Oh good, we are making progress , about the only honest thing you have said.

And fits with the general American Right wing political theory that it is all about pissing off liberals. Does not mater how wrong you are, how much damage you and your weird right wing theories do, just as long as you piss off the dirty fucking hippies who were right all the time.

You’ve noticed? Good, something’s getting through then.

Please don’t confuse Knowledge with opinion. You think you are spouting knowledge, but you do no such thing. You just regurgitate right wing economic talking points. (in a particularly patronising way by the way)

Of course, you are a supporter of the UK Independence party, which is mostly comprised of ex tories who are too nutty even for the current Tory party. (and that says all we need to know about your credentials. )

“The kinds of measures that I have pointed to above (e.g. huge retrospective windfall tax on oil companies profits) can be used to pay for things like the citizens pension. Citizens’ / basic income would not be nearly as expensive as people tend to assume, because there would be enormous savings on the benefits bureaucracy, and because it would incentivise part-time work etc, eliminate the poverty and unemployment traps, and thus pay for itself to a considerable extent.”

A windfall tax is (by definition) a one off, so can’t really be used to pay for nearly doubling the state pension. It could pay for it for a year or two, but what happens then?

No one in the Green Party seems to know how much their basic income proposals would cost – my best guess based on the figures provided is about £250 bn, or about £60-70bn more than current welfare spending.

I’m all for looking at where it is possible to find agreement on a progressive agenda which lefties of different parties can sign up to, but if it is fair game for the Greens to attack Labour’s economic policies, it is worth pointing out that the Green Party’s policies don’t add up and would lead to a disaster even worse than the one being threatened by the Tories.

Please do detail what these “limits to growth” are. Conventional economics acknowledges all sorts of limits to growth. I’m interested to see though what your “ecological economics” would say they are (I know very well what they are purported to be but I’d like to see you try and both explain and then defend them).

That monstrosity? You mean the one that says that if we lower interest rates (thus encouraging consumption over saving and deterring foreigners from sending us their capital to use) and have capital controls (thus stopping foreigners from sending us their capital) then we’ll increase the amount of capital we can invest in a country that already has a low savings rate and imports capital?

You mean that stupidity?

I’m neither a Tory nor a conservative so we’ll put that down to your lack of knowledge again, shall we?

Charlieman: 30 years ago we had a fixed currency exchange rate. Thus the monthly export (and import) figures were terribly important as they were part of the determination of whether we could hold that fixed exchange rate.

Now we have a floating exchange rate: trade deficits are vastly less important now. To the point that they might not matter at all.

There’s a comment from Cllr Read in the RSS feed which isn’t here (probably been rejected for too many links by the spam filter):

“The economics that you two still subscribe too is SOOO 20th century. Industrial-growth-economics has hit the buffers. The new economics is green; its official title within the discipline is ‘ecological economics’.”

And there is a fundamental error. Ecological economics is the discipline of brining ecology to economics. Environmental economics is the discipline of bringing the insights of economics to dealing with the environment.

The analogy with medicine would be bringing the Woo! of reiki and healing crystals to conventional medicine: or using the insights of conventional medicine to examine reiki and crystal healing.

Hermann Daly for example tells us all interminably that economic growth cannot go on. That we need a zero growth economy. But when you dig deeper you find that he admits that we can have growth from technological advance. From adding more value to resources already available. *Shrug*. Conventional economics also tells us that we can have economic growth from technolgical advance, from the more efficient use of resources already available.

Indeed, conventional economics tells us that even if we have a zero resource consumption economy (not that we ever will, but think of it as an extreme case to prove the logic), in that everything is powered by renewables, everything is recycled, then because we’ll still have technological advance (because we little shaved monkeys are simply so damned inquisitive) then we’ll still have economic growth.

Which, when you dig around, Daly finally admits. So the very idea of a “zero growth economy” is nonsense.

The error is in thinking that economic growth inevitably means greater consumption of resources: but since when measuring GDP (the usual measure we all agree?) we do not in fact measure resource consumption, we measure value added, resource consumption is not the limiting factor: our ability to add value is. And value add depends upon the technologies that we use to do so. If they continually advance then we can, even in a zero nett resource use world, have economic growth. Indeed will.

Ecological economics is, sad to say, nonsense. It’s simply based upon false premises.

“With respect, you cannot determine that my proposals will land us in worse debt, increase inequality etc, without actually studying the proposals.”

o.k., 2 questions to help you demonstrate your mastery of your party’s proposals:

1. How much would raising the state pension to £165/week cost?

http://www.greenoxford.com/content/view/881/2/

2. How much would the Green Party’s basic income proposals cost?

*

I’ve got no problem with Matt’s argument (that a Green government would require a mass movement, and hence the popular support needed to transform the economic system would be available), but the spending pledges which are official Green Party policy cannot possibly be delivered in any kind of a sustainable basis, especially if the policy aim is zero growth.

People have mentioned the UK has had higher debts in the past but we also had a much larger industrial base from which we earned money from our exports. Consequenty, the international markets had confidence we could pay our debts. The question is that do the markets have the same confidence in the UK’s ability to pay our debts as in days gone by?

We’ve had this debate a few times, but basically it comes down to a difference in first principles, I think it’s fair to say. Don says “you can’t demonstrate that a zero growth economy could work under capitalism, it would cause recession, therefore we can’t have a zero growth economy.” I, and other left Greens, say “a zero growth economy can’t work under capitalism, it’s impossible to have anything other than a zero growth economy without destroying our life support system (i.e. the planet), so we need to devise another economic system”.

I think it is an honest difference – it is not that I, and others, don’t understand conventional economics, or so on. It’s that we reject many of its premises as being wrong. Of course, in the short term we advocate Keynesian principles, such as the Green New Deal, because we need to propose things within the framework of currently existing economic systems. In the medium to long term, a Green government (which could only come to power on the back of a massive groundswell of grassroots activity anyway, which would lay the foundations for many of the changes we talk about) would change that economic system.

Thats the way I see it, broadly, anyway.

All the best,

Matt

See quote @9 of Stephen Roach in the FT.

There is a convergence of thinking among heavyweight economists – Martin Wolf of the FT is another in his book: Fixing Global Finance (Yale UP 2009) – that one root cause of the financial crisis was the macroeconomic imbalances of the US, the UK, China etc as reflected in the relatively huge balance of payments deficits of the US and the UK and the huge balance of payments surpluses of China and Japan.

The surpluses inevitably generated foreign exchange market pressures for the appreciation of China’s Renminbi and the Japanese Yen, which both governments wanted to resist because currency appreciation would reduce the competitiveness of their respective exports in international markets. Both governments therefore invested their accumulating foreign currency credits in dollar (and other foreign currency) securities in order to reduce the pressures to appreciate their currencies. This stoked the demand for paper assets which US investment banks were pleased to satisfy by supplying those Collateralised Debt Obligations (CDOs) which were partly or mostly underpinned by subprime mortgages:
http://en.wikipedia.org/wiki/Collateralized_debt_obligation

Remember Gresham’s Law: Bad money chases out good. So it was with dubious paper assets – they got quickly passed around, which is why banks stopped interbank lending to avoid being left with CDOs which were being used as collateral for interbank loans. But some banks – like Northern Rock – had become especially dependent on interbank borrowing to fund their rapidly growing mortgage business (including 125% mortgages). When interbank lending dried up, Northern Rock and its like were stymied.

Unpicking all that is challenging and international. But rather than explain the complexities of CDOs and international finance, it’s so much easier to blame it all on Gordon Brown and whitewash the bankers.

Bad boy, Tim. Sally is annoying, but try hard to accommodate. Those were not words that you would wish to read next year.

I’m not qualified to say whether external debt is the only one that matters. But I do recall the monthly news reports 30+ years ago when the balance of trade figures were delivered with the same gravity as consumer inflation. Perhaps those reports may return in the forthcoming payback years.

Always nice to see the tories showing off their true, patronising , obnoxious selves.

As John Kenneth Galbraith said “The modern conservative is engaged in one of man’s oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness. “

Yup, supply side is all about details, about lifting the costs of individual decisions: changing personal incentives.

“Now that looks very much like MACRO POLICY albeit which operates at the MICRO LEVEL before there are MACRO EFFECTS.”

No, you’re missing the differentiation between micro and macro. Micro is all about those effects on incentives, personal actions, Macro is about how these don’t in fact work (or have different effects) when looking at the whole economy.

This was very much Keynes’ point. That in the face of reduced income (say) it’s entirely logical, even correct, for a household to reduce expenditures. The difference between micro and macro is his insistience that this isn’t true for an economy as a whole.

Another way of putting the same point. Something which works at the micro level is of course micro: it may well have macro effects (which of course everything does), but as the very basis of macro is that things work differently at that level then something which works at micro level cannot be judged as macro. Just to take you one step further: if you want to state that something which works at micro level must be assumed, if it has macro effects, to be part of macro, then that means that you similarly insit upon a macro that has micro roots.

But the insistence of every macro-economist (other than the Austrians) is that a micro based macro is not only impossible it’s unwarranted: because things act differently at the different levels.

Me? I’m saying that lifting the burden of regulation will lead to faster growth. That’s very much micro. For I’m talking about lessening the time spent dealing with this piece of paper, that, which is local and personal incentives.

“So I rather think that snark backfired, hmm?”

So no.

““There have been a number of studies over the years that show that the abolition of stamp duty on shares will *increase* total tax revenues. This isn’t unusual with low level transactions taxes.”

Yes, and I am sure they are written by the same people who tell us that there is no such thing as global warming, and that if you eat more sugar you won’t get fat.

Of course the real reason the tories are going to abolish stamp duty on share dealing is because they have taken millions of pounds in donations from hedge fund owners who find this one of the few taxes they can’t avoid paying.”

Sally, please do try and get an education …an education in anything at all…before you speak out on subjects you don’t know anything about.

Hedge funds tend not to pay stamp duty: for they conduct their transactions through derivatives, which don’t carry stamp duty. Options, futures, contracts for difference etc. If you don’t know what these are, do try and find out, there’s a good girl.

I’m not sure, for example, that you can characterise a paper as Eurosceptic on the strength of a letter written to it…

Regretably in many ways in retrospect, much of the ensuing and protracted professional discussion was focused on the components of the demand function and continuing controversy over which of its features could explain how a market economy could maintain over many years a relatively high level of unemployment, a condition which the preceeding mainstream economics had regarded as merely anomalous and which could be remedied by a general cut in wages while balancing fiscal budgets.

In Keynes’s own statement of his focus in The General Theory, he wrote: ” . .it is an outstanding characteristic of the economic system in which we live that, whilst it is subject to severe fluctuations in respect of output and employment, it is not violently unstable. Indeed it seems capable of remaining in a chronic condition of sub-normal activity for a considerable period without any marked tendency either towards recovery or towards complete collapse.” [p.249]

Professional discussion of the aggregate supply function and its factors did not develop until much later after disenchantment had set in with the consequences of fiscal policies intended to manage aggregate demand to maintain “full employment”. As I recall, JCR Dow, in his much cited study: The management of the British economy, 1945–1960 (Cambridge UP for NIESR, 1964), certainly took the position that that budgetary and monetary policy, between 1945 and 1960, was positively destabilising.

The most dramatic statement about a change of mind came from James Callaghan, when he was PM. As he put it in 1976, “We used to think that you could just spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you, in all candour, that that option no longer exists; and that insofar as it ever did exist, it only worked by injecting bigger doses of inflation into the economy followed by higher levels of unemployment as the next step. That is the history of the past twenty years.”
http://www.geocities.com/ecocorner/intelarea/mf1.html

For all that, when faced recently with the prospect of a repeat experience of the 1930s depression, the governments of the US, Germany, Japan etc resorted to a fiscal stimulus, as prescribed by orthodox keynesianism. By reports, the new German government is about to embark on a third fiscal stimulus.

Maybe all those governments had been reading the FT.

I have a copy of: The Birth of the Euro – a Financial Times guide to EMU (Penguin 1998), a collection of pieces by various FT writers, which is anything but a monolithic tract extolling the benefits for monetary union.

Btw this P/B is still available through the Amazon Market Place for any who want to savour a discussion of the upsides and downsides of monetary union in the EU – and I write as someone labelled “senile” and “insane” in online debates around 1998 for questioning whether the UK should join a prospective Eurozone. What started me thinking about the downsides was this article by the late Rudi Dornbusch in: Foreign Affairs for September/October 1996:
http://www.foreignaffairs.com/articles/52431/rudiger-dornbusch/euro-fantasies-common-currency-as-panacea

In February 1998, German academic economists wrote to the Financial Times:

“More than 150 German economics professors have called for an ‘orderly postponement’ of economic and monetary union because economic conditions in Europe are ‘most unsuitable’ for the project to start.

“The call to delay Emu ‘for a couple of years’ is made in a declaration signed by 155 university professors and sent to the Financial Times and the Frankfurter Allgemeine Zeitung newspaper in Germany. It signals intensified opposition to the government’s euro policy.

“The declaration was organised by Manfred Neumann, professor of economic policy at Bonn university and chairman of the Bonn economics ministry’s council of expert advisers. It signals concern among professional economists about Bonn’s determination to begin the single currency on January 1 1999. . .”
http://www.internetional.se/9802brdpr.htm

The Conservative Party is likely to damage its own credibility by spinning a smear campaign against the FT. In my experience, few read and value the FT for its editorials. What matters is the quality of its commentary and its focus on economics and business news without the trashy partisan garnishing of some other broadsheets.