World government debt

MaizieD

^There was very little spending to stimulate growth, not just Tories, Blair/Brown did very little either.^

That’s what I said.

What do you define as ‘social spending’?
What spending to ‘stimulate growth are you thinking of?

Social spending,
Pensions especially are too high they should be means tested, we don't need to borrow, reduce pensions to those that dont need them
Other benefits and Health and Care spending need waste and fraud eliminating, then more can go to those that really need it.

There was very little spending to stimulate growth, not just Tories, Blair/Brown did very little either.

That’s what I said.

What do you define as ‘social spending’?
What spending to ‘stimulate growth are you thinking of?

Missed this

I am curious to know when in the past 40 years government 'borrowed' to improve the economy. Especially as the tories, who were in power for most of that period, were dead against state spending if they could possibly avoid it.

Perhaps you could give me some examples?

There was very little spending to stimulate growth, not just Tories, Blair/Brown did very little either. Johnson made everything worse, Im hoping Burnham will turn the economy round, maybe he will borrow to increase growth i dont have a problem with that. I will guarantee he will not do it by more social spending

MaizieD

^You are proposing borrowing more to pay for social spending, it's your ideas that borrowing more will improve the economy that I am opposed to, it hasnt over the last 40 yrs and won't in the next.^

I'm not proposing more borrowing in the sense in which you like to understand it. The government could run an 'overdraft' on the Ways and Means account or it could implement a form of QE, which is another way to 'borrow' from the Bank of England (which is a wholly owned subsidiary of the UK government..)

I am curious to know when in the past 40 years government 'borrowed' to improve the economy. Especially as the tories, who were in power for most of that period, were dead against state spending if they could possibly avoid it.

Perhaps you could give me some examples?

The BoE has no plans to borrow more reviving the Ways and Means account, Healey has indicated that there will be no increase in borrowing, so you are clutching at straws

I think it's significant that it was announced that Defence spending targets have been postponed, no doubt due to pressure from back benchers.
Are the cracks beginning to show not the honeymoon is over?

You are proposing borrowing more to pay for social spending, it's your ideas that borrowing more will improve the economy that I am opposed to, it hasnt over the last 40 yrs and won't in the next.

I'm not proposing more borrowing in the sense in which you like to understand it. The government could run an 'overdraft' on the Ways and Means account or it could implement a form of QE, which is another way to 'borrow' from the Bank of England (which is a wholly owned subsidiary of the UK government..)

I am curious to know when in the past 40 years government 'borrowed' to improve the economy. Especially as the tories, who were in power for most of that period, were dead against state spending if they could possibly avoid it.

Perhaps you could give me some examples?

"Keynes certainly did not envisage borrowing as a way of social comfort,

I think your ideas about Keynes are so weird that it's not worth trying to respond to them. He certainly saw bonds as a mechanism for funding and he was certainly deeply concerned about the need to provide social welfare for all citizens. He was dead before Labour created what we know as the welfare state, but he had a great deal of input into the planning before he died. He not only rated full employment as being beneficial to the economy in terms of growth and returns to the Treasury; he understood that a foundational driver of growth was the wide availability to the population of money to spend. Something that doesn't seem to be considered by economists, politicians, journalists, commentators and the public at large these days."

As you stated above Keynes envisaged "returns to the treasury" to fund social comfort, thats how it should be, I agree with his principles but many economies have moved away from from those ideas.

You are proposing borrowing more to pay for social spending, it's your ideas that borrowing more will improve the economy that I am opposed to, it hasnt over the last 40 yrs and won't in the next.

You are very kind, GG13. Thank you.

Keynes was a giant among economists and a very interesting, humane. man. It's a shame he's been abandoned...

MaizieD I know we differ in our politics, but due to you I have read a little about Keynes.

As a business owner, I totally get that government (state) employees and projects are beneficial to society as it keeps money flowing.

Not sure that any of our current MP’s or party leaders have the cajunas to invest in infrastructure at a level needed. Despite it providing employment, training (apprenticeships) and revenue via tax and NI.

I will continue to read and learn, thank you 👍

fancythat

You have not answered either question[you dont have to], so I will stop that discussion with you.

That's OK, fancythat.

You've flounced on me before when I have challenged you.

Keynes certainly did not envisage borrowing as a way of social comfort,

I think your ideas about Keynes are so weird that it's not worth trying to respond to them. He certainly saw bonds as a mechanism for funding and he was certainly deeply concerned about the need to provide social welfare for all citizens. He was dead before Labour created what we know as the welfare state, but he had a great deal of input into the planning before he died. He not only rated full employment as being beneficial to the economy in terms of growth and returns to the Treasury; he understood that a foundational driver of growth was the wide availability to the population of money to spend. Something that doesn't seem to be considered by economists, politicians, journalists, commentators and the public at large these days.

as above it was "enjoying the benefits of their productivity", those that are productive have every opportunity to do that.

I don't think that people doing two or three jobs on minimal wages which gave them enough to just about survive would agree with your conclusion.

Im sure he would be horrified of the way western governments have allowed their economies to rely on selling off assets and borrowing to prop the economy up, instead of investing in productivity.

I absolutely agree with you. He was firmly opposed to Hayek's free market theories.

"Keynes' was indeed very much concerned with productivity , but it was in the context of full employment and he recognised that to achieve full employment and increased productivity needed attention to the health and welfare of the citizens who worked to achieve it. Not only that, but he believed that citizens should have a full and good life outside of 'work' to enable them to enjoy the benefits of their productivity. Social welfare was an important contribution to this. So he was very much concerned about the comfort of citizens."

Keynes certainly did not envisage borrowing as a way of social comfort, as above it was "enjoying the benefits of their productivity", those that are productive have every opportunity to do that. Im sure he would be horrified of the way western governments have allowed their economies to rely on selling off assets and borrowing to prop the economy up, instead of investing in productivity.

The UK has invested very little in growth for decades and is now having to import nearly all the new technology we use today

You have not answered either question[you dont have to], so I will stop that discussion with you.

Spend spend spend, and dont worry about any consequences whatsoever, further down the road.

I wish you'd stop repeating that silly anti state spending mantra.

In which country or scenario, ever, in the history of mankind literally, has that action ever come out well for the citizens, even medium or long term?

Well, you tell me with concrete historical evidence to prove your assertion.

^ But if governments put the interests of 'the market' ahead of the the wellbeing of their citizens, as they do, they are failing completely to act on behalf of the said citizens'.^

No they are not failing to act for the citizens.

A government cannot go against the market.
When can they ever get away with that?

In which country or scenario, ever, in the history of mankind literally, has that action ever come out well for the citizens, even medium or long term?

Maybe you are thinking short term only?
Spend spend spend, and dont worry about any consequences whatsoever, further down the road.

fancythat

he is not the only economist who is saying these things today. I strongly suspect that Keynes would have said this is the way to go

Keynes theories were disputed even in the 1980s'.

Keynes' theories stood the test of time.

It was Keynes who fought against the treatment of Germany after WW1 when swingeing reparations were demanded alongside making it virtually impossible to develop their economy well enough to be able to pay the reparations. This led to the failure of the Weimar Republic, the rise of Naziism and WW2.

It was Keynes' theories which informed the Roosevelt 'New Deal' programme which in the 1930s lifted the US out of the depression caused by the 1929 crash far faster than the depression in any other country which had been adversely affected by the crash.

It was Keynes' theories which informed the implementation of the Welfare State, the economic recovery and the closing of the inequality gap in the UK after WW2.

The theories implemented post 1979 were those of Hayek, who was deeply influenced by his upbringing in a communist state and developed his 'free market' economic theories as a result. These have led directly to the social and economic mess that we are now in.

I know which economist's theories I have more confidence in.

LemonJam

"But they're not doing it, are they?"

Is the market paying attention to the interests to the well-being of UK citizens? Not that I've noticed.

Is the government exercising responsibilities for public service responsibilities? Well I have not noticed the markets stepping in to do so instead or the government stopping.

You are completely missing the point.

I agree, I keep on pointing that out. Tthe markets' have no interest at all in the wellbeing of UK (or any other country's) citizens'. But if governments put the interests of 'the market' ahead of the the wellbeing of their citizens, as they do, they are failing completely to act on behalf of the said citizens'.

Keynes was dead before the welfare state was invented there was very little support for the population in general.

What absolute nonsense David. Do you actually have any knowledge at all of Keynes and the Welfare state?

Fact no.1.
The Beveridge Report, which was a result of many decades of concerns about the social welfare of the UK population expressed and studied by a wide body of people, was published in 1942. Keynes died in 1946 and was working very nearly until he died.

Fact no.2.

Keynes was very much involved in working on economics of Beveridge's plans

"Keynes became involved during 1942. Beveridge sent him memoranda setting out his emerging proposals, and Keynes subsequently became one of the important people scrutinising the plan from the Treasury/economic perspective. Cambridge's edition of Keynes's collected writings describes his involvement in considerable detail."

The above from AI.

I checked out the link given. It leads to a Cambridge University edition of Keynes' collected writings (he was a Cambridge professor, of course) in which Chapter4 covers his involvement with the Beveridge Report.

www.cambridge.org/core/books/abs/collected-writings-of-john-maynard-keynes/beveridge-report/9073BC40D7985E8770B048C0C32BDCB1

His theories were for governments to create investment for productivity not to improve comfort of citizens.

Keynes' was indeed very much concerned with productivity , but it was in the context of full employment and he recognised that to achieve full employment and increased productivity needed attention to the health and welfare of the citizens who worked to achieve it. Not only that, but he believed that citizens should have a full and good life outside of 'work' to enable them to enjoy the benefits of their productivity. Social welfare was an important contribution to this. So he was very much concerned about the comfort of citizens.

In the 1930s he wrote an essay 'Economic Possibilities for our
Grandchildren' in which he, rather optimistically, predicted that technological improvements, leading to increased productivity would, within a 100 years:

...for the first time since his creation man will be faced with his real, his permanent problem-how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well.

The strenuous purposeful money-makers may carry all of us along with them into the lap of economic abundance. But it will be those peoples, who can keep alive, and cultivate into a fuller perfection, the art of life itself and do not sell themselves for the means of life, who will be able to enjoy the abundance when it comes.

He also, in this essay, expressed his belief, which is very relevant to this current discussion, that:

^...*The love of money as a possession -as distinguished from the love of money as a means to the enjoyments and realities of life -will be recognised for what it is, a somewhat disgusting morbidity, one of those semicriminal, semi-pathological
propensities which one hands over with a shudder to the specialists in mental disease.* All kinds of social customs and economic practices, affecting the distribution of wealth and of economic rewards and penalties, which we now maintain at all costs, however distasteful and unjust they may be in themselves, because they are tremendously useful in promoting the accumulation of capital, we shall then be free, at last, to discard.^

www.econ.yale.edu/smith/econ116a/keynes1.pdf

he is not the only economist who is saying these things today. I strongly suspect that Keynes would have said this is the way to go

Keynes theories were disputed even in the 1980s'.

David49

LemonJam

"But they're not doing it, are they?"

Is the market paying attention to the interests to the well-being of UK citizens? Not that I've noticed.

Is the government exercising responsibilities for public service responsibilities? Well I have not noticed the markets stepping in to do so instead or the government stopping.

No government can give unlimited services to the population there us always do someone wants more it has to provide what it can from the resources it has. If public spending was doubled it would not satisfy everyone a balance has to be found.

I agree with the principle that public services should be financed by revenue not from borrowing, so if more is needed taxation must rise, so far that seems to be Burnhams policy.

I agree with your post.

Maisie

"She is not the only economist who is saying these things today. I strongly suspect that Keynes would have said this is the way to go. It's just we're wedded to the contrary ideas of another school of economics, with the demonstrably bad effects for a very significant number of citizens which we have seen over the period of time since they were implemented."

Keynes was dead before the welfare state was invented there was very little support for the population in general.
His theories were for governments to create investment for productivity not to improve comfort of citizens.

In recent decades very little has been borrowed to increase productivity, instead outside money (PFI) has been used to provide services the government should provide, this has proved very costly as we know.

The comfort of the population has improved dramatically but too many have too much leaving others lacking, the UK does not need to borrow more it needs to be more efficient and change the taxation system to help those that need more. The UK is a rich country there is plenty of wealth that can be used

LemonJam

"But they're not doing it, are they?"

Is the market paying attention to the interests to the well-being of UK citizens? Not that I've noticed.

Is the government exercising responsibilities for public service responsibilities? Well I have not noticed the markets stepping in to do so instead or the government stopping.

No government can give unlimited services to the population there us always do someone wants more it has to provide what it can from the resources it has. If public spending was doubled it would not satisfy everyone a balance has to be found.

I agree with the principle that public services should be financed by revenue not from borrowing, so if more is needed taxation must rise, so far that seems to be Burnhams policy.

"But they're not doing it, are they?"

Is the market paying attention to the interests to the well-being of UK citizens? Not that I've noticed.

Is the government exercising responsibilities for public service responsibilities? Well I have not noticed the markets stepping in to do so instead or the government stopping.

David49

LemonJam

My view is that successive UK governments exercise public service responsibilities, a regulatory role and democratic legitimacy whatever of a variety of economic model each follows.

We can agree to differ- thats fine 😊

Any government does not have to borrow money they do so to provide more services to the population or sometimes stimulate growth. The principle of borrowing is usually to pay back the loan but all that happens is that another loan is taken out, so interest just keeps increasing.
Lenders whether internal or foreign just want interest, we don't have to borrow if we do it's on their terms, if we try to set our own conditions they can just walk away
.

I'll quote my economist again:

There are three ways the government can deal with additional spending or investment:

Borrowing – Under the Full Funding Rule, the Debt Management Office issues gilts (government bonds);

Raise Taxes;

Create money – this can be done in many ways: both forms of Quantitative easing used in the UK were forms of money creation; even more simply, the government can create money simply by spending and leaving the overdraft in the Ways and Means account

The standard objections, outlined below, can be refuted.

“Government debt is dangerously high, so we can’t borrow.”

British public debt today is below our historical average and our government has the power to create money when needed. The public debt to GDP (income) ratio will only fall if economic activity (investment and employment) rises along with incomes and profits.

“Taxing the wealthy would stop-trickledown and the poor would suffer.”

The so-called ‘trickle-down effect’ has no evidential basis. Both economic and wage growth were higher when top rates of tax were higher.

“Creating money just leads to dangerous inflation.”

The Bank of England has created £895 billion since 2009, and this was not the cause of inflation. (Supply bottlenecks after COVID and the Iran War were the main causes of inflation).

The third option – creating money – is considered so outlandish that it is seldom even discussed. And yet, as Lord Turner wrote in 2016,

….inadequate nominal demand is one of very few problems to which there is always an answer.Central banks and governments together can create nominal demand in whatever quantity they choose by creating and spending fiat money.Doing so is considered taboo – a dangerous path toward inflationary perdition.But there is no technical reason money finance should produce excessive inflation, and by excluding this option, we have caused unnecessary economic harm.….money finance of fiscal deficits is technically feasible and desirable, [and] it may be the only way out of our current problems.”

She is not the only economist who is saying these things today. I strongly suspect that Keynes would have said this is the way to go. It's just we're wedded to the contrary ideas of another school of economics, with the demonstrably bad effects for a very significant number of citizens which we have seen over the period of time since they were implemented.

We are in agreement therefore that the markets have no particular interest in the wellbeing of a country's citizens- hence why it falls to governments to exercise public service responsibilities.

But they're not doing it, are they?

I repeat:

...the Prime Minister gives the strong impression of being powerless: that change is not possible because change would be opposed by the ‘markets’ by bond holders and by the Bank of England and the Treasury. His chancellor has already in effect argued that - There Is No Money.

Maizie:
As it is, we become poorer and unhealthier and worse educated and worse served by the 'public services' all in the interests of 'the markets'.

If they're going to have so much control over the government why bother with a government at all?

Because it is government that decides many of the parameters that the market responds to.

Experience has shown neither the extremes of complete government control, as we had in post-war Russia and communist Eastern Europe, nor in countries where the market runs rampant, as in the US, gives us anywhere near to a station where all benefit.

The nearest we have is in Scandinavia and Demark where there is more of a balance between public and private interests.