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Remembering 1931

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Stephanie Flanders | 00:01 UK time, Wednesday, 6 May 2009

Britain's oldest economic think tank believes that the economy could shrink by more this year than it did in 1931.

That's not good. But it's not as bad as you might think.

We've all heard so much about the Great Depression in the US, we forget that for Britain, the Great Depression wasn't that Great.

In the worst year of the Depression, our national income shrank by 4.6%. That's the figure that the National Institute of Economic and Social Research (NIESR) has in mind when it makes the comparison with 2009.

In its latest Economic Review, it forecasts a decline in GDP this year of 4.3%, but, as the authors demonstrate, the pace of the downturn to date has been on a par with 1930-1931.

NIESR tables

The Chancellor, Alistair Darling, will not relish the historical comparison. No-one in the Labour party likes to be linked to anything that happened in 1931.

Ramsay MacDonaldFor those that don't know, that was when the Labour Prime Minister, Ramsay MacDonald, was forced out of office by the economic crisis, but then agreed to be part of a national government with Labour's enemies. For Labour, it's an act of party betrayal that has been handed down the generations.

Still, economically speaking, 1931 was not half as bad for the UK as it was for other parts of the world - notably the US, which shrank by more than 10% that year, and by around 30% between 1929 and 1933.

Where the UK is concerned, the year you really don't want to replicate is 1921, when the economy shrank by nearly 10%.

Thankfully the NIESR doesn't think that we're approaching that territory right now. Although you might imagine so, given the carnage afflicting the public finances.

Like many others, the institute thinks that the chancellor's being optimistic about the strength of the recovery from 2010.

To remind you, Mr Darling is forecasting growth of 3.5% from 2011 onwards (though he's using a more conservative forecast of 3.25% in his predictions for the public finances).

As I noted on Budget day, that's not unheard of. We often have rapid growth of that kind after a recession, especially a deep one.

But, as I also remarked, it's not what economies have tended to see after major financial crises.

Nor, as the authors of this report point out, is it necessarily what you would expect to see in a year when the government is expecting to subtract 0.7 percentage points from overall growth in GDP.

For the economy to grow 3.5% against that backdrop, the rest of the economy would have to grow by 4.25%.

Again, that has happened before. But not since 1988, which was itself the peak of an unsustainable boom.

Many economists I talk to are starting to sound much more optimistic about the next year. After the kinds of declines we've seen over the past six months, there's a sense that there is only one way the numbers can go.

But even if we were to see growth on the order of 1% next year, I haven't found many who expect several years of rapid growth from 2011.

Maybe the Budget forecast will be right, and the Treasury will get the last laugh. Where the growth forecasts are concerned, it's happened quite a few times in the last few years.

But the same cannot be said of the Treasury's borrowing predictions. If the NIESR is even slightly right on those, net debt is going to approach 100% of GDP by 2015-16, and things could be a lot stickier than the markets now expect.

Comments

  • Comment number 1.

    Stephanie,
    Your last 2 blogs seem to be inter-related. Only the most pig-headed of governments (hats off to Gordon Brown and co) would deny that the past few years were a debt-fueled boom. House prices don't simply grow at double or treble the rate of GDP because everyone's salaries are growing exponentially. They grow at unsustainable rates because lending becomes ridiculously slack and would-be buyers are lent money that they can never realistically hope to pay back.
    So looking forward, where does the government expect this phenomenal economic rebound to come from? As you point out, rebounds can be strong following recessions but not following a financial crisis. That's because the banks suddenly tighten lending standards and refuse to lend money to creditworthy businesses and individuals. The banks can't even afford to fund themselves, let alone the rest of the economy, and with the subsequent contraction in credit the UK's GDP is likely to continue sliding.
    By the time Labour work this out they will have already been voted from office.

  • Comment number 2.

    Brown's latest video tells us you have to 'grow' yourself out of a recession.

    http://news.bbc.co.uk/1/hi/uk_politics/8033388.stm

    Brown just doesn't get it! If the economy is not healthy, it will not grow - it will shrink instead, as we are now seeing.

    As any gardener knows, in order to stimulate new growth (those elusive green shoots) you have to cut hard back with some vigorous pruning and remove all the dead wood.

    Brown does not understand, you can't spend your way out of debt. Until he cuts back on waste, our economy remains sickly.

  • Comment number 3.

    Picking up on #1, the last blog concerning the "boom" or "non-boom" since the late 90'shows what happens if you start playing with the statistics. If the economy has a "long run growth rate" then it must be constant in the long run. If not, and you can change it, whenever you think it justified (or helpful) then there is no long run growth rate at all.

    The Treasury appears to have decide to do this; and they're probably right.

  • Comment number 4.

    Well, it is nice to know about other countries happening, because one can compare with is going on our neighbors USA (America, as you call it in Europe).Also the time compare: In 1931 there was no Global commerce as today.The economic happening was local or may be regional, but not global.
    What will be next? Difficult to see... subject is complex.
    Is the story repeating itself? May be in some branches, in some issues, but not in all.Global consequences? Let´s wait and see
    As Chuck Jaffe of Marketwatch WSJ recommended it is better not to precipitate, but to monitor happening in Markets and Economy.

    Just my view on subject
    Homero Velazquez

  • Comment number 5.

    Picking up my earlier train of thought, if there is a long run growth rate to which the economy adheres, it follows that the excesses of any boom will (long run) be balanced by the losses in the related busts. If this is so then, on the graphs in the preceding blog (boom & bust), we should be looking at about five years before the economy starts to grow again.

    The 1929 and 1979 curves shown in this blog suggest maybe three to four years: pretty close. so, as 1# asks, what is going to prevent this pattern being repeated and provide the predicted growth in the next few years? Not government spending: people in the public sector have been cushioned from the downturn up to now (spending being maintained by borrowing) but, as this blog says, the squeeze is coming. 0.7% this year and wasn't it estimated to be something like 2.3%pa thereafter as the borrowing is paid down?

    Can the private sector pick up this slack and grow at c5%pa year on year? The Treasury estimates of an upturn were founded on the idea that (a) the money being pumped into the economy would stimulate demand and (b) the the weak pound would stimulate exports.

    There's something implausible about this. Unless there is a real increase in wealth generation (implying an increase in investment), then surely a monetary increase in demand will be caused by inflation and the weak pound will fuel this further unless we are weaned off our dependency on imports.

  • Comment number 6.

    With all the bailouts, fiscal stimuli and monetary pumping this government has so far committed itself to, a very long period of time will pass before this depression is over. No, I'm afraid this one is a big one that will make the Great Depression seem like a trivial blip.

    Incidentally, does anyone know that the USA experienced a big depression during the period 1920 1921 which, in its initial stages, was comparable to the Great Depression of 1929? No? Well, let me explain. During that depression (1920), Wilson and Harding did exactly the opposite of what Hoover and Roosevelt did (1929 1939) and what Bush and Obama have recently done. Yes, they actually CUT the Federal budget, refrained from fiscal stimulus (Keynes was relatively unknown back then!) and did not allow the Federal Reserve to engage in monetary inflation. Guess what? The depression lasted barely 18 months!

    Were these guys (Wilson/Harding) getting some good advice from Austrian economists?

  • Comment number 7.

    Too much household and corporate debt has caused today's economy to contract sharply. To counter this, the British government has assumed the debt - ie private debt has become public debt.
    This move from private to public has allowed a brief respite, as the State becomes the borrower of last resort....

    However, when the State has to start repaying the public debt, it can only do so by cutting public expenditure and increasing taxation. This will then stifle the British economy, and curtail future growth.

    Unemployment of 10% or more will invoke fear of unemployment across the wider economy, which will act to rein in consumer spending and consumer borrowing.

    So, all in all, growth forecasts of 3.5% for 2011 onwards do seem a little over-optimistic......

  • Comment number 8.

    I get the feeling that the economy may will shrink by that amount, but it might not feel like it. I don't think the measures of economic growth acurately deal with the plunge in commodity prices, especially energy, from their record highs in mid 2008. So while e.g. BP might make less profit, and this will reduce the GDP in this sector, it won't feel so bad for the rest of us. All industries are dropping from high, top-of-the-cycle margins to defensive positions. So again, a widespread drop in industrial profitability will indeed drop GDP, but won't result in a proportional amount of job losses. Having come off an unusually long period of high economic growth though, we are seeing a lot of rationalisation that really should have occured over 2006-8, like 3 years worth of bad news compressed into the first half of 2009. So, while we see both a drop in GDP and job losses, it's still not the same story of genuine economic collapse that we associate with the great depression.

  • Comment number 9.

    As the growth in the economy was running at approx 3 percent p a prior to this recession it would appear there was an underlying decline, the flat rate of growth being produced by the 'boom' that wasnt't a boom.

    The main reason for the underlying decline was probably the low labour zones pulling work away from the UK. That mechanism is still in place. It will continue operating for the forseeable future.

    The current low FX is acting to mitigate imports. The manufacturing sector is saying it is not helping exports. An uplift in exports has been repeatedly aired as a route to recovery.

    Manufacturing has been in longterm decline. Manufacturing used to consist of high tech, or at least high skill goods like machine tools and capital plant, heavyweights, big ticket stuff. Now manufacturing includes a lot more stuff such as lightweights like sticky plactic lettering for signs, a lightweight, small ticket stuff - a lot of it really should be listed in the service sector not manufacturing.

    Growth has to be initiated by the private sector recovering.

    The latest set of figures refer to possibly an 8 percent tax rise being need to fix the public accounts. This is not likely, historically 46 percent total tax take is a buffer and has been run up against in the UK and in developed EU countries. Therefore a substantial drop in public spending is due, due to economic contraction and paying for this lot. That means more job losses.

    The debt in the system is not going to disappear rapidly. That will affect consumer attitudes and spending.

    Housing looks to be set for further declines, growth is likely to be muted. There look to be no plans to try to help building which is an important sector. Whatever the faults of housing, and there are many, it has been an important sector for several decades now. House prices are falling but there is a limit to the fall and the result will not be cheap housing, just cheaper housing. Negative equity for millions will damp activity. Fear of high interest rates will dampen activity.

    The financial sector is unlikley to grow strongly, it is now shackled. Even if there is the appetite for debt, it cannot exist at the same levels as before due to the tougher criteria due to be in place and the fact substantial debt is in the system already.

    There is a thing called the poverty trap. A large number of the population are being placed in it.

    There is little reason to suggest employment will increase.

    In a situation like this the tendancy is to report on the positive side. This is driven by fear of the downside, fear of being accused of talking recover down, fear of outcomes, a lack of understanding of the mechanisms at play. Therefore the majority of forecasts are always going to be too optomistic. Please note that the curve is straight line, the bottom is the bottom, when it occurs.

    Looking at history is all very good but it is not proven that some of the uplift seen in previous profiles will repeat. The movement to low labour zones is a contemporary mechanism.

    Can you not see what is going on. If things are driven low enough then a rebound is going to happen. That does not stop underlying decline, an underlying decline which was in place whilst the recent 'boom' that was not a boom was ongoing.

    False expectations, which is what got us here, are still in play. Not dealing with the problem, which is what got us here, is still in play. If false expectations lead to mismanagement of the growing public accounts they the situation can become a great deal worse.

    It is all very well pumping money into banks but banks do not generate wealth, they simply enable others to generate it. There is no point in haveing a car with no fuel, but equally well there is no point in having fuel and not car.

    There are businesses doing well, but that is not the point, it is general activity which is important. Innovation is important and as I have repeatedly tried top point out big business here on the whole have progressively been run more and more by cost cutters, the risk adverse, low margin types, a typical decline management mode, not innovators who have to have higher profits and take risks. Innovation is far more likely to occur in the low labour zones than here, because they do not have the decline management mentality. They will steal a march, nothing stands still.

    The situation is still being severely underestimated. The current situation, with a little uplift but no more, could well be the landscape.

    Any government, or individual politican who believes they are in control of global forces and that they can profoundly influence them, is, and will always be, dangerous to all, they are worse than a fool.

  • Comment number 10.

    Stephanie,

    Can we please have the 1870s recession on the graphs too?

    For quite some I have time been impressed by the structural similarities between the 1870s depression (the Long Depression) and our present problems and I, and I hope others, would be interested to see the figures compared as the recession develops.

  • Comment number 11.

    7 Mr Tweedy

    Thank you.

    Long term debt is very much part of the problem and long term debt remains, and everytime 'pass the parcel' is played it grows not contracts.

  • Comment number 12.

    "We forget that for Britain, the Great Depression wasn't that Great."

    Steph, what you don't mention is that the UK economy wasn't exactly booming before the '29 crash. This time though, it was booming. As they say, 'the higher you fly, the further you have to fall'....

  • Comment number 13.

    It would be great if this so called steady growth wasn't fuled by borrowing beyond our means and gambling. Doesn't matter if it was a boom or growth it didn't work. We are bust.... and need to reinvent.

  • Comment number 14.

    Stephanie,
    Interesting title " Remebering 1931" - certainly historical lessons can be learnt but the differences between then and now are clear. Then, there was a gold standard fixing the exchange rate - now we're floating in the currency markets. Then, there were tariff wars in a more polarised world - now we have a broad coalition seeking to limit protectionism.

    Our problems are different - we are embarking on unconventional unconventional credit and monetary "easing" or money making, which Mr Darling's growth figures are relying on to give him his boost. We have a synchronised world banking failure sucking in public capital, and, according to the IMF much more will be needed.Again Mr Darling's growth figures assume credit markets will rejuvinate to service quicker recovery- will it? We have public debt issued to sponsor massive deficits at the potential cost to private investment. We have social security safety nets to cushion the disadvantaged.

    In amongst the growth statistics we find that uk banking intermediation grew 3.5% in the last quarter of 2008. Spreads between paying savers and charging borrowers is causing propped up banks to profit from the grief. How perverted is that?

  • Comment number 15.

    Whilst I can appreciate academic navel-gazing has its satisfactions I do not think there is an historical parallel for our current plight other than that it was a Labour government in charge in 1931 as today.

    The concerns that I have are the level of public debt and the distinct prospect of inflation at some time in the not too distant future. Neither of these are going to help us going forward and in both instances the current government has clearly announced that not only are they are going to do nothing about them but they seem to be actually courting them.

    A prospect of high interest rates and high taxation are far from ideal for an economy trying to recover from a recession (slump).

    I can well understand leading Labour politicians not wanting to become Prime Minister in place of Gordon Brown as there is only one practical economic policy that makes sense and that is massive, savage cuts in public spending. This would be seen by their client groups in the public services as a bigger act of betrayal that that of Ramsay Macdonald forming a National government.

    Personally I have never seen anything wrong with Ramsay Macdonald forming a national government as it least shows he was placing the nation at a higher priority than his party. One can respect that position so there is absolutely no prospect of the current bunch attaining even that limited level of political morality.

    The choice before Britain is stark: either de-construct the social-democratic superstructure allowing the real economy to improve or become a banana republic without bananas but with a monarch on a bike.

  • Comment number 16.

    No.9. Glanafon

    Agreed.

    Unfortunately, when we throw everything into the mix, we see that Britain faces:

    (i) Increased competition from foreign lower cost skilled manufacturers; and
    (ii) Lack of real British production gains due to lack of real British innovation during the "boom" of 2001 to 2007; and
    (iii) Lack of British investment in real education to support real competitive innovation. For example, producing thousands of photography graduates each year, who are indebted with student loans, does not help the British economy innovate and compete in the global arena; and
    (iv) Britain saw finance and insurance as a wealth generator rather than its real role as a wealth enabler. Even if Britain exports loans abroad, this funding enables our foreign competitors to develop their industries, enabling them to take market share from British manufacturers; and
    (v) The world's natural resources are finite; so, as new countries get richer, the old countries must give up some wealth to accomodate. This will be true unless we find new ways of making more efficient use of the world's resources; but we come up against (i), (ii), (iii) and (iv) acting against the Western nations; and
    (vi) Private debt can only be converted to public debt if British interest rates are attractive to foreign lenders/investors. Increased interest rates on gilts will cause the real rate of interest to increase in the wider British economy; and
    (vii) The long term public debt will have to be repaid through higher taxation and public spending cuts; and
    (viii) Unemployment and fear of unemployment will keep the brakes on consumer spending and consumer borrowing, whilst pushing up welfare costs for the State and bad debts for the banks.

    What a situation we find ourselves in.
    But other than that, I'm really optimistic.....



  • Comment number 17.

    I think Christian Guthier's comment is very pertinent, although would not necessarily agree with his conclusion. The fall anticipated this year is comparable to that of 1931 but we start from a higher base. That doesn't mean the 4.3% is undertated, it simply means that after a 4.3% drop we will not be in a Great Depression, which is the implication of the comparison.

    I would agree with comments that debt is the problem. The consumer boom of the middle part of this decade was fuelled by increased household debt, and while the government may have bought time by taking on a greater proportion of total debt, that total still has to reduce and households face real difficulties as they run down credit cards and come to terms with a more prudent mortgage and lending market. I'm not sure the penny has really dropped on this. The view that green shoots create confidence and we all trot off to the shops and overspend on our credit cards again simply cannot happen.

  • Comment number 18.

    Is there really any value comparing these national income numbers with a period of time so different to today? The standard of living is so vastly improved today I cannot see the relevance. In simple terms, we are so much richer today, a drop in income (and therefore standard of living) has nothing like the impact that one did in those days where so many more lived at a subsistence level (in today's terms).

    But debt is a different matter. Did the government of the 1930's saddle the country with so much debt that it would require the basic level of income tax to need to be raised 8p (as reported yesterday)?

    If we "took the hit" of the current problems now, rather than passing it on to the next 30 years of tax payers, then its quite clear that this downturn far surpasses anything that has happened in history. Without factoring these actions into comparisons with the past, any discussion about it is meaningless.


  • Comment number 19.

    This is an interesting analysis, but like much of economics, it is based on historical data. E.g. the graphs now look the same shape as graphs then.

    However, we could only reasonably expect our current recession to continuing panning out like past recessions if all the other factors are the same now as they were back then. In other words, there are likely to be factors in the current situation that are different to back then and these will cause the progression of the current recession to be different from those past ones.

    One such factor that is different the level of taxation as a percentage of GDP is much higher now than it was in the 1920/30s. This means that the government wields much more influence over the economy since it controls a much bigger portion of the GDP (currently around 50%, but likely to rise even higher as GDP is dropping faster than government spending).

    The high level of government influence is especially worrying when the government does not seem to be realising the issues and taking the bull by the horns, but instead is conniving to try and win an imminent election. Furthermore, private businesses that are run badly go bust and are replaced by competitors that can run their business better. However, governments that are badly run just charge more tax!

  • Comment number 20.

    This whole discussion is academic. The reality is that the economic system will collapse because it was built on unsustainable debt. All the growth we saw over the last few decades was entirely bogus. Without the significant amounts of borrowing we would not have had the businesses, the jobs and the lifestyles. There would have been no Ipods, no Laptops, no flat-screen TVs, no DVDs, no cheap flights, no Buy to let 'businesses' etc.

    Unemployment will therefore snowball and it is no use arguing that the solution is for government to cut spending because, given that they themselves have created many of the jobs in the last couple of decades, unemployment would go even higher. And by the other token, if they try and raise taxation, which of course they need to do, then that will create even more unemployment. It is a paradox.

    We are then faced with 6 million plus unemployment here - and a similar situation across the world - which would cause civil unrest. They could try sharing out the labour, i.e. a mass move to enforced part-time working, but then no one will earn enough to pay off their debts.

    Basically, this has been a longtime coming. The capitalist system lasted 300 years, but it finally has been brought to its knees. Yes it might have been better than the existing alternative (communism), but it is itself inherently flawed. The profit motive is why we have half the world in famine and the other half with an obesity crisis; it is why we have the capacity to treat numerous cancers, but rationalise the availability of drugs because of post-code lotteries; it is why we talk about the dangers of global warming and tax consumers for their rubbish, but allow businesses to produce the junk in the first place, because it keeps people in jobs; and it is why we complain about congested roads, but seek to encourage more and more people to live here because they spend more.

    Profit maximization is a recipe for disaster because it puts the individual - government, company or person above that of the needs of the wider society and that is exactly why we are where we are.

    Whether we like it or not the landscape has changed. We will be forced by circumstances to start all over again and ask what are we all living for, what are our needs - not wants - and how can we best meet them?

    Unfortunately, our political masters (of all persuasions, including Obama) are incapable of understanding this and simply think that we can tweak a few things here and there, but essentially carry on with the lifestyles we have come to expect. Sorry to disappoint you, but we can't.

  • Comment number 21.

    Credit Crunch, Tax Crunch, Pensions Crunch ... entirely predictable outcomes until the style of 'leadership' and 'economics' changes ...

    In a global economy only those capable of offering (and exporting) things other nations want will survive in the long run. This country lost this concept some years ago and/or wrongly believed financial services were the answer!

    'Leanomics', a much wider and far more holistic form of 'economics', looks at community factors too ... such as individual well-being and community contentment, as well as the sustainability of enterprise and the environment. For example, one simple Leanomics test, called the "BUTS" test, can create a great deal of insight by looking at debt alongside the capability of the community to pay it back.

    B=Borrowing
    U=Untapped talent
    T=Trade deficit
    S=Stress

    Trade deficits, untapped talent and stress all negatively impact on a nations ability/capability to pay back debt, and what do these look like at the moment ? I'll give you a clue - terrible!

    We have got into huge debt, sold the family silver, demoralised people, stressed people out, created a broken society, overburdened our children (and our children's children), and still have the 1940's baby-boom to come (with a poorly funded pension system).

    Will future generations stay in this country to pay for all this ... I doubt it. Would you?

    Posted by David Clift, a Future 500 Leader

  • Comment number 22.

    Whilst like for like comparisons over time are difficult to analyse, Britain now faces some severe structural and infrastructue issues that need to be addressed urgently.

    Britain is a small island but with rising sea levels is set to become smaller if coastal defence plans are not implemented asap. The east coast of England where some of the nuclear power stations are placed (good planning that!) needs to be shored up. In the Netherlands Schipol Airport is actually below sea level. It can be done and would provide a lot of manual labour work (unskilled to skilled) running into hundreds of thousands of jobs. But it is not a glamorous project, which is a prerequisite of spin doctors and the parasitic lobby groups in Parliament.

    Our energy needs have been neglected for too long, and strategically we are very vulnerable as no long term plan exists. The only reason there were no electricty blackouts last winter was because manufacturing had shut down production due to the credit crunch. Even if we invented a new industry, we could not implement it here due to lack of energy. In five months time a large profitable steelworks in Wales will shut down (1000 jobs to go), because the neighbouring nuclear power station is to be decommissioned and no alternative source of energy is available. it is ironic that NuLabour has focused on a centralised government structure, and the one thing they have failed on is planning - current initiatives put forward recently will only be realised in about 10 years time.

    Disposable incomes now are severely restricted tax wise now, in the 1920's income tax was still a novelty as it was brought in as a temporary measure in the First World War. Energy prices especially gas are too high and completely unjustifiable, but it all adds up nibbling away at margins and making for a greater struggle for survival never mind spending on fripperies.

    Post WWI, there was a relative shortage of labour available due to the staggering kill and injury ratios during the war. So there was a smaller population for the economy to sustain, whereas now we greater and rising population for a shrinking economy and until banks regain confidence again a shrinking source of capital for new investment.

    It is not looking good at all.

  • Comment number 23.

    The trouble with forecasting Long - Term movements by using Statistics of Yester-Years past events, when combinding into this mix what is also today a Global Economical Recession with meltdowns of Trade and Export as well as Currency fluxuations which in turn will cause endless rising Unemployment for at lease the Medium Term from the next 5 to 10 Years.

    The main problem is in not being able to tell where all the Employment places will be lost for the next 3 to 5 Years, but in being able to predict just what will be needed in Terms of "NEW" Jobs, and "NEW" Industries once we emerge from this Recession and Slump.

    There is therefore really no point in proping-up current Old established Industries that are currently over producing products that are not being consummed just to keep people Employed, for this will just create even more mountings of un-sold Goods as well as further Financial Debts in the Long - Term, for the Question has to be now is: what do you do with Skilled Workers made reduntant when you also have an exspanding Market of School leavers staying on in Education beyond 18 Years of Age moving onwards towards useless further Training for some kind of course to be a Jack and Jill of ALL Trades, and Masters of NONE, when we clearly today have no ideas as to just what "New" Jobs will be required not just for ourselves in the U.K. in the future, but more to the point what will be needed in Terms of World Exports Markets in the future course, for we will have to be able to beat our rivals in every field of Industry to win in World Trade Markets as these other Countries also will be looking to UP THEIR GAME in Exports once they also come out of their respective Recessions.

    So Statistically, how can anyone predict what will happen next, with or without a Crystal - Ball.

  • Comment number 24.

    Now I admit that I am not an economics expert, but can someone please fill me in ... it appears recession is a bad thing - economic growth is good ... but...

    How can every country in the world grow its economy (which appears to be the aim for everyone) without global consumption increasing in line with that growth?

    My understanding, in my simplified terms, A buys things(goods/services) from B who uses that part of that income to fund production of further things and part to buy other things from C, who uses part of that income to fund production of further other things and part to buy different things from A (and thus the cycle continues).

    This system only works if A, B & C use up their purchases and thus create more demand, or we introduce D who then has to have both a wealth creation ability (the ability to produce an item that someone wants to purchase) and a consumption requirement. If no-one uses the things they have purchased then the market collapses unless we continue to increase demand through population growth.

    In the past few years we have all been criticised for being a 'throw away' society which needs to 'reduce, re-use & recycle', how can this ethos work hand in hand with us all consuming more to stimulate the economy?

    I can't see how there are enough 'sustainable' goods out there which we can all spend money on, consume and then buy more of such that we maintain the growth in all global economies.

    Is there a 'Global Economics for Dummies' book out there?

  • Comment number 25.

    What you failed to explore was the exponential growth of fraud which has affected the businesses and people of this country for the past ten years resulting in billions of pounds going abroad. Every bank and building society has had this torrent of money slipping away and they did nothing about it because it was beneath their radar. Put simply if this money had been stopped then we would not have had this banking crisis.
    Yes the senior management was at fault but so was junior management because no one realised that ten cheques for £10 equals a loss of £100. Billions of pounds were stolen from trusting but deluded pensioners because the MPs of the UK parliament were too much in a dither about foxhunting to legislate.

  • Comment number 26.

    GLOOM BUT NOT DOOM

    .... hardly likely to be a winning election slogan for 'smiler' and David Cameron has little to look forward to if he does become PM - I doubt his heart will be in making the savage cuts that must come

    So I would generally agree with Mr Tweedy's and Glanafon's conversation above - we are in for a long-term slump/decline; but I wouldn't go nearly as far as the doomsters like XCAnderson; we already have massive part-time working and many friends of mine have had to accept 5-7% pay cuts this year to keep their (admittedly well paid) white collar private jobs; but people will buckle down, tighten their belts; cut back on spending

    Which means that the current stock-market 25% bounce is a dead cat bounce; I would contend that it is largely manufactured by the wealthy, professional investor, who has dived back into the market and made a lot of money; they will leave the market again at the first new sign of trouble

    I am not wealthy but have shares and have applied the 'sell in May go away' saying; so I have sold up - my gamble on the RBS shares has allowed me to take a healthy profit thanks to HMG propping up the zombies

    I have also sold my car to a very nice Romanian bricklayer who assures me that no matter how sad things may get here they will be a lot better than back home, and that he is definitely staying, working hard and paying his taxes

    Good on him!

    Britain feels tired to me; it hasn't had any genuine growth in years and recovery will be weak; the inequality of British (and US) societies will hold both back (read 'The Spirit Level') and a lot of national and global growth is clearly no longer sustainable anyway

    Of course we are much better off than in the '30s, so this long slump may not feel so bad, though I wouldn't fancy trying to survive on £60 sterling a week and a lot of people are far less self-reliant now than then

    Ultimately global standards of living etc have to even out - water finds its level - this will take another 50 yrs+, but the long-term trend has to be that the BRICs continue to grow but countries like UK, US, France etc stagnate; small, highly-educated countries like the Scandavians might buck the trend; I can't see any way that the UK can fit into that group

    Personally, I'm off to Canada for the summer; a one-way flight to Montreal is currently available for £9.50 + tax! yes honestly

  • Comment number 27.

    Lies Damned lies and Statistics. Cherry picking history and using old graphs to give false hope for the future seems to be all the rage. I agree with most of the comments and would just add.
    That in the 70's we had a crisis and were bailed out by North Sea Oil. In 1988 we had another big one and were temporarily bailed out by the banking system!! Now to pay back all these debts we have to have a positive balance of payments.
    Stephanie please tell us how that is going to happen except with the pound being worth about %25 of to days value. I.E we will be cheap, impoverished, riot driven suppliers to err China. It would be so good if yourself and
    Robert could challenge the establisment a little more robustly on the necessary structural changes to our economy needed to pay back debt.

  • Comment number 28.

    Voting labour out of office is actually doing them a favour, I say we vote them back in.

    Watch the U Turns
    Watch them Squirm
    Watch them turn on each other, and the blame culture develop
    Watch them eventually face prosecutions on expenses as the squeeze develops further
    Finally, watch them dangle from the lampposts of London when the tax payer wreaks his revenge!

  • Comment number 29.

    XCAnderson (#20) Good post. Too few are prepared to face matters as they are, which is what those who brought about the current dismal mess have always preyed upon.

  • Comment number 30.

    Economists are like generals they always try to fight the previous war again. History will not repeat its self exactly. For a start we are not the same people we were in the thirties; have you ever seen people being interviewed in the thirtie, they are so wooden, and how often do you hear the phrase, must'nt grumble - we can't even queue up for a bus now, it's just every man for himself at the bus stop. Look too much backwards when you are travelling forwards can get you into trouble.

    We Europeans are losing our power, we are just slipping, fairly gracefully, down the pole. As I put it your other blog, take a look at the landed gentry, that will give you a good idea what it happening to us, as we sell off the silver, and wait for the National Trust to take the house over.

  • Comment number 31.

    #12. Christian Guthier wrote:

    "We forget that for Britain, the Great Depression wasn't that Great."

    Quite true - the numbers show that England started going downhill from 1919 - the 1930's problem is generally used to date the depression as it is convenient to have the USA's little financial difficulty as a starting point.

    But isn't our proper interest in previous depressions the desire to get a grip on the probable course of this one?

    I see the things that will prevent a rapid recovery including the inability of the banks to come to terms with their gigantic losses (and not just the ones that they have so far reported) combined with the inability of the government (both elected and permanent) to realise that the old ways of creating a property boom are unable to give rise to a recovery now and to recover the value of money again. (I left the word 'unsustainable' out as it should no go without saying!)

  • Comment number 32.

    The Chancer's (sorry, that should be "Chancellor's") budget speech was nothing more than optimistic propaganda.

    Economic recovery rates in 20010, 2015, or the year dot, will never equate to the Government's hallucinogenic projections.

    And yet we still apparently treat them with respect !

  • Comment number 33.

    Meltdown is coming - all escape avenues are firmly closed.

    Western governments are clearly planning to inflate all debt away - hence the borrowing and the money printing. Bond markets are already begining to kick back - with longer dated interest rates on the rise notwithstanding the money printing.

    Governments will need to surrender to the market at some point - but their arrogance and ignorance probably makes this point some way off. More money will be wasted, more commitments made to a lost cause. If they continue to raise the stakes then they will reach the point of no return and create hyper inflation - If this happens no-one will have control.

    People in the UK talk about manufacturing riding into town to save the day. Manufacturing is a bit like Hitlers armies in 1945 - it only exists in the minds of the desperate or the deranged. What is there is too small to carry an economy the size of the UK.

    North sea oil and gas production is on an irreversible downward trend. Oil prices remain volatile, but with a likely upward trend. Financial services can never get back to what people once thought it was.

    The government is out of control - long term strategic planning is absent, attention is not paid to straightforward level one infrastructure. Material power blackouts are likely from about 2017 onwards. Foreign policy is deranged - the UK is being sucked in ever deeper into Afghanistan, and the definition of Afghanistan is being steadily and covertly expanded - soon it will encompass Pakistan.

    Education is based on lies and spin - tens of thousands of barely literate and numerate graduates are being produced each year. Those at the top end of the spectrum (in general) have very little interest in a long term career in the UK. Pretty much everyone I know has either left the UK, or can leave very quickly. The only exceptions tend to be those working in the public sector. Economic apartheid is being created - again covertly.

    The media has largely redifined itself to be little more than a cheerleader for ever more bizarre consumption. Look at all the adverts for stuff, ending wirh "...because you deserve it."

    People talk about economic recovery - but never talk about what it will consist of. Go back just a few years to Thatcher. She was clear - we are going to destroy mining and heavy industry and replace it with the services industry. We are going to attack the Falklands and remove the foreign invader. Doesn´t matter whether you agree or not - the message was clear. Today: The financial services industry is destroying itself - and it will be replaced with, with what? We are going to commit military forces to Afghanistan, because? (because what?)We will know when we have won because (because what?).

    I look at my own family. My Mother a child of the 1930´s can live perfectly well each week on an income that my children would struggle to live on for a day. These attitudes and behaviours have been inculcated almost from birth - they cannot be readily changed. Times will get harder, and the population is in general ill equipped to deal with it. Society has destroyed traditional support measures - the family, trades unions, self help groups, the church, even pubs - all laid waste.

    The UK is busy turning itself into a police state (If you don´t live there, you really notice the difference when you go back), obssessed by all kinds of largely imagined perils and signs of racism. At the same time it sees no contradiction in killing johnny foreigner in far away lands, and no problem with a core economic policy that basically reduces to a proposition that the foreign man will just send money to the UK, presumably because you deserve it.

  • Comment number 34.

    Let me see if Ive got this correct.

    The UK banks were bailed out (with our tax paying money, and our kids and our grandkids) when the foreign banks asked for their cash back. Fair enough some may say but here is the best bit as far as I can make out.

    The BofE lowers interest rates to the lowest ever on record, i.e. they are taking our future money and lending it to banks now at peanuts. These same banks then use oOUR future cash and lend it (remember its OUR money) back to us (for mortgages at circa 5%) (for CCs at circa 18%).


    Am I missing something?

  • Comment number 35.

    Stephanie
    I don't entirely value projecting past economic statistical series onto current scenarios - the prevailing circumstances are so different in specifics and the aggregates composed of a war weary generation on the one hand and our shopaholic Hannah Montana generation on the other.We should never forget the "real people" under those statistics.
    Interesting to raise the National Government example of the thirties - I expect that would be a desirable result for the next election, but don't expect our partisan MP's to be able to swallow that. As you have indicated in the past, the policy options are in reality very few, but the choices of how to restructure the UK economy will need experienced and talented hands, not necessarily inexperienced Tory newbies or the few razzled diehard Labour survivors.
    Who would head up such a government? Cameron surely is too smarmy and shallow for the majority of the population to accept, but who else? I have Vince Cable pencilled in as Chancellor and Frank Field on the line for Pensions. There you are Stephanie a new interactive idea for the blog - Fantasy National Government ;)

  • Comment number 36.

    John_from_Hendon (#31) "But isn't our proper interest in previous depressions the desire to get a grip on the probable course of this one?"

    No, because we basically know what created this 'depression', and it's essentially unique given markets were computerised/de-nationalised in the 80s. See a DOW graph from '85 onwards (ensure it's a non log scale) and look into how Nominee Accounts have been mined. Like everyone else, you know all about deregulation/securitization driving 'growth'. What we face now is a political crisis where effectively, there is no effective governance to speak of by design, just anarchism and spin.

    "When I first took office they showed me a chart. On it was a line which showed the apparently inexorable rise in crime over the previous 50 years.

    They said to me:-
    This is what has happened to crime over the last 50 years.

    It is going to carry on rising. And the first thing you must understand, Home Secretary, is that there is nothing you can do about it.
    Your job, they said, is to manage public expectations in the face of this inevitable rise in crime.


    Michael Howard Oct 2007

    What I have had to say is based on data trends across departments. Does this help? Only if it leads to an increase in governance and an abandonment of free-market (anarchistic) economics. As the current Opposition Parties can't do that ideologically, and New Labour stole their policies what's left?

  • Comment number 37.

    24 Simpleengineer

    I share you bafflement but I gather it is as follows - You need growth to balance inflation and you need inflation because you dont want deflation, you dont want deflation because dropping prices mean people wait to buy, and you dont want that. Its not growth its standing still but they call it growth because it sounds better. Meanwhile goldilocks is chosing which porridge is the best and sprinkling on M and M's - M0, M1, M2 M3 and M4, and politicans are spinning the plates and sugaring it up to get consumers to eat up. I might have cause and effect mixed up and I am sure the economystery guys will have a laugh. Give them an excuse to correct me.


    26 somali pirate


    Canada, sorry to hear about your extradition, I'm surprised the flight is costing you that much.

  • Comment number 38.

    Hindsight is a wonderful thing.... the revision of official figures, and now the revision of the bases upon which official figures are predicated is not in any way a bad thing----but the leap towards then simply believing utterly the 'new' official figures, and the 'new' bases upon which these are predicated is one I am finding tough.

    There is a lot of talk about the 'real world', by economists who have little clue how to apply their theories to the real world because all their experience of the real world is actually refracted through their theories...this isn't ground breaking stuff although it was when Plato wrote the Parable of the Shdows.(Present economist-ic company excepted!)

    It's a little bit similar to the Estate agent(s)mantra that the 'pent up demand is there' so the housing market must return to the highs (and character) of the recent past---the only thing holding it back being that the banks won't lend...

    I DO agree this, though..because for years, and decades , there has been a huge pent-up demand amongst my friends and myself to buy large villas in Monaco...and the only thing holding me, and them back, has been the inexplicable reluctance of the banks to lend us the money to do it.

    Finally---in the real world are the problems in the legal profession, the media, advertising, accountancy at present due to this depression?...Or to the internet algorithims supplying the services both more cheaply and more conveniently than the old method having having nicely paid people sitting in offices doing it?

    IN the last century it was the blue collar industries that suffered the downturns and contraction...in this it is turning out to be the 'professions'----- metal bashing and mining aren't the only industries where productivity gains come at the expense of jobs...and in a services-dependent economy that is a story not illuminated in the historical demand charts....

  • Comment number 39.

    CHUTZPAH

    JavaMan1984 (#34) "Am I missing something?"

    Just a more extreme expression of appropriate outrage as I see it (but that sort fo talk can get one put on a Home Office list I hear) ;-)


  • Comment number 40.

    I know it's the two posts in swift succession etiquette breach..... but I do agree with Amagedeontimes at post no: 33!!

  • Comment number 41.

    Libertarian Kurt ~6 well said ... an event that is so often over looked

  • Comment number 42.

    The problem with looking backwards to The Great Depression is that we cherry pick the information we want. With hindsight it is easy to say "well actually the numbers weren't really that bad" and forget about the poverty and pain, the lack of hope and lack of proper health care that are hidden in them.

    It is time for us to completely review what we, as a nation and as an economy are all about. We take as given that manufacture and services (call centres ec) have to be exported to low or lower cost countries. Yet, cost is only one element of the financial equation. We take profit as the other and we forget that profit is far more than a monetry sum. Money itself is the root of our problem. We need to drive money back to its proper position as the oil (I think glanafon use the term 'enabler') of the economy and not the objective. Value has to be our goal - value to the consumer, the producer and the nation as a whole.

    Can we do this? Yes if we have the will. Our bankers and financiers have made a mess. Our governments have appear to have colluded with them. Therefore why do we expect them to be able to lead us out of it?

    Let's take the energy situation. There is no reason why we as a society cannot build a new energy system. In 10 years we could be almost self-sufficient in power if we invest NOW in nuclear, tide, wind and yes coal. However, that would take a major stretgic plan.

    We do need to learn the lessons of the 1930's. Perhaps the biggest one is if we do nothing we will not recover economically. If we do nothing we will have social unrest. If we do nothing we could easily see the start of WW3.

  • Comment number 43.

    FORGET ALL THIS DOOM AND GLOOM. The markets are surging ahead, pile-in now! The recession is faltering and it will soon be business as usual. The doomsters will be left behind by the new optimism.

  • Comment number 44.

    post 34 no I think you have got it just about right.

    Mad isn't it!

  • Comment number 45.

    #36. JadedJean wrote in anger against my positing #31

    "But isn't our proper interest in previous depressions the desire to get a grip on the probable course of this one?"

    JJ - I am sorry that you think that it is not our proper interest to illuminate how this depression will pan out.

    Perhaps you misread 'course' for 'cause' in my positing otherwise I fail to understand your contribution at all.

  • Comment number 46.

    Stephanie,

    It would be interesting for you to outline the external debt ( public and private) of the UK in 1931 as compared with that of today. I have read some economist estimating the figure today could be in the region of 400% of GDP which is much worse than others, including the US.

    Much talk now of worrying levels of household debt and the asset bubble bursting and how stupid we all were to not tame the boom - Charlie Bean ( chief BoE economist) led the BoE response in July 2004 against the siren warnings that household debt was reaching unsustainable levels and fuelling dangerous house price inflation. A 'debt bomb'/asset bubble was looming. But Charlie said that because household debt accumulation was more to do with asset accumulation rather than the finance of consumption and because higher debt was matched by higher financial assets it was not obvious to BoE / MPC that it had any impact on the macroeconomic outlook. It was not BoE business anyway, he said, to "clobber the consumer"........lets not blame ourselves, then!

  • Comment number 47.

    Herts60 (#61) "Libertarian Kurt ~6 well said ... an event that is so often over looked"

    On the off-chance that you are not a wolf, beware of wolves in sheep's clothing. Anarchistsdrove the behaviour which we're now having to deal with. They count on most people not seeing the consequences of what they advocate, which in this case, is further erosion of governance/regulation. This is why they fled Germany in the 1930s, and before that, the Pale of Settlement at the end of the C19th. Immigration/Nationality Acts in the USA and UK in the early C20th were designed to limit further entry. These types are nation-state wreckers in pursuit of private/group profit. Don't trust anyone who is explicitly anti-empiricism, as it's anti-pursuit of truth, i.e. what the Muslims call 'Satanism' ;0)

  • Comment number 48.

    Hindsight is such a wonderful thing. Such a shame all these so called economic experts didn't see all this coming and shout as loudly as they are all shouting now. Every day we seem to get a new 'think tank' with a new take on the subject. How can they possibly predict what is going to happen in six months time when apparently none of them thought to warn us about where we were all heading. Guess they were all happily picking up nice fat bonus'. Of course most of the public knew it was a bubble which had to burst because house prices simply could not sustain that level of growth. Guess the 'experts' were also enjoy reaping the profits from their overinflated house prices to say anything which might upset their own rewards.
    I also get the distinct feeling that many of the bloggers on both this site and Prestons seem to actually be getting some kind of twisted, warped pleasure from being about as gloomy as they can be.

    Strangely I don't actually see all this doom and gloom replicated on the ground. What we see on TV and hear in the press does not represent what people are saying and doing in the Country.
    I fully appreciate that some people have lost their jobs and for them it couldn't get any worse, as unemployment benefit is dire. People who depend on interest from their savings to bolster their pathetic pensions are suffering but the vast majority of the public are carrying on as normal.
    People are probably holding off buying a new house to see where prices fall to because they could end up buying a bigger/better house when the market flattens out. We know we could buy something that was out of reach before as the decrease has been greater in some parts of the Country where in others the drop is much less. We will move when the time is right.
    people are still going on holiday.

    i think it is highly dangerous, highly irresponsible for people to speculate on what might or might not happen. They just have no idea, they cannot substantiate their claims and yet they create fear, when the very last thing we need is fear.
    people would do better to start backing Britain rather than trying to beat the hell out of it because the longer there is little or no confidence the longer this will last.
    I would be much more inclined to support an opposition party if they were backing Britain rather than trying every opportunity to bash the Labour Party.
    They are not interested in you or me, they are only interested in gaining power for themselves. Kid yourselves, we have seen it all before. Mrs T pretended she was going to look after all of us ( wasn't she the housewife holding the purse strings) and the first thing she did was to kill of the mines, kill off the steel industry. There was no investment in the railways, schools or hospitals.
    It matters not who is in power, we live in a global economy and not masters of our own destiny but we could bring pride back in to being British. Other countries are proud of who they are, not us. the press and the media take every opportunity to run this country down and for what?

  • Comment number 49.

    Simpleengineer # 24

    I would recommend Henry Hazlitt's Economics in One Lesson. Google it!

  • Comment number 50.

    24 - Simpleengineer - "Is there a 'Global Economics for Dummies' book out there?"

    The unfortunate reality is traditional 'economics' is well defined but much too narrow in scope (and is dead now anyway!) When considering 'economics' from a more holistic point of view it becomes naturally shaped by the fundamental values upheld (e.g. honor) and the philosophies applied (e.g. continuous improvement).

    For instance:

    Poweromics = People use position and power for their own personal gain, based on poor moral values, self interest and greed.

    Leanomics = People take responsibility for adding value and continuously improving the situation for others (e.g. customers, communities, overall environment), based upon fundamental values such as trust, honor, responsibility and respect.

    Guess which one we have at the moment? Guess which one's had its day? The internet has changed the rules and will transform everything, including 'politics' and 'economics'.

    Google's mantra is "Do no harm". The Leanomics mantra is "Do good".

    David Clift, a Future 500 leader

  • Comment number 51.

    Herts60 # 41

    Thanks, I just wish more folks like you would interpret its significance.

    ;)

  • Comment number 52.

    If I remember correctly, there was a Labour administration in Liverpool when that once great city was declared bankrupt in the 80's. Why on earth would people expect anything less when that same political party are running the country? In my humble opinion, the administration which is in power now has successfully brought this once great nation to it's financial knees. Even the Germans couldn't do that during two world wars. With political party's like Labour who needs enemies?

  • Comment number 53.

    I'm not totally on top of these economics thingies, but this worries me

    http://www.spectator.co.uk/coffeehouse/3592736/the-alarming-trends-surrounding-quantitative-easing.thtml

    Is the analysis actually correct?

    I have been asking for some time for Robert to explain what the Government was doing in the bond market, but if there is now evidence that the Government isn't actually telling the truth then I think that you might be best placed to explain what is happening there.

  • Comment number 54.

    # 33 - "a core economic policy that basically reduces to a proposition that the foreign man will just send money to the UK, presumably because you deserve it." AND THEY DO SEND THE DOSH. More fool them I say. Spend away blighty ...

  • Comment number 55.

    WHO'S AT THE WHEEL?

    John_from_Hendon (#45) "Perhaps you misread 'course' for 'cause' in my positing otherwise I fail to understand your contribution at all."

    No. How could a reading or misreading of 'course' as 'cause' adversely affect your undertanding of my post in #36? If you don't understand it, I suggest you read it again, paying particular attention to the fact that it was long-in-the-tooth Civil Servants briefing him.

    You (and you are not alone) don't appear to have much appreciation of just how much control 'liberal-democratic' nation state politicians have relinquished through legislation (which limits what they can do) in favour of 'natural', market-forces. It is the very fact that they have done this, and that their electorates still naively argue about the merits/demerits of this or that party, vainly insisting upon their politicians doing something, that I'm drawing attention to, and with some concern. Rolling this back goes in one direction.

    Finally, don't confuse anger with clear assertion. Looking back to the early C20th won't help us very much as we have draatically changed the game via neo-liberalism.

  • Comment number 56.

    JadedJean # 47

    Just keep on providing those types of links JJ; there's nothing like shooting yourself in the foot. Let me know when you run out of bullets; I may be able to help you.

    There is ONLY one type of wolf that cajoles, compels, coerces, defrauds, robs and threatens ordinary people. It is the State, and you know that.

  • Comment number 57.

    43 LordGreenShoots

    Too true, there's ooooodles of money to be made. On the hunch that pimping is imminently to be legalised I am going to parade my unique business model (and girls) on Dragons Den and see if there's any takers.

    An opportunity like this arrives once in a lifetime!

  • Comment number 58.

    48. timetoponder

    Some good stuff there, and, yes, I have to admit I do get a twisted pleasure out of being gloomy, though I'm far from the worst (come in Armagedion times and XCAnderson, to name but 2 of many!)

    What is more serious and worrying is you saying that "we could bring pride back in to being British". Is that the same as being white anglo-saxon? If not, what exactly are you saying?

  • Comment number 59.

    timetoponder (#48) "the press and the media take every opportunity to run this country down and for what?"

    To sell copy, earn their living, get promotion, and help their employers/owners buy up what's left of the state and then asset strip it usually.

  • Comment number 60.

    JadedJean 47
    Thaks for the link to Mises on which I found today's news that "In effect, the federal government and the UAW are moving to seize and split nearly all future profits for GM".

    Maybe we could do with Socialism-syndicalism here, cutting out the shareholders to the benefit of workers and ordinary taxpayers.

    Tell Sid - your time's up.

  • Comment number 61.

    StrongholdBarricades # 53

    Yes, essentially it is correct. Unlike the US bond market which is flourishing at the moment (it won't last by the way, it will crash and so will the US dollar once foreign investors realise that the US will never be able to repay its debt), the UK bond market for foreign investment is dead. The only way the government can now sell its debt is to monetize it by the BoE simply printing money, euphemistically known as QE.

    Weimar Republic on the cards? Quite possibly.

  • Comment number 62.

    ThorntonHeathen # 60

    Keep reading Mises and educate yourself.

  • Comment number 63.

    ThrontonHeahen (#60) "Maybe we could do with Socialism-syndicalism here"

    We've had the gist of that Hayekian anarchism since 1979 (at least). You try telling Sid - he helped bring it about in the 80s, as did his naive Russian voucher-taking/selling counter-parts in the 90s!

  • Comment number 64.

    #55. JadedJean wrote a load of pernicious falsehoods and deliberate misunderstandings and misrepresentations! (as is usual I am sad to notice.)

    "You (and you are not alone) don't appear to have much appreciation of just how much control 'liberal-democratic' nation state politicians have relinquished through legislation" - What a load of nonsense!

    It is absolutely unacceptable to promote the deviant philosophy which espouses the belief that any form of dictatorship will 'make the trains run on time'.

    "It is the very fact that they have done this, and that their electorates still naively argue about the merits/demerits of this or that party, vainly insisting upon their politicians doing something, that I'm drawing attention to, and with some concern. Rolling this back goes in one direction." The opposite which by implication you are recommending is totally unacceptable in that it is the thin end of the wedge of exactly what you have previously been arguing against - fascism (I have previous taken you to task fro using the term Nazi out of its particular context I recall!)

    You ruin your arguments by intellectually bankrupt and ill-thought out reposts! What arrogance and historical illiteracy to argue that the state and its administrators could do better if only they were less liberal - for that it what you are arguing. That is neither obvious or proven or able to be proved. The World is as it is and to try to revert to some ideal of an earlier age today is neither wise nor sensible nor likely to be effective - ans what is more there is no demonstrative evidence to say that it might be successful!

    I, unlike you, will never espouse any from of dictatorship, of the masses or otherwise! How dare you accuse me of supporting one party or another - I support none as they are all the purveyors of the same economic policy, but that does not mean that I am in any way prepared to consider a dictatorship as you imply! I find your arguments beneath contempt.

  • Comment number 65.

    Reddollar (#52) "If I remember correctly, there was a Labour administration in Liverpool when that once great city was declared bankrupt in the 80's. Why on earth would people expect anything less when that same political party are running the country?"

    You may be right, without knowing it, but this isn't Labour any more than that was Labour in 80s Liverpool. That was Militant Tendency (i.e. entryist Trotskyites of 'Ted Grant's' fame - look his name up). New Labour made out that they had purged them, in fact that was probabaly just theatrics, as in practice they have effectively become them, as I see it. New Labour are indistinguishable in their attack upon the state and their contempt for Old Labour values as the Tories and Neocons. That is why we are in such trouble.. Where are we to turn?

  • Comment number 66.

    Stephanie,
    Very dry stuff. The Depression in Britain was certainly 'Great' for those who suffered it , including my father who was laid off and whose family went through great hardship. This needs to be remembered when you're crunching numbers...
    The Jarrow Marchers would also have had a very different perspective. Need to speak to more people than other economists to gain a richer more rounded perspective on economic consequences.
    Simon N

  • Comment number 67.

    JadedJean # 60

    "Where are we to turn?"

    I would suggest laissez-faire capitalism. In other words, personal and economic freedom.

    ;)

  • Comment number 68.

    LibertarianKurt (#56) "Just keep on providing those types of links JJ; there's nothing like shooting yourself in the foot. Let me know when you run out of bullets; I may be able to help you."

    I will, and feel free to supplement - let the truth win out.

    As I see it, if people can't/won't put the work into seeing the effects of 'good' nefarious rhetoric (Kabbahlah), when it's presented to them, where the authors of words without tangible reference eschew the only method we now know of to keep us safe and secure empiricism and refuse to show respect to those who try to protect them from predatory others, in the end, they deserve the chaos and misery they'll bring upon themselves.

  • Comment number 69.

    John_from_Hendon (#64) "What arrogance and historical illiteracy to argue that the state and its administrators could do better if only they were less liberal - for that it what you are arguing."

    I am well aware of that, why has it taken you so long to grasp it? ;-)

    The penny may be dropping at last. Your hyper-emotional reply simply indicates to me that you may be starting to grasp a basic truth of politics, namely, that liberalism is anti-statism. The UK state has been under de-construction since at least 1979.... The bogeyman of Nazi Germany and the 'evil empire' of the Soviet Union was used by liberals/Neocons (e.g Hayek, Popper) to promote and sustain free-market liberalism/anarchism. Neo-liberals have been doing this viz. Iraq, N.Korea, Iran, 'Alki-Ada', 'women-beating Taliban', Uzbekistan etc, and that, ultimately has been our nemesis, which, as I've repeatedly pointed out, shows up in our demographic measures of biological unfitness, just as they sadly did in Weimar Germany....

    I suggest you look more carefully into the facts behind my assertions (unfamiliar and unpalatable though these might be) putting aside liberal-democratic spin/propaganda such as 'The Road To Serfdom' and allied Collective Guilt Campaign engineered by Psychological Warfare.

  • Comment number 70.

    LibertarianKurt (#67) "I would suggest laissez-faire capitalism. In other words, personal and economic freedom."

    Yes, I know that's what you and your anarchistic chums want, i.e. a return to business as usual, but that's hardly 'a turn' is it? ;-)

  • Comment number 71.

    JadedJean # 68

    "...let the truth win out."

    It will, eventually. And I will smile when people come to understand the true meaning of the words Life, Liberty and Property.

  • Comment number 72.

    #69. JadedJean wrote confirming the desire for a dictatorial police state.

    "I am well aware of that, why has it taken you so long to grasp it? ;-)"

    Because I give people the benefit of the doubt even when they have transgressed reason and sanity as you have on many many occasions! Your arguments are false. Your conclusions are aberrant and foolish!

  • Comment number 73.

    NONE SO BLIND AS ...

    John_from_Hendon (#64) "What arrogance and historical illiteracy to argue that the state and its administrators could do better if only they were less liberal - for that it what you are arguing."

    Why do you think Thatcher and friends clobbered ('liberalised') the Civil Service? New Labour went on to make it ever so politically correct by setting recruitment targets proportional to local ethnic base-rates...Go on, ask what's wrong with that ;-)

    There's lots more you know - how about liberalising education so that 50% go to university instead of 5% (and the effect on differential fertility), and especially via females - go on, I dare you

    'arrogance and historical illiteracy' indeed... ;-)

  • Comment number 74.

    JadedJean # 70

    "...but that's hardly 'a turn' is it?"

    It is a turn away or, should I say, PROGRESSION from what we have now; which, of course, is statism.

  • Comment number 75.

    John_from_Hendon (#72) "JadedJean wrote confirming the desire for a dictatorial police state.

    A dictatorial police state is where the police enforce the law at the request of the politicians in power rather than to the laws which have been put on the statute-books by legislatures (which will have included the elected politicians). You need to read what I post much more closely before imputing statements which I have not written.

    You appear to need some lessons in logic as well as politics.

    First of all, this is what I agreed to: "the state and its administrators could do better if only they were less liberal - for that it what you are arguing."

    This was a logical point, not an expression of personal preference. Administrators could do better if they were less liberal because administrators and our Civil Servive is not a democratic system. It is dictatorial. The clue lies in the term Civil Service, which is akin to our Military Service. In the British Civil and Military Services, the troops have to do what their leaders tell them. These are bureaucracies. Liberalism is anathema. Junior Civil Servants have to do what their superiors dictate, sometimes that can be totally at odds with what they and the general public may think is right. This is how government really works. What has happened since 1979 (and even more so since Blair), is that the Civikl Service has been liberlaised in pursuit of free-market anarchism and de-regulation. You simply do not understand how the UK Civil Service use dto be.

    I wrote: "I am well aware of that, why has it taken you so long to grasp it? ;-)"

    and you responded:

    "Because I give people the benefit of the doubt even when they have transgressed reason and sanity as you have on many many occasions! Your arguments are false. Your conclusions are aberrant and foolish!"

    No, you haven't shown any such thing, have you? You have just asserted that - you could have said: "you are a baby-eater/pedophile" etc. What you have done is shown, publicly, that a) you didn't know what I was writing about, and b) that when it comes down to detail, you don't know what you are talking about when it comes to government and politics. Have you noted undr New Labour how the UK is shrinking into a group of Regional Development Agencies, each about the size of an EU NUT (6m); have you noted how inefficient all departments in the Public Sector apparently are? Have you noted how much power must be devolved to (ever more ignorant/ineducable) people from 'elitists'?

    Instead of turning to abuse, I suggest you try to learn from what I have been posting by looking further into it. Begin with the Civil Service Code of Conduct and its revisions since Thatcher, and perhaps, how the German National Socialist Party was Left Wing like the USSR's and PRC's Democratic-Centralism (a little like Old Labour in fact), and what they were struggling with under the guise of 'freedom', 'liberalism' or Militant Tendency's New Left/Neocon 'grass root', 'workers democracy'. Like the New-Left, Neoconservatives are anti-Stalinist, but not anti-Trotskyite.

    Why? Does that help the free-market perhaps? Who, disporoportionately do really well from the international free-market?

  • Comment number 76.

    #75. JadedJean wrote:

    "the state and its administrators could do better if only they were less liberal - for that it what you are arguing."

    No, I did not say that - you may have, but I did not. I make no statements with regard to more or less liberality - that is your game!

    As for the rest of your posting...

    I have previously taken you to task for the abuse of historical references (specifically Nazi), but you have not listened. I stick to my assertion that the arguments that you make in support of abandoning democracy are crass, stupid and entirely without merit and what is more also extremely dangerous. You do not seem to comprehend that without some form or representative government that, most importantly, can be changed from time to time the whole of society tends to lurch towards to dictatorship, yet that is the precise direction that you wish to take!

  • Comment number 77.

    John_from_Hendon (#76) "the state and its administrators could do better if only they were less liberal - for that it what you are arguing."

    No, I did not say that - you may have, but I did not."


    Let me explain something about the philosophy of language to you. I cut and pasted what your typed. I quoted you verbatim. That is what one must do when one says 'you said x'. Otherwise one is creating something which the other person did not say. Do you undersatnd? Saying, like reading and thinking are problematic as they are intensional verbs of propositional attitude (psychological verbs basically) and as such are prone to go off the logcal rails so to speak as they violate tests of extensionality which is the sine qua non for rational expression/inference. In short, you did write what I reported you wrote. You have not grasped what I have posted.

    I then confimed that I assented to what you wrote. I also went on to explain how government works in the UK (or how it used to work via the Civil Service before it was knobbled by elected anarchists).

    "I make no statements with regard to more or less liberality - that is your game!"

    This is not a game. What you have to try to grasp is that I am describing how this works in reality. Some time back I picked you up for making a) sensible suggestions but... b) ones which are only implementable if one has an executive (Civil Service/Public Sector) which can enforce those actions. What you do not seem to appreciate is that the executive arm of government is being eroded by anarchists in pursuit of the free-market. This was first done with vengeance by anarchistic Conservatives after 1979, and then by New Labour in 1997. The legislature can pass all the laws it likes, but if the means of enforcing them are not there 'the trains do not run on time' - see the FSA, or this.

    "I have previously taken you to task for the abuse of historical references (specifically Nazi), but you have not listened"

    No, you have presumed to lecture me on the nature of National Socialism without really understanding how it was in reality (look up 'g' and 'conscientiousness' (this trait appears to be somewhat lacking in psychopaths), but consider the example items, which country comes to mind?. The term 'nazi' in Liberal-Democracies, like Stalinist 'Socialism in One Country' or 'Radical Islam', is abused to politically sustain free-market anarchism. You just don't appreciate how this propaganda works. Nor wil you take instruction. This just means you are well conditioned. It is engineered by experts. This also serves to keep parties like Old Labour (which is basically 'nazi') out of power.

    "I stick to my assertion that the arguments that you make in support of abandoning democracy are crass, stupid and entirely without merit and what is more also extremely dangerous."

    This just shows that you have nothing rational to say. Perhaps you are upset or unsettled. The above is just name calling. I suggest you think about what I say, folllow a few links etc. It may take some time.

    "You do not seem to comprehend that without some form or representative government that, most importantly, can be changed from time to time the whole of society tends to lurch towards to dictatorship, yet that is the precise direction that you wish to take!"

    I understand much more than you give me credit for, but never mind that. What has changed since 1979? You have the choice between three different coloured rossettes where the differences in policies are so trivial that ever fewer people bother to vote and those who do probably don't understand hat the are really voting for. To know what is going on requires one to follow legislation as it passes throuh the Houses. That is beyond most of the population's verbal ability. If you look at the Lisbon Treaty it all but proscibes politics which are not 'Liberal-Democratic' free-market. You effectively live in a one-party system which goes about trying to subvert statist governments everywhere else in the world in order to create markets!

    You need to wake up to this, as however sensible your suggestions to fix the economic mess we are now in, they are not going to be implemented in a free-market Liberal-Democracy!

  • Comment number 78.

    Addendum (#77) Posted several times before but it won't hurt to do so again under the circumstances. Both the aforelinked two-parter and the following link are on Old Labour and National Socialism/Socialism in One Country being the road to 'dictatorship' - or so the free-marketeer anarchists would have you fear. Government is indeed bad for business where business preys on the vulnerable, so business promotes the myth of equality and freedom.

  • Comment number 79.

    AN OPENING OR TWO FOR THE BNP!!

    WELL DONE GORDY & THE GANG!

  • Comment number 80.

    AN ORWELLIAN WAKE-UP CALL

    alexandercurzon (#79) Typical, every time the anarchistic liberal-democrat bandwagon is shown up to be the propaganda dependent scam that it is, some allegedly minority persecuting group is highlighted as the only alternative in order to scare people back on message. It's reinforced in our schools, it's regularly pumped out in the media, and most people perpetuate their own slow demise without even noticing that they're doing it. Ironically, they feel self-righteous and socially desirable for doing so! :-(

  • Comment number 81.

    How about another warning from history

    "To preserve [the people's] independence, we must not let our rulers load us with perpetual debt. We must make our selection between economy and liberty, or profusion and servitude."

    Thomas Jefferson, President of the United States of America,1801-1809

  • Comment number 82.

    #77. JadedJean wrote at length in a vain attempt to justify the unjustifiable.

    1. JJ you cannot use the term 'Nazi' without a direct and unavoidable connection with the 3rd Reich no matter how much psycho-babble you surround it with! So please desist.

    2. I, and all of the other people on the bbc blogs (except you and one other) full well understand the natural limitations of free-market Liberal-Democracy, however that does not mean that we will let you become our dictator in the name of free speech. You may rant all you want but it will be fruitless.

  • Comment number 83.

    John_from_Hendon (#82) "JadedJean wrote at length in a vain attempt to justify the unjustifiable.

    Are you intentionally missing the point?

    "1. JJ you cannot use the term 'Nazi' without a direct and unavoidable connection with the 3rd Reich no matter how much psycho-babble you surround it with! So please desist."

    I intended to make reference to the Third Reich. I have done so in order to make it clear how anarchistic free-market neo-liberalism has been bolstered through through egregious propaganda. It began after WII with teh denazification programme. Hayek also used it in 'The Road To Serfdom'. Do you still not understand this? It was central to what Thatcher and her ideolgues like Keith Joseph did as anti-statist politicians.

    "2. I, and all of the other people on the bbc blogs (except you and one other) full well understand the natural limitations of free-market Liberal-Democracy, however that does not mean that we will let you become our dictator in the name of free speech. You may rant all you want but it will be fruitless"

    You mean you won't listen to reason.

    What you're doing above is exactly the sort of thing which I assert has insidiously contributed towards bringing about our recent anarchic mess. All you are saying above is that you are still not able to grasp what has been driving deregulation and how it has driven Old Labour off the political scene.

 

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