Corbynomics: A Dystopia

bobbymotors

Rusty_Shackleton wrote: »

Bobby I'm not trying to argue with you but it really isn't the same, this isn't about opinion, it's a matter of fact. This is simply because household budgets are a zero sum game, whereas government finances are not. That's not subjective, it's absolute fact. When money was first invented and it was backed up by gold or some resource at a fixed rate, then money was (more or less) a zero sum game, but the modern economy is nothing like that.

Yes, the economy has to grow to pay off debts, but it doesn't matter when it grows as long as it grows, and it does always grow in the long term. Whether that's through technical innovation, improving productivity or efficiency, population growth (organic or by immigration) or competitive advantage over other economies, it doesn't matter. Even war or natural disaster can have a stimulus effect. Simply put, when the markets have faith that the economy will grow in the long term and the country is stable, we will always be able to borrow more money.

Plan B is always, borrow from someone else over a longer period to pay off the original loan... you just keep pushing it forward. Best of all, with interest rates so low during periods of low growth, the cost of said borrowing is cheaper than usual as well!

'Exactly. Nobody's claiming the details are the same. It's the principles that are the same.

Debt is expensive at the best of times & ruinous at the worst of times. There are occasional times when it's a necessary evil or a sensible risk. Most times aren't those times.'


THIS ^^^^^^^ all day long

antrobus

bobbymotors wrote: »

It's EXACTLY the same as running a business or household....

It's not exactly the same. But operating on the basis that it is, will stop you from doing some really stupid things.

bobbymotors wrote: »

..Debt has to be repaid at some point.,,

Quite. Of course, the normal course of action is to raise more debt to repay the debt that has matured. The problem that nation states often encounter is that if they have too much debt, no one will lend them any new money.

bobbymotors wrote: »

..The economy has to grow in order to pay off the QE...

Not really, QE will be paid off by issuing more gilts. Or at least that's the plan. The economy has to grow, recover, whatever, so that we can do that with the minimum of pain.

bobbymotors wrote: »

...It's EXACTLY like saying next years wage bonus / next years increased profits will pay xyz off: most of the time, they do: but when they don't, there is no plan B, because all the money's gone.

That would be an example of one of those "really stupid things" I mentioned above.

Rusty_Shackleton

antrobus wrote: »

Straw man fallacy.

Yes there is. The Debt Management Office runs it. There is a very large outstanding balance.

Plain nonsense.

We would soon lose "credibility" if we went back to running a deficit of 10% of GDP.:)

In the long run we are all dead. In the short run we can always be forced into bankruptcy. Modern history has recorded a number of countries who have defaulted on their debt. Google 'Sovereign defaults'.

Hoping that some magic bonus is going to turn up and save your bacon is not a rational basis for fiscal policy.

Were exactly?

If you were looking for "truly disastrous results", wouldn't you start with Venezuela?

Calling something a straw man doesn't make it so. There are fundamental differences between household budgets and the governments finances, which I've illustrated above, but for good measure:

- the government issues the currency. We can print more money. As demonstrated by recent years we can print an awful lot of it and not cause inflationary problems.
- government can write new laws or change existing to restructure the economy to handle problems. Households cannot.
- government can change rate of or introduce new taxes, instantly changing revenue
- government (or in our case, the independent BoE) controls interest rates
- the nation state lasts an awful lot longer than your household (case in point, our WW2 debts were repaid after ~60 years... do you get many loans with those sort of terms?)
- when government spends money it receives a huge amount of it back in revenue, e.g. income tax and NI, VAT, corporation tax, capital gains etc. When you spend money you've taken on a loan, does whoever you gave it give you some back alongside whatever you bought?

There is not a national credit card. The only similarity is that the state has debts.

No, we wouldn't lose credibility - we've historically had much higher debts overall, and it's only been a small number of years that we've had a large deficit, due to the understandable impact of the GFC. Keynesian economics has been used to boost economic growth after recessions before, it's been used by the the US and other after the last one. Nobody needs to worry about temporarily increasing the deficit if it reduces it quicker (i.e. spend more now, boost the economy, restore confidence and increase tax receipts quicker). Cutting spending causes economic contraction and makes the problem worse.

Yes, lets talk about sovereign defaults. Take a look at that list and tell me what countries in the last century have an economy and government even remotely comparable to the UK. Ignoring world war related US/UK ones, the only one I found was the US in 1971 and even then that's a stretch.

Where was Friedmans economic ideas tried? The words Reagan and Thatcher should have given a clue, but for the purest application of Friedmans work I would suggest reading up on Chile. Argentina and others have had lasting economic problems from the flawed privatisations of utilities and other issues, but off the top of my head I can't be more specific, you'll need to read up on your own.

As for Venezuela, the comparison to Corbyns policies is absurd. Venezuela has serious political problems, and it's economic problems have been largely down to trying to run a command and control economy (sort of like the soviet system but not directly comparable). Corbyns policies are closest to social democratic countries... you know, those basket case economies of Denmark, Norway and Sweden.

Rusty_Shackleton

Good god, the principles are not the same! If the government behaves like consumers during a recession and cuts spending, it deepens the problems. This is literally GCSE level Economics.

mrginge wrote: »

Oh what a surprise. It's all the media and the tories fault.
Honestly, this patronising drivel from some halfwitted gimboid who's read a few opinion pieces and turned it into some revolutionary economic strategy is pure comedy gold.

Yes, it is the media and the Tories fault, because they've taken complex economic issues and told the public to think of it like they do a household budget. You're making judgments about something you don't understand, as are millions of others. It's being used to drive ideological changes, like reducing the size of the state. Politically, if that's what you want to do, say so and get elected on that basis. But they don't dare because their ideas would never get voted for. That's undermining democracy.

As for opinion pieces, please take a look at the links I've provided. They include factual reporting in the media about what organisations such as the IMF have researched/said, analysis of factual data from the likes of the ONS, and books by world leading, nobel prize winning economists. Care to justify your comment of me 'reading a few opinion pieces' with evidence of how I've done so? Maybe you'd care to provide some sources to back up what you're saying... or are you embarrassed to admit that the Daily Mail or a Tory press release is the best you'll find?

bobbymotors

Could you possibly see if any economists can rearrange these words:

supercilious are t**t a you.

It's EXACTLY the same. There is no magic money tree.

And there's the left for you, every time. Blame the media, the wicked tories, etc., because the left can't be wrong.

cogito

Thrugelmir wrote: »

Brown didn't save the banks. He just stopped the entire UK financial system crashing on the that weekend in October 2008. In When both RBS and HBOS as was the case with Northern Rock, found to be illiquid. RBS was partly nationalised and HBOS merged with Lloyds. Though no one told the markets at the time that LLoyds were given a Treasury loan of £25 billion to keep HBOS solvent.

QE was to maintain stability in the money markets. That's all. Financial engineering of the highest degree. To allow time for the banks to trade their way out of their mess.

Looking back one wonders how it was ever allowed to happen. We'll never know I suspect. As Brown is unlikely to ever tell the tales of what was said with his mates. .

The UK enjoyed illusory boom times on the back of the tax receipts. Will that period of time be restated to show the inconvenient truth. No it won't. As the statistics won't make good reading .

It was actually Alastair Darling wot dun it as he was Chancellor at the time. Brown put up a lot of resistance but then caved in and subsequently tried to take the credit. Darling's book is a pretty good read if you disregard the self-congratulation.

Incidentally, I have never seen so much tosh on a single thread on here from economic illiterates. No wonder so many people voted for Corbyn.

Rusty_Shackleton

So Bobby, can i assume you arent capable of backing up what you believe to be the case?

This is literally nothing to do with left or right, the sources Ive given you are respected internationally and across the political spectrum.

Ah the magic money tree argument, getting desperate now. Funny how the tories seem to have one for the DUP and to give tax cuts to the rich and corporation. Maybe they could take a few clippings from it and in a few years can share it with the majority of people theyre supposed to represent?

Eric_the_half_a_bee

Rusty_Shackleton wrote: »

This is literally nothing to do with left or right, the sources Ive given you are respected internationally and across the political spectrum.

Krugman and Stiglitz are respected across the political spectrum? Now I know you are joking.

Rusty_Shackleton

Cogito, care to share any specific criticisms of lab/corbyn economic policy? Sorry if youve posted further up, im only reading on my phone

Rusty_Shackleton

Eric Bee, they are leading economists, have held the most senior posts in the IMF and World Bank, and advised a lot of western govts. Granted, Theresa May is hardly going to start singing their praises, butin terms of economic theory and policy, yes they are very well respected