Genuinely not to understand the government's economic policy

[Thisishowyoudisappear]

This is a genuine question, I'm not trying to start a political argument. For the record I am fairly left wing.

So GO says the govt needs to make huge cuts in order to reduce the deficit. The cuts are going to be made at least in part from 'welfare'.

I guess I am wondering what all this deficit cutting is supposed to be achieving. I don't know, in real life, anybody who's been made better off under this govt. I don't understand this idea that 'balancing the books' for the whole economy a)bears any resemblance to doing same for a household or small business; b)is doing anything for the vast majority of people.

I don't understand how 'welfare' can be cut much more without starting on pensioners, which surely isn't going to happen.

I also don't understand why anyone except the seriously well-off vote Conservative. Why would you, when they are cutting services and not giving anything in tax cuts or whatever? Genuine question again.

I'm intelligent and take more than a passing interest in politics. So AIBU (or just a bit dim) or what??

But, there are people who don't see anything wrong in going round and round in circles of sophistry. They're mainly called Westerners. Mind you, in the places where cultured, (if meaningless) arguments are not used, and the power brokers use real violence, (Mugabe being an example) the arguments are no more valid and the results are much worse. I believe that our Plantagenets were good at politics such as those.

So, sophistry and economic waste, on a vast scale, would seem to count towards progress in Europe.

I don't think people ever vote for any party other than for reasons of self-interest. Politics practically by definition emerges in the negotiation between different interest groups. This is not unique to Conservative voters, though by inclination they are perhaps less hypocritical more realistic about it.

Human nature means self interest will be a factor when voting, but it is not just the economy that influences voting preference.

Tron - Whichever way it is placed into the poorer class, it still must be printed and placed there. I'm sure they will come up with many ingenious ways of dressing up the mechanism, but they will do it, and it will be printed money. The country will become poorer, the national debt will increase, we'll change the way we calculate debt in order to make the figures look better, we'll continue to roll out experts to point at this hay barn, or that well, and say, "Look, that shows the economy is getting better." But people will know when they go to their shops, when they pay their fuel bills, when they cut back, that the country is getting poorer. We are moving inexorably towards a two tier society. The people in the middle are being squeezed hard. Their wealth is being transferred upwards, and their standard of living is slipping downwards. The middle classes have billions of pounds in pensions pots. We need to see those 'nationalised' for the benefit of the poor. But in realist the money will be taken, a government promise given, and the things it is spent on will be done by companies owned by the wealthiest in our society. The poor people get a little work and a new TV, and the corporations get the revenue from the government contracts paid for by the nationalised private pension pots of the middle classes.

I remember some muppet telling me he thought it was great that legislation had been passed that said that bank creditors would now bail out the banks in the vent of failure rather than the taxpayer. He was over the moon. He was dead against what happened to the Cypriots, and he thought this was a victory for the common man. What he didn't understand was that the people who have money in their bank accounts as those unsecured creditors of the banks that the legislation is talking about. That every pension pot in Britain and every ISA account is held by an institution as an unsecured loan by you to the bank. It is not your money. It is their money. You leant it to them with no security or collateral against repayment. And he seemed to think, when it finally dawned on him that he, the taxpayer, would not just lose a little bit of his tax, but all of his savings if a bank failed, that the Government would print his banknotes again and just give him them.

Any country can print as much money as it wants and just give it to its people, but all that does is make a country bankrupt. It has, in every country that has ever tried it. Our government are not the geniuses that are going to succeed where everyone else has failed.

OTheHugeManatee - A noble philosophy if Ayn Rand is to be believed.

This is an interesting bread, but I'll need to catch up tomorrow....

"Time for bed." Said Zebedee.

Quantitative Easing fails because you can't mix a command economy with a market economy. You can't control this bit of it or that bit and let market forces control this bit or that bit. You either control all of it (go Angela and Stalin) or you control none of it, go Queen Victoria.

Or you control bits of it badly, go the Modern West.

!!!! Thread. Bloody autocorrect!

Dora - I don't think we have had a free market economy in the UK for centuries, and the US hasn't operated one since the turn of the last century, so at this point the concept of a free market economy is pure philosophy. The entire economic system, it's instruments, it's measurement, and its movements are wholly controlled. There is no such thing as a free market force.

I completely agree. The free market died about 150 years ago. But, in the controlled economy, the winners are the Chinese and Angela Merkel.

Why "the Chinese" as a group but Frau Merkel as an individual? Why not "the Chinese and the Germans"?

The government does not have to 'print money' in order to engage in government spending, it needs to reallocate funds from benefits to paying people to be productive. This in itself will not create more spending if the amount is the same as the benefits cut but it will at the very least create something which has potential wealth for future generations

The crux of the policy is that the Government cannot continue to run a structural budget deficit indefinitely. This is because is it will get to the stage whereby they will either not be able to sell UK Gilts on the bond market or the interest rates on the bonds will be so high we will get stuck in a debt spiral and the Government will require a bail out. The other less severe possibility is that increased Government borrowing requires increased Government spending on paying the interest on Government bonds which eats up resources in the economy for no net gain to the overall economy,

George Osborne believes that the deficit should be closed through mainly spending cuts over tax rises (his figures today project 82% of fiscal consolidation will come from spending cuts and 18% from tax rises from the 2010 fiscal position). Personally I find this difficult to believe it will be achieved as the Government has so far decided that the NHS budget should be increased rather than reduced and has legislated for the triple lock on the State Pension which increases the cost of the State Pension which combined with demographic forces will lead to the cost of it increasing considerably. Add in the interest on Government debt (although the overall cost of this was revised down yesterday) then it seems unlikely that Osborne will meet his fiscal target in my opinion if he does not consider addressing the cost of the NHS or State Pension.

elephant
how was GBP created in 1971?
Forget monry, look at livining standards - watch old episodes of corination st or eastenders, we are better off today than at any point in our history.

Thanks neart.

As far as understanding the purpose of government, that wasn't really what I was asking. Just wanting to know what GO is on about, and why people support the current govt's economic policies.

carol - well, it all depends on whether or not you believe that inventing the mobile phone, the internet and the iPad are what is classes as improved living standards. One the measure of public health, with obesity, diabetes, and heart decease on the increase, I'd suggest people's standard of healthy living is falling. With an increase in suicide, particularly among children, an increase in drug dependancy, and an increase in divorce rates, I'd suggest our standards of social living are also falling. And on the basis that in 1971 a huge swage of the population were households where one parent worked and the family unit lived on what he earned, and today we live in a society where in most households both parents work and pay taxes to achieve the same results, all the while no longer giving over the time that once was given over to family life, I'd suggest that quality of home life on the family level has diminished or become harder/more expensive to achieve.

But at least we all get to buy as much shit as we want, so does that make up for it? for me it does not.

Tron - There are at least three flaws with your idea.

Firstly, continuing with the same level of spending on welfare, even if removed from welfare completely and spent of education etc, will continue to accelerate the countries increasing debts. The country has no way of ever repaying the debts it already has. It cannot survive and increase to even a nominal 3% base rate without destroying the value of the pound. It's only choices are to inflate the currency and destroy the peoples' savings, default on sovereign bonds and relegate the country to banana republic status (as Argentina and Venezuela have done), of suppress interest rates at zero and lobby for a world war to create a worldwide currency reset off of (as happened after WW1 and WW2). Sadly we have chosen war and global currency reset, and as before, what comes with that is a humongous Great Depression.

Secondly - we have already passed peak employment. It is not possible to create enough productive jobs for the amount of people we have in the country to do. We simply do not need all the population of the world. Now, we could be socially equitable and say pay everyone double for doing half the amount of work, and put the remaining populous to work, but that form of communism runs contrary to our pseudo-capitalist oligarchy. So we let those that businesses wish to employ work, and we leave the remainder at home on welfare. The principle being that we steal the fruits of the product members of society and give it to the unproductive members of society. Un unsustainable system as I'm sure you will agree.

Lastly though, basic economics always prevails unless along with this forced labour scheme, you add forced pricing for goods and services, because no person is going to pay £600 for a TV build in the UK by people trained and employed at £10 an hour, when you give them to opportunity to buy one for £200 build by people employed at £1 an hour. People are inherently greedy, and they care not who makes their TV so long as it's cheap and they don't have to watch the person build it. The same goes for picking fruit, manufacturing clothes, anything. It will never be economic to manufacture in the UK on a global scale, so long as people in the UK expect to be paid more for their labours than 90% of everyone else in the world.

The country has lived on greed and gluttony for 40 years, where we have taken more from the world than we have been willing to give back, and it cannot be sustained. The world is ceasing pandering to us and moving away from our pound and dollar. The pound began to collapse it the turn of the last century, and we went to war to conceal it. It took a further 70 years to transition to the dollar as the world reserve currency. America became the world dominating power. Now the world is shifting and US dollar is collapsing, and the worlds wealth is moving east. Our population whether they like it or not will have to accept depression and austerity, and a reevaluation of a days labour, and we'd do well to teach our children to speek Chinese, as China will be the wealth provider to our children's' generation.

Thank you Elephantspoo for so succinctly explaining things to me - I knew the first bit about the problems with fiat currency, but couldn't either explain or articulate the rest. Are you economically trained, or someone who has an interest and curiousity?

skolastica she is talking bollocks. Anyone who thinks life in the 70's was better for women, gays, or, frankly, anyone else never lived then or is wearing rose tinted glasses.

except of course a certain type of lecherous white middle class men and child abusers, they preferred the 70's

A saver, and not an idiot who keeps money in a bank. People don't have an interest in money. They are never taught the difference between money and currency in school. They work hard their entire lives, and they don't even know what they are earning or what to do with it. At the fundamental level, we are working to protect the futures of their children.

You might be, I also work to enjoy myself - you seem very negative and martyrish

elephantspoo, I have been saying for over two years now that the $ and £ are doomed. Once China decide they have enough gold they will back the yuan with it and make it fully convertible. They're being aided in this by the US and British attempts to keep the price of gold down by releasing 'futures', or fiat gold. When that blows up the price of gold, silver and other precious metals will rocket and China will laugh all the way to having the world reserve currency.

Gidiot is counting on us going massively into debt, it's the only way his way works. Namely for the poor to pay to continue to fund his lifestyle.

Carol - this is a thread about the current economic policy of govt. and if it is unreasonable that someone doesn't understand it. It is not about the oppression of gays and women in the 1970's. But if you think this thread is about gender politics, go ahead and continue your flaming. I haven't seen any credible of coherent argument or opinion offered by you to the OP. Are you in any way able to contribute to a discussion on economic policy or why people don't understand it (the question OP asked)?

I'm sure you are unaware, the beginning of the 70's saw major political economic upheaval. The UK finally surrendered its position as the world reserve currency, a failure that began before WW1. The dollar was taken off the gold standard and all currencies effectively became fiat, and the petro-dollar was created after negotiation with the newly formed OPEC nations. That cemented the position of the Dollar as the newly formed world reserve currency, and the US hasn't looked back until 2007/8.

Ever since the 1970's the increase in debt has outpaced the increase in GDP. every single year. That means every single year size of the country's debt grows faster than the amount the country is able to earn. The country has never been poorer ever in recorded history.

Now, Mr and Mrs Decker may be better off than their parents were in the 1970's and they may be able to point to a more sophisticated washing machine and a mobile phone and flat screen TV, and they may be able to buy ugly fruit in Sainsburys and 42 varieties of coffee in Starbucks. But those standards do not apply to a nation or society as a whole, and there is incontrovertible proof that the economy is failing.

Just because women have greater opportunity to work and pay taxes, and gay people have fewer fears of violence and the chance to open patisseries, does not mean the economy is stronger or we live in a more prosperous era.

You cannot compare a rotary dial telephone to an iPhone and say, we live in a more prosperous time because those thick bastards in the 1970s didn't know how to build iPhones and most of them watched black and white TVs, and to be honest if you take the barometer of your life's value system from Coronation Street and East Enders (which didn't exist), then I suspect the flaw in your argument has its routs there.

Fuck me these posts are depressing. Looks like we need another world war or global epidemic to reduce the population, reboot to year zero and start all over again..........

I'll get me coat

Doctor Two - There are two other alternatives. The IMF is leveraged only 1.5 to 1. It could back the SDR with gold and underwrite a basket of sovereign currencies. But also the EU as a block of nations has sufficient gold to back the Euro should they divide to do so. They haven't gone down the money printing route yet, so they can step back from the brink and swallow the bitter pill of austerity. But yes, the GBP and the USD are just coffins looking for nails.

In realist that doesn't change anything. Mr Jones who paints doors, and Mrs Smith who has chickens will still paint doors and sell eggs, only there may not be so many people with the need to have a dress coat of paint on their door, and the people who buy eggs may be of a different ilk.