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

antrobus

michaels wrote: »

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

If you want to know what real austerity looks like, see Ireland.

Austerity has proved to be an utter disaster in Ireland, with GDP growth collapsing to 4.8% in 2014. Oh, hang on a minute, 4.8% is actually quite good isn't it? Perhaps that's why we have some economist called Hans-Werner Sinn saying "I can only recommend everyone to follow the Irish example".

Does he qualify as a 'top academic'? I think we should be told.

Irish economy surges ahead with 4.8% growth in 2014
http://www.irishtimes.com/business/economy/irish-economy-surges-ahead-with-4-8-growth-in-2014-1.2136685

Europe should follow Irish example on austerity, says economist
http://www.irishtimes.com/news/social-affairs/europe-should-follow-irish-example-on-austerity-says-economist-1.2076828

antrobus

Linton wrote: »

Austerity is a matter of balance. ...

Since good old Gideon (Chancellor 2010-15) reduced the deficit more or less exactly in line with the plans set out by A. Darling esq in his March 2010 budget, presumably you are satisfied that he got the balance just right.

Linton wrote: »

...Too much and you depress the economy, which cuts profits and income which decreases tax take which makes the deficit worse.....

Therefore since the economy isn't depressed, and the deficit is not getting worse, you are telling us that he got the balance just right.

Linton wrote: »

... 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.....

Therefore since we have had no 'social and political instability', you are telling us that he got the balance just right.

Linton wrote: »

... 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 yet again, you are telling us that that he got the balance just right.

Linton wrote: »

...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.

Just as well then that "extreme austerity" is not on the menu.

calicocat

To be frank I usually just read in these threads and don't post as feel very thick as I generally and don't understand lots of aspect about economics. (dad is now turning in his grave as that was his field).


However.....my simplistic view on austerity.


You need everyone to be spending to make thing work and go forward yes?. Not just high end, but everyone.

When the general public stop doing so , the rot sets in and is a downward cycle.

Too much austerity would presumably cause a non spending spiral. If I am to believe what I read then folk are now starting to spend more, meaning business keeps going etc...grand.

I don't think that Joe public has recovered in general enough to maybe cope with more austerity just yet, this could hault spending.

CLAPTON

calicocat wrote: »

To be frank I usually just read in these threads and don't post as feel very thick as I generally and don't understand lots of aspect about economics. (dad is now turning in his grave as that was his field).


However.....my simplistic view on austerity.


You need everyone to be spending to make thing work and go forward yes?. Not just high end, but everyone.

When the general public stop doing so , the rot sets in and is a downward cycle.

Too much austerity would presumably cause a non spending spiral. If I am to believe what I read then folk are now starting to spend more, meaning business keeps going etc...grand.

I don't think that Joe public has recovered in general enough to maybe cope with more austerity just yet, this could hault spending.

all funded by extra borrowing?

antrobus

calicocat wrote: »

To be frank I usually just read in these threads and don't post as feel very thick as I generally and don't understand lots of aspect about economics. (dad is now turning in his grave as that was his field).....

Don't worry. The OP doesn't understand anything about economics and that doesn't stop them from posting.

calicocat wrote: »

...
However.....my simplistic view on austerity.

You need everyone to be spending to make thing work and go forward yes?. Not just high end, but everyone.

When the general public stop doing so , the rot sets in and is a downward cycle.

Too much austerity would presumably cause a non spending spiral. If I am to believe what I read then folk are now starting to spend more, meaning business keeps going etc...grand.

I don't think that Joe public has recovered in general enough to maybe cope with more austerity just yet, this could hault spending.

Since clearly we are not in a 'downward non-spending spiral', then we have not, as yet, had "too much austerity"; we have had either (a) too little, or (b) just enough. Perhaps all we need to do is carry on with the same level of 'austerity'?

cells

there really needs to be some big scale economic experiments to give some real merit to economic theories one way or the other

michaels

cells wrote: »

there really needs to be some big scale economic experiments to give some real merit to economic theories one way or the other

You mean like France and Greece

Compared to Ireland and UK

theEnd

Keen always seems to make sense, so I'll have a good listen to this interview.

Krugman is a different story.

Generali

calicocat wrote: »

You need everyone to be spending to make thing work and go forward yes?. Not just high end, but everyone.

When the general public stop doing so , the rot sets in and is a downward cycle.

Too much austerity would presumably cause a non spending spiral. If I am to believe what I read then folk are now starting to spend more, meaning business keeps going etc...grand.

I don't think that Joe public has recovered in general enough to maybe cope with more austerity just yet, this could hault spending.

You've got the measure of it. I don't agree with your conclusion but what you're saying is right.

The problem is, if the Government borrows money then companies can't. If Companies can't borrow money they can't take on workers who would otherwise buy stuff (causing more employment) and pay taxes (causing a smaller deficit).

antrobus

michaels wrote: »

You mean like France and Greece

Compared to Ireland and UK

I believe that the argument in Greece has moved on from austerity versus non-austerity, to default versus non-default.:)