A classic example of the BBC proving that they play the man and not the ball…..or rather attack the Tories whatever policy they come up with.
How many times have you heard someone dragged onto the BBC to complain about banks not lending to them? How many times have you heard the answer to low growth is building more houses? How many times have you heard a BBC economic guru tell you that governments only go for policies that have short term benefits that can win a few votes in a coming election? (And isn’t China the model of government that we should follow…not having to bother with awkward democratic requirements like winning votes and the People’s consent, they can do as they like for as long as they like).
Apparently, now George Osborne has decided to cough up £40 billion for construction projects, relax planning laws and guarantee lending, and perhaps create a government business bank, all those concerns were rubbish…we want short term answers, we don’t want massive spending when we don’t know where the money comes from, we don’t want more building if projects aren’t financially credible..
If Osborne is shelling out money the BBC now tells us we’ve got to ask where’s the money coming from, is it going to make the deficit worse and isn’t this a long term project that helps no one immediately, and isn’t there a contradiction here…if to get a guarantee your project needs to be financially credible then presumably the banks not lending is because the project is not credible…and isn’t all this just to massage the economic figures for political benefit?
You know it’s a funny old world…those are the very questions you might have been asking about Balls’ ‘spending big for growth’ plans…..unfortunately the BBC generally wasn’t too concerned about asking such questions of Labour’s economic genius.
It looks as if whatever Osborne does, even if its pretty much as he’s been pressured into by the Media, he’s wrong…because he’s not a Labour Chancellor.
In a healthy economy you wouldn’t absolutely need growth…it is only because we were left enormous debts to pay off that we need growth to pay them off or even larger cuts in government spending. There’s nothing wrong with having no growth ….what is growth anyway (is it exports, or earnings or spending, or borrowing?)…and why do we need it?…the BBC never explains…to do so might undermine the ‘drive for growth’ that they have used as a weapon against Osborne.
Growth can only come from suddenly finding oil under this green and pleasant land or some such resource, or by training our people with skills they can sell abroad or use to make products that we can sell abroad, by people working longer or harder for the same money…and by exports. Growth does not come from governments borrowing money to build houses paid for by people borrowing more money for mortgages….and filling them with sofas and plasma TVs bought on the never never. If I borrow £100,000 and buy a Ferrari am I suddenly rich? The neighbours might think so…but they don’t see the debt, only the Ferrari on the drive. Your income hasn’t grown a penny…in fact it’s dropped ..because you are paying interest on the loan as well as capital.
Such ‘growth’ is illusory and purely a short term book exercise…much like Labour’s PFI spending.
It looks good for a while until the bills start rolling in…and then you’re back to square one or worse…..teetering on the edge with even bigger debts….and financial markets upping the interest rates on your loans making repayment even harder.
Still….if the BBC tells us that’s the answer who are we to doubt? After all Stephanie Flanders thought that the government should employ more public sector workers…because they would pay tax and the government revenues would go up. Clever girl that. Try that with your bank….say you will repay your loan if they will lend you another loan to pay off the first loan.
So it seems the BBC were all for ‘Stimulus’ when balls was trumpeting its merits but aren’t quite so sure now Osborne has succumbed…and perhaps they are right to be sceptical…China isn’t looking so hot just now even with its own stimulus package…….
Has stimulus really helped China or is it a short term mirage?
‘More determined stimulus measures could help the economy regain momentum and resuscitate the investment demand that is crucial to China’s growth model.
But they also could produce nasty side effects of the sort that followed a huge stimulus package in the wake of the financial crisis in late 2008. Combined with lower interest rates and a flood of bank lending, the spending package helped the economy bounce back quickly in 2009. However, it also led to high inflation, soaring property prices and an increase in loans that could ultimately go sour.’
And of course it was a property boom and soaring prices that got us here in the first place! (Not ‘casino’ banks….but retail banks overlending mortgages that would never be repaid…….Vince Cable talks rot)
The BBC has settled in to its role as a final failsafe mouthpiece to check revanchism from any government, labour or tory alike. Not that there’s any real difference between the parties anymore.
Any tiny hint of turning back from obviously failed progressive policies (recent ones are GCSEs, squatter’s rights, immigration rules etc) gets howled down as though armageddon were being proposed. Oops hang on I forgot to mention that all progressive policies have failed for the last 50 years.
They won’t be happy until they can point to a dog and call it a horse, and then insist you agree it’s a horse under threat of a sentence in the gulag.
Oh you know the BBC only too well!
What else would the airbags of assorted Milibands and Balls types say to the rest of us…that they`ve been wrong since 1976, and really f***ed up from 1997 to 2010?
That Thatcher and Lawson got more right than wrong?…and all these feather bedded phonies at the BBC crave only the chance to stay funded at the point of a knife by we the fools?
The BBC have absolutely NOTHING to say about finances or economics…Stephanie Flanders…no further questions, your honour!
Of course, it won`t stop them from forever squauking about things they know nothing about…all they want is an open vein to the taxpayer, and they`ll nick your tea and biscuit afterwards.
Time to just laugh at them ,stop paying for them and love Rupert,, Carol Thatcher or ANYONE who hates `em.
They`re running out of anything but the shallow end of the gene pool…witness the incoherent stick insect that is Allegro Stratton…and she`s the future?…HA!
‘those are the very questions you might have been asking about Balls’ ‘spending big for growth’ plans…..unfortunately the BBC generally wasn’t too concerned about asking such questions of Labour’s economic genius.’
It’s what they don’t do that often matters as much as what they do.
Sadly, near impossible to capture and hence portray easily… and they know it, from the guys who ‘create’ the ‘news’, to the ones in CECUTT who can swat away anything with a ‘we are comfy in our professional expertise at getting things about right’.
“There’s nothing wrong with having no growth ….what is growth anyway (is it exports, or earnings or spending, or borrowing?)…and why do we need it? …Growth can only come from suddenly finding oil under this green and pleasant land or some such resource…”
Please Alan, stop making a fool of yourself it’s becoming embarrassing.
Ad hom Dez,
When you have zero growth, that tells you that 100% of what you had yesterday is still 100% here today. It is just not “more” than yesterday. Doesn’t sound that bad an outcome at this time. 100%.
You say zero growth like it’s a bad thing . Why?
dez
How about finishing the quote?
“Growth can only come from suddenly finding oil under this green and pleasant land or some such resource, or by training our people with skills they can sell abroad or use to make products that we can sell abroad, by people working longer or harder for the same money…and by exports. Growth does not come from governments borrowing money to build houses paid for by people borrowing more money for mortgages….and filling them with sofas and plasma TVs bought on the never never. If I borrow £100,000 and buy a Ferrari am I suddenly rich? The neighbours might think so…but they don’t see the debt, only the Ferrari on the drive. Your income hasn’t grown a penny…in fact it’s dropped ..because you are paying interest on the loan as well as capital.
Such ‘growth’ is illusory and purely a short term book exercise…much like Labour’s PFI spending.”
Now please explain logically the flaws in the above. This is important! Everyone is waiting for your economics lesson!
dez
Maybe you can also explain how the wealth of the nation is increased by Dr Daniel Conway studying and producing a report on the politics of Margaret Thatcher’s clothing? Presumably his valuable time was generously paid for by the taxpayers.
Another cut and run from Dez. No counter-argument, just playing the man in a game he doesn’t even understand.
I think Dez and the like work for the BBC , they are probably trainees allowed to meddle on this site in between learning how to fiddle their BBC expenses.
gave up listening to WOTM a couple of years ago, the pair of clowns on there reminded me of Harry Enfields loadsamoney, the Bliar years and all that was shit about Britain, now I can eat my cornflakes in peace without choking 🙂
I don’t know if he’s still on there, but one of the presenters used to be a guy with a slightly cockney accent: at some point in his career he lost a month’s wages when the firm he worked for got hammered. He also complained once that his wife, without telling him, had put down a deposit for some furniture at Courts, a week before they went bust. The guy seemed to be a bit of a jinx in money matters, if you asked me.
And, of course, the Beeboids’ high-cost ‘greenie’ propagandists, led by Harrabin, oppose economic growth through private investment on the development of shale gas in Lancashire.
“We probably need Shale Gas”
http://www.cuadrillaresources.com/news/industry-news/article/we-probably-need-shale-gas/
Excellent posting. I believe that the shale gas will come, but we’ll be at the back of the queue as usual.
Didn’t the Spanish economy get “growth” with huge housing investment? hows that going now?
‘Didn’t the Spanish economy get “growth” with huge housing investment? hows that going now?’
Some figures here..
http://www.telegraph.co.uk/property/9520883/In-pictures-the-ten-best-places-to-lose-your-money-in-property.html
Nice pictures! thanks a lot
If this Government of tory wets doesn’t get a grip on the shale gas/fracking energy reserve those corrupt EU commisioners will claim it as their’s.
But of course the real obstacle here is their carbon reduction targets. Just ask Germans how committed they are to carbon reduction and their new coal powered plants under development.
(oh what was that? it’s clean coal? yeah right!)
Putting to one is the fact that this post has absolutely nothing to do with the BBC, let’s look at Alan’s assertion about growth and his decidedly socialist idea that we don’t need growth and his thoughts on how growth in an economy occurs.
If a nation’s GDP remains the same but the population continues to grow then clearly each member of the nation is getting less, everyone is getting poorer.
Let’s say you have no population growth, then if GDP remains the same then the only way one group can enrich themselves is at the cost of another (it is a zero sum game, for me to get rich, someone else has to become poorer). A economy that doesn’t grow is by definition static as its society.
If an economy doesn’t grow, what are the drivers in that economy? Where is the stimulation for innovation? Where is the drive for people to enrich themselves and to improve their lot? Economic growth is the driving force of capitalism. The economies that historically did not prioritise growth were typically command economies. Bhutan has prioritised national happiness over economic growth.
If a nation’s GDP does not grow then why would anyone invest in it? If country A is growing at 5%pa and Country B at 0% why would I invest in A? Furthermore that country will be declining in its relative position in the world, those people who can make money will leave, drawn to countries that reward their skills.
Economic growth can come from new resources, or productivity growth. If technology allows one person to do twice the work and so sell twice as many goods from the same inputs then that is economic growth. Reducing waste, reducing cost and technology are what drives growth.
If I borrow £100,000 and buy a Ferrari then yes I haven’t got any richer (although Ferrari has, and it in turn may take on more workers so creating more jobs). If I borrow £100,000 and build a road that reduces fuel costs by £1 for every lorry that comes in and out of my factory that uses that road and there are 200,000 movements a year my £100,000 borrowing has resulted in a net saving of £100,000.
It depends on what you do with the money.
how can it ahve nothing to do with teh BBC when half (at least) of the post is decrying the BBC’s shameful and blatant bias in addressing/ interviewing/informing about any economics issue the government takes any action/inaction on? I get the feeling to pre-wrote your comment ready for the next post by Alan on any economic issue.
All well and good Nickys emu but what the post is about is BBC bias in allowing only one side one outcome one voice! the basics of economics and growth should be the debate but what they are doing isn’t debate it’s opinion from one economic and political perspective !
Nice try at baiting Alan though I’m sure once he has stopped laughing he will get back to you !
Oh and one like aswell must mean dezzy the zeddy is back ??
If immigration falls then the population falls and with zero growth everyone gets richer. Is that the logical extention your argument?
But to be serious ultimately growth is unsustainable – that’s basic maths – eventually stuff runs out – then what? Surely it makes more sense to have a sustained economy where everyone leads as comfortable a life as they are prepared to work for?
If immigration falls then the population falls and with zero growth everyone gets richer. Is that the logical extention your argument?
If out remains the same then yes. Deporting half the country, or killing off anyone who does not produce would increase the per capita wealth of the nation (if the economy did not grow).
ultimately growth is unsustainable There are some ultimate limits, but they are some way off (global population, total energy consumption, etc).
Look at the incredible power of Moore’s Law and what that has driven. Look at the incredible economic growth that the internet has driven.
And of course there is an increasing economy in virtual goods — people paying for things that consume no raw materials.
Deporting half the country, or killing off anyone who does not produce would increase the per capita wealth of the nation (if the economy did not grow).
What? You socialists really are genocidal maniacs aren’t you? A complete halt to immigration would reduce the number of people in the country as birth rates are falling. At a sustainable level the population would benefit immediately from a static GDP.
No need for deportations and certainly no need for deaths. Definately no need for murderous lefties either.
Please emigrate 😉
Socialism has been responsible for more deaths that any other ideology in history
Actually environmentalism has killed more through the banning of DDT etc.
There is of course the argument that enviro-nutters are also socialists.
I wasn’t actually advocating it as a policy …
But no, even with a static GDP your society would ossify. And more to the point what benefit is there in a static GDP? Economic growth is the driving force of capitalism, it is what stimulates innovation and what enriches society.
This idea that we should have zero growth is decidedly socialist.
‘Look at the incredible economic growth that the internet has driven.’
Do you have proof that’s the case for GB? Can’t see it will have done much as most of the stuff bought on the internet is manufactured abroad.
Nicked emus
Interesting thoughts.
Is it necessary for the UK population to grow every year and for how long is this sustainable?
With no population or GDP growth you say that the only way one group can enrich themselves is at the cost of another. But older people are always retiring and younger people are always advancing their contributions. Some products and services decline whilst others become more wanted. Can there be a sort of balance?
Over time, advances in science and technology should allow improvements to living standards, but then the measurement of GDP may become contentious.
Developed nations are naturally most likely to grow slower than developing nations.
I think Alan is expressing his concern that we have been consuming more than we have earned for decades, thereby putting at risk our future growth because of the burden of debt while simultaneously making us desperate for high growth to service the debt.
You are indeed correct to say that “It depends on what you do with the money.” If the money is used by government, say, to overpay some people, then does Keynesian economics imply a growth stimulus or do these people simply consume more than they produce while depriving other people of their consumption?
These issues are difficult and seem to be beyond politicians and their economic advisors to understand, never mind Joe Public!
Is it necessary for the UK population to grow every year and for how long is this sustainable?
We enter tricky waters … The answer is no, some populations are declining and aging. The problem is that the demographic profile becomes very distorted — a large aging population being supported by a small working population. Immigration is a way of re-distributing that profile. Of course it brings with it considerable other issues.
How long? At some point, even though Malthus is widely discredited, there has to be a limit.
Because the old age pension was so poorly designed pensioners are a drain on society. Had rather braver steps been taken when the pension was introduced we might not be in the place we are and the distorted demographic profile would be of less concern. It will be hard to undo that.
If the money is used by government …
That is an excellent question and one that economists have long debated. Essentially it depends on the state of the economy and what the government does with that money.
Borrowing money to forward invest is not a stupid thing to do — other countries did it very successfully. If you are going to build a new road and you bring its construction forward then you have not increased expenditure over the lifetime of the government. If you borrow to do that, and use surplus labour (high unemployment) then you can stimulate demand — people you would be paying unemployment benefit to are working and creating value (as per my lorry/road example).
If you have low unemployment then diverting government money makes a lot less sense.
The problem with the coallition strategy is there is no plan for growth. The idea that low interest rates are going to stimulate the private sector to consume is clearly not working. We have had 42 months at 0.5% and the economy grew by £3 million (not billion, million). In government terms £3 million is a rounding error — it is roughly the cost of six flats in a middling part of London.
‘Borrowing money to forward invest is not a stupid thing to do — other countries did it very successfully’.
That would be true were it not for the fact ‘there’s no money left’ (L Byrne, 2010).
And the idea that government can create growth, as opposed to creating an environment to encourage growth, is barking, and the reason we’re in this mess (G Brown, Chancellor 1997-2008).
Btw, 900,000 jobs have been created by the private sector in 2 years. How many of those have gone to immigrants I’m not sure, but over the lifetime of the Labour government 70+% of the new jobs created went to immigrants. The expression ‘running to stand still’ comes to mind.
Well that is a first. Someone on this site quoting Gordon Brown to support their argument. However I can’t find the quote to see where he said it.
Of course governments can borrow money to stimulate growth. Have a look at Turkey, which last year was the second fastest growing economy in the OECD. THey had a very successful policy of bringing forward infrastructure projects paid for by borrowing.
Even if the “70+% of the new jobs created went to immigrants.” figure is correct (I am not saying it isn’t, I just haven’t checked it) then if they remain in the country, spend their money in the country and stimulate the local economy, so what? If they buy TVs, shop in shops, buy cars, food and everything else, from the economy’s point of view it makes no difference who gets the jobs.
‘Well that is a first. Someone on this site quoting Gordon Brown to support their argument’. Not a quote (note absence of quotation marks) – just attributing the mess to your country-wrecking hero.
‘Even if the “70+% of the new jobs created went to immigrants.” figure is correct (I am not saying it isn’t, I just haven’t checked it) then if they remain in the country, spend their money in the country and stimulate the local economy, so what?’
A small matter of 2 million plus unemployed, that’s what. Oh, and all the dependants the immigrants bring with them. Ah, and the wives they import.
So….. we don’t need private enterprise at all, then? The government just keeps borrowing money and building more stuff? Like Spain did? And how long before an infrastructure project employs the first worker who starts to put the foundations in place? And how many successful infrastructure projects did we see under Labour? Was the schools building project one of them?
Gordon Brown wasn’t my hero.
As for immigrants — that is why I stressed from an economic point of view. Of course there are social issues. But if an immigrant is economically active and spending the money they earn in this country then as far as the economy is concerned that is great.
So….. we don’t need private enterprise at all
Where did anyone suggest that? I am not the one suggesting we have some control on the economy. I am not the one suggesting zero growth is a good thing.
All I am saying is that it is perfectly possible for governments to stimulate the economy. It has been done several times and with great success.
‘But if an immigrant is economically active and spending the money they earn in this country then as far as the economy is concerned that is great’.
Repeating yourself is not an answer.
And there are many other points you’ve chosen to ignore.
Par for the course.
>A small matter of 2 million plus unemployed, that’s what.
The economy is blind to a worker’s passport.
>Oh, and all the dependants the immigrants bring with them. Ah, and the wives they import.
As long as they are net contributors to the economy so what? If they are not net contributors then it is a problem.
>So….. we don’t need private enterprise at all, then?
Straw man argument.
> The government just keeps borrowing money and building more stuff? Like Spain did?
No
>And how long before an infrastructure project employs the first worker who starts to put the foundations in place?
Piece of string question.
>And how many successful infrastructure projects did we see under Labour?
Without going through each one I have no idea.
>Was the schools building project one of them?
I don’t know enough about it. Probably not. It was probably a disaster but I seem to remember that was a PFI scheme so a different case.
When talking about immigration it is the economic case I am looking at. I am deliberately not regarding the social issues. Workers, be they migrant or indigenous, that make a net contribution are obviously good for an economy. Workers, be they migrant or indigenous, that make a net drain on the economy are not good for the economy. There are different societal issues.
This may be slightly off topic but with all the news concerning the reshuffle there has not been one mention by the BBC the Government Libs Tories and Labour about the EU: UKIP has been obliterated from the news The Greens are still getting more mentions than they deserve. The EU has affected our economy more than anything. It is still the elephant in the room, but all the Politicos seem to have a code of silence.
How many more elephants can we get into this room?
Nicked, the “incredible power of Moore’s Law” was always ultimately unsustainable. The man himself has said it will fade in 10 to 20 years. And high costs are going to limit our ability to take advantage of whatever power it has left.
The “incredible economic growth” driven by the internet has already burst once before. Obviously online commerce is where things are headed, but caveat emptor. Remember the DotCom Bubble? How about the current Facebook IPO fiasco? Even the BBC has noticed we might be in the midst of a second bubble.
There is a very good video on the Adam Smith Institute blog on the economics of stimulation. Briefly it doesn’t work and never has. It highlights the problem of putting the workless into jobs that earn money in proper industry and getting capital to go there. As he says “governments cannot do this, there are no market signals for guidance”.
The major growth problem in the last 15yrs has been population.
Just look at the faces in todays London classroom, and I don’t mean the teachers.