LibLink: Vince Cable: Politicians get lost in search for fabled Magic Money Tree

Vince Cable has written for City AM about governemnt’s fiscal responsibilities and how it has become less important to be financially credible.

Yet since the 2015 election, belief in financial magic appears to have grown. Brexit’s biggest appeal was a treasure trove to finance the NHS. Labour has caught the new mood.

A few weeks ago, shadow chancellor John McDonnell added £200bn of PFI contracts to a lengthening list of Labour financial commitments, including the nationalisation of rail franchises, energy and water utilities, free universities, and much else.

The IFS was scathing at the June election about Labour’s numbers, but it did little political harm, perhaps because the Conservatives had no numbers at all, and have since oscillated between preaching austerity and signing cheques when pressed. My own party, the Liberal Democrats, received an IFS Gold Medal in 2017, but it did us little good.

He then goes on to talk about a recent discussion with economics students who thought that austerity had had its day. Vince recounts the main points that he made with his response:

The first is that the preoccupation with public debt is overdone, even at 90 per cent of GDP (net). The Rogoff idea of a 90 per cent “trigger point” has been discredited. And the UK continues to enjoy negative interest rates on long term debt.

Unfortunately, the Treasury foolishly allowed the initial clarity of the coalition’s fiscal objectives – to eliminate the structural element in the current budget – to become a generalised objection to all government borrowing.

As a result, an opportunity has been missed to finance a programme of productive investment in infrastructure and housing, which could have supported long term growth and even reduced the ratio of debt-to-GDP. But while austerity has been given a bad name, fiscal discipline does still matter.

Second, superficially plausible but flaky assumptions about tax revenues are being incorporated into “costed manifestos”.

Labour’s enthusiasm for a lucrative financial transaction tax belies the experience of other countries which have actually lost money in this way.

The undoubtedly popular idea of taxing bankers until their pips squeak ignores the fact that Brexit (let alone such a tax) will export the tax base. And while I see no merit in the current race-to-the-bottom in corporation tax, it is naive to expect that corporations will volunteer for more tax if they can avoid it.

And finally, there is “people’s QE”: directing the Bank of England to lend to the government.

The idea is not completely foolish; it was seriously considered in the aftermath of the financial crisis. And it may prove necessary in a future, deep, recession.

You can read the whole article here. 

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39 Comments

  • Peter Martin 16th Oct '17 - 11:15am

    governemnt’s fiscal responsibilities and how it has become less important to be financially credible.

    Of course it is just as important as ever it was to be ‘fiscally responsible’ and ‘financially credible’

    Al Vince needs to say that this doesn’t necessarily mean balancing the budget. Government’s hardly ever do this anyway! It is just a statement of reality.

    It’s not even something that Government’s should aim to do. The Government’s budget deficit is just like an exchange rate when the currency is allowed to freely float. You can’t have a floating exchange rate, ie allow it to vary, without the Government’s deficit being allowed to vary too.

    It simply isn’t possible! Although the neoliberals are very keen to say that it is!

  • Peter Martin 16th Oct '17 - 11:23am

    PS I wish we had an edit button! Then I could correct by appallingly bad tendency to add unnecessary apostrophes! Like “Government’s” 🙂

  • Geoffrey Payne 16th Oct '17 - 12:33pm

    Well I approve of this apart from his comments on the financial transaction tax. It is meant to be a very modest tax – nothing like “taxing banks until the pips squeak” and it taxes behaviour that Adair Turner calls “socially useless”, see https://www.theguardian.com/business/2009/aug/27/fsa-bonus-city-banks-tax. And if we carry out “Exit from Brexit” then we can join Macron who is actively pushing the idea; https://www.reuters.com/article/us-france-tax-ftt/macron-says-european-financial-transaction-tax-must-make-sense-idUSKBN19Y1B7.

  • Steve Trevethan 16th Oct '17 - 4:16pm

    Is the Treasury’s change of a crucial fiscal facet/”loss of clarity of the coalition’s fiscal objectives” an incompetence, a sign of weakness, a covert change of policy or what?
    Does the concern about increased tax actually paid by corporations mean that we will only pay nurses enough to avoid starvation or the use of food banks or the taking out of survival debt only if it’s OK with the mega wealthy?
    Does the use of the phrase “people’s QE” tell us that the massive amounts of QE already issued was not for general benefit but for the benefit of a few?
    “Q E is a hidden tax on the wealth of middle class savers and pensioners which—the government can use to finance the deficits associated with —a welfare state [or] redistribute to— the top 5% of households.—It is a fiscal policy which the Bank [of England] has de facto taken over.”
    https://www.theguardian.com/business/economics-blog/2016/sep/28/quantitative-easing-qe-pernicious-effects-favour-wealthy-tax-middle-class

  • Laurence Cox 16th Oct '17 - 6:33pm

    This Legatum Institute report (co-written by a Brexiteer, but I’m not holding that against him) shows that there is a good deal of support for higher taxation levels (as well as nationalisation of more than just the railways, energy and water).

    https://lif.blob.core.windows.net/lif/docs/default-source/default-library/1710-public-opinion-in-the-post-brexit-era-final.pdf

    “Regulation is deemed necessary, support for increased NHS funding is strong, zero hours contracts should be abolished and people’s obligation to pay taxes is deemed more important than rewarding them for working hard by allowing them to keep more of what they earn. Moreover, the public tends to favour increased taxation, bigger government and more spending as opposed to lower taxes, smaller government and less spending.” (p 18)

  • Richard Underhill 16th Oct '17 - 6:46pm

    Cynical as it is, the Alex cartoon strip in the Daily Telegraph might make some people believe in QE, paid to banks and bankers.

  • Ashley Cartman 16th Oct '17 - 9:29pm

    Unfortunately the public seem caught between two extremes:
    1. The politically motivated austerity of the Conservatives, an austerity that is nothing more than a cover for ideological drive for a smaller state, and;
    2. The Labour party that hasn’t so much discovered a magic money tree as a magic money forest. Which may explain why in economic terms they can’t see the wood for the trees.

    Frankly as Lib Dems our position is seen as boring. This is a shame. My answer would be to fund a massive expansion in public investment through a combination of higher taxes, borrowing, and peoples QE. We should build a narrative of investing for our collective future. By in greening our economy and transforming our education system (for example) we should inspire people to vote for us.

  • Firstly Vince, the IFS were not scathing about Labour’s costings for their June manifesto. The IFS support the neoliberal economic consensus, but they only warned that the behavioural changes caused by Labour’s policies might long term mean that the expected income might not be as high as Labour were forecasting.

    Secondly, the IFS did not examine our costings in as much depth as the other two main parties.

    It is good to see Vince recognise that the Liberal Democrats were wrong to get so concerned about the size of the National Debt that they supported the Conservative policy of austerity when the UK didn’t need to have so much pain inflicted on it.

    Vince seems to forget that it was a Liberal Democrat Chief Secretary to the Treasury who was happy to agree to cut investment spending in the early years of the coalition. I do not recall our ministers telling us they kept proposing we build more social housing and that they would get it from the Conservatives in the end, because they didn’t.

    Labour did not include a “financial transaction tax” in their June manifesto costings document.

    If the coalition government considered “people’s QE” it would have been a good thing for our ministers to have told us this and why they rejected it, and so supported the increase in property prices and share prices and the increase in inequalities that resulted.

  • @ Ashley Cartman “a massive expansion in public investment through a combination of higher taxes, borrowing, and peoples QE”.

    And how different is that to a magic money tree ?

    I happen to agree with you…………… but I do wish some Lib Dems including yourself and the worthy Vincent would stop echoing Tory nonsense about magic money, shrubs, trees, thickets, hedges, copses, plantations or indeed, in your case, forests.

    It would make more sense now to try to get some common agreement with Labour, the SNP, the Greens and Plaid about a radical Keynesian alternative to respond to the undoubted economic smash up post Brexit that will undoubtedly follow down the line as a result of this “economically competent” Tory Government.

  • Katharine Pindar 17th Oct '17 - 10:21pm

    You made me laugh, David, which I enjoyed, having just been muttering to myself that this was going to be another 150- comment thread with numerous well-informed must-learn-from discussions going on between Peter Martin, Michael BG, and Joe Bourke, and that I had better not admit that I haven’t a clue what ‘People’s QE’ may entail because it will certainly lead Peter M. patiently to instruct me! (Sorry, Peter, you do try to help and I am very trying!) David, I was glad to ‘hear’ from you anyway, because I hadn’t noticed any comments from you over the weekend, but your cheerful contribution here leads me to hope that the wee’n is better, and that both your daughter and the other twin are doing fine as well, since it must have been a worrying time for you all. Best wishes for their future, as of course for yours too.

  • @ Katharine Pindar

    You made me laugh Katharine, which I enjoyed and needed.

  • @ Katharine Thanks, K. You’re a very kind good old Hudders lass to say what you did.

    Yes, it’s been a hairy few days but thank goodness wee Ted plus wee Jack and my beloved Katie were finally discharged on Monday night – hence much relieved cheerfulness.

    All we wan t now is for David Wagner’s lads to stuff Manchester United next weekend and my cup will be full and runneth over. One must always, despite constant experiences otherwise, remain optimistic.

    PS Don’t put yourself down about esoteric economic nostrums from the three musketeers. A lot of it is blether.

  • On the economy at PM’s questions today:

    PM:
    Government has no money of its own. It collects money in taxes from businesses and people to spend on the NHS and on the services that people need. If businesses are not being set up, if businesses are not growing, and if people are not in work, Government does not have the money to spend on NHS pay, on schools, and on hospitals. Of course, the only way we ensure that those businesses are growing, and the only way we ensure that people are in jobs and that Government has the money to spend on schools and hospitals and NHS pay, is with a Conservative Government.

    Jeremy Corbyn

    Young people are in record levels of debt. This week, the Financial Conduct Authority warned of

    “a pronounced build-up of indebtedness amongst the younger age group”

    to fund “essential living costs”. Is not this yet another sign not of a “strong economy” but of a weak economy?

    PM

    … When it comes to students and young people and their fear about debt, there is one thing we know, and that is that we should not be racking up debts today, like Labour proposes, that those young people would have to pay off tomorrow.

    Jeremy Corbyn

    …we have a weak economy. UK growth is currently the worst among the 10 largest EU economies. We are the only major economy where wages are lower today than they were 10 years ago. Even without the risks posed by this Government’s bungled Brexit negotiations … we now have weak growth, falling productivity, falling investment, and falling wages.

    PM

    …the OECD says about the United Kingdom that we have the most efficient, accessible healthcare system, that fiscal sustainability has improved, that important steps have been taken to improve educational outcomes, and that jobs and earnings are good. That is what the OECD says about the strong economy under this Conservative Government. The way to get a weak economy is to borrow £500 billion like the Labour party is proposing. The way to get a weak economy is to ensure that you are promising spending after spending after spending and people are going to have to pay for that. The only way we get money to put into public services, and the only way we can give people tax cuts to help them with the cost of living, is to ensure that we deal with the deficit, get our debts down, and deal with Labour’s great recession which put us into this position in the first place.

  • Richard Underhill 18th Oct '17 - 7:25pm

    Salesmen know and politicians should know the answer to the question
    “What do you mean by YES?”
    At PMQ on 18/10/2017 a Labour MP asked a question and Theresa May said “Yes” to opposition cheers. Please do not check Hansard, the MP in question, in this case Theresa May, will have had the opportunity to clarify what she meant and correct any misunderstandings.
    In this case “YES” probably meant not much more than “I heard you” (in a noisy chamber, as the Speaker said several times.)

  • David Raw and Katharine Pindar,
    I find myself (sometimes) looking from a different hill at things, than do you but I recognise, and admire, your genuine beliefs and consistency of desire to help your fellows.
    But my question to you both, and it is to you both, is “How do the Keynesian debts get paid back? What form do you see our country’s recovery taking? What sectors? and When do we return to prosperity?
    I ask you because you strike me as sensible types and I can’t see a recovery phase at all. Worse still, no serious debate about how to create one apart from the hopeless “invest in skills and infrastructure”.
    Why should British versions of Apple, Hyundai, Huawei etc emerge from a 10 minute reduction in journey time between London and Birmingham? The carriages will just be full of the usual “suits” shouting down phones and sending each other pointless emails.
    Thank you and I would appreciate the thoughts of the down to earth (that is a compliment).

  • Press Release from Vince Cable responding to an IPPR report on inequality in wealth:-

    “Tackling inter-generational inequality and the growing concentration of wealth will require radical solutions, including reforms to the taxation of land, property and inheritance.”

    “Our current tax system, by focusing on income rather than wealth, facilitates the accumulation of unearned assets while punishing productive activity by individuals and businesses.”

    “The Liberal Democrats are the only party committed to changing this, in order to achieve the fundamental re-balancing our economy so sorely needs.”

  • Christopher Haigh 18th Oct '17 - 10:12pm

    There was a financial report in the Daily Telegraph on Monday stating that UK export levels had not responded to the fall in the value of the pound. Also the treasury had recalculated the value of net investments held by UK citizens’ and institutions in overseas countries.and this had become a negative figure of about 40billion compared with a previously stated positive amount of about 400billion. The Telegraph estimated a further decline of about 20% in the value of the pound based on this Information.

  • Katharine Pindar 18th Oct '17 - 11:31pm

    Ah, Palehorse, I do not trust thee, ‘alone and palely loitering’, if I remember my Keats, though you are not the victim and neither shall I be! This thread has lightened pleasantly, not least thanks to David’s good news (which I am really glad to hear of, David), and also Michael’s friendly response – but I must decline to add to the general entertainment by rising to your bate, good sir. Suffice it to say that I agree with Vince’s policy statement helpfully provided by Joe, thank you Joe. And I have hitherto been rather impressed by the thoughts of Thomas, another of the several contributors who really seem to know what they are talking about, though he has not been spotted lately. He recommended investment spending to over 20% and R&D spending to over 2% of GDP, and embracing green, digital and automated technology, plus land-value taxation and financial transaction taxation. Quite a feast. I leave you to it, gentlemen all!

  • Katharine,
    Thank you and I am sorry I give an untrustworthy air. My motives are simple. I am trying to find like minded practical people who are up for a debate on how to restore our economy and generate the wealth that can improve the lot of all of us. Unfortunately, at the word ‘economy’ the topic becomes dominated by Keynesian economists who try and ‘out-link’ each other to ‘prove’ their point but I regard them as bald men arguing over a comb.
    I thank you (really) for your reply but my humble opinion is that the list is superficial (and there would be no poor countries if it were that easy). I am trying to find thinkers who see the problem (and its solution) as much, much, much more radical and which invokes sweeping changes to the structure of our society, our offices of state our education system and discretionary spending, but most of all how we end this centuries old episode of British self assurance, arrogance and sense of wealth entitlement and generate a new period of confidence and energy.
    At the age of 66 I have seen all that stuff about ‘R&D spending’ and nebulous ‘investment’ proposed by politicians over and over again. It has never worked. Why would it work now? It will just end up falling into the usual hands who are long practised at milking the latest government ‘initiative’.
    But thanks again, anyway.

  • Christopher,
    “stating that UK export levels had not responded to the fall in the value of the pound”
    I have long been astonished by the shallow expectation of economists, politicians and newspaper editors who actually thought that trashing the currency helps exports.
    Have none of them ever visited an actual factory?
    Probably not.
    If they ever do they will notice that the days of Josiah Wedgewood exporting British clay and William Armstrong making ships from British coal and British iron ore have actually ended.
    Exports are made from imported energy, materials, components, sub assemblies etc.
    Sussex trugs and Norfolk reed baskets are all British, though, perhaps we can flood the world with container loads of those.

  • Christopher Haigh 18th Oct ’17 – 10:12pm:
    There was a financial report in the Daily Telegraph on Monday stating that UK export levels had not responded to the fall in the value of the pound.

    This is what the article said…

    ‘Trade to recover with deficit on downward path at last’ [Monday 16th. October 2017]:
    http://www.telegraph.co.uk/business/2017/10/16/trade-recover-deficit-downward-path-last/

    Rising exports and constrained imports should put Britain’ long-running trade deficit on a downward path after years of ever-rising imbalances, economists at the EY Item Club believe.

    The current account deficit should fall from a high of 5.9pc of GDP last year to 4.4pc this year, 3.9pc in 2019 and continue declining to 2.3pc in 2021.

    On this forecast, the deficit will fall to its lowest level since 2005.

    That is driven both by a fall in the goods deficit and a rise in the services surplus.

    The weaker pound is one factor which should help. Exports have failed to respond strongly to the exchange rate, with exporters enjoying larger profits instead of ramping up sales.

    But that should change in the coming years.

    “We expect net trade to make modest positive contributions to growth over the rest of 2017 and during 2018. It can take considerable time for exchange rate movements to fully feed through to support exports and we believe it is likely that a still very competitive pound and ongoing decent global growth will support exports over the coming months,” said the EY Item Club.

  • Palehorse 19th Oct ’17 – 9:10am:
    I have long been astonished by the shallow expectation of economists, politicians and newspaper editors who actually thought that trashing the currency helps exports.

    The pound has gone from being the World’s most over-valued major currency to a level which is more competitive…

    ‘Pound is ‘most overvalued currency in the world’, analysts claim’ [December 2015]:
    http://www.telegraph.co.uk/finance/currency/12065157/Pound-is-most-overvalued-currency-in-the-world-analysts-claim.html

    Analysts at Deutsche Bank warned that the Bank of England may not be able to raise interest rates “at all” if Britain’s recovery slows.

    It believes the pound could fall as low as $1.27 next year and $1.15 in 2017 from about $1.485 today if the US Federal Reserve continues to tighten monetary policy and the Bank of England leaves interest rates on hold.

    “We have various different ways of looking at currency valuations and what we find is that sterling is the most expensive currency out there at the moment – even including the dollar,” said Oliver Harvey, foreign exchange strategist at Deutsche Bank. Earlier this year, the International Monetary Fund said the pound was between 5pc and 15pc overvalued.

  • Christopher Haigh 19th Oct '17 - 11:02am

    @palehorse, yes the simplistic arguments of the leave campaign won through over the nuanced discussion of the remainers on this site.

  • Jeff,
    I used to be a Telegraph reader but realised that the only bits worth reading were the obituaries and the Matt cartoon.
    Over the years I have watched it turn from a trusted organ to now being tripe from cover to cover. When I finally realised that they were filling their pages with yesterday’s Mail online I gave them up.
    Their economics and business editors are pure anti-EU fantasists.

  • @ Palehorse Flattering of you to describe Katherine and myself as “sensible types”, but sorry, I’m afraid I must decline your invitation. It might be more persuasive if you didn’t shelter behind the anonymity of the sinister Palehorse.

    My old Huddersfield Methodist Sunday School childhood reminds me that in Revelation 6:8 :
    “And I looked, and behold, a pale horse, & his name that sate on him was Death, and hell followed with him: and power was given unto them, over the fourth part of the earth to kill with sword, & with hunger, and with death, and with the beasts of the earth.”

    I’ve had enough brushes with Death, thank you – although given his products, your hero Baron Armstrong of Cragside might have been more obliging…

  • David,
    Thank you for replying but I wasn’t asking for your bank password just an opinion as to where you thought the “Great British Recovery” was coming from and I note that you have given other anonymous contributors the benefit of your advice. But, no matter, I shall keep looking for the white, red and black horsemen out there.
    My question wasn’t mischievous but it is pointed and aimed at causing reflection because it is the $64,000 question (worth £64,000,000 after our next inflation round).
    Without a serious plan for an upturn, well it’s just borrowing and hoping the politicians will find Sooty’s magic wand and save us all.
    Otherwise, the British Empire just slides down the inexorable slope followed by the Romans, the Greeks, the Mongols, the Ottomans the…….
    Thanks anyway .

  • The British Empire (thank goodness) slipped away many years ago with all the cruelty and exploitation that went with it. I do not lament its passing.

    As for Keynes, I take my hat off to the Attlee Government which had the courage to set up the welfare state despite having a country on it’s knees after WW11……. with the full and active involvement of john maynard k. At the time, the Tories parroted “We can’t afford it” – which they continue to do today – although they can afford a £ 1 billion DUP bribe – and seem determined to drag the country down even further with Brexit.

  • Nonconformistradical 19th Oct '17 - 2:40pm

    @David Raw
    “The British Empire (thank goodness) slipped away many years ago with all the cruelty and exploitation that went with it. I do not lament its passing.”

    Seconded

    “As for Keynes, I take my hat off to the Attlee Government which had the courage to set up the welfare state….”

    As long as people remember it was a Liberal, Lord Beveridge, whose report was the basis of it.

  • @ David Raw

    I am sorry you think some of my comments are “long-winded without making very much sense or having no real substance.”

    @ Joe B(ourke)

    I don’t know why you posted the economic illiterate statements of the Theresa May at PMQS yesterday. As everyone knows the government can borrow money, and the UK has been doing it successfully since 1694 and not so successfully before that. Also the state can create money. The money supply increases every year.

    @ Palehorse
    “How do the Keynesian debts get paid back?”

    The National Debt is never paid back. Individual bonds are paid back by borrowing the money from someone else. The National Debt can decline as a share of GDP in the good times.

  • “The National Debt can decline as a share of GDP in the good times.”

    I continually ask “When do the good times come and how?”

    Anyone, business or country can maintain a steady debt if their income is steady and also adequate. I, #neoliberalandproudofit, would be content with that. Our situation is that our income is declining and debt is rising. Pressure to resume spending just increases. Our wealth creating tools are being taken and moved to competitor nations, relentlessly.
    My question is never answered. Replies are trite = “invest in skills and infrastructure”. Ludicrous = “when we get back to full employment” and “when the cycle turns back up”.

    I shake my head and move on. I am getting close to the stage when earthly troubles will be no longer mine but I grieve for the oncoming generations to whom we are bequeathing no way of earning a living in the competition of nations.

  • @ Michael BG I suggest you accept the Scottish meaning of blether : “in colloquial terms, people usually know it to mean a lengthy chat between friends.” The Scotsman.

  • Michael BG,

    I posted the exchange at PM questions yesterday to highlight what passess for economic debate at the highest levels in our parliament. Contrast that with Vince Cable’s press release in response to the IPPR report which gets to the heart of current issues.

    Keynes left a framwork of economic analysis to be developed (as well as securing the loan from the United States that allowed for the reconstruction of Britain and the development of the welfare state). He was a student of Alfred Marshall, the leading economist of his time and credited with the development of Marginalism. Marginalism itself was developed from the earlier analyasis of the classical economists including the great liberal philosopher, John Stuart Mill.

    Keynes was adamant that trade imbalances were fundamental to maintaining a healthy global economy and in his final years proposed the ‘Bancor’, an international currency along the lines of the IMF special drawing rights as a means of addressing this issue.

    Keynesian analysis had little to say on the impact of high levels of private credit in the economy, the issue of Land or the relative distribution of income and wealth in the economty. He proffered that in a century or so (about now) the main concern of mankind would be how to occupy all the free time on people’s hands.

    The world has changed dramatically from the inter-war perid and great depression that marked Keynes times. The UK and UK in particular have moved towards a service based economy. Globalisation has seen the addition of Asia’s mass populations to the global workforce. New solutions are required for the 21st Century where multi-national corporations and Chinese state capitalism, not smaller nation states, control the flow of capital and trade. As Keynes said “When the facts change, I change my mind – What do you do?

    Modern day economists and thinkers like Thomas Piketty and Vince Cable speak of “Tackling inter-generational inequality and the growing concentration of wealth requiring radical solutions, including reforms to the taxation of land, property and inheritance.”

    What worked for a time in the post-war period will not work in a much changed world where wealth and capital is once again becoming highly concentrated in a few hands.

  • Katharine Pindar 19th Oct '17 - 7:23pm

    Palehorse, it was difficult to trust the sincerity of an anonymous writer with an ominous pseudonym, who had told us nothing about who or what you are, your background or your gender or whether you are a Liberal Democrat. Previous posts of yours had not left a definite impression of your views. Now that you have apparently come into the open at least as to your sincere desire to discuss how our economy can be reformed ‘to generate the wealth we need’, we are a little further forward. You also sound quite radical and passionate, to which I respond, and I would not wish you to fall into despair at the tender age of 66!

    But what is to be done? You now want to find ‘thinkers who want sweeping changes to the structure of society, our offices of state’ etc. which is a lot to ask of mere practical
    and realistic people. It would surely be best to start by writing a piece yourself, setting out your own ideas, which we should be glad to read. You are already in the society of people who deplore the inequality and poverty of our country, and are not Vince Cable’s ideas at least tending in the right direction towards helping with that? Have you not read at times Michael B.G.’s radical plans of economic development, and Joe Bourke’s insistence on land-value taxation? – which seems highly relevant at a time when wealthy people are investing in land and property rather than in business development.

    Personally, I don’t see how the ‘structure of our society’, with its tendency to uphold, foster and perpetuate the privileged, can change much while we keep our public schools, especially if they continue to be treated as charities. From that gilded class it seems that the young move effortlessly upward into the City, the most prestigious law firms, the best-reputed media outlets, and of course, Parliament. But I don’t know what to do about that, other than to hope that the shock of Brexit and the disarray of the Tories may start a minor earthquake to reduce privilege and inequality.

  • Katharine,
    A well constructed and constructive response for which many thanks.
    Anonymity shouldn’t be a problem. An opinion is abstract and my history and personal life has no bearing.
    I have written a piece but as a talk to an audience not 500 words on this site. The themes are incendiary and challenge mostly how the British see themselves. It’s too extreme a pitch just to be mocked here. But then the future is often laughed at by those who are sure their world is secure. Now I dislike Trump a lot because of his many faults especially bullying but just Google “Anne Coulter laughed at” if you want to see how wrong the consensus can be.
    I am really fishing for like minded souls to work through a plan for reform and revival (I already have one or two involved). I will be able to spot them from how they respond to my (very gentle) provocations as it shows how deep their thinking has been. Much though I respect the opinions of Vince, Joe and Michael (and enjoy reading them) the problems are much, much too big to be solved thereby.
    For someone who has seen MSC, TECs, Business Links, LEPs, the Enterprise Initiative Innovation, Incubators and all the rest come and go know that “invest in skills and infrastructure” will just be more resources squandered (until some radical steps are taken first).
    I call myself Palehorse because despite all the Keynesian confidence in the “cycle” the future plays out as follows. Inflation rises, interest rates follow, negative equity, homes repossessed, political unrest, an international panic to liquidate British assets before their value collapses, runs on banks etc…….
    Sorry, but step one is get rid of Keynesian free lunch and build a New Britain.

  • @ Palehorse

    I recall your pessimistic outlook for the UK economy long term. Our GDP has increased continuously since 2012. The government deficit has been declining and if we were not leaving the EU I expect growth would be greater than the government deficit in GDP terms.

    @ David Raw

    I am happy to accept The Scotsman definition of blether.

    @ Joe B(ourke)
    “I posted the exchange at PM questions yesterday to highlight what passess for economic debate at the highest levels in our parliament.”

    Thank you for the clarification. I think it is always best to point out what one is trying to say.

    Do you not support Keynesian economic policies at any time and in any circumstances? I thought you did. (But not to achieve full employment only the non-accelerating inflation rate of unemployment [NAIRU]).

    “He (Keynes) proffered that in a century or so (about now) the main concern of mankind would be how to occupy all the free time on people’s hands.”

    I expect when he said that history was on his side, with the working week declining from 60 hours to 48 hours. I remember my parents saying that they had to work Saturday mornings. I do not know when working only five days become the norm, but working hours have not been reduced since at least 1974.

    @ Katharine Pindar

    Palehorse has written about himself, if you go back to the thread which you referred to above that had a discussion of economics, you can find some posts by Palehorse where he states he had a mortgage, is not a Tory (because his father would haunt him if he were) and he was an MD whose company trained more Community Apprentices than they would have jobs for.

  • Michael,
    GDP is just turn over. We have a very large economy which we operate at a huge loss rather than a profit.
    I do not have your confidence in Britain’s economy. I wish I did. I would worry less about my childrens’ world.
    I don’t get involved much in the wealth redistribution threads. I leave that to others. My own obsession is with economic success. I see economic failure as the father of many ills. I believe that if the USA had had the prosperous economy of the 50’s then they wouldn’t had turned to Trump. And it was, I believe, our economic decline that caused our own citizens to lash out at Europe and vote for Brexit.
    I also recall that the NSDAP got less than 3% of the vote in 1928 but over 40% in 1933.
    In between was the Great Depression of 1929.
    BTW, in my career I spent a period seconded to the Govt on business support. I have seen the ‘machine’ out there that feeds off government initiatives and delights in fleecing them so I can predict exactly, that ‘invest in skills and infrastructure’ will be a disappointment.

  • What a very interesting thread. Funny how people and atitudes are teased out.
    @Palehorse
    Maybe it is the psychology of having more than three score years under the belt, but I’m afraid I share your pessimism. I would also add the exodus of our young and talented to your list of woes. The trouble is that the socioeconomic paradigm of this country has some very deep rooted nodes which hold this country back in many respects. Consequence of history.
    @ Katharine Pindar
    I’m afraid I would go further and abolish public schools altogether. They are one of the tendrils that anchor one of these nodes.

  • P.J. Well I’m more than three scores and ten too – but I’m not prepared to give in to cruelty and injustice. The Trumps of this world will all be dust one day – and the eternal fight for liberty and justice will go on long after I’m gone.

  • Katharine Pindar 20th Oct '17 - 10:19pm

    Well said, David! Long may you continue act as usefully as you do. Michael, thank you for pointing out what was already known about Palehorse (and I knew he had knowledge of the nuclear industry from a previous thread), and I am glad he has told us more – being very open myself, I can’t respond to a blank canvas. It will be interesting to discover his ‘incendiary themes’ eventually! P.J., I did imply that I too would like to see the end of the public schools.

    Pessimism vs.optimism? I used to believe in the progress of mankind, but the sheer horror and violence of our times is daunting, and I suppose I do see something of the decline of the West, as far as the USA and Britain are concerned – but not if we defeat Brexit, because the EU is a shining castle on a hill, compared with the rest of the world, and upholding all of Europe, thankfully for us Europeans. Anyway there is plenty to go on fighting about, as David says and does – and some exhilaration in this kind of fight.

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