Johann Hari

petebates26

I was wondering what you folk made of this?

The biggest lie in British Politics

I've only skimmed it, so haven't checked any of his sources, but it's an intersting read.

Radiantsoul

I don't know.
The simplistic idea that more debt is good or bad seem to ignore real world complexity.

ninky_2

petebates26 wrote: »

I was wondering what you folk made of this?

The biggest lie in British Politics

I've only skimmed it, so haven't checked any of his sources, but it's an intersting read.

i agree with 90 percent of what hari says and this article is no exception. only thing he could have made clearer is the difference between debt and deficit.

i disagree with his assessment of blair and brown. blair was wrong to go to iraq but i don't think it means he should be in prison. he was an elected leader doing what elected leaders do. cameron is wrong to have taken troops into libya but he has the mandate of the elected parliament on that one.

i also think brown is the possibly most harshly and incorrectly judged pm of the last century.

nearlynew

Just another "debt-is wealth" article peddling keynesian bullsh1t.

shortchanged_2

Well it is obvious the cuts are as much to do with political ideology as anything else.

ninky_2

shortchanged wrote: »

Well it is obvious the cuts are as much to do with political ideology as anything else.

labour's spending policy is ideological also. just depends which ideology you prefer.

shortchanged_2

ninky wrote: »

labour's spending policy is ideological also. just depends which ideology you prefer.

Yes that's fine. I did actually say when the tories came into power I bet they were actually delighted with the state of the economy because it would give them the smokescreen to go ahead and privatise everything they can, which they are well on the way to doing.

LilyRose

Great stuff. Interesting to learn we've been in debt for 200 of the last 250 years!

Niksan

As I posted on another thread regarding the same article.

I think we're the product of being on a pendulum as we suffer the fate of each parties ideals to dealing with the status-quo.

Unfortunately, I'm not sure how far it swings either side for either party, maybe this eb and flow is needed to keep it relatively stable (unfortuantly over a long period of time so you feel the effects more), as Johann says himself, keynesian economics works after a crash, surely if wasn't for the crash that follows a recovery it would create a bubble of all bubbles? Maybe the problem is no one knows at which point to stop the debt-is-wealth argument to avoid a crash and flatline.

Maybe. :undecided

StevieJ

petebates26 wrote: »

I was wondering what you folk made of this?

The biggest lie in British Politics

I've only skimmed it, so haven't checked any of his sources, but it's an intersting read.

I agree that Labour racking up debt year after year was a lie, after all the debt to GBP was lower in 2006 than it was in 1997 when they took over.

http://www.ukpublicspending.co.uk/downchart_ukgs.php?year=1900_2010&state=UK&view=1&expand=&units=p&fy=2010&chart=F0-total&bar=0&stack=1&size=1003_535&color=c&title=UK

Mr_Mumble

Sigh, Johann Hari, where does one begin?

Let us start with a straw man:

"Here’s the lie. We are in a debt crisis. Our national debt is dangerously and historically high."

Well, we may or may not be in a debt crisis - it really depends on whether you include pensions and social security promises in with debt. If you don't include these promises then, yes, debt is historically lower than in the war strewn past. That's quite a big caveat considering the cost of these promises are in the trillions however.

Its important to note modern governments do not have the same tools to reduce debt. Seigniorage, population growth and even inflation (with many of the government's liabilities now linked to inflation - everything from inflation-linked gilts to the basic state pension) are either no longer effective or very minimally so (Seigniorage iirc accounted for 12.5% of the US's debt reduction post-WWII, since the amount of cash in circulation is now so much lower - people now use plastic and electronic transfer rather than notes and coins - today Seigniorage would only account for 2.5% of a similar drop in debt to GDP) .

Comparisons over the past 250 years are foolhardy. The two times Britain has had astronomical 250% debt were after a. the Napoleonic wars and b. WWII. With the former the population doubled between 1801 and 1851 - if you have a lot more people eligible to pay tax then debt isn't as much of a problem! WWII saw a humungous cut in government spending post war. 35% in nominal terms - you'd have to privatise the NHS and scrap all non-contributory benefits in this parliament to get a similar drop in government spending. Unsurprisingly the drop in spending post-WWII meant Britain ran large surpluses post-war and never ran a deficit >3% until the mid 1970s. This is the crux of why Johann Hari and all other deficit deniers are wrong - they ignore the deficit!

Before the recent Euro crisis it was Italy who had the highest debt in the Eurozone. So why is it that Greece, Ireland and soon Portugal will blow up before Italy? Why according to CDSs is Spain more likely to have a crisis than Italy when it has a lower debt-to-GDP figure?

It's the deficit stupid!

Projected 2011-12 deficits (Britain vs the PIIGS)

9.4% -- Ireland [1]
7.9% -- Britain [2]
7.4% -- Greece [3]
6.0% -- Spain [4]
4.8% -- Portugal [5]
3.9% -- Italy [6]

These numbers all presume governments hit their targets (and yes that is unlikely especially for Portugal after its political upheaval).

[1] BBC
[2] p.95 2011 Budget Report.
[3] Businessweek / Bloomberg
[4] AP via MSNBC
[5] Guardian
[6] Financial Times

shortchanged wrote: »

Well it is obvious the cuts are as much to do with political ideology as anything else.

This Labour talking point is ludicrous imho. Just take a look at the facts!

Spending by government will be 46% of GDP [7] in 2011-12, the highest non-credit crunch level since 1984-85 [8]. The state has grown by almost 10% of GDP (£150bn) [9], in real inflation adjusted terms, since the turn of the century under New Labour!

We have no clue whether the coalition cuts are "ideological", in 2015-16 the government still intends to spend 3% more of GDP than Tony Blair did at the start of this century![10]

[7] p.95 2011 Budget Report.
[8] p.105 2010 Budget Report.
[9] ibid. 36.4% & 36.8% of GDP in 1999-2000 & 2000-1.
[10]ibid 7 & 8 & 9. TME is estimated at 39.9% in 2015-16.