Margerykemp 'the USA barely has a social security system'... oh, dear, I see this is going to be difficult.
The reason, MK, that the Scandinavian countries don't have a problem now is when the sh*t hit the fan (around the time of the Icelandic banking crisis they CUT PUBLIC SPENDING. No, they really, really did.
I am still incensed by that sweeping statement that the global crash wasn't caused by social spending. How to get leftard heads out of their backsides?
[Iain Martin] "Evan Davis [on Radio4] tried manfully to get [Ed Balls] to admit his and Labour's role in the deterioration in the nation's finances and explosion of the national debt. Evan might as well have beaten himself over the head with a copy of Gordon Brown's "Beyond the crash: the first crisis of globalisation."
Balls will take responsibility for Labour's failure on financial regulation. And goodness, he was right at the heart of it. Here he is, as Economic Secretary to the Treasury, talking as late as April 2007. That's five minutes to midnight in terms of the financial crisis: "The Financial Services Authority is working well, and is a world leader in a number of areas ? which can only be good for the competitiveness of the UK financial services sector."
The FSA has itself admitted how woefully deficient it was, with poor monitoring of firms such as RBS, Northern Rock and HBOS. Unfortunately, the Balls explanation for what happened ends with the failure of regulation and the supposedly sudden, unforeseeable accident of a banking crash. There was nothing more that he or Gordon Brown could have done.
But going into the crash the government was spending too much. Spending had risen dramatically from 2001 and the government was recklessly running deficits at the top of a boom. That doesn't mean that increased government spending caused the crash. Of course not. Instead, what should be obvious, is that it left the country poorly prepared for a downturn when it turned up.
This isn't difficult. High spending meant that the sudden collapse in tax revenues as a result of the financial crisis and ensuing recession created an enormous gap between what the government took in and what it was spending, meaning giant deficits.
If spending had been at more sensible levels before the crash, the fall off in revenues would not have had such a dramatic impact and the deficit would have been smaller, meaning that the amount being added to the national debt would have been less than it turned out to be from 2008. If government spending had been considerably lower in the boom years, both the deficit and the debt could have been lower than they are now in the bust.
Incidentally, the British experience wasn't, as Balls likes to suggest, repeated everywhere. Countries such as Canada and Australia [what have I been telling you?] were more ? what's the word? ? prudent. They didn't let their banks run riot and they kept spending and debt under control. Canada's national debt hovers at around 30 per cent of GDP, having been up above 60 per cent in 1997.
The shadow Chancellor cannot, or will not, face up to any of this. He will not admit that there is any connection between what he and Gordon Brown did on spending and on what happened later to the public finances.
I am no psychologist ? although writing about these questions it sometimes feels as though a qualification in that department would come in handy ? but at the root of it all was surely one of the maddest ideas of peacetime politics: the end of boom'n'bust. If your argument was based on the notion that you were a genius who had fixed the economic fundamentals so that good times would not end then you had no reason to worry about the unsustainability of your spending rises. There wouldn't be a downturn, or not a serious one anyway, so just carry on spending.
History demonstrates time and again that believing the good times cannot end, or be interrupted by a reverse, tends to be hubristic hokum. There always have been periodic booms, crashes and panics. There always will be. Anyone who formulates economic policy and ignores this is an egomaniac, a misguided utopian or a fool.
And Ed Balls is no fool. I can only assume that he declines to acknowledge what happened because to do so would be to admit that the project in which he believed for so long ? Gordon Brown and the end of boom'n'bust ? was built on his boss's self-delusion. "