Tories panicking unduly

boyse7en

Johann Hari postulates a theory in The Independent that the proposed Tory spending cuts are unjustified and will be counter-productive (should they ever happen):

Clicky

So are we really not in debt as much as we are being led to believe, or is he being selective with his figures?

JayScottGreenspan

Two words: Structural. Deficit.

To write so vociferously about national debt and public spending without mentioning the structural deficit either betrays ignorance or dishonesty.

There is an argument to be had about the paradox of thrift and the timing of cuts, but this article does nothing to advance that debate. A terrible piece of journalism and an embarrassment for the Independent.

JayScottGreenspan

The deficit this year will be ~£200bn. The structural deficit is, according to Treasury estimates, £90bn. This is the amount we would be borrowing right now if we weren't in a recession.

The current total national debt is indeed smaller than many other developed nations, so that does give us some breathing room to reduce the annual deficit at a more modest pace then otherwise, and it mitigates the pressure to run surpluses any time soon.

Nevertheless, a £90bn deficit is unsustainable. If that persisted our economy would collapse. Tax rises and spending cuts are unavoidable. Osbourne's speech included £7bn worth of cuts. Pretty small beer.

Now, there is a coherent Keynesian argument that cuts should be deferred until the recovery is well underway, but anyone arguing that there shouldn't be any cuts at all is insane.

CLAPTON

boyse7en wrote: »

Johann Hari postulates a theory in The Independent that the proposed Tory spending cuts are unjustified and will be counter-productive (should they ever happen):

Clicky

So are we really not in debt as much as we are being led to believe, or is he being selective with his figures?

It's quite a good article.
I's indeed true that there is debt hysteria about and little thoughful analysis.
The conservations are fully committed to Blair 'spin' and it's very difficult to see what real cuts they are imposing. The pension changes will of course make no difference for years,
the freeze on public sector workers will only hit in 2011 and is in a climate with negative RPI and so not many were expecting a rise anyway;
cutting the number of PMs will probably cost in the short term and is anyway fairly unlikely to happen,
ereducing the 'cost' of government by a third is an asperation rather than a policy

and of course no mention of the asset side... hoefully RBS and Lloyds and Northern Rock will make some money for the country in due course.

Generali

boyse7en wrote: »

Johann Hari postulates a theory in The Independent that the proposed Tory spending cuts are unjustified and will be counter-productive (should they ever happen):

Clicky

So are we really not in debt as much as we are being led to believe, or is he being selective with his figures?

Selective and disigenuous. Also he's taking single (unsupported) datum points and turning them into entire theories before our eyes!

edgex

the proposed spending cuts are, in the grand scheme of things, such small amounts as to be pointless

if you owed £1m, it would be no good scouring the streets looking for dropped pennies


& look at who the cuts effect, & where they take place
the people that are picking up the tax credits, & even those in the £18-25k range, that money goes back into the economy very quickly, as it gets spent on day to day living

Mr_Mumble

Your household has an income of £30,000 per annum and outgoings of £40,000, do you have a serious problem? Yes: you believe every mainstream politician, no: you believe Hari. Hari's whole argument (using debt to GDP) is effectively worrying about the size of the mortgage and saying you don't have financial problems because the Jones' down the road have a bigger mortgage - despite the Jones' having more income and less outgoings.

The arguments he uses are tired nonsense. Debt to GDP was far higher during the Napoleonic wars but then the population increased by 150% between 1800 and 1850 - is that solution to paying down debt practical now?! Or post WWII when debt to GDP again peaked but was rapidly brought down by reducing military spending which peaked at 75% of government expenditure.

Today Defence spending is 6% of GDP, you can't pay down the debt by cutting back on armed forces anymore. The NHS, Education and benefits system have taken over from the military as the big taxpayer sinks - unless you wish to reduce funding to these by two-thirds any argument regarding paying down debt in comparison to historic, heavily military-biased spending, is specious.

edit: to get an idea of Britain's problems and how rapidly things have gotten worse over the last decade take a look at these tables. Hari is looking at the final table in isolation, at one moment in time without factoring in table 2 (nor 1 which even for the committed socialist is awful considering governments have historically been unable to squeeze >40% of GDP out of the British public in taxes).