The Tory way of governance

Correction whitewave. Austerity is continuing for the least wealthy. The UK has never operated true austerity, which would also have affected the wealthiest.

Grow the economy by investing in our infrastructure - new hospitals, schools roads etc.

The trouble is with traditional QE is that money doesn't get to where it's needed most and where it can do most good in improving infrastructure and creating jobs. It goes to the people the banks think are the safest risk.

The point is they are continuing with austerity. By 2020 the poorest will see a fall of their income of 16% but the richest a rise of at least 4%. They claim that the reason for continued austerity is that we are spending more than we earn in tax. But grow the economy and tax the very wealthy to ensure greater fairness rather than continue with cuts and austerity, and we would see a rise in tax receipts and a closure of the gap.

Exactly, Fitzy. The whole idea is for the money to find its way into the real economy, rather than be invested (very often offshore) by bankers and the people they choose to lend to.

Richard Murphy only ever suggested it could be a solution if the UK hits a period of sustained deflation. There were two quarters in 2015(?) when that's what the UK had.

The trouble with deflation is that people tend to hang on to their money if they can and avoid unnecessary purchases, because they hope prices will drop. That leads to low demand and job losses and further drop in demand...and so it goes on.

Controlled inflation isn't a bad thing, as it encourages people to spend money. That's also one of the reasons why interest rates are being kept low. The idea is to discourage saving. One of the problems with low interest rates is that it's encouraging people with money to buy investment property, which is increasing the gap between those with assets and those without.

All of this has been affected by the fall in the pound and who knows what other repercussions from leaving the EU and American protectionism.

One way or other, we're in for a rocky ride, but I do think there needs to be protection for the poorest and most vulnerable, because they're going to suffer most.

DJ - we do need all the things you mention, and I believe the Tories are just as keen to have them as anybody else. QE might do the job - I think the bankers have been too reluctant to lend the money available. But by the same token the have had their fingers burnt by taking too liberal an attitude to lending. On the other hand, if the govt. can just print money and hand it out i think the opposite may happen and we could end up with raging inflation. To be honest I just don't know and I'm not one for taking great risks.
GG - re the economy, I agree we don't have as high a quality growth and employment as we could but I think things are improving (but may well disintegrate post Brexit). Re employment, working in the gig economy can't be much fun if you are bringing up a family. We need employment legislation to catch up with the changing market.

I can't see real growth though Fitzy; not UK wide. I don't believe we really needed the sort of austerity they landed us with. Osborne has since said he got it wrong when he thought it was 'Economy, economy, economy' and it is great that he could admit it but he has not been on the very destructive receiving end. You are right the global recession was difficult to deal with but the Tory balance was, as I admit we should have expected, to look after capital and let the society and its structure sink or swim. Sadly many have sunk and structures that support us are being destroyed.

When you look at employment, again any government would have had to cope with globalisation and all parties have ignored the areas that have not been 'left behind' as they chime out but left out of any economic improvement. Politics is about the economy but it is also about people and, to some extent, all parties seem to have forgotten those who haven't been shouting loudly. They have bunkered down in Westminster and viewed the world from London and the South East - just sheer laziness on their part.

Full employment may be how the statistics appear but it is not the lived experience of many who are working. Not enough to live on, a society which taunts us with consumerism and no security. We cannot hold up progress and now that the hoi polloi can see what they are missing we need greater equality or we will be on the receiving end of rather more than votes that the power elite dislike and which may, sadly, hurt the very people who vote against establishment.

T May is making some of the right noises but if that goes without follow-up - or worse, as we can expect over the next year or so - there will be a backlash. Bread and circuses always ceases to appease eventually.

You've got it, fitzy. That's the whole point of PQE. We need more houses, schools, hospitals to be built. How do you propose that happens without PQE?

IF the government can print money, it makes sense for it to be used in the general economy rather than given to rich people to save. The banks controlled the economy in 2007, and Labour have been blamed for what happened ever since, even though the slump was worldwide.

DJ I didn't say I was happy for the Tories to print money for the bankers. But I do think QE is less likely to be inflationarybthat PQE as the bankers control the money and the onward lending. If the govt. hand it out directly to the builders, it would think much more will find its way into the real economy. Of course, those who like PQE would say that's the idea - but I don't like the idea of the govt. having too much say as to how much is injected as they will be hugely conflicted. But no way am I saying it couldn't work.

They have increased the debt by using QE, and giving the money to the bankers instead of the builders. Osborne has admitted that it has just made the rich richer.

QE= give the money printed to the bankers
PQE = give the money printed to the builders

Simplified, of course, but you get the gist.
So you are happy for the Tory government to give it to the bankers, but not the Labour government to give it to the workers.

DJ you asked what I thought about PQE. It sounds feasible in theory but I can't get comfortable about the idea of printing money on the basis of however much the government in power decides it wants to spend. The temptation to go mad will be very hard for some to resist.
Graces - it's just not true to say the govt. have made a mess of the economy. We have good growth and low unemployment. Yes, they have increased the debt, but how on earth could they possibly have avoided that without austerity of a magnitude which would make what we have seen over the recent past look like a party? They came into power in the teeth of a global recession and the tax take went through the floor. They had to borrow a great deal of money - and I would have thought your view would be that they should have borrowed even more?

POGS, so you haven't bothered to read Maizie's link to taxresearch.
I know all about Murphy's criticism of Corbyn.
You admit to being a Tory, so could you please say what you think this government is doing that is good, as asked by Gracesgran.

I thought this was about "the Tory way of governance" so could we please hear from someone who thinks this government are doing a good job while they are even now about to put more into poverty and, during their time in power, have made a complete mess of the economy while increasing the debt. That is fact rather than the false news about Labour Party governments which are always without reference to any real research (truth) I notice.

Talking about links to Richard Murphy / taxresearch / PQE I found his comments interesting and here are extracts:-

"The first is why it had been worth giving Corbyn a go. The second is why that did not work. The third is what now? I’ve recounted several times, already, that despite the media suggestions I did not, as such, write Corbynomics. It’s true that a significant number (but not all) of the ideas in Jeremy’s economic manifesto (which has now gone from his website, and of which I never seemed to keep an electronic copy (NB: now located)) were written by me, but not for Jeremy per se, and certainly not in the way in which he presented them.

Main ideas Progressive taxation Tackle tax gap People’s Quantitative Easing

The three main ideas are summarised here. They were more progressive taxation to create greater equality both as a matter of fact and to deliver justice in the way that the deficit was tackled. Second, the tax gap was to be tackled to provide funding and to create a level playing field for business. And third, People’s Quantitative Easing was, in combination with a National Investment Bank, to be used to fund a new industrial strategy. What the document did not say was what the overall vision was: it focussed on policies not philosophies but it rattled the mainstream media and much of Labour nonetheless.

A year on it’s hard to see why. Progressive taxation was hardly a surprising proposal from a left-wing politician whilst closing the tax gap is just about everyone’s aim: the only problem was Jeremy used my £120 billion figure and did not make clear that not all of it could be collected. And People’s Quantitative Easing now looks as if it will be delivered by the Tories. All were issues on which I had written extensively: of course I was going to support a politician who said they were going to use them.

So why didn’t things work out? There are four fundamental reasons.

The first was a lack of conviction. John McDonnell became shadow chancellor and the first thing he said was he would sign up to George Osborne’s bizarre, and now abandoned, fiscal charter, guaranteeing a balanced budget. It was lunacy. I told him so. He still put it in his conference speech only to have to U turn on it. But the damage was done, and has remained done. The message was clear: a Corbyn / McDonnell opposition was going to do economic policy on Tory ground. Radicalism disappeared and never returned. Labour’s own fiscal charter is evidence of that: it was re-heated neoliberals Balls at best. If this was meant to be what left wing economics was meant to deliver then it looked very much more like a lot more of the same failed policies to me based on a total misunderstanding of what the role of the government in the economy actually is..

Second, Corbynomics disappeared. PQE, which had been the defining economic and industrial symbol of Jeremy’s election campaign – the policy that was going to deliver growth, jobs, new industry and hope – might well have never happened. It’s taken Stephen Crabb and Theresa May to revive it. In its place nothing was offered at all; just vague words at best for months and then reference to a National Investment Bank on occasion but nothing else.

Third, I had the opportunity to see what was happening inside the PLP. The leadership wasn’t confusing as much as just silent. There was no policy direction, no messaging, no direction, no co-ordination, no nothing. Shadow ministers appeared to have been left with no direction as to what to do. It was shambolic. The leadership usually couldn’t even get a press release out on time to meet print media deadlines and then complained they got no coverage.

Fourth, and critically, there was no vision. A team of economic advisers were set up, but never properly consulted, let alone listened to. Three enquiries, into the Treasury, Bank of England and HM Revenue & Customs were established and given far too long to report: none has as yet. I gather the tax report is in draft: I have not seen it. Whether it will be presented is anyone’s guess. The Bank of England study has collapsed with the departure of Danny Blanchflower. Of the Treasury report I haven’t a clue. The point is though that for coming on for a year now policy has been on hold for these reports and the world has moved on. That’s just not competent."

inews.co.uk/opinion/richard-murphy-corbyns-economics-didnt-work/

Oh, and have you read Maizie's link to taxresearch? The Tories have always borrowed more over the past 70 years. That does not fit with what they always tell us, that it's Labour who borrow more.
So why does the erroneous Tory message get across, rather than the Labour message?
Obviously because of the right wing media bias.

What do you think of PQE, fitzy?

You seem to be quite politically astute. What do you think of this?

kittysjones.wordpress.com/2017/02/26/urgent-uk-us-trade-inquiry-and-consultation-quietly-launched-by-select-committee-deadline-for-submissions-this-monday/

Typical Tory style of governance.

I've always been clear that the Tories have increased the debt. They inherited en economy which was on its way down and the inevitavlvke result was a lower tax take. they had to borrow a lot of money to make up the loss. All I have said is that they are reducing the increase in the debt. As to the idea that we should borrow more because interest rates are low, it still all has to be repaid. We owe enough already and will owe more before the govt. finally, hopefully, stops it from increasing. To be clear I don't think Labour were running the economy particularly badly pre crash. But I absolutely don't think the current Labour economic policy of substantially increased borrowing is the way to go - much too risky.

Crisis in financial tech companies

www.theguardian.com/politics/2017/feb/25/brexit-fintech-exodus-begins-london-eu-luxembourg

But the Tories haven't reduced debt.
There was a Tory MP who put a graph on his twitter feed about how bad Labour was at running the economy.
Unfortunately for him it showed the opposite. When it was pointed out to him, he removed it from his site. Fortunately for us, others had noticed, and kept the link.

i2.wp.com/voxpoliticalonline.com/wp-content/uploads/2017/02/170205-Kawczynski-tweet.jpg

Why does the government need to reduce debt with such low interest rates? In any case, the debt has risen more over the last six years than previously, because the tax take has been low.

Labour govts. certainly can manage the economy well, and conservative govts. can mess up. It's rubbish to say that the conservatives don't appreciate the positive effect of stimulation via govt. spending in the right circumstances, but Labour do seem go overboard on the idea. In any event with rising inflation and the need to reduce debt, I have to say I trust the Tory economic policies above Labour's.

The tories are good at making people believe that they are better at managing the economy but This suggests that they are not:
Richard Murphy March 2016

www.taxresearch.org.uk/Blog/2016/03/13/the-conservatives-have-been-the-biggest-borrowers-over-the-last-70-years/

I was interviewed twice on the radio on Friday evening to discuss John McDonnell’s new fiscal rule, once on LBC and the other on Radio 5. In both cases the interviewers were quite explicit in stating that it was known that Labour always borrowed more than the Conservatives and that was why the electorate could not trust them with the economy. I knew that evidence I had prepared a year ago did not support that view in recent years (post 1997) but I decided to see if this claim really had any substance to it all at all. This blog is about my findings. There is a note on data sources at the end.

There is a perception, promulgated by Maggie Thatcher and by subsequent tory governments, that managing the country's budget is like running a household budget. This is just one of many articles explaining that this is not correct:

www.bevanfoundation.org/commentary/the-economy-is-not-like-a-household-budget/

So when Labour proposes spending it is met with a sharp intake of breath and accusations of trying to live beyond the country's means. Yet cuts to government spending not only have a knock on effect of higher welfare payments as staff are cut and they have less money to be spent in the consumer economy but also,, because public services have less to spend their suppliers lose custom and revenue. Money spent on public services is money which circulates in the economy; tax cuts for the rich don't seem to have quite the 'trickle down' effect that neo-liberal economic theory proposes. The 'rich' seem to prefer to squirrel their money away rather than use it to stimulate the economy.

The Bankers and certain spendthrift/over leveraged govts. caused the crash and subsequent international debt problems. Our debt, largely as a result of Brown's borrowing, did increase the pain for us, but certainly wasn't the cause and it wasn't seen as massively extravagant pre 2008.
He did take a bite out of pension funds but by far the biggest reasons for pension black holes are increased longevity and low interest rates.
The debt has gone up a lot under Tory govts. but they could hardly have reduced spending more than they did in response to the crash. At least the rate of increase is finally under control.

Or Labour or Gordon Brown or Blair

Or Maxwell.