[Ignitionnet]

Originally Posted by dazzer89

So the ConDems took over and growth figures have gone 1.1%, 0.7% and now -0.5% - seems like they have it all under control.

At least the first quarter figuers of a new year usually see positive growth...oh hold on the VAT rise, fuel rise and redundancy notices landing on people's door mats will hit those figures. Welcome to the double dip.

Presumambly the snow that they are blaming was that pesky socialist stuff as well was it?

Nice rant. Some kind of evidence that it related to ConDem policy would be good though.

Growth during recessions zigzags historically, it happens, my main concern about ConDem policy is that it isn't doing enough to encourage growth. The level of public spending cuts they are instituting I consider to be barely adequate.

---------- Post added at 09:28 ---------- Previous post was at 09:03 ----------

Originally Posted by dazzer89

Hi Chrysalis, look around the world. Look at the deficits that many countries have got. It wasn't just that too much spending was done here, it wasn't really that too much spending was done at all, it was just that public spending is a pretty normal thing to do. Government borrowing is a very normal thing to do.

Our deficit is the second highest in the EU27 behind Ireland, borrowing nearly 12% of your entire economic output is not a very normal thing to do.

I am astounded that you don't think too much spending was done. I haven't seen anyone, short of people on the extremes, who don't think Labour overspent during their period in government. They increased tax take substantially and ran deficits during a boom. We had the strongest economy in the G7 in 2002, by the time we entered the financial crisis we had gone from being in some of the best shape to weather the storm to worst, due to the structural problems Labour introduced.

Originally Posted by dazzer89

It is just that the system suffered a big, global crash. Which then required further public spending to prevent an outright collapse. To uphold the system. Hence the current level of the debt. But it was necessary to prevent collapse.

Deficit spending during 'boom' parts of the economic cycle is not a normal thing to do. Deficit spending during the 'bust' part is, which is why economies are supposed to pay down debt while the going is good. The UK rolled into the 'global crash' in some of the worst condition of any nation in the OECD, which is why we ran the highest deficit, bar Greece, and have now overtaken them.

Originally Posted by dazzer89

Public spending, in times of recession, keeps the economy from contracting in on itself. If you are a private company and economy starts to contract, then you stop spending. So companies stop doing business with each other. So then they lay off staff, because their business is down.

Depends whose train of thought you follow, some might say that reducing taxation would be a better course of action. You know, keeping the money in people's pockets in the first place rather than taking it out and putting it back.

Originally Posted by dazzer89

The private sector will turn in on itself and will make the problem even worse - fact is, it doesn't matter whether you are a socialist or a market fundamentalist - the private sector needs the public sector in order to provide a steady stream of cash flow and to smooth out the peaks and troughs of the economy.

The private sector expands and contracts. Interesting you talk about smoothing the peaks of the economy. In what way was running deficits during the good times smoothing anything?

Originally Posted by dazzer89

Ideological fundamentalism will not solve the problem. But that is what we have in government - ideological market fundamentalists, so expect it to go pop.

The cuts being instituted are nothing more than a correction back to the already frankly unacceptable trend. They feel severe due to the extent of the previous overspending.

No need to take my word on it of course.

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The second lesson is that, even by post-war standards, the increase in public spending from 1999-2000 until 2009-10 was exceptional. Spending rose by 53% in real terms over this period. In effect, the coalition is "only" planning to unwind half of that increase, to take the growth in spending back to its long-term trend. But that doesn't mean it will be easy.

Originally Posted by dazzer89

Putting some money through the public sector ensures that people in the public sector keep their jobs. It also ensures that private sector companies can ride out a recession a little more easily, because they keep or win new contracts with the public sector, which is still spending Government money.

Constantly expanding the public sector crowds out the private one and the taxation required to support this expansion stifles growth, or clocks up debt which then has to be repaid or inflated away. The previous growth was largely an illusion anyway.

Originally Posted by dazzer89

Cut the money and you pull the plug on the economy.

Keep spending you saddle the economy with even larger debts which require increases in taxation to be supported and reduce funds available for future investment.

Originally Posted by dazzer89

That's what the Tories have done, so that they could implement their ideological policies. Not required ones. We don't need to privatise the NHS, or the Post Office (which makes a profit for the country).

The Post Office has veered between profit and loss, it requires substantial investment and has a huge unfunded pensions liability, it's not that simple. The NHS is not being privatised, such a statement is ideological.

Originally Posted by dazzer89

No. The wisest course of action is to keep spending through these bodies so that the private sector keeps ticking over.

Most mainstream economists vehemently disagree. The money markets disagree. The business community disagrees.

Originally Posted by dazzer89

But instead this government will continue with the opposite course of action.

Sorry for the rant but some posters on here are way off beam.

The rant is fine, but disagreeing with the suggestion that the country should borrow its way out of debt isn't being 'way off beam'. It's not even like they could claim following Keynesian economics, they threw that down the toilet when they ran deficits when they economy was expanding.

Originally Posted by dazzer89

Strange how Labour had the spend spend spend attitude, you seem to forget the Tories backed Labours spending plans.

Interesting how you call the Tories ideological in their desire to cut the public sector then note that they backed high spending, and that you ignore that some elements of Labour were nervous over deficit spending some 4+ years ago, which was ignored by mssrs Brown and Balls.

This government isn't Tory, it's Tory-Lite, nowhere near strong enough on the Tory side and nicely watered down enough obsessing over fairness to take the decisions that promote growth.

This government is just like the old one in many ways, slimy, say anything to stay in power, try and appeal to everyone. Just a slightly bluer shade of grey.