It's going well then!

C.D.
Warren, I agree, it makes it seem that the unemployed are too lazy to find a job, when there are none.
The times I have read the amount of letters to Companies who even fail to answere an applicants letters amazes me. I am sure there are plenty of jobs, but the Government fail to give incentives to Companies to employ the unemployed.
Jim.
Lincoln .7

If Governments can creat jobs, then how come we have so many unemployed in the UK?

Exactly my point! If governments can ‘create’ growth why don’t they do it…..all the time?

I suspect Mr Hollande is playing politics here other than dealing with economics.

I agree.

Either way it is Governments effecting directly the economic path of a country.

But if ‘growth’ works better than ‘cuts’ (and it isn’t that simple) why isn’t this option being taken to help Greece?

And, as I’ve said, I certainly agree that governments can directly affect the economic path of a country. The problem is that what most governments tend to do is borrow as much money as they can, revel in the ‘growth’ that they’ve created, find they cannot borrow any more, lose an election when the economy starts to turn bad and then bitch about how much better-off everybody was when they were in charge! 😀

Re thread 23, If Governments can creat jobs, then how come we have so many unemployed in the U.K.
Jim.
Lincoln. 7

I suspect Mr Hollande is playing politics here other than dealing with economics.

The Euro zone IS offering Greece more money providing they match certain criteria.

I’m not of the opinion that the euro zone is adopting the correct approach re Greece. On one hand they are deseperate to keep the euro zone “whole” as it were. On the other hand Greece is a basket case and I cannot see how they can ever re-pay the owed funds. As I say, more politics than economics.

Either way it is Governments effecting directly the economic path of a country.

Edgar Brooks

Yes I agree. Capitalism and Communism as practised in the 20th and 21st centuries have been proved not to work.

A sad inditement of man kind. After all these years on the planet will still cannot evolve an economic system that works.

So CD
Still, capitalism has never worked successfully. Thanks to greed indemic in western society it always breaks down into war and depression, killing millions.
…..

Not so very different from socialism and communism, then, is it?

And here is French President Francois Hollande, he of the ‘growth’ plan, putting pressure on Greece to cut spending:

http://www.bbc.co.uk/news/business-19377666

If ‘growth’ is the answer (and it is) why is President Hollande not offering Greece more money so that it can increase public spending? :rolleyes:

…you obviously know much more than the IMF…

Nope, I would never claim to know more than the IMF but I wonder what the IMF would advise Greece to do right now? I wonder what the IMF advised Greece to do in the past; presumably Greece deliberately chose not to follow the advice and deliberately plunged itself into the state that it is in?

The problem Greece (and other countries) seem to have is not that they cannot ‘create’ growth…..it is that they couldn’t keep borrowing money to do it!

So, no, I don’t believe that governments can ‘create’ growth or jobs in the short term without borrowing money to do it…..especially not during an economic downturn.

So, what is the point then in Governments, politics or economics?

As I said (in an earlier post)…

…governments can stimulate growth (over time), but I don’t believe it is possible to ‘create’ growth; if it were then no country anywhere, ever, would experience low growth.

Governments can influence growth and jobs certainly but it is a difficult and slow process; the rhetoric about ‘creating growth’ is usually spouted by those in opposition in the hope that it will win them votes.

Could you please come up with an economist or economic theory to back up your beliefs that Governments cannot effect the economy?

I’ll try…..but I’d thought I’d better address some of the questions that you’d posed first.

From todays Daily Torygraph

“IMF advises delaying austerity until growth returns
Cutting government spending in a crisis will condemn a country to an even deeper recession and inflict “permanent” damage on the economy, the International Monetary Fund has warned. “

Well CD you obviously know much more than the IMF………………………………

So CD
AA/ You do not believe Governments can create growth.
BB/ You do not believe Governments can create jobs.

So, what is the point then in Goverments, politics or economics ?

Could you please come up with an economist or economic theory to back up your beliefs that Governments cannot effect the economy ?

The reason why the deficit has recently increased again is due to a sudden slump in the payment of Corporation Tax.

If this slump continues and all the indications are that they will what do you think is going to happen ?
Especially when an expedential reduction in the tax take starts to occur ?

Its a long time since I was studying economics but I was always taught that when putting forward point you need to back it up with a reasoned argument.

I know what you will reply……..lets keep cutting spending……well if that continues to occur take a tip.

Buy in lots of food and what-ever-else you need to survive. Since quite frankly an complete economic brake down could very possibly occur especially if the euro zone breaks up. And that situation might well be much closer than you think.

Still, capitalism has never worked successfully. Thanks to greed indemic in western society it always breaks down into war and depression, killing millions.

My model for recovery is to follow is FDR’s example plus a large dose of JMK. Further, for this country to return to a part planned economy other than slavishly following the free market principals which as I alluded to above dont seem to work.

What would be your approach CD ?

PS This inept, socially devisive and economically inept Government will be very soundly beaten in the next election.
Nick Clegg has assured that the Lim Dems will return to total obscurity.
UKIP will not feature strongly in the next election.
Labour will win the next election. Though I doubt this will improve things much since I dont think the two Ed’s have the intillect or economic policys to succeed. Things might be a little better if the other Milliband holds high office.

………..god help us all………..

This idea of giving the unemployed £28,000 though would worsen the problem by just increasing the incentive not to work…

I never expected anybody to actually do this; I just wanted to demonstrate the flaw in the ‘getting-people-back-to-work’ argument.

In my opinion this is an argument that has been used by every opposition party at any time of high unemployment, and when those that do have jobs feel under threat of losing them…..like now!

The reality is far more complex; you simply cannot ‘create’ jobs and then expect to earn more in tax than you spent creating them…

…if you could why does such a thing as unemployment even exist? :confused:

I would be surprised to see a Conservative / UKIP coalition as well – UKIP have a long way to go before they become credible enough to become electable.

This idea of giving the unemployed £28,000 though would worsen the problem by just increasing the incentive not to work. Why work for £25,000 pa (and pay tax) when you can get £3,000 more for doing nothing!

Much better to use the money to cut the tax that people who work pay (and the tax paid by the firms that employ them), giving people more money to spend and increasing, rather than decreasing, the incentives to work.

though I wouldn’t be surprised if we saw a Conservative-UKIP coalition.

I would, given that they don’t have any MPs, and never have.

All they succeed in doing is splitting the conservative/anti EU vote between Conservatives and themselves, hindering the ambitions of both. They are very vocal, making them seem like a big force, but don’t forget that UKIP is still very much a minority party – even the Green Party have won more seats than UKIP.

Was it not the USA that lit the fuze of their depression which had a knock on effect with their “Sub Prime Lending”.which then affected us and then Europe?.
Jim.
Lincoln .7

…this is NOT a case of party politics.

Amen to that! 🙂

I would love to see growth as much as anybody but I just do not think it is as simple as ‘making’ growth.

Making growth requires money; and that money will have to be borrowed since the UK does not have a surplus. It is also not certain that ‘creating jobs’ will reduce UK unemployment; many jobs filled in the UK in the past decades have not been filled with long-term UK unemployed but with economic migrants. Income tax from any jobs created will only repay a fraction of the money borrowed to create them. Also any increased spending may not end up benefitting the UK manufacturing sector since we import so many of our goods these days.

How could we be sure that the UK would not borrow huge sums of money to fund ‘infrastructure’ projects that would employ foreign workers and benefit foreign manufacturing but be of little benefit to the UK economy.

There is no magic ‘growth’ button to press; if there were why is no country pressing it?

The only difference between what is happening now and what happened in the 1930’s in my opinion is that in the 1930’s the crash resulted from the attempt to maintain the gold standard. Today it is the attempt to maintain government bonds.

The risk of plunging into a massive deprression remains very real indeed although much of this is related to the euro zone situation.

As much as the subject interests me I’ll skip a thesis on JMK and recoveries from situations such as exist presently.

I very much agree with you CD that the French situation will indeed be most interesting. There situation as I’m sure you are aware is very different from ours, since they are constarined by the euro zone meaning they cannot use the levers of interest rates and QE like we can.

In my very humble opinion……the economic policies of the coilition so far have not worked. I believe the figures show this. That is just my opinion. Though I am certainly not alone in these thoughts. some of which come from right of centre.

My interest is the welfare of the nation and the common good. this is NOT a case of party politics. It is about stimulating the economy, getting people back to work. I dont mind who does this as long as someone does.

Even the IMF is telling the country to attempt stimulus. In there case they suggest a further reduction in the base rate and have been doing so for some time.

In this thread I am looking for peoples opinions, stimulating debate and perhaps some interesting ideas from left field (like your giving money to the unemployed).

I think we need to change tack immediately.

I dont want to put words in anyones mouth but if you think the current policies and correct, hey, thats great, thats your opinion and thats just fine with me.

Me ? I think it is quite possible that a crash that makes the 1930’s look like a school outing to the seaside is a very real possibility and it scares me senseless.

I’m sure those ‘business leaders’ are only worried about the prosperity of the whole country! :rolleyes:

As I said, governments can stimulate growth (over time), but I don’t believe it is possible to ‘make’ growth; if it were then no country anywhere, ever, would experience low growth.

While it is always tempting to compare now with the Great Depression I am not sure that the US then and the UK now are that similar; also remember that it took the US ten years to get out of the depression, the US didn’t import much and US government spending only represented a small percentage of GDP. The US government also had greater control of the US economy that the UK does now.

It is also possible that the US came out of the depression despite the ‘new deal’.

The UK has taken £375billion in Quantitative Easing so far; that would pay for every unemployed person to be on £28,000 for over five years. Surely that would produce record ‘growth’; so why not do it?

What ‘average salary thing’? :confused:

Has ‘massive cuts’ (actually quite modest cuts) failed? Is it certain that making no cuts would have reduced the deficit further? If not making cuts was the right plan then why was the economy in such a mess before the new government started making cuts?

I think the trouble with ‘no cuts’ is that it makes a great slogan but no party, even Labour, was actually planning ‘no cuts’. Ed Balls is always very careful to score political points without actually saying Labour would not make cuts themselves.

To return to my earlier question; how many countries in Europe have a different plan? I will be very interested to see how France does with the new president and his plan for ‘growth’.

Latest hedline from the Daily Torygraph

“Do more and do it now to kick-start the economy, business leaders tell George Osborne
George Osborne has failed to kick-start the economy and must cut taxes, reduce red tape and invest in new infrastructure to boost growth, business leaders have warned. “

“The Institute of Directors (IoD) says that the Chancellor’s growth strategy is largely “ineffective” and “too little, too slowly”, as demands increase for radical action in the autumn.

A survey of more than 1,200 business leaders found they have “serious concerns” that the recession will last throughout 2012 with only a modest recovery next year.

Their concerns come as official economic figures showed that the Chancellor has had to increase public borrowing.

The Government is on course to borrow £30 billion more than expected this year, which may lead to a new round of public spending cuts.

The Coalition has also been criticised for failing to invest in big infrastructure projects such as expanding Heathrow or building a new airport in the South East. “

CD
So how do you think countries recovered from the great depression.
Try reading a little John Maynard Keynes or looking at what FDR achieved.
If you do not believe governments can istigate growth what is the point of any government persuing any economic policies?

Re giving the unemployed £28,000.
The answer is using the money to get the unemployed , employed. the stimulus resulting from this is obvious. I wrote an essay over 30 years ago now about stimulating the economy by simply giving every man and women in the country a sum of money that they were required to spend, replacing QE. There is indeed an argument for this. Note thats every man and women.

Giving the unemployed £28,000. £3,00 above the average wage in the UK would be perhaps not the best form of QE. (please…….lets not get into the average salary thing again).

So having answered your questions could I please ask you one.

Since the plan of cutting the defficit through massive cuts in Government spending has failed since it has been showed to be increasing the defficit. What do you think we should do next ?

Are you saying that it is not possible for a government to create growth through its economic policies?

Short term? No. Germany did it but it took decades and involved a lot of pain along the way.

If people have money to spend then growth will be stimulated. Simple supply and demand.

So give the unemployed £28,000 per year and all our problems are solved right?

This is a serious question by the way; why wouldn’t you do this? 😉