The " state " of the country, perhaps, Growstuff ?
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What will the future be?
(69 Posts)I’ve been reading about how crises, like war, severe economy recession and and pandemic often brings changes to the way we live our lives.
Prior to the beginning of the war in the USA, Roosevelt has introduced the “new deal” plan. Keynesian economics were utilised to bring about a swift recovery from the 1929 crash, and although resisted by the republicans and more conservative Politicians proved so successful that it kept the democrats in office for decades.
In Britain, the same Keynesian economics were employed by the incoming Labour government, post WW2 to provide growth on a scale the U.K. had never before experienced, and which lasted for nearly 2 decades. There was wholesale social restructuring with the welfare state, nationalisation of some industries and increased taxation.
The national debt incurred by the end of the war exceeded 230% GDP but in the following decades this reduced considerably primarily through economic growth. Opportunities were distributed much more fairly and overall the standard of living was increased to a level never previously thought possible.
All this both here and the USA was done without any reliance on austerity or belief that debt was something you needed to pay back, to balance the books. Those governments were much wiser.
My argument is that for success in our future, a form of Keynesian economics need to be deployed once again. To grow our way out of the recession and debt. How we grow is another issue. We have choices. But grow we must. There must be absolutely no return to austerity, which will choke off any seeds of growth. It would be disastrous and delay and weaken any recovery, with the real cost being even more damaging to our public services health and education. Britain can’t afford another period of austerity.
But of course the right will resist this just as they did in the 1930s and post war. They argue the now familiar refrain. “Governments must only spend what they have”
But this is as history has taught us entirely incorrect.
“The state is the last remaining pillar of the economy when households or businesses cannot or will not spend. If government also retrenched, there is no way to stop the spiral downwards. But - if government spends, others are much more likely to do so. It doesn’t crowd out private initiative or spending, it encourages it.
It is the way to our future.
Yes I meant post brexit in December. The country will be on its knees economically.
That is why the right are so keen to push the workers back to the work place. They know what further economic shock is in store for the country, particularly if there is a no deal outcome.
The economy has to be re-started regardless of the fact that none of the measures that are required to be in place are up and running in order to protect the workforce from harm.
There isn’t another developed country in the world who has such a shock looming ahead and so the urgency to get the economy back up and running simply isn’t the same. Except perhaps Trump, who has an election. But nothing can compare to Trump’s mad delusional world.
Let us not enter Trump’s delusional existence, by denying this is a real danger, and accept that no deal will bring another huge shock to Britain’s economy.
That is why I am arguing for a total economic and social re-think.
We will be broke, it will be trying to rebuilt the economy, all this money won't be recouped in our our children's life time, it will be extremely difficult, I feel very depressed about it all, I could have coped, British spirit and all that, but now Labour have made it all about them and it scares me, they are not thinking of what's right and best, just knocking everything and demoralising an already struggling country dealing with this virus. I simply don't want to face that on top of everything else..I dread the future now, this will be over but all to look forward to are these awful battles as we had about Brexit. A legal ejection result that was delayed for their own ends what a waste of public money that was. I pity the youngsters now for their future, for me that's hard to bare.
sparkling buck up! Just think how we recovered after the war the Labour government ensured the largest economic growth ever seen, and there was fairer distribution throughout the U.K.
So it can be done, where is your do or die that your leader is so fond of?
There is everything to go for, the future is ours.
No, Sparkling we won't be broke, unless the Chancellor decides to make certain sections of society broke. Money just doesn't work like that.
The country has had much bigger debts at various points in history, including after both world wars, and look at what happened in the five years between 1945 and 1950. We had the biggest changes in education, health and welfare the country had ever known and there was massive public investment.
Don't ever forget that one person's debt is another person's asset. The short term problem is likely to be lack of supply. It will take time for producers to get back on their feet and some will have gone bankrupt. People will have money, but there will be a shortage of things to buy. That's why the government is having no problem in selling bonds, even at very low interest rates.
Don't fall for the spin, if the government tries to re-introduce or ramp up austerity.
I don't understand how Labour "is making it all about them". Please could you explain Sparkling because I don't see it. What I do see are calls from Labour not to put lives at risk in a premature and self-defeating attempt to get the economy going.
No amount of positive, gung-ho attitude is going to solve anything. Cool pragmatism will.
But you're right to mention Brexit. First priority for the government should be to ask the EU for an extension until the situation is clearer. The deals which are currently being proposed with the US (and have been drowned out to an extent by the pandemic) are in many ways more terrifying than the pandemic itself.
No, EllanVannin, I don't think that's what people mean by the "state". They blame it for taxing them, but they're always very vague about its function.
Since the Thatcher and supply side economic policy there has been allowed the free circulation of capital, with its ability to evade taxation by billionaires. Social Inequality has grown ever since.
I would like a revival of the social state which would bring a fairer taxation and ensure all large companies are brought into a tax regime.
In my view inequality is simply not sustainable in the long run, and a correction is badly overdue. Whatever else this pandemic has done, I think that it has enforced the legitimacy of investment in public services.
The government will continue to sell bonds to private and corporate investors. At the moment, it's not finding that difficult because investing in the government is safe and there is a surplus of money.
The difference between what the government spends and what it can raise through bonds, etc will eventually have to be raised by some form of taxation and it will be up to the Chancellor how he distributes that burden. The word is that the government doesn't have an appetite for austerity, especially if it wants to keep its newly won seats. For example, the NHS debt hasn't been written off. It was transferred to a government loan, which is an accountancy sleight of hand.
One way or another, this is completely different from a household having to pay off a huge debt.
Unsurprisingly, I agree with Whitewave about inequality being unsustainable - it will even be unsustainable for the wealthy because nobody will have any money to buy whatever they want to sell and they will have to live in gated communities, surrounded by the sickly and uneducated.
Go back to the mid nineteenth century. People began to realise that more equality actually benefited everybody, including the most wealthy.
The largest threat to Britain and the world economic outlook is from the Coronavirus fallout on personal incomes globally. More than a quarter of the United States workforce are now unemployed and many of them are now standing in queues waiting for food handouts.
Donald Trump desperate for a second term in the White House is determined to place the blame for the above on China and in that is already damaging trade and economic relations between the two countries.
The European Union is slowly coming out of lockdown with varying degrees of damage to member states economies and through that economic pick up overall may be slow and inconsistent.
The British government overall has handled the economic impact of Coronavirus well up to this point in time well by way of its financial support for workers affected by the crisis. However, with the three greatest economic powers in the world damaged by Covid-19, the outlook for the United Kingdom cannot be bright with recession if not economic depression very much on the horizon worldwide.
Apologies for sounding so gloomy, but if anyone looks to the future in a realistic manner I believe they will come to a similar conclusion to the above.
I very much hope my analysis is proven wrong and I am more than willing to listen to any calculation that states to the contrary.
Undoubtedly we are heading for a massive downturn grandad I think that is pretty obvious, but my point is that there is a sustainable way out of it without the desirability to continue with the supply side economics that we have all be suffering under(except the very wealthy).
My argument is that we should learn from history by looking at the USA in the 30s and the U.K. in the 40s where demand led economics provided growth and a standard of living never before seen in either country.
Demand led economics coupled with fairer taxation and well funded public services will ensure a much more optimistic future for all levels of society, than the misery that supply side has caused.
Well Said Whitewavemark2
Your MP can protect the NHS from trade deals - tell them how
The Trade Bill is coming back to Parliament on Wednesday 20th May, and still contains no protection for our NHS!
This is URGENT - Ask your MP now to speak up in the debate and demand that the Trade Bill is amended to protect the NHS
weownit.org.uk/your-mp-can-protect-nhs-tell-them-how
My MP is a total convert grany
Grandad Most of the world was in a far worse situation in 1945. At least we haven't had our infrastructure bombed and destroyed. The UK will, as a nation state, still have enough in terms of infrastructure and assets to survive, but it's going to need to be distributed more equitably. The US is in the same situation, although with Trump as President, I fear for equitable distribution.
Trump's attitude seems to be to blame China (as if that would achieve anything) and let the devil take the hindmost in society.
And what's more, our government seems to want to let the UK be dragged down with the US.
We don’t have to follow the misery of austerity.
We can grow out of debt and be proud of a population that has equal opportunity and a good standard of living.
The difference between what the government spends and what it can raise through bonds, etc will eventually have to be raised by some form of taxation
But that's not actually true, is it growstuff?
The government can issue money without any need for bond sales or increased taxation.
Richard Murphy has some good recent blogs around this issue. With data based graphics
This one is particularly interesting. The graphic shows that about 20% of gilts are held by the Bank of England. This is printing money in effect because, the B of E being the source of the UK''s money (just look at a bank note), authorised by the government to issue it, the government really cannot be 'indebted' to itself, can it? The B of E buys gilts and bonds in order to release 'money' into the economy. There actually seems to be no particular reason why it has to buy the gilts rather than just issue the money...
www.taxresearch.org.uk/Blog/2020/05/15/uk-government-debt-some-facts/
Here's the B of E explaining how they do it:
www.bankofengland.co.uk/monetary-policy/quantitative-easing
Grandad Most of the world was in a far worse situation in 1945.
It certainly was.
I'm sure that someone posted the graphic from this link on another thread, but here's the whole thing. National debt from 1692 to the present day
www.ukpublicspending.co.uk/spending_chart_1692_2020UKp_17c1li011tcn_G0t_Three_Centuries_Of_UK_National_Debt
It was I who posted it.
Couldn't hunt through the threads for it...
Maizie I know the government can raise money without selling bonds, although they're doing quite well at the moment.
Eventually, however, the money will need returning to the Treasury via taxation or inflation, even if it's very long term. If individuals are earning and spending money, it's not a problem. The money will all circulate anyway.
The government's role is to decide how that money returns and, crucially, who returns it.
I agree with your general point. This does not need to be the disaster that some people are claiming.
Eventually, however, the money will need returning to the Treasury via taxation or inflation, even if it's very long term.
I would phrase that slightly differently, growstuff and say that "Eventually the money will return to the Treasury via taxation or inflation".
And if the money is put into the 'real' economy by way of investment in infrastructure and funding public services it will come back a damn sight faster through income tax & NI, and taxes on consumption than has the 2008 QE which mostly went to financial market sector with much of it ending up in tax havens.
JenniferEccles The rich won't be spending their money in the UK, or at least not much of it. Remember Kate's wedding dress? The lace for that was hand made in Normandy because apparently we didn't have a lace making business in the UK. Or maybe the French make better lace.
The companies that make the cars bought by the rich are foreign based and/or owned. Jaguar is owned by Tata, Rolls Royce by BMW. The chicest modern furniture and lighting are made abroad.
They will be spending their money on expensive restaurants and front row seats or boxes for whatever takes their fancy but you can bet that they won't be buying exclusively British made items.
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