Last night on Newsnight, reader D. Burbage noticed that in a segment on the Euro (called “Shaking the Currency”), the presenter Paul Mason (subtitle: “Business correspondent”) was explaining some economics to us — which was presented as fact, not as opinion:
This graph shows the contribution public spending has made to GDP. While Gordon Brown has been able to use public money to help sustain economic growth, his counterparts in the Euro zone have been under pressure to cut public spending, hence the gap.
Thus creating the impression that the large amount of public spending in Britain in recent years has been a good thing for the economy, and also creating the bizarre impression that Europe doesn’t spend that much, that the supposed cutbacks in public spending are what has been harming its economy, and that it needs more public spending in order to do good by its economy. (Why not just spend everything we’ve got and make us all rich beyond our wildest dreams?)
(Video link here — Mason’s comments 27m 30secs in.)
P.S. The graph was titled “Boost to GDP from Public Spending”. I’d like to know where they get these figures from. (There’s nothing on the website about it – c’mon Beeb, it’s not the twentieth century any more, put up a few links). Any economists care to comment?
The BBC still subscribes to the “Monkey pulling itself out of the swamp by its whiskers”.
I was not aware that Gordon had significantly broken the stability pact? If he hasn’t then the story ,is totally irrelevant even if the BBC’s public spending fantasy were true.
> Any economists care to comment?
How about a quote from Milton Friedman?
” There are four ways in which you can spend money. You can spend your own money on yourself. When you do that, why then you really watch out what you’re doing, and you try to get the most for your money.
Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I’m not so careful about the content of the present, but I’m very careful about the cost.
Then, I can spend somebody else’s money on myself. And if I spend somebody else’s money on myself, then I’m sure going to have a good lunch!
Finally, I can spend somebody else’s money on somebody else. And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get. And that’s government. And that’s close to 40% of our national income. “
A bit of Googling found THIS on the web (in connection with an industrial dispute in Bradford)
Dear brothers/sisters
Just a short personal message of solidarity – I will raise your dispute in our Chapel when we meet next. I am constantly struck by the small minded penny pinching of media owners who spare no expense for their own largesse.
Your fight is part of a resurgence of grassroots trade unionism that is telling the managers “we’re back” in every sector of the economy.
A donation follows.
Venceremos!
Paul Mason
Business Correspondent, BBC Newsnight (personal capacity)
The Government doesn’t actually “spend” anything, it merely transfers the wealth from the productive sectors of the economy to the unproductive (see welfare state).
The government can “boost” the economy by spending more than it receives, the price of this is debt, which is merely defered taxation, if the uses the government put to the debt cause more wealth growth than the cost of servicing and paying off the debt then it could be seen as a boost to GDP. Unfortunatly this is not the case with this governments spending on the NHS etc.
I think the next 6 months will let economic reality assert itself and show that Labour have squandered vast amounts of taxpayers money for no benefit.
SOCIALISME EST MUERTE
And that googled find is unsurprising. Quite how many business people in the real world address each other as “brothers/sisters” and are interested in the progress of grass roots trade unionism and sticking it to the management?
Rock on, BBC “Business” Correspondent. Surely “Left-Leaning Trade Unionist” correspondent would be a more accurate description?
Hello,
I am writing from the USA. We have just started a site named Media Slander to counter the outlandish lies on our side of the ocean.
Your site is wonderful. I was surprised to find it in a way. I was led to believe that most people in England didn’t like Americans. Of couse, I say this with tongue in cheek. I knew better, but I didn’t know where to find it. Now I have.
You have a very good topic that has been answered by many bright people. I will leave my dignity in tact by submitting to their knowledge. LOL. I do agree, however, with Friedman. Thank you.
Gosh – a journalist supporting the NUJ? Whatever next?
Paul Mason – the unbiased BBC business reporter. What a laugh. He was the guy who gushed that “Ode to Joy” was the perfect music for the launch of the Euro.
Anonymous – read Mason’s words again (the tone, sentiment etc) and tell me that you’d be happy for this man to give an impartial report on, say, a multinational’s business practices or perhaps a British supermarket announcing record profits.
Actually you would probably be happy with whatever he spouts.
Maybe Paul Mason fears the axe himself. He has been business correspondent for Newsnight for several years. But why does Newsnight need a business correspondent all to itself ? (The same applies to many, many highly-paid “specialists” at the BBC.)
Googling his name suggests a distinct paucity of stories with his byline over recent years. One of the other Newsnight specialists, Susan Watts, crops up quite often. But Mason is noticable mostly by his absence from our screens. Again – the same would apply to many of the BBC staff. Nice work if you can get it !
I still can’t see why the cuts are so shallow.
“Googling his name suggests a distinct paucity of stories with his byline over recent years.”
Perhaps that’s because he ‘works in tandem with Newsnight’s Economics Editor’?
http://news.bbc.co.uk/1/hi/programmes/newsnight/3094397.stm
Of course, he has won the 2003 Wincott Award for business journalism. How galling for him that the website for this award has mistakenly stated that in 2003 there was ‘No Award’:
http://www.wincott.co.uk/bbj.htm
Or perhaps he means the Business Programme Broadcast award and he has instead slightly misled the reader into thinking his award was for him personally rather than a team effort?
http://www.wincott.co.uk/bpj.htm
So Mason “works in tandem” with the Economics Editor on Newsnight- that could translate as two people doing one job.
But we often see the Economics Editor on-screen – Stephanie Flanders. She comes across as very bright, a fluent economist. She had previously worked at the FT – a good commendation for solid journalistic ability. I can’t see why she should need anyone to “work in tandem” with her. Certainly on her appearances on Newsnight, the subjects she covers are way above Mason’s ken.
But I suppose he has lots of union meetings to attend as well.
It may seem unfair to focus on one BBC journalist – but perhaps he drew attention to himself. I find it difficult to see what he actually does all week, all month, all year. Yes, he did a series of three pitches on capitalism in China (leaving big question marks over “capitalism”). Fairly fluffy stuff, IMHO. Maybe worth a fortnight’s salary back in 2002 or 2003. But the rest of the time ?
And how much does it cost us LICENCE-PAYERS to keep this guy on the road ? I bet his salary plus exes plus travel plus overheads totals well in excess of £100,000. Where’s the value ? The same question applies to hundreds if not thousands of BBC news staff. If there were far fewer of them, with more work to do covering the actual news, maybe we would get less opinionating from them.
Mason and others are bleating about marginal job cuts. The cuts need to be far deeper to make any real change.
There’s no reason why Paul Mason shouldn’t express his personal views – note “personal capacity” – outside of work, especially when it concerns fellow journalists.
Government spending does indeed boost GDP – there’s something called the “multiplier” that any of you self-taught economists might want to look up on.
Take an example of increasing the NHS budget. Besides saving peoples lives (cutting deaths from cancer by 12%, heart disease by 27%, waiting times down 35% since 1997), this would lead to (obviously among other things)…
– greater demand for NHS equipment, so obviously private equipment providers take on more staff to cope with the extra demand and possibly pay their existing workers more with an increased workload.
– these workers then spend their extra disposable income on other goods and services, further boosting aggregate demand, and thus GDP
– in turn, their spending on other goods and services, eg clothes, stimulates demand in the clothing industry so clothing suppliers take on more workers
… and so on, and so forth.
See this Tutor2U article, especially the paragraph entitled “Influencing the level of macro-economic activity”, and also this article on the multiplier effect.
Increasing public expenditure is not the only way to achieve the multiplier effect. Tilting the balance away from PE has much the same effect.
But various studies have shown that PE is often far less productive. Even going on your highly-suspect measures of improved NHS output, this lags far behind the rate of increase in NHS spending.
PE is too often seen as a “good” thing – without proper comparison of input/output. It is typical of BBC journalism that this is their flavour.
I worked for 2 decades inside the Whitehall machine – it is amazing how many stupid ideas get funded, how many PE disasters are simply buried in the figures. Spending other people’s money is easy, there is no real check on performance. The ratchet effect is always there, and Gordon Brown has achieved it in spades. No wonder he wants the PFI spending excluded from the National Debt.
Do you have a source for those figures? I ask because Dr Maurice Slevin said:
and Professors Sikora and Bosanquet found that
None of that sounds like an advert for the NHS.
Of course increasing public expenditure isn’t the only way to boost GDP, that wasn’t my point. I was responding to the original post which implied that public spending didn’t boost the economy. It certainly does. Now, cutting taxes etc is also another way of boosting the economy, I fully accept that and there’s no reason why I would deny that. However, cutting taxes has to result in a reduction in public expenditure (unless you want to increase the national debt), and this would mean harming NHS funding. People’s lives obviously depend on the NHS, which is why I believe that public spending in this area is both socially desirable, and also at the same time somewhat economically beneficial.
If I remember correctly (having also watched that segment of Newsnight last night), that part of the programme was only one small bit – it’s one graph that you’re complaining about here, which was part of a report on why the Eurozone might not be doing too great at the moment. Again, correct me if I’m wrong, but I thought it also gave substantial space to discussing other factors involved here.
I certainly wouldn’t deny that Government waste money, though.
Regarding waiting lists fallen, the 35% figure was off the top of my head and I can’t find it again, but here are statistics from 1999, and here are the statistics from the DoH (Q4 2004).
1999 – 1,072,860
2004 – 821,686
drop of about 25%
also, notice:
1999 – 43,000 patients on that waiting list waiting over 12 months
2004 – 38 patients waiting over 12 months
1999 – 54% of patients waiting less than 3 months
2004 – 68% of patients waiting less than 3 months
Remember that the benefits of doubling investment won’t come immediately; doctors take at least 7 years to train, and without more doctors you obviously can’t treat many more people.
The original point of this topic was the ability of the BBC to imply to a lay audience that increased public expenditure = improved growth. This is clearly a nonsense as known in nearly all economic circles outside of the BBC and the Guardian (see Will Hutton).
As for the NHS, given the extraordinary increase in expenditure, it would be a bit of a shock is something hadn’t improved. If I throw enough £20 notes at a wall some of them will stick.
Like any monopoly we are forced to rely on armies of accountants and statisticians to try and understand what is going on. We have “five year plans” “national strategies” etc. Sound familiar? Try Soviet economic planning circa. 1975.
The NHS as a model is bust. Similar to the run up to the “winter of discontent” in 1979, the current Government experiment in dramatic increased funding for Health and Education will run into the ground and set the scene for a dramatic change in service provision. Health and education will be a battleground for politics in a very exciting way in 4 or 8 years time.