labour government ended up introducing monetarist policies at the behest of the IMF in response to the economy struggling post oil shock. Corbyn would be under exactly the same pressure - and he would have the counter push of a strong union movement that 70s labour did

I'm sorry I don't see the relevance.
But was the economy struggling in the 70s? Do you, like paolo, think the economy in the 90s/00s was "better" than the economy of the 70s?

 

[Kaka Tim]

Yet your original claim was the opposite.
And your insistence on a growth in GDP puts you in the same basket as the BoE, Carney, Obsourne, the IMF, etc, the only option allowed to you is more of the same of the last 30 years.

No it wasn't. Are you being deliberately obtuse? i said economic shocks result in spending on services being slashed - that doesn't mean overall gov spending goes down - because of increased spending on welfare payments. And how the fuck does noting that - historically - sudden declines in GDP over the past 50s years always result in said cut backs put me in that basket - its a factual observation.

I'm sorry I don't see the relevance.
But was the economy struggling in the 70s? Do you, like paolo, think the economy in the 90s/00s was "better" than the economy of the 70s?

the relevance is that having labour in charge does not mean they will deal with an economic shock any differently to the tories.
Is the economy "better" now? Well its different - the 70s economy was a more heavily industrialised, there was relatively higher pay, less inequality, there wasn't a housing crises. the economy of the 90/00s was bigger, but had become more service based, more based on property prices and debt - so less sustainable - as we saw in 2008. But what does that tell us? That reducing GDP to 1970s levels will bring back coal mining and lots of council houses?

You're arguing that growing GDP is a blunt measure and does not dictate better conditions for the population overall etc - . Well yes - absolutely - and their are plenty of examples of this.

But you also seem to be arguing that therefore a sudden drop in GDP will equally not cause an increase in poverty, inequality and cut backs. Which it absolutely does.

 

[DexterTCN]

New Zealand opposes UK’s WTO quota plan

 

[MightyTibberton]

The extent to which Brexit has become an exercise in the future of the Conservative Party and the personal political careers of some of its most prominet - and allegedly brilliant - members has been completely disgusting to witness. You would hope that it make them unelectable for generations. . .

I can't see anything other than a general election because I can't see May getting a deal that the ERG and Labour will vote through, and if there's a danger of genuine No Deal "crash out" I think enough Tories will jump ship to allow Labour to get a no-confidence vote through.

 

[Kaka Tim]

The extent to which Brexit has become an exercise in the future of the Conservative Party and the personal political careers of some of its most prominet - and allegedly brilliant - members has been completely disgusting to witness. You would hope that it make them unelectable for generations. . .

I can't see anything other than a general election because I can't see May getting a deal that the ERG and Labour will vote through, and if there's a danger of genuine No Deal "crash out" I think enough Tories will jump ship to allow Labour to get a no-confidence vote through.

yeah - i think thats a plausible scenario.

 

[DexterTCN]

And leave labour to negotiate trade deals?