Well who saw that coming?

rick_chasey

bompington wrote:

Rick Chasey wrote:

Paul Krugman (well known lefty prophet with a knack for making predictions that turn out to be nonsense) on his take of the UK recovery.

FTFY

Seems to garner a lot of fairly politically netural accolades for the quality of his work. Nobel prize doesn't get thrown about all that lightly for economics.

UndercoverElephant

Surrey Commuter wrote:

Why does nobody seem to think that debt matters - that is a serious question as nobody seems to have a plan for paying off the £1.56 trillion. The annual cost in interest is £43bn. Instead they get the annual deficit down a little and all start talking about spending more money.

To me it seems obvious that if you keep increasing the total debt it will only end badly. So if max total tax take is limited to 45% it will require a major rethink in what we expect the state to provide. The sooner these decisions are made then the less painful they will be.

I'm no economist, but from what I've read...

The headline figures sound scary, but most well-run companies have a level of debt which is relative to their expected future income. Same goes for households and holds true for countries too. It allows you to plan for the future and allows you spend the money you make now on the things that matter currently and allows you to amortise larger investments over time (think of a car purchase, mortgage, etc. On a larger scale, think motorways, HS2, etc.).

If, in the bad times, you pay off that debt, rather than paying for the things that currently matter, you run into the problem where you're not actually living, just paying off debts. Austerity during the bad times can be very hurtful to the economy.

If you realise that the bad times don't last forever, you can manage to live and coast on the debts. The problem comes when during the good times you still spend more than you really should. The investments you kept on with during the lean times *should* be paying off at these points, meaning you should pay your creditors more.

It's not as though any country that has its own currency can actually run out of money, but it's a balancing act with inflation.

seajays

Surrey Commuter wrote:

To me it seems obvious that if you keep increasing the total debt it will only end badly. So if max total tax take is limited to 45% it will require a major rethink in what we expect the state to provide. The sooner these decisions are made then the less painful they will be.

It may seem obvious - but that's the tricky bit. It sounds like the finances of a country should be just like a household budget. But they aren't. This is quite a long read, but it's worth it:

http://www.theguardian.com/business/ng- ... y-delusion

anonymousblackfg

So those countries which maintained their high levels of spending and debt have performed better that the UK? Krugman makes his assertion about what we've done wrong (you seem to highlight the US's stimulous but that was QE given to banks as opposed to welfare and infrastructure spending).

rick_chasey

anonymousblackfg wrote:

So those countries which maintained their high levels of spending and debt have performed better that the UK? Krugman makes his assertion about what we've done wrong (you seem to highlight the US's stimulous but that was QE given to banks as opposed to welfare and infrastructure spending).

No it wasn't.
http://en.wikipedia.org/wiki/American_R ... ct_of_2009

slowbike

Seajays wrote:

Surrey Commuter wrote:

To me it seems obvious that if you keep increasing the total debt it will only end badly. So if max total tax take is limited to 45% it will require a major rethink in what we expect the state to provide. The sooner these decisions are made then the less painful they will be.

It may seem obvious - but that's the tricky bit. It sounds like the finances of a country should be just like a household budget. But they aren't. This is quite a long read, but it's worth it:

http://www.theguardian.com/business/ng- ... y-delusion

It’s true that you can’t run big budget deficits for ever (although you can do it for a long time), because at some point interest payments start to swallow too large a share of the budget. But it’s foolish and destructive to worry about deficits when borrowing is very cheap and the funds you borrow would otherwise go to waste.

Well - I know there's plenty of waste in the public sector - I used to work there - anyway, even an anti-austerity piece says you can't borrow big for ever ...

what it doesn't say is how long is for ever - or rather more importantly, how big is big?

One nice little saying I like ...

Slowly Slowly Catchey Monkey ...

Make the changes small yet incremental and we can get to where we want - sure we could make large quick changes - but what if that has the wrong impact - you could break it on the way ...
The problem I see with spending our way out of a recession is that we continue spending once we're out and never cut back on that deficit, like a house of cards, it'll come tumbling down eventually ... the question is when ..

surrey_commuter

UndercoverElephant wrote:

Surrey Commuter wrote:

Why does nobody seem to think that debt matters - that is a serious question as nobody seems to have a plan for paying off the £1.56 trillion. The annual cost in interest is £43bn. Instead they get the annual deficit down a little and all start talking about spending more money.

To me it seems obvious that if you keep increasing the total debt it will only end badly. So if max total tax take is limited to 45% it will require a major rethink in what we expect the state to provide. The sooner these decisions are made then the less painful they will be.

I'm no economist, but from what I've read...

The headline figures sound scary, but most well-run companies have a level of debt which is relative to their expected future income. Same goes for households and holds true for countries too. It allows you to plan for the future and allows you spend the money you make now on the things that matter currently and allows you to amortise larger investments over time (think of a car purchase, mortgage, etc. On a larger scale, think motorways, HS2, etc.).

If, in the bad times, you pay off that debt, rather than paying for the things that currently matter, you run into the problem where you're not actually living, just paying off debts. Austerity during the bad times can be very hurtful to the economy.

If you realise that the bad times don't last forever, you can manage to live and coast on the debts. The problem comes when during the good times you still spend more than you really should. The investments you kept on with during the lean times *should* be paying off at these points, meaning you should pay your creditors more.

It's not as though any country that has its own currency can actually run out of money, but it's a balancing act with inflation.

Now I have a degree in economics and would say you have a good understanding and I agree with most of what you say but my point is that nobody pays off any of the existing debt. We pay £43bn a year in interest which would pay for all of the rash promises made in the election.

Yes countries can (and do) go bust - (this is much more concise and readable than a Guardian article) http://www.economist.com/blogs/economis ... xplains-20

rick_chasey

Sure. Uk was never going to go bust however. Not by a long long long long way.

surrey_commuter

Rick Chasey wrote:

Sure. Uk was never going to go bust however. Not by a long long long long way.

I am not saying it was going to go bust - I am saying we will go bust if we keep overspending

rick_chasey

Surrey Commuter wrote:

Rick Chasey wrote:

Sure. Uk was never going to go bust however. Not by a long long long long way.

I am not saying it was going to go bust - I am saying we will go bust if we keep overspending

Grow your way out of it.

Everyone wins.

Anyway, it's moot.

Argument was never convincingly made, so we'll get more fiscal retraction, which not only takes the heat out of the (almost deflationary) economy, but will affect those who are most reliant (the vulnerable) on said fiscal expenditure.

surrey_commuter

Rick Chasey wrote:

Surrey Commuter wrote:

Rick Chasey wrote:

Sure. Uk was never going to go bust however. Not by a long long long long way.

I am not saying it was going to go bust - I am saying we will go bust if we keep overspending

Grow your way out of it.

Everyone wins.

Anyway, it's moot.

Argument was never convincingly made, so we'll get more fiscal retraction, which not only takes the heat out of the (almost deflationary) economy, but will affect those who are most reliant (the vulnerable) on said fiscal expenditure.

my fear is that the short-term political mindset will mean we always run a deficit.

re the vulnerable - in Japan people take out of the welfare state what they need not what they can... we need a similar sea change in attitudes so it reverts to the safety net that it was intended to be

UndercoverElephant

Surrey Commuter wrote:

my fear is that the short-term political mindset will mean we always run a deficit.

re the vulnerable - in Japan people take out of the welfare state what they need not what they can... we need a similar sea change in attitudes so it reverts to the safety net that it was intended to be

Then we need a system where it actually pays people more to go out to work. Plenty of people with kids are unable to get off benefits due to the cost of childcare. Plenty of people would have all their benefits stopped if the do any work, no matter how low paid. Where is that incentive?

Add to that the fact that they're vilified and castigated by the rest of society for not being able to feed their family if they work. Add to that the fact that they live in crappy housing (owned by private landlords who cream more off the system than their tenants) with no insulation and have to pay through the nose to heat themselves/use electricity because they're stuck on prepayment meters. I don't know how I'd manage in that situation, I'm pretty sure I'd be hit with depression making getting out of it even harder.

surrey_commuter

UndercoverElephant wrote:

Surrey Commuter wrote:

my fear is that the short-term political mindset will mean we always run a deficit.

re the vulnerable - in Japan people take out of the welfare state what they need not what they can... we need a similar sea change in attitudes so it reverts to the safety net that it was intended to be

Then we need a system where it actually pays people more to go out to work. Plenty of people with kids are unable to get off benefits due to the cost of childcare. Plenty of people would have all their benefits stopped if the do any work, no matter how low paid. Where is that incentive?

Add to that the fact that they're vilified and castigated by the rest of society for not being able to feed their family if they work. Add to that the fact that they live in crappy housing (owned by private landlords who cream more off the system than their tenants) with no insulation and have to pay through the nose to heat themselves/use electricity because they're stuck on prepayment meters. I don't know how I'd manage in that situation, I'm pretty sure I'd be hit with depression making getting out of it even harder.

I was thinking more of the wealthy who happily take winter fuel allowance and buy a case of claret, or claim every grant going to make a house safer for elderly relatives. They do this because in this country they see it as their right. In Japan they see it as a finite resource so only ask for what they need.

elbowloh

Surrey Commuter wrote:

UndercoverElephant wrote:

Surrey Commuter wrote:

my fear is that the short-term political mindset will mean we always run a deficit.

re the vulnerable - in Japan people take out of the welfare state what they need not what they can... we need a similar sea change in attitudes so it reverts to the safety net that it was intended to be

Then we need a system where it actually pays people more to go out to work. Plenty of people with kids are unable to get off benefits due to the cost of childcare. Plenty of people would have all their benefits stopped if the do any work, no matter how low paid. Where is that incentive?

Add to that the fact that they're vilified and castigated by the rest of society for not being able to feed their family if they work. Add to that the fact that they live in crappy housing (owned by private landlords who cream more off the system than their tenants) with no insulation and have to pay through the nose to heat themselves/use electricity because they're stuck on prepayment meters. I don't know how I'd manage in that situation, I'm pretty sure I'd be hit with depression making getting out of it even harder.

I was thinking more of the wealthy who happily take winter fuel allowance and buy a case of claret, or claim every grant going to make a house safer for elderly relatives. They do this because in this country they see it as their right. In Japan they see it as a finite resource so only ask for what they need.

We should also make sure everyone (individuals and corporations) pay their taxes.

surrey_commuter

elbowloh wrote:

Surrey Commuter wrote:

UndercoverElephant wrote:

Surrey Commuter wrote:

my fear is that the short-term political mindset will mean we always run a deficit.

re the vulnerable - in Japan people take out of the welfare state what they need not what they can... we need a similar sea change in attitudes so it reverts to the safety net that it was intended to be

Then we need a system where it actually pays people more to go out to work. Plenty of people with kids are unable to get off benefits due to the cost of childcare. Plenty of people would have all their benefits stopped if the do any work, no matter how low paid. Where is that incentive?

Add to that the fact that they're vilified and castigated by the rest of society for not being able to feed their family if they work. Add to that the fact that they live in crappy housing (owned by private landlords who cream more off the system than their tenants) with no insulation and have to pay through the nose to heat themselves/use electricity because they're stuck on prepayment meters. I don't know how I'd manage in that situation, I'm pretty sure I'd be hit with depression making getting out of it even harder.

I was thinking more of the wealthy who happily take winter fuel allowance and buy a case of claret, or claim every grant going to make a house safer for elderly relatives. They do this because in this country they see it as their right. In Japan they see it as a finite resource so only ask for what they need.

We should also make sure everyone (individuals and corporations) pay their taxes.

as somebody on PAYE I could not agree more

rick_chasey

Isn't hanging about.

High five everyone....

http://www.theguardian.com/politics/201 ... are_btn_fb

pblakeney

Rick Chasey wrote:

Isn't hanging about.

High five everyone....

http://www.theguardian.com/politics/201 ... are_btn_fb

Humph.
I believe that phone and internet companies already do this anyway.
How else would searches be remembered, and advertising targeted?

If you are online, you are being used. Accept it, or go offline.

pollys_bott

Rick Chasey wrote:

Sure. Uk was never going to go bust however. Not by a long long long long way.

Maybe, maybe not. The chapter on the financial crisis in this excellent book http://www.amazon.co.uk/The-End-Party-A ... 0141046147 is eye-opening & powerful stuff. From memory we were pretty close to waking up one Monday morning to find every bank / building society closed to prevent a Northern Rock-style run across the entire banking sector. I've no idea how far that situation is along the road to the country going bankrupt but am pretty sure it wouldn't have been a good start to the working week...

rick_chasey

PBlakeney wrote:

Rick Chasey wrote:

Isn't hanging about.

High five everyone....

http://www.theguardian.com/politics/201 ... are_btn_fb

Humph.
I believe that phone and internet companies already do this anyway.
How else would searches be remembered, and advertising targeted?

If you are online, you are being used. Accept it, or go offline.

It's not the phone companies that are the problem. Under current laws they can't release that information to the state without a warrant.

With that rule the state can examine any recorded way of communicating without any good reason.

I don't see why the state needs to see my texts unless I'm behaving suspiciously - in which case they can get a warrent and have a look.

pblakeney

Rick Chasey wrote:

I don't see why the state needs to see my texts unless I'm behaving suspiciously - in which case they can get a warrent and have a look.

They would have to be very bored to be having a look at my texts without good reason.

surrey_commuter

PBlakeney wrote:

Rick Chasey wrote:

I don't see why the state needs to see my texts unless I'm behaving suspiciously - in which case they can get a warrent and have a look.

They would have to be very bored to be having a look at my texts without good reason.

So let's assume that 50 million people in the UK spend half an hour a day reading their own e-mails and texts. That would require the Govt to employ over 3 million people (working an 8 hour day) to read them all.

Or they use sophisticated software to scan for suspicious groups of words then follow up on their suspicions - sounds like a good idea to me.

veronese68

Surrey Commuter wrote:

Or they use sophisticated software to scan for suspicious groups of words then follow up on their suspicions - sounds like a good idea to me.

Much as I'd like to be keen and all in favour of civil liberties, unfortunately we don't live in a perfect world so I must confess I tend to agree with this. I have nothing to hide, I lead a very dull life. As with the thread about the thing in cars if you crash. So what if they can monitor what I'm up to, I've got nothing to hide.

tgotb

Veronese68 wrote:

Surrey Commuter wrote:

Or they use sophisticated software to scan for suspicious groups of words then follow up on their suspicions - sounds like a good idea to me.

Much as I'd like to be keen and all in favour of civil liberties, unfortunately we don't live in a perfect world so I must confess I tend to agree with this. I have nothing to hide, I lead a very dull life. As with the thread about the thing in cars if you crash. So what if they can monitor what I'm up to, I've got nothing to hide.

+1.

If it reduces my chances of getting blown up (which would be a rather bigger infringement of my civil liberties than having a stranger read through my rather dull inbox) I'm all for it.

vermin

I'm equally dull, most of the time, but shouldn't we lift our heads and look beyond the "I've got nothing to hide" bubble?

The ability to check up at-will on terror suspects may be a nice idea, but what happens when Mr Bent Bobby (and Manc33 assures me they do exist) decides it would be a jolly old jape to check in on the activities of those amongst us who are rather more interesting, in a non-nefarious way?

surrey_commuter

vermin wrote:

I'm equally dull, most of the time, but shouldn't we lift our heads and look beyond the "I've got nothing to hide" bubble?

The ability to check up at-will on terror suspects may be a nice idea, but what happens when Mr Bent Bobby (and Manc33 assures me they do exist) decides it would be a jolly old jape to check in on the activities of those amongst us who are rather more interesting, in a non-nefarious way?

Being of "swarthy" appearance I find that if travelling through an airport with a white woman I get randomly chosen for an enhanced security check. I see as a good thing as not only am I less likely to be blown up but they always randomly chose me when I first join the security queue so it is like a fast lane upgrade.

seajays

vermin wrote:

I'm equally dull, most of the time, but shouldn't we lift our heads and look beyond the "I've got nothing to hide" bubble?

The ability to check up at-will on terror suspects may be a nice idea, but what happens when Mr Bent Bobby (and Manc33 assures me they do exist) decides it would be a jolly old jape to check in on the activities of those amongst us who are rather more interesting, in a non-nefarious way?

This. This is the insidious nature of erosion of privacy. It all sounds so reasonable. Why if you've got nothing to hide you've got nothing to fear! To be against intrusion into your private lives is to be pro-terrorist!

But the big "Danger, Danger, Will Robinson" should be shouted loud and clear. Erosion of privacy in a free society has many significant dangers associated with it. It is absolutely right that I should be able to have secrets from the state. The state should not have free and unfettered access to my private life, or the discussions I have with others. This is actually a protection in a free society to make sure that we can stay free. We are lulled into a false sense of "the state only wants what's best for us", as we have had relatively benign governance for a some time. But it need not always be so, and has not always been so. There are unjust laws and if we have allowed our rights to privacy to be eroded, the ability to challenge them at a time when we need to do so can be removed.

Take for example the persecution of homosexual people by the state as recently as a few decades ago. Now most people would agree that enforced chemical castration would be a horrific thing. Not all laws are just, and people should be free to discuss and organise against such things. The erosion of privacy leads to the greater control of "thought policing", whereby any dissent to the state is met with punishment. The less privacy we have the easier it is for the state to control us, and that is not necessarily a good thing.

Surveillance is two-faced. There are some advantages, but some huge disadvantages too. We should be careful not to sell our souls, lest we or our children find ourselves at the mercy of a state that does not always have our freedoms or best interests at heart.

seajays

There's a good article here as well about why privacy is important: https://www.amnesty.org/en/articles/blo ... veillance/

rick_chasey

I think that's the main issue about privacy.

With the current system the person in authority doing the snooping is regulated on a case-by-case basis, making sure that each time the level of privacy violated is proportionate to what is required to ensure our right to being safe and our right to privacy are looked after. It's not perfect, granted.

Under new legislation the person in authority today may be behaving correctly and doing it in the right way, tomorrow might very well be different. We can't assume the authorities are always honest and that the authorities in the future will be as benevolent as they are now.

As such, you want to ensure that privacy is always maintained in an appropriate way to ensure the path to non-democratic behaviour in the future is kept shut.

I like the checks & balances the current system has, and I think it protects vital privacies, which is one of the things that makes life liveable.

tgotb

Rick Chasey wrote:

I think that's the main issue about privacy.

With the current system the person in authority doing the snooping is regulated on a case-by-case basis, making sure that each time the level of privacy violated is proportionate to what is required to ensure our right to being safe and our right to privacy are looked after. It's not perfect, granted.

Under new legislation the person in authority today may be behaving correctly and doing it in the right way, tomorrow might very well be different. We can't assume the authorities are always honest and that the authorities in the future will be as benevolent as they are now.

As such, you want to ensure that privacy is always maintained in an appropriate way to ensure the path to non-democratic behaviour in the future is kept shut.

I like the checks & balances the current system has, and I think it protects vital privacies, which is one of the things that makes life liveable.

I think the value of legislation to keep evil regimes under control is overstated. The impression I get is that evil regimes either change the law to suit their own requirements, or just ignore whatever laws they want to. We clearly need legislation to make sure that honest and benevolent governments operate in an appropriate manner, but I don't think for a minute that legislation will protect any of us against a non-benevolent regime.

seajays

TGOTB wrote:

I think the value of legislation to keep evil regimes under control is overstated. The impression I get is that evil regimes either change the law to suit their own requirements, or just ignore whatever laws they want to. We clearly need legislation to make sure that honest and benevolent governments operate in an appropriate manner, but I don't think for a minute that legislation will protect any of us against a non-benevolent regime.

Legislation does not keep the regime in check. If you have already given away all your rights little by little under the "benevolent" state, then a less palatable government need do nothing but walk in and use the systems that have already been set up. After all, you allowed them in the past so why argue now. You've got no time to counter them, and they have the immediate advantage of have the surveillance state in place without having to lift a finger. Sure, if it's not they can start to try to put it in place themselves, but that's a lot more difficult and time consuming, compared to something that's been embedded and accepted in society for years or decades.