Never here Keir?

fancythat

From AI

Economic theories in the 1970s were dominated by the challenges of stagflation (high inflation and high unemployment), which led to the decline of Keynesian economics and the rise of monetarism and supply-side economics. The stagflation, driven by factors like the 1973 oil crisis, contradicted the prevailing Phillips curve model, which suggested an inverse relationship between inflation and unemployment. This prompted a major reevaluation of economic policy, leading to a new focus on controlling the money supply to combat inflation, as championed by monetarists like Milton Friedman.

What AI doesn't tell you is that the 1970s inflation wasn't caused by excess money in the economy but by the huge supply side shock of OPEC massively increasing the price of their oil. This immediately caused price inflation and no amount of controlling the money supply can counter supply side price inflation.

Supply side inflation will diminish by itself as the impact of the price increases work their way through the economy. Reducing the money supply just makes it more difficult to adjust because there is less money available to purchase at the higher prices. It doesn't actually serve to reduce prices...

Reducing the money supply only works when there are not enough resources available for purchase. Then you get price inflation because those who are selling the resources take the opportunity to increase their profits,

Friedman was a follower of Hayek, who was a proponent of eliminating state spending and leaving the direction of the economy to market forces. His theories were strongly coloured by his origins in communist eastern Europe, where the whole economy was under state control and there was no private enterprise at all. His theories were as much a result of ideology as of empirical research.

As we are living with the consequences of his ideology based theory and we don't find the consequences at all comfortable I can't see why anyone should think them worth defending.

Luckygirl3

Ref economy discussion in this thread .... roll on the day when economics becomes a basic curriculum subject and we have an electorate that can vote from a position of understanding how national budgets work.

Economics is not an exact science though, there is a spectrum of different beliefs.

Maizie your posts are interesting, I have to admit to not being very educated on the subject and as such are pulled this way and that by varying arguments. I'm all for a larger share of the cake for the lower paid and there have been times when I've seen the remuneration of various head honchos and gasped at the disproportionality. I bought The Ragged-Trousered Philanthropist a while back, but my son walked off with it before I had a chance to read it, but I'll get it back off him. A relatable argument I gather, inspite of being written over 100 years ago. I do find it increasingly difficult to square so much of deep rooted feelings with the ethos of the main parties.

petra

GrannyGravy13

MaizieD I admire your tenacity on this, and thank you for sharing again and again this useful and important information.

I was a handbag economy believer, until I read your posts and swotted Keynes, thank you 👏👏👏

The same here.
MaizieD has educated me in how it all works against the average working man.

Adam Smith, regarded as one of the 'fathers' of economic research and theory, writing in the late 18th century, recognised that business men had their own agenda when it came to accumulating wealth and the interests of those they employed and of the country had little to do with them.

This is a long quote from his massive work, The Wealth of Nations. written in 18th C language but hopefully still understandable

The interest of this third order (merchants and manufacturers) therefore, has not the same connexion with the general interest of the society, as that of the other two. Merchants and master manufacturers are, in this order, the two classes of people who commonly employ the largest capitals, and who by their wealth draw to themselves the greatest share of the public consideration. As during their whole lives they are engaged in plans and projects, they have frequently more acuteness of understanding than the greater part of country gentlemen. As their thoughts, however, are commonly exercised rather about the interest of their own particular branch of business. than about that of the society, their judgment, even when given with the greatest candour (which it has not been upon every occasion), is much more to be depended upon with regard to the former of those two objects, than with regard to the latter. Their superiority over the country gentleman is, not so much in their knowledge of the public interest, as in their having a better knowledge of their own interest than he has of his. It is by this superior knowledge of their own interest that they have frequently imposed upon his generosity, and persuaded him to give up both his own interest and that of the public, from a very simple but honest conviction, that their interest, and not his, was the interest of the public. The interest of the dealers, however, in any particular branch of trade or manufactures,is always in some respects different from, and even opposite to, that of the public. To widen the market, and to narrow the competition, is always the interest of the dealers. To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can only serve to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens. The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.

He also has this to say and it is still relevant today:

No society can surely be happy and flourishing of which the far greater part of its members are poor and miserable. It is but equity, besides, that they who feed, clothe and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed and lodged

From AI

Economic theories in the 1970s were dominated by the challenges of stagflation (high inflation and high unemployment), which led to the decline of Keynesian economics and the rise of monetarism and supply-side economics. The stagflation, driven by factors like the 1973 oil crisis, contradicted the prevailing Phillips curve model, which suggested an inverse relationship between inflation and unemployment. This prompted a major reevaluation of economic policy, leading to a new focus on controlling the money supply to combat inflation, as championed by monetarists like Milton Friedman.

Luckygirl3

Ref economy discussion in this thread .... roll on the day when economics becomes a basic curriculum subject and we have an electorate that can vote from a position of understanding how national budgets work.

I did some economics even in the 70s.

One theory was Keynes.
There was another main one, which I have forgottn the name of.

They were at odds with each other.

I think economics went out of fashion a bit for two reason.

One was, it became quite a matter of opinions rather than much else.

The other reason was, the government, even back then, interfered so much with the it[as was their right of course], that theories could never properly be proved, one way or another.

MaizieD

State spending doesn’t need ‘borrowing’ to fund it, David. As the state issues our money why should it need to borrow it?

Especially as domestic purchasers of government bonds (which are the majority of UK bond holders) are using state issued money to purchase them..

Yes it can print money.

Which, if that is all it did, would cause massive inflation.
It would bring down the Uk.

The Uk borrowing is not just domestic.

Ref economy discussion in this thread .... roll on the day when economics becomes a basic curriculum subject and we have an electorate that can vote from a position of understanding how national budgets work.

I am glad that Starmer is retrieving some of our recognition on the world stage after our reputation plummeted during the buffoon years. I admire him for this. A good reputation internationally has an influence on trade deals.
He has secretaries of state on the case at home and I am delighted that under his watch the whole equivalent of Sure Start is back on the map.
I am tired of people casually dissing the UK.

^
We never did establish the source of wealth, did we?^

God plays a part.

Christian countries used to be wealthy.
Nowadays, those same Countries are not so Christian.

GrannyGravy13

MaizieD I admire your tenacity on this, and thank you for sharing again and again this useful and important information.

I was a handbag economy believer, until I read your posts and swotted Keynes, thank you 👏👏👏

The same here.
MaizieD has educated me in how it all works against the average working man.

ronib, I'm intrigued by your post about the "middle classes ..settling in Abu Dhabi". What's the data on this?
My experience ( limited, of course) is that people who work in the Middle East return home at the end of the contract.
I understand that some aspects of the judiciary in this country are governed by Sharia law, which has not had a good press in our country.

I don’t think you understood what I was saying, David.
Try again

WHY SHOULD THE GOVERNMENT ‘BORROW’ MONEY THAT IT ISSUED IN THE FIRST PLACE?

MaizieD

State spending doesn’t need ‘borrowing’ to fund it, David. As the state issues our money why should it need to borrow it?

Especially as domestic purchasers of government bonds (which are the majority of UK bond holders) are using state issued money to purchase them..

The State could print more money or use QE but that would be a negative step in the eyes of financial markets we have already borrowed 100% of GDP that’s £2.4 Trillion. The UK does not exist in a vacuum what others think matters.

That does not mean we cannot borrow more, but, it needs to be to increase productivity not to increase social spending. Successive previous governments have spent almost the entire borrowing on social enhancement to win votes at elections, very little on productivity.

This is probably the last chance for Labour to get the finances right, if they get it wrong the economy will sink

ronib

I am left wondering what an economy looks like when a population spends more of its own money. Very low tax, low government expenditure but with excellent funded healthcare and a safe public environment. It’s no wonder that the UK’s middle classes are settling in Abu Dhabi.
Any high earning individual currently on Advance Tax, and paying 60 percent tax already must wonder why bother staying here.

I’m afraid I can’t make head or tail of your post, ronib.

I do think, from the drift of it, that you read too much of the wealthy’s propaganda.

.

MaizieD I admire your tenacity on this, and thank you for sharing again and again this useful and important information.

I was a handbag economy believer, until I read your posts and swotted Keynes, thank you 👏👏👏

Allsorts

The wealthy employ people, spend the money, what a nice problem to have, that is the reality. Maisie have you looked at our debts? No government has the answers, Labour always borrowed out of trouble. I no longer support any political party so disgusted at them all.. There are good decent people in all parties but overall others very lacking

I’m afraid that the very opposite of this is true, It is a common belief that the rich and powerful perpetrate because it makes their greed look virtuous. I’m afraid that once you start looking at economic research you will find it is untrue.

I am left wondering what an economy looks like when a population spends more of its own money. Very low tax, low government expenditure but with excellent funded healthcare and a safe public environment. It’s no wonder that the UK’s middle classes are settling in Abu Dhabi.
Any high earning individual currently on Advance Tax, and paying 60 percent tax already must wonder why bother staying here.

The wealthy employ people, spend the money, what a nice problem to have, that is the reality. Maisie have you looked at our debts? No government has the answers, Labour always borrowed out of trouble. I no longer support any political party so disgusted at them all.. There are good decent people in all parties but overall others very lacking

MaizieD thank you for your explanation. Clearly put and understandable to me at least and I am not an economist.

State spending doesn’t need ‘borrowing’ to fund it, David. As the state issues our money why should it need to borrow it?

Especially as domestic purchasers of government bonds (which are the majority of UK bond holders) are using state issued money to purchase them..

FriedGreenTomatoes2

Not being funny here MaizieD but if it’s so obvious to you why the economists keep getting it all so wrong, how come what you think doesn’t gain traction?

The Keynes theories are good, if you use state investment expand the productive capacity of the economy. Rosevelt did this in the 1930s, China, Korea, Japan, and Germany have done that more recently.
The UK along with many other western nations chose to pursue a service economy, thinking that internal investment would fund expansion. It hasn’t, pressure to increase social spending has meant ever more borrowing the cost of which is a problem in itself at £100 billion a year. Our borrowing has made the rich richer, not just state borrowing the interest we pay on mortgages car loans and credit cards is making someone somewhere richer.

FriedGreenTomatoes2

Not being funny here MaizieD but if it’s so obvious to you why the economists keep getting it all so wrong, how come what you think doesn’t gain traction?

I think it doesn't gain traction because it contradicts the economic theory which Reagan and Thatcher introduced in the 1980s and which has become the unquestioned 'orthodoxy'. It's partly ideology and partly a theory which, when put into practice gives tremendous advantage to the wealthy and they are the people who have the most power and influence over governments. Naturally they will fight any attempt to diminish their ability to continually increase their wealth, regardless of the consequences to 'ordinary' people.

Before the 1980s economic practice was based on the economic theory of Keynes' It was that which inspired Roosevelt in the US to invest public money in projects which created jobs for the less wealthy and helped the US to come through the 1930s period of depression after the late 1920's stock market crash in a far better state than other 'first world' countries. It was also Keynesianism that helped the UK to come through WW2 and to create the Welfare State and nationalise industries in the post war period (even when it appeared that the UK was broke).

I have posted time and time again explaining how state investment drives an economy and trying to dispel the myth, heavily promoted by Thatcher, who wasn't an economist, that the country is dependent on taxation to fund government spending. This is absolutely contrary to the reality of how money enters the economy. It has been empirically proved to be wrong, but the myth has taken such a strong hold that it is very hard to dispel, especially as it it repeated continually by commentators and , I'm sorry to say, many economists.

mokryna

Although kier may not be here as much as you would like, he is working, l bet he is more than Boris was in his last 6 months.

According to AI
“Keir Starmer has made significantly more foreign trips in the last six months than Boris did in his final 6 months as Prime Minister” earning him the nickname name Never Here Keir!

Not being funny here MaizieD but if it’s so obvious to you why the economists keep getting it all so wrong, how come what you think doesn’t gain traction?

ronib

Um…. Does anyone know what the election promises were by now? Clearly 1.5 million houses, 6,500 more teachers. Still not happening? Childcare has improved but that was a Sunak initiative and very welcome it is too.
I don’t remember any manifesto promises to smash the middle classes but if the rumours are true, council tax for bands F to H are set to double. Maybe hospital waiting lists have improved but the new round of strikes by doctors and consultants is not going to help. Etc

It's not the government that is smashing the middle classes, ronib, it's the wealthy who are sucking up the nation's wealth faster than the nation can increase it.

We never did establish the source of wealth, did we?