Is it time to ditch our obsession with austerity and deficit?

cepheus

This theme has been developed and disseminated as a part of neo-liberal economic elite, first by new Labour, then the Lib Dems and the Tories, but particularly in the UK, assisted of course by a near universally supportive and biased press. The purpose was keep the caps on real wage rises and retain exceptionally low inflation, whilst the idle rich gorged themselves on an escalating asset price bonanza fuelled by quantitative easing. However, the top academics and centre left parties weren't fooled by this propaganda. Isn't it about time the rest of the population caught up?

I don’t know how many Britons realise the extent to which their economic debate has diverged from the rest of the western world – the extent to which the UK seems stuck on obsessions that have been mainly laughed out of the discourse elsewhere.....Is there some good reason why deficit obsession should still rule in Britain, even as it fades away everywhere else? No. This country is not different. The economics of austerity are the same – and the intellectual case as bankrupt – in Britain as everywhere else.

http://www.theguardian.com/business/ng-interactive/2015/apr/29/the-austerity-delusion?CMP=share_btn_tw

Leading economist attacks austerity, praising Greens and SNP

the austerity-heavy Conservative and Lib Dem approach and the austerity-lite version from Labour as naive and based on a Kindergarten level of understanding of economics. Professor Keen, credited with being one of the very few economists to predict the recent financial meltdown, also claimed that failing to invest in growth wouldn’t generate a sustainable recovery due to the problem of high levels of private debt – public debt being more a symptom than a cause of economic problems.

http://www.businessforscotland.co.uk/leading-economist-attacks-austerity-but-praises-greens-and-snp/

CLAPTON

definitely in praise of the Greens and SNP

borrow more work less

SNP - simply want the English to borrow more and give it to them in the absolute certainty they will default and leave the English to repay their share of the debt

Greens - want less wealth and production and a universal living wage without actually working

what could go wrong?

michaels

Anti austerity is going so well in Greece.

In terms of deficit compare the uk to other European countries and then say whether we have much more austerity than everywhere else.

chucknorris

cepheus wrote: »

This theme has been developed and disseminated as a part of neo-liberal economic elite, first by new Labour, then the Lib Dems and the Tories, but particularly in the UK, assisted of course by a near universally supportive and biased press. The purpose was keep the caps on real wage rises and retain exceptionally low inflation, whilst the idle rich gorged themselves on an escalating asset price bonanza fuelled by quantitative easing. However, the top academics and centre left parties weren't fooled by this propaganda. Isn't it about time the rest of the population caught up?


http://www.theguardian.com/business/ng-interactive/2015/apr/29/the-austerity-delusion?CMP=share_btn_tw



http://www.businessforscotland.co.uk/leading-economist-attacks-austerity-but-praises-greens-and-snp/

Time to stick our heads in the sand and ignore the issues? Not yet, is my response.

Generali

Austerity is generally forced on countries that have spanked all their money up the wall.

Better to keep borrowing at modest levels and never have to impose austerity.

Linton

Austerity is a matter of balance. Too much and you depress the economy, which cuts profits and income which decreases tax take which makes the deficit worse. It is also a matter of sharing the load fairly. If it's the poor who have to take the real pain you will get social and political instability. This would have economic consequences as well as making this country a less pleasant place in which to live.

There are two downsides to high debt. One is the cost of interest and the other is that most national debt is time limited and so there is the risk of the non-availability of new debt to replace maturing old debt. At the moment interest rates are extremely low and there is no shortage of willing lenders.

So although we need to be aware that in the future conditions may be less benign and ensure that levels of debt are sustainable when conditions return to normal extreme austerity seems financially foolish. Now is surely the time to focus more on investment.

CLAPTON

Linton wrote: »

Now is surely the time to focus more on investment.

: is that code for increase the borrowing?

Linton

CLAPTON wrote: »

: is that code for increase the borrowing?

No - use savings from decreases in current expenditure to increase investment as well as reducing the debt over a longer time period than envisaged by the current government.

Starving one's dependents to pay off a cheap mortgage quickly doesnt make financial sense or contribute to a worthwhile family life, better to cut one's own luxuries and invest money to get a better net return.

CLAPTON

Linton wrote: »

No - use savings from decreases in current expenditure to increase investment as well as reducing the debt over a longer time period than envisaged by the current government.

Starving one's dependents to pay off a cheap mortgage quickly doesnt make financial sense or contribute to a worthwhile family life, better to cut one's own luxuries and invest money to get a better net return.

at the moment we are borrowing money every day

if we are going to increase spending on 'investment' then either (or both) we increase borrowing still more or cut current expenditure (increase austerity) even more

of course it also depends what is meant by 'investment' : does it increase tax take or reduce spending to enable the debt to be repaid and in what timescale.

as I see it, we aren't starving anyone to pay off a cheap mortgage : we are increasing the mortgage daily

michaels

Nice graph but unfortunately not an image I can paste - shows pretty clearly that compared to the rest of Europe the UK is still a long way from austerity.

http://ec.europa.eu/eurostat/tgm/graph.do?tab=graph&plugin=1&pcode=teina200&language=en&toolbox=sort

Thrugelmir

cepheus wrote: »

Isn't it about time the rest of the population caught up?

Majority of the population moved on a long time ago. Austerity in some form is an accepted necessity.