Britain's Trillion Pound Horror Story...

[scorza]

We're currently running a deficit, which means that we're borrowing money to meet our spending commitments because national income (tax revenue, VAT, whatever) is lower than our national expenditure.

That is why we have to make cuts, otherwise we're borrowing more and more money in the hope that one day national income will rise significantly. There is no indication that this will happen in the near future and therefore it makes no sense to try and spend our way out of recession (which has worked in the past) and into growth.

We are paying interest on the debt, by the way, to the tune of 27.2 billion last year and 42.9 billion this year. If that's how much it rises in just one year, what do you think it would be after 10 years of making small meaningless cuts?

That's the thing. Debt is fine. Debt enables growth and investment. BUT only when you're running a surplus, when you have extra money to cover the repayments and interest. Otherwise you end up in the mess we're in.

We can see the problem with this way of thinking if we, as our wonderful chancellor lectured, look across the Irish sea. Ireland has cut public spending back massively to eliminate its deficit, the net result is that the Irish economy is finished, their credit rating gets downgraded, they can't pay back their debts and it's only a matter of time now before the IMF is called in.

The reason why we need national deficits is precisely to revive demand when private consumption implodes, which is what happened when the banking-led recession happened. Yes that means you have to reduce the deficit when private consumption recovers, but you sure as hell don't throw the baby out with the bathwater. I'm frankly astounded that the government remain keen on following Ireland into an IMF bailout.

 

[Dolph]

We can see the problem with this way of thinking if we, as our wonderful chancellor lectured, look across the Irish sea. Ireland has cut public spending back massively to eliminate its deficit, the net result is that the Irish economy is finished, their credit rating gets downgraded, they can't pay back their debts and it's only a matter of time now before the IMF is called in.

The reason why we need national deficits is precisely to revive demand when private consumption implodes, which is what happened when the banking-led recession happened. Yes that means you have to reduce the deficit when private consumption recovers, but you sure as hell don't throw the baby out with the bathwater. I'm frankly astounded that the government remain keen on following Ireland into an IMF bailout.

Which is exactly why we shouldn't have been running a deficit during the boom times, which would have meant running a deficit now would not have been a problem. The cyclical deficit (that which comes and goes with the economic cycle) is not the problem, the structural deficit (that which remains even at the peak of the economic cycle) is.

Brown created a massive structural deficit, and increased the total reported national debt (at the time excluding PFI and other liabilities despite constant criticism for not including it) by 50% during the boom, rather than the bust.

Can you not see the problem here? Keynsian stimulus relies on saving during the booms to spend during the bust to even out the worst of the natural economic cycle. This is exactly what Brown prevented us from doing.

If you look at what people are actually posting, most people aren't criticising labour for running up deficit during the downturn, but for their actions before it. They were simply massively overspending during the boom, and that is why we are in the mess we are in now.

If we'd been running a 3% surplus instead of a 3% deficit during the boom, we would be in a massively better position and the spending cuts wouldn't be needed, but we aren't, because Labour, as they always do, have spent all the money, and more, without any real benefit, consideration or analysis of requirements, and, as every time they have been in government for an extended period, left the country in an economic crisis.

It is also worth noting that we aren't cutting spending, we're increasing it less quickly, whether in absolute or real terms. Total government spending is still rising over the course of the parliament, not falling.

 

[scorza]

Which is exactly why we shouldn't have been running a deficit during the boom times, which would have meant running a deficit now would not have been a problem. The cyclical deficit (that which comes and goes with the economic cycle) is not the problem, the structural deficit (that which remains even at the peak of the economic cycle) is.

Brown created a massive structural deficit, and increased the total reported national debt (at the time excluding PFI and other liabilities despite constant criticism for not including it) by 50% during the boom, rather than the bust.

Can you not see the problem here? Keynsian stimulus relies on saving during the booms to spend during the bust to even out the worst of the natural economic cycle. This is exactly what Brown prevented us from doing.

If you look at what people are actually posting, most people aren't criticising labour for running up deficit during the downturn, but for their actions before it. They were simply massively overspending during the boom, and that is why we are in the mess we are in now.

If we'd been running a 3% surplus instead of a 3% deficit during the boom, we would be in a massively better position and the spending cuts wouldn't be needed, but we aren't, because Labour, as they always do, have spent all the money, and more, without any real benefit, consideration or analysis of requirements.

The deficit is currently at 11%, a 3% deficit beforehand doesn't make much difference in the overall scheme of things and was within the rules laid down in the Maastricht treaty.

The truth is that since 1750, our national debt has always been higher than it is now, except for two 40-year gaps. If we are “in a mess” now, we have almost always been in a mess. The debt was more than twice this level in 1945, and we still built the NHS and secured decades of prosperity.

Edit: Why do you continually try to pretend that running a budget surplus before the global economic crisis struck would have solved all our problems? Why do you constantly ignore the down sides of running a budget surplus, like unemployment or the inevitable increase in the balance of trade deficit? China cheats and keeps its currency valuation artificially low, we wouldn't be able to do that and a strong pound would have killed off the remaining exporting industries in the UK making it even harder for us to have recovered from the global recession. I note that Brazil, a country going through something of a boom, is running a national deficit of over 3% of GDP, things aren't as black and white as you claim.

 

[Dolph]

The deficit is currently at 11%, a 3% deficit beforehand doesn't make much difference in the overall scheme of things and was within the rules laid down in the Maastricht treaty.

It does to the size of the debt, especially when you use percentage deficits, as these allow for much higher absolute deficits (which result in a much greater debt increase) during times of booming GDP.

Come on, this is simple maths and statistics, unless of course you think money grows on trees.

Appealing to the maastricht treaty doesn't make it any better, any more than 'I was only following orders' does. Do you accept the statements from Banks that they were only following the regulation set in place by Gordon Brown and working to his rules, or is there scope for double standards when it suits you?

The truth is that since 1750, our national debt has always been higher than it is now, except for two 40-year gaps. If we are “in a mess” now, we have almost always been in a mess. The debt was more than twice this level in 1945, and we still built the NHS and secured decades of prosperity.

Appeal to tradition, the world, and the global economy, as well as our position within it, have changed dramatically during this time.

 

[Dolph]

Edit: Why do you continually try to pretend that running a budget surplus before the global economic crisis struck would have solved all our problems? Why do you constantly ignore the down sides of running a budget surplus, like unemployment or the inevitable increase in the balance of trade deficit? China cheats and keeps its currency valuation artificially low, we wouldn't be able to do that and a strong pound would have killed off the remaining exporting industries in the UK making it even harder for us to have recovered from the global recession. I note that Brazil, a country going through something of a boom, is running a national deficit of over 3% of GDP, things aren't as black and white as you claim.

Unemployment isn't a problem, it's a driver for improvement, innovation and job creation unless the welfare protection system is broken (as ours is currrently).

Pretty much all the Nordic countries who you so regularly praise ran a surplus through the early 00's, as did Germany.

Why are you so intent on spending money we don't have and indebting future generations to give yourself a better life? Is it the nature of the left to be that selfish?

 

[Biohazard]

Appeal to tradition, the world, and the global economy, as well as our position within it, have changed dramatically during this time.

LOL

Or appeal to historic fact?

He isn't trying to claim it should be this way because it has, just that - it always has been this way.

Its a no brainer saying things have changed since then, its like saying the sky is blue.

 

[LateX'Dog]

Makes me want to live in China.

 

[Von Luck]

I caught some of the programme last night and it was the most biased, unbalanced load of crap I've ever watched. It was like filming a right-wing think tank's wet dream.

The number of inflammatory statements made without a shred of supporting evidence was breathtaking, complete garbage journalism with zero value. It's the kind of tosh you'd expect on Fox News in the states, but not on a (insert irony here) partially publicly funded broadcaster like channel 4.

 

[ChroniC]

To put this in perspective for me??
If from someone stats earlier our debt is 417% of gdp. Then if someone earns 20k, thats a debt of 8.34m. (if you imagine their the country)

Holy moly.

 

[Narj]

Makes me want to live in China.

Especially after seeing some of the hawt ladies

 

[Dolph]

LOL

Or appeal to historic fact?

Same thing, it's still a fallacy.

He isn't trying to claim it should be this way because it has, just that - it always has been this way.

Its a no brainer saying things have changed since then, its like saying the sky is blue.

You've just repeated the very definition of an appeal to tradition fallacy while trying to claim it isn't one

http://en.wikipedia.org/wiki/Appeal_to_tradition

He also is trying to claim that it should be this way because it always has, that's exactly what Scorza believes, that our current debt/deficit, and indeed any debt/deficit run up by Labour is not a problem. 'If we are in a mess now' is the essence of the statement that we can't be in a mess, because its been worse than this in the past, in different times, circumstances and situations.

 

[scorza]

Unemployment isn't a problem, it's a driver for improvement, innovation and job creation unless the welfare protection system is broken (as ours is currrently).

Pretty much all the Nordic countries who you so regularly praise ran a surplus through the early 00's, as did Germany.

Why are you so intent on spending money we don't have and indebting future generations to give yourself a better life? Is it the nature of the left to be that selfish?

"Unemployment isn't a problem" - great stuff. Even the last lot of Conservatives in the '90s knew better than to come out with crass statements like that.

Oh right we want to be like Sweden do we? You're right they successfully managed to get themselves through the last global economic crisis where they were particularly badly affected due to their banks needing to be bailed out. Well let's look at how they did it:

a) Raising taxes in conjunction with spending cuts - basically gives a bit more credibility to statements like "we're all in this together".

b) Actual co-operation between state, workers and unions. But of course we don't like unions do we? as it takes away power from the elite.

Anything would be better than how our government are proposing to do it though.

 

[LateX'Dog]

Especially after seeing some of the hawt ladies

 

[Biohazard]

Same thing, it's still a fallacy.

Telling historical facts is not a fallacy.

You pretending it is a fallacy is a fallacy.

You've just repeated the very definition of an appeal to tradition fallacy while trying to claim it isn't one

http://en.wikipedia.org/wiki/Appeal_to_tradition

FACT is not an appeal to tradition.

History is not an appeal to tradition.

What is in front of our eyes are not an appeal to tradition.

 

[Dolph]

Telling historical facts is not a fallacy.

You pretending it is a fallacy is a fallacy.



FACT is not an appeal to tradition.

History is not an appeal to tradition.

What is in front of our eyes are not an appeal to tradition.

The statement:

The truth is that since 1750, our national debt has always been higher than it is now, except for two 40-year gaps. If we are “in a mess” now, we have almost always been in a mess. The debt was more than twice this level in 1945, and we still built the NHS and secured decades of prosperity.

is an appeal to tradition, not a statement of fact. It breaks down as follows.

The truth is that since 1750, our national debt has always been higher than it is now, except for two 40-year gaps.

Fact

If we are “in a mess” now, we have almost always been in a mess.

There's the first fallacy. It implies that if we are in a mess now, we were in a mess in the past. It then follows that as we weren't 'in a mess' in the past (at least in the view of the poster) that we aren't 'in a mess' now.

That is an appeal to tradition/appeal to history fallacy, a classic one no less.

There is then a second appeal to tradition, just to top it off.

The debt was more than twice this level in 1945, and we still built the NHS and secured decades of prosperity.

Again, the implication is that, as we set up the NHS when debt was higher, and 'secured decades of prosperity' (which is somewhat ironic because the country was, in comparison with other countries, on a downward trajectory in both wealth and power throughout this time), we can do the same again now.

 

[rypt]

b) Actual co-operation between state, workers and unions. But of course we don't like unions do we? as it takes away power from the elite.

Our unions have NEVER been interested in delivering the best services possible, their only concern has always been to ensure that as many of their members remain employed as possible on the largest salary possible.
Our unions have ALWAYS opposed modernisation and redundancies even if both of those would either improve nor not affect the actual service.

 

[Thesaff]

I caught some of the programme last night and it was the most biased, unbalanced load of crap I've ever watched. It was like filming a right-wing think tank's wet dream.

The number of inflammatory statements made without a shred of supporting evidence was breathtaking, complete garbage journalism with zero value. It's the kind of tosh you'd expect on Fox News in the states, but not on a (insert irony here) partially publicly funded broadcaster like channel 4.

Who has Kelvin MacKenzie worked for, could it be Murdoch the owner of fox news?

 

[Thesaff]

Our unions have NEVER been interested in delivering the best services possible, their only concern has always been to ensure that as many of their members remain employed as possible on the largest salary possible.
Our unions have ALWAYS opposed modernisation and redundancies even if both of those would either improve nor not affect the actual service.

Your proof is?
So what you are saying that employers have always been interested in providing the best services possible?

 

[Dolph]

Who has Kelvin MacKenzie worked for, could it be Murdoch the owner of fox news?

Not a particularly great argument. Ad homming a source rather than challenging the information is never very convincing.

 

[Dolph]

Your proof is?
So what you are saying that employers have always been interested in providing the best services possible?

Generally, they are interested in providing the most efficient services available, which is a balance between service quality and cost measured against the customer base expectations. The final definition of 'best service' can vary quite dramatically as a result.

Both John Lewis and Currys, for example, think they have found the best compromise of service and cost, despite giving very different levels of service, and both attract enough customers to keep going.

This is the problem with creating state funded monopolies, you break the customer/business relationship, as well as the financial link between the service provided and money recieved, and is why we have so many problems with our public services (and indeed why most other countries don't run theirs the way we do, even those with heavy state spending such as the Nordic countries).