'Things Can Only Get Better'

[Chil1234]

I know its easy to be wise with hindsight but here goes. The CB issue this week has highlighted how overcommitted a lot of families on relatively good incomes are struggling to make ends meet - and often personal debt in the form of loans, cards and hefty mortgages are cited as the reason. If they're struggling, what must be happening elsewhere?

My with-hindsight feeling is that, totally aside from failing to regulate the activities of the banks... the last government actively encouraged the explosion of personal debt that is now crippling so many by whipping up an atmosphere of 'things can only get better'. It's been 15 years since the last recession but they do come around eventually. Lenders behaved abominably, but it was also irresponsible of the last government to put it around that recession was a thing of the past.

Agreed, the Torries want to shrink the public sector and the need to make cuts feeds into their ideology. I just question how front line services being axed, class sizes rising, sacking TA's in schools, cutting budgets in social work dept's will make life easier for the growing numbers of soon to be unemployed people. Add this to lack of funding for teacher training and social work and we are just storing up problems for the future.

I have lost count of the times I have heard Vinnie the weasel say the banks have been greedy and must pay. I don't see too many bankers needing help from social work depts, state schooling, NHS and all these other services that will be effected.

The difference between Labour and the Tories would not have been Iraq or City regulation - they would have been the same.

The difference between them would that rather than spending like crazy in the good times like Labour did, the Tories would have probably reduced public sector debt, shrunk public sector spending and reduced the tax burden. Once the cyclical downturn hit they could have increased public sector debt, hired people and even raised additional tax revenue.

The problem is that Gordon Brown said that "Boom and Bust" was gone forever. What a twit! Were the public so deluded that they actually believed the standard of living in the UK was going up as fast as it did in the last decade? Did they really not realize it was a debt driven illusion?

I absolutely agree that the Government sets the tone for their age and for ages thereafter. I firmly believe that the "have it now" and the utter desperation for people to own their own homes at whatever cost is a result of the previous Tory government. That is when it changed. Easily available credit simply made appear to be within everyone's grasp. That did not start under the last Labour government.

I agree that laxer credit has been a 20y+ phenomena.

The decision to increase the size of the state, however, was Labour's folly. It's just ridiculous that now in many parts of the country the public sector is a bigger employer than the private sector.

That was Labour's big idea ... ensuring that in these areas people would have to vote for them or potentially lose their jobs.

Siasi, I think you'll find that the Tories created a benefits culture during the Thatcher years, making people dependent on the state - by killing off industry and putting millions on the dole with no hope of a job. To talk about public sector jobs created by Labour in the same terms is a nonsense. And house price inflation took off in the Thatcher years too, along with the pressure for everyone to own their own house.

• i.e. referring to your comment 'Labour has effectively created a dependent client state', Siasi.

No one has mentione dte role of teh Bank of England.

Eddie George (former Bank of England Governor) gave this very revealing interview a few years before he died.

"The Bank of England deliberately stoked the consumer boom that has led to record house prices and personal debt in order to avert a recession, the former Bank Governor Eddie George admitted yesterday.

Lord George said he and his colleagues on the Monetary Policy Committee "did not have much of a choice" as they battled to prevent the UK being dragged into a worldwide economic slump by slashing interest rates. And he said his legacy to the current MPC was to "sort out" the problems he had caused."

Very loose monetary policy fuelled an unsustainable borrowing binge that fuelled house price growth and it was a quite deliberate policy to engender a 'feel good factor'. In my view, interest rates should have been raised sharply in 2003 just before he left office to cut off the flow of credit. It would have caused a house price drop but nothing like the one we are about to see and we would have avoided the appaling credit crunch we have seen. We would also be back to economic growth again by now. Instead, loose monetray policy carried on disasterously for 4 more years.

State spending now accounts for 53.4% of UK GDP as compared to less than 40% when Labour came to power (ONS data). I'm Australian and by comparison the equivalent there is 36.6%. The US is 41.5%.

I'm talking about an increasing public sector crowding out the private sector. Unnecessary 'middle class' jobs in the public sector for diversity officers, community cohesion managers, directors of transformation ... Basically paying people £40k/year+ and a final salary pension for doing nothing useful at all.

Perhaps if we spent the money on getting the unemployed back to work rather than creating more state bureaucracy the UK might start getting somewhere.

Riven

Gross domestic product (GDP) is a measure of a country's overall economic output. It is the market value of all final goods and services made within the borders of a country in a year.

As the % of GDP due to the public sector goes up this means the private sector is becoming less and less relevant ('crowding out'). So the other 46% is the private sector.

Perhaps you'd prefer it if it was 100% and we just call it each other 'comrade'

There is a simple answers to our woes then, the government could spend this 53.4% of GDP investing in the private sector and making banks lend to small businesses.

This would generate jobs in the private sector. Perhaps we could all then export these good to (where? poorer countries) and then GDP would rise. Done. Siasl are you anti public sector? I am not and believe that capitalism is creating world poverty and hunger and ruining our planet.

I think i love you minimathmouse
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Can we get some diversity officer and community cohesion managers (are you sure about that one, Siasi) to defend themselves against the claim that they do nothing at all? Funny that, when everyone else in the public sector is so overstretched - social workers, nurses and teachers to name but a few.

Well said Cinnamontoast. Nurses, police officers, prison wardens, social workers, people employed by charities, nurses and teachers have all got difficult and demanding jobs. Their pay is lower than many jobs in the private sector but this has traditionally been offset by job security.

I would say I am broadly anti-statist. I would prefer to reduce the size and scope of the state to a minimum.

Encourage citizens to take responsibility their actions and provide for themselves where possible, to not interfere with personal freedoms unless absolutely necessary, and to take as little as possible from them in terms of taxation.

ISNT, thank you, thats the sweetest thing anyone has said to me on mn. I ususlly get called a marxist, leftish, looney, comrade

"Their pay is lower than many jobs in the private sector but this has traditionally been offset by job security."

But average public sector pay is now higher than private sector pay, they also get final-salary pensions and better job security.

I've just started working with (with, not for) some public sector organisations in one of the most deprived areas in the UK. It's one of the areas most impacted by the previous Tory government's stance on unions/coal mining etc. It is eye opening.

It's bloody awful for the people who work there and the people that live there. It's incredibly depressing and I'm only on the edge of this. The public sector organisations are the biggest employers in the area. They are pretty much the only employers in the area of any note. If all these people lose their jobs (which are not "created" jobs and I know most are not highly paid as the benefits analysis for cutting costs by losing people is negligible) the area will become even more depressed, etc.

I don't know what the answer is. I guess if I did I wouldn't be MNing on a Sunday afternoon but would be spouting economic theory on Newsnight while Mr Paxman disagreed with me.

Actually siasl if you take your ideas to their logical conclussion we could end up with anarchy. I hope you have paid your private health care insurance, have no need of an NHS dentist and you won't be expecting help in your old age. While your busy building your self sufficiency bubble there are people starving in the third world and neglected kids eating out of bins in this one.

Nobody was forced into it; ythe reason we've weathered hard times is an absence of debt and acceptance of a lifestyle bvased upon what we could afford when times were better. We had (and still get) as many pre-approved notices as anyone, but turn away on principle. We have an emergecy overdraft that sits there unused JIC, and an £8.99 phone contract each.

But partly learned when things did go avoidably tits up years ago- and because I think dh and I are fortunate to be of that strange ilk that doesn;t care less if their clothes are designer or thrift, as longa s they're intact and more or less fit. Ditto old car/ etc etc.

Siasi I just ahd a chat with ds3 about social repsonsibilty and not taking from teh state, but he just flapped at me, stood on his head and blew a bubble of saliva.

Sorry, personal responsibility doesn;t cure autism. I tried though. Honest.

BelleDame, MN is the cutting edge of economic theory so no shame is spending Sunday afternoon on it! Paxman fades into insignificance in comparison.