2015 Election

[Disease]

According to the IFS, the GINI co-efficient was 0.24 in 1979. It is now 0.34. Over those 35 years, Tories controlled government for 22 of them, and Labour for 13. So, yes, the Tories did oversee a huge increase in inequality. Labour didn't do a good job either though, they failed miserably - but then during the Blair years, they were just Tory light.

 

https://fullfact.org/live/2014/jun/inequality_gini_coefficient_lowest_level_rising-33044

 

It's a flawed co-efficient anyway as it counts some parts of income but not others.

 

The ONS’s measure includes benefits such as company cars, as well as benefits in kind from employers such as subsidised loans for house buying.

 

But, the ONS’s disposable income calculation doesn’t include benefits in kind received from the state.

[localzuk]

Ah, I see, as soon as you get some evidence it isn't good enough. The ONS figure is very similar to the IFS one 32.3% instead of 34%. What would be good enough evidence for you, if that isn't it?

[pcstru]

I was amused that when I put "gap between rich and poor uk" into google, the top result was from the Daily Mail! Who'd-a-thunk it!

[Andrew_C]

And in other news:-

 

Nigel Farage is p!ssed with the BBC.

 

Just because he got ridiculed on HIGNFY. So for that matter did all the parties, but "This party is at war with the BBC" is their response. Looking for free publicity, me thinks!

[sonofsanta]

A very interesting article by a Nobel-prize winning economist: The austerity delusion | Paul Krugman | Business | The Guardian

 

Since the global turn to austerity in 2010, every country that introduced significant austerity has seen its economy suffer, with the depth of the suffering closely related to the harshness of the austerity. In late 2012, the IMF’s chief economist, Olivier Blanchard, went so far as to issue what amounted to a mea culpa: although his organisation never bought into the notion that austerity would actually boost economic growth, the IMF now believes that it massively understated the damage that spending cuts inflict on a weak economy.

 

Meanwhile, all of the economic research that allegedly supported the austerity push has been discredited. Widely touted statistical results were, it turned out, based on highly dubious assumptions and procedures – plus a few outright mistakes – and evaporated under closer scrutiny.

 

It is rare, in the history of economic thought, for debates to get resolved this decisively. The austerian ideology that dominated elite discourse five years ago has collapsed, to the point where hardly anyone still believes it. Hardly anyone, that is, except the coalition that still rules Britain – and most of the British media.

[localzuk]

Indeed! I find it amazing that the idea of austerity continues here when it has been debunked so thoroughly!

[sparkeh]

Indeed! I find it amazing that the idea of austerity continues here when it has been debunked so thoroughly!

Its easy to say "We have less money therefore we need to make huge cuts" and difficult to explain the economics behind why that isn't correct.

It tallies up with the Tories ideological drive to drastically reduce the size of the state so they play along with the misinformation...

[Garacesh]

Yep, it's basically that.

 

Which one makes - to the average person - more sense.

"We don't have a lot of money. If we stop spending money for a while, we'll have more money."

OR

"We don't have a lot of money, but if we stop spending money we'll have less money because reasons."

Edited April 30, 2015 by Garacesh

[clockend25]

Long-term economic plan!

[sonofsanta]

Some further choice quotes, as I've just finished reading to the end (and learnt a lot, and feel smarter now than I did half an hour ago; it's a wonderful piece).

 

British economists have no doubt about the economic damage wrought by austerity. The Centre for Macroeconomics in London regularly surveys a panel of leading UK economists on a variety of questions. When it asked whether the coalition’s policies had promoted growth and employment, those disagreeing outnumbered those agreeing four to one.

 

The key point to understand about fiscal policy under Cameron and Osborne is that British austerity, while very real and quite severe, was mostly imposed during the coalition’s first two years in power...

 

Given the fact that the coalition essentially stopped imposing new austerity measures after its first two years, there’s nothing at all surprising about seeing a revival of economic growth in 2013.

 

Why does big business love austerity and hate Keynesian economics? After all, you might expect corporate leaders to want policies that produce strong sales and hence strong profits.

 

usiness interests dislike Keynesian economics because it threatens their political bargaining power. Business leaders love the idea that the health of the economy depends on confidence, which in turn – or so they argue – requires making them happy. In the US there were, until the recent takeoff in job growth, many speeches and opinion pieces arguing that President Obama’s anti-business rhetoric – which only existed in the right’s imagination, but never mind – was holding back recovery. The message was clear: don’t criticise big business, or the economy will suffer.

 

But this kind of argument loses its force if one acknowledges that job creation can be achieved through deliberate policy, that deficit spending, not buttering up business leaders, is the way to revive a depressed economy. So business interests are strongly inclined to reject standard macroeconomics and insist that boosting confidence – which is to say, keeping them happy – is the only way to go.

[clockend25]

I was fairly on board with the Tory message about the economy until the campaign kicked in. Having looked at it in more depth you see that for nigh on 3 1/2 years we went nowhere, and only in the last few quarters have we achieved growth. To say we're now the fastest growing economy in the G7 is true, however it needs to be seen in context. Over the whole period post-recession, it really hasn't been a success story.

[zag]

I still find it strange that socialists think that "austerity" is a bad thing... I'd actually use the words "living within ones means".

 

Anyone remember Ed Balls saying the austerity budget was a bad idea and we should have an economic plan B. Which was basically spending lots of borrowed money? I'm not surprised he's completely forgotten that idea now the economy is doing so well

 

Do they really believe that spending money we don't have is healthy for our economy? In the long term, having less debt will surely be a huge benefit for the country. More money to spend on public services and infrastructure instead of the interest on our national debt. Seems like basic economics to me.

[Garacesh]

Do they really believe that spending money we don't have is healthy for our economy? In the long term, having less debt will surely be a huge benefit for the country. More money to spend on public services and infrastructure instead of the interest on our national debt. Seems like basic economics to me.

My guess is it's a 'long term plan' type of idea.

 

Do nothing and pay back borrowed money now, at a rate of £x-per-month.

OR

Borrow a bit more and invest it wisely over the next 5-10 years, generate much more income, and start paying back £3x-per-month.

[StevieM]

Do they really believe that spending money we don't have is healthy for our economy? In the long term, having less debt will surely be a huge benefit for the country. More money to spend on public services and infrastructure instead of the interest on our national debt. Seems like basic economics to me.

 

Let's look at it this way. 3 years ago I spent A LOT of money that I don't have. It's called a mortgage. I could have said, 'Oh well, I don't have X thousand pounds to spend on a house, so I'll just live within my means and continue to rent.' The thing is, while I have a MASSIVE debt that will be over my head for the next 25 years, it's also an investment in my future. It also means I don't have to pay over the odds rent to a private landlord. If the government needs to borrow money to invest in future economic growth, so be it. I'd much rather they did that than continue to cut public spending while throwing money away on inefficient PFI contracts.

[Andrew_C]

Seems like basic economics to me.

Basic, and probably wrong. This isn't like trying to balance a family budget, which George might be capable of.

 

Try reading the piece linked to with an open mind.

 

Part of the answer is that politicians were catering to a public that doesn’t understand the rationale for deficit spending, that tends to think of the government budget via analogies with family finances. When John Boehner, the Republican leader, opposed US stimulus plans on the grounds that “American families are tightening their belt, but they don’t see government tightening its belt,” economists cringed at the stupidity.

Edited April 30, 2015 by Andrew_C

[localzuk]

I still find it strange that socialists think that "austerity" is a bad thing... I'd actually use the words "living within ones means".

 

Anyone remember Ed Balls saying the austerity budget was a bad idea and we should have an economic plan B. Which was basically spending lots of borrowed money? I'm not surprised he's completely forgotten that idea now the economy is doing so well

 

Do they really believe that spending money we don't have is healthy for our economy? In the long term, having less debt will surely be a huge benefit for the country. More money to spend on public services and infrastructure instead of the interest on our national debt. Seems like basic economics to me.

 

Did you just ignore the article posted earlier? The one that pointed out that austerity doesn't work - to the extent that the IMF has said they made a mistake?

 

The economy isn't "doing well". Its still slow and, other than services, way below the pre-crisis levels of productivity.

 

Yes, spending money is good for the economy. The rates we pay for interest are far lower than the returns the economy sees as a result of that investment!

 

Your grasp of economics is majorly flawed. We know full well that you build your way out of recession. Even the Torygraph agrees with that notion.

[zag]

You find that people in our society need to use foodbanks amusing? Shameful.

 

Not at all. I believe the talk of food banks when brought up in a political context in the UK by Labour MP's, is simply an easy way to score a political point. I've travelled to countries all over the world and seen real food poverty in places like China, North Africa, India and even some western countries with less generous welfare policies, and for them I have huge compassion.

 

In this debate, everyone seems to forget the fact that benefits in the UK are linked to inflation and have gone up. That's not the same in all countries. Some don't even have a safety net and thats when you get increased food poverty.

[zag]

The economy isn't "doing well". Its still slow and, other than services, way below the pre-crisis levels of productivity.

 

Hmm

[sted]

I still find it strange that socialists think that "austerity" is a bad thing... I'd actually use the words "living within ones means".

 

Anyone remember Ed Balls saying the austerity budget was a bad idea and we should have an economic plan B. Which was basically spending lots of borrowed money? I'm not surprised he's completely forgotten that idea now the economy is doing so well

 

Do they really believe that spending money we don't have is healthy for our economy? In the long term, having less debt will surely be a huge benefit for the country. More money to spend on public services and infrastructure instead of the interest on our national debt. Seems like basic economics to me.

 

but hasnt the national debt increased massively under austerity

[zag]

but hasnt the national debt increased massively under austerity

 

Yes but economics is not instant. Problems stored up by the last Labour government spending too much will continue for many years. Its all about the trend.

[localzuk]

Hmm

 

Hmm what? Hmm "oh yeah, you're right"? Or "hmm... I disagree with facts"? UK economic growth halves ahead of general election | Business | The Guardian

[tmcd35]

The claim was quite specific, that the Tories ARE attacking the poor.

 

Picking at and opening an old wound...

 

...The 'Spare Bedroom Subsidy' (There I didn't call it a tax) is a direct assault on the poor! As LD voter last time I'm actually ashamed they went along and continue to defend this more than their more understandable (under the circumstances) u-turn on university tuition fees.

 

 

Kinda back to current topic...

 

Just for a giggle, New Statesman used Democracy 3 to model the outcome of the party manifestos:

 

Thanks to @sonofsanta I've been playing Democracy 3 the past couple of days and it's been a bit of an eye opener. I must say I'm struggling to keep to my Liberal Socialist principles and grow GDP and reduce the deficit. And fact I've failed point blank to do anything other than grow the deficit to various degrees any every game.

 

I've always view capitalism as a necessary evil. I think I now understand the idea of creating jobs, to create wealth, to grow the country out of recession and ultimately pay down debt. The problem is this coming at the expense of the poor, which is where I think Tory's push the capitalist policies to far to the right. It's a surprising difficult square to circle.

 

but hasnt the national debt increased massively under austerity

 

Debt and deficit are two different things. The debt will always go up, it's completely unavoidable, until the deficit is reduced to zero and wont be even start being paid off until we have a budget surplus. The goal at the moment is to reduce the deficit, reduce the amount the debt is increasing by, not pay off the debt.

Edited April 30, 2015 by tmcd35

[sonofsanta]

I still find it strange that socialists think that "austerity" is a bad thing... I'd actually use the words "living within ones means".

 

The whole point of it is that macro-economics, and particularly government economics, do not behave in the same way as household economics.

 

I earn my money by going out and working or selling things I produce. The government can do neither of these things; if the rules* around it earning money are so different, why do you insist that the rules on spending must be the same? If the government spends a pound that encourages me to spend an extra pound each month, a pound that they then take 1/6th of in VAT, after a year they've doubled their money.

 

The government earns money from tax; money is taxed when it flows; therefore the government needs to encourage the flow of money. If no-one is spending any money (e.g. a recession) then it is up to the government to start spending the money to get it flowing again so it can be taxed again. It's not about the myth of "market confidence"; it's about economic momentum.

 

Spending money we don't have is good for our economy. If it wasn't, we wouldn't be able to get such good rates on our national loans. You seem to have a pretty strong belief in a free market, capitalist economy; that same capitalist market believes that lending money to us to spend is a safe bet. Do you honestly believe the eternally incompetent politicians over the expert opinion of the market on this matter?

*in the sense of "the rules of the system", rather than "the legislation"

Edited April 30, 2015 by sonofsanta

[LeMarchand]

In this debate, everyone seems to forget the fact that benefits in the UK are linked to inflation and have gone up.

 

Am I the only one whose weekly shop has gone up much more than the alleged rate of inflation? The only thing I've noticed getting cheaper is a loaf of bread.

[localzuk]

Am I the only one whose weekly shop has gone up much more than the alleged rate of inflation? The only thing I've noticed getting cheaper is a loaf of bread.

 

Yup. Food costs have spiralled up.