“Some of the “big names” of the Labour/Left Blogosphere, (Including Will Straw, Sunder Katawala, Alex Smith and Ellie Gellard) joined MPs and journalists on the left of politics in signing a letter to the Guardian…”…..drink up..the revolution’s just kicked off!

Whatever the rights and wrongs of this, we shouldn’t do anything to please the media. About 75% of the print media counts as the enemy, so why should we care what they think? To be honest, I think we should antagonise them.

TFFT. I’m really quite scared about the ramifications of printing money as nobody has a clue about what’s gonna happen after the time lag kicks in. It can be claimed by the whole spectrum of political opinion that mistakes have been made but we’ve seemingly dodged the first bullets in the campaign. Talk of a fiscal stimulus shouldn’t be about the politics of it (except, I think we can all agree, simply giving it to the bankers can not occur again) so if we get the election out of the way first and view the pragmatic responses afterwards.

No-one can agree on anything at the moment as it’s obviously all through the prism of electoral and potentially tribal affiliation. It would be a pipe dream to believe that such bullshit can be dispensed with directly after May and that the honeymoon will afford space and allow for plans and reasoning to be laid out (hopefully, please God, the wonks have actually been working rather than wanking in public which is the best that can be said at the moment) and if we have a nice summer, a good to very good world cup run then perhaps this febrile process that we churn out every 5 years can become a bit more sensible.

I assume we can all agree that politics/economics has now had its road map determined for at least 10 – 15 years and the short termism that a stimulus gives rise to must be based on common sense.

(And i’ve not even been drinking – perhaps I should ask nurse to decrease the medication though).

What matters with QE is whether aggregate monetary demand is rising much faster than the capacity of the economy to produce more goods and services. Plainly, it isn’t.

In 2010Q4, business investment was running 25% down on a year before.

Bank lending has slumped, as this PwC brief shows:
http://www.pwc.co.uk/pdf/ukeo_mar2010_banklending.pdf

The immediate main concern is the possibility of a double-dip recession – especially since the Eurozone economy – our main export market – is fragile. With public spending being cut back and consumers being urged to save more to pay off debts and build savings balances, where is the boost to demand going to come from?

News update Sunday:

“Succumbing to the ‘temptation’ of a further fiscal stimulus will backfire, George Osborne warns on Monday, as he stakes out the political battlelines for next week’s pre-election Budget”
http://www.ft.com/cms/s/0/e3a299f8-2fa9-11df-9153-00144feabdc0.html

Osborne has invoked the support of Jeffrey Sachs of Columbia University to counter attack all those economists who signed up to those letters in the FT of 18 February.

In the early 1990s, Professor Jeffrey Sachs was one of the leading advocates of instant shock therapy to revive the Russian economy.

Remember how well that shock therapy in Russia performed compared with the way the Communist Party government in China have promoted development through the transformation to a capitalist market economy while preserving the party’s monopoly over power? “Socialism with Chinese characteristics” they call it. Democratic pluralism has been rejected but there’s no doubt that the Chinese road to economic transformation is proving much less traumatic than what happened in Russia.

Oh joy, Earnest Ernest/Chairman Moo/Imsocool is back to snipe and offer nothing.

w00t

Try this on Jeffrey Sachs and his shock therapy for Russia:
http://en.wikipedia.org/wiki/Shock_therapy_(economics)

Of course, with shock therapy many companies start to fail so the prices of their shares collapse, which means the shares can be bought cheaply by smart people able to raise the cash – and perhaps with a bit of help from insider dealing:

“Market abuse in the UK’s financial services sector is at an ‘unacceptably high level’.” the head of the City watchdog has said.”
http://news.bbc.co.uk/1/hi/business/8566904.stm

Company and private pension funds collapse and stop paying out pensions.

Russia went through a financial crisis in 1998 and the exchange rate of the Rouble collapsed:
http://en.wikipedia.org/wiki/1998_Russian_financial_crisis

What turned the Russian economy was not the shock therapy but the world price of oil rose steeply from a low point of c. $10/barrel at the end of 1998. Russia became a major producer and exporter of oil and natural gas.

By linking up with Jeffrey Sachs, Osborne is flashing a clear signal of what’s in store for Britain if he becomes Chancellor in a Conservative government with a working majority. The big difference with Russia is that North Sea Oil and Gas are running out.

The most important aspect of any project is assembling the team such that they have the appropriate sklls. How much investment is actually going to be spent in the UK especially high value construction and R and D ?

When developed the Industrial revolution the money was spent in this country. I have serious doubts as to whether we have enough people with the relevant skills in the UK. How many of the cosntruction workers at the Olympics are foreigners because we lack the skilled workers? China is spending the money producing vast numbers of craftsmen, technicians , scientists and engineers. When the majority of A level students are taking Maths, Further Maths, Physics, Chemistry, Bioloogy and Physical Geography/Geology, then I will consider this country is serious about obtaining the technical skills required to compete in the world economy.

Sykes was correct, a £1 spent at Imperial provides more worth than a £1 spent at Thames Valley University. High speed railways requires large numbers of people capable of undertaking advanced manufacturing not people studying Media Studies or Sociology at A level.

It takes 2 yrs for an A level, 4 yrs for a degree and a further 5-6 yrs to become chartered. For the cutting R and D many engineers and scientists will need a a masters and/or a doctorate . That means for those deciding on a career in engineering, it will be 11-12 yrs before they become a professionally qualified .We had better start deciding on where our national priorities lay fairly quickly, especially the education budget.

@8: “When developed the Industrial revolution the money was spent in this country.”

Compare:

“19th century trade was accompanied by massive international capital movements, which were much larger relative to the size of the world economy than anything seen since WWI: in a typical year in the late 19th century, Britain invested about 40 per cent of its savings overseas.”
Source: [Nobel laureate] Paul Krugman: Peddling Prosperity (Norton, 1994) p.258

Charlie,

Of course, if we need more engineers in the short term we could always just hire them from abroad? Or are you against skilled immigration…

Whilst there is a place for medium/long-term infrastructure planning, trying to plan the skills that will be needed in twenty years time is somewhat different. After all, if you were asked in 1990 to set out what was needed to undertake a project running through to 2010, would you have accurately identified the important roles software and networking would play?

@Bob B – I had absolutely no idea Jeffrey Sachs was on board. He’s my favourite economist I think. I was fortunate to attend one of his Reith lectures a few years ago and to say the lad was awesome would be an understatement. His pragmatic approach to climate change, defence spending, malaria nets and a whole panoply of economic endeavours drew out a rational & humanitarian approach which made politics truly adopt its own position as that which enables rational behaviour to exist. Complete hokum if cynicism is applied but beautiful in its simplicity. Ah, heady days – days before Ruin.

@10: “Of course, if we need more engineers in the short term we could always just hire them from abroad? Or are you against skilled immigration…”

Labour market conditions and relative earnings provide some clues about skill shortages.

Here is a survey from last year of graduate salaries according to degree subjects:
http://www.independent.co.uk/news/education/higher/table-what-do-graduates-earn-1675502.html

“BRITISH doctors now earn more than their counterparts on the Continent, according to a new study. It has revealed that hospital consultants’ salaries increased by more than 30% between 2000 and 2004. British consultants and GPs are now better off than medical specialists in France, Germany and Denmark.”
http://www.timesonline.co.uk/tol/news/uk/health/article758105.ece

Bob,

I wonder if that is actually a directly useful comparison, as the skills and mind sets for working as a doctor and as an engineer are (perceived as) quite different, and they are likely to attract different sorts of people in the main, even at the age of 17 when the choice is normally made.

9. Bob b. The growth of British industry could be said to start in 1709 when Abraham started the mass production of iron . The fact that Germany and the USA started to catch up with and then overtake Britain occurred after about 1860 and definately after 1890. Prussia winning the Prussian French of 1870-71 showed the success of Bismarck’s Blood and Iron policy which had resulted in a large industrial capability in steel and explosive production which enabled advanced weapons to be manufactured. The massive increase in investment of British capital in the USA post Civil War, the Empire, Argentina , Brazil and Russia post 1860-1870 resulted in a lack of funds to modernise factories in this country. By 1914 and at the beginning of WW1 , Britain had to import dye for uniforms from Germany via the Netherlands because our inability to develop a heavy chemical lindustry.

Therefore , the period of 1709 to about 1860 , Britain invests in this country , from 1860 -1870 , capital starts to be sent overseas and and the starts our relative decline with Germany and the USA. Post 1945 , we continue our policy of not investng in technical skills and modernising our factories and by the mid 60s are overtaken by Japan.

Skilled immigration is just a short term easy way out of trying to solve many of our industrial problems, which in the long term makes things worse. In takes skilled people away from developing countries. Peter Scheef , an American has pointed out the relative decline of manufacturing in the USA is in part due to the inability of producing enough skilled technical people.

There apears to be a cultural issue : once a society has a certain percentage of middle class people start to turn away from the rigour required to become a craftsmen and/or an engineer and favour the arts. If we look at the expansion of post 16 education since the 60s, what has been percentage the studying the arts compared to that of the sciences/engineering? Where is China and India spending the money on education/training?

Most people who have undertaken a degree in engineering have computer programming skills. Retraining an electrical or mechanical engineer to become a software engineer is cheaper, quicker and easier than someone wih a degree in the arts.

@11: ” I had absolutely no idea Jeffrey Sachs was on board.”

Never mind Sachs’ lectures, try reading up on what happened to the Russian economy under Sachs’ shock therapy.

It made a lot of people in Russia very miserable. Life expectancy sank – which reduced the pay out of state pensions, of course – and corruption soared.

According in Transparency International’s Perceived Corruption Index, Russia is now not very far from the bottom of its international league table of 166 countries.

Naturally, there are some who relish such prospects for Britain. But there are many who don’t – the transformation of China’s economy to a capitalist market economy has proved much less traumatic. As the late Deng Xiaoping used to say: Does it matter what colour the cat is so long as it catches the mice.

As for me, I’m far more impressed by the signatories of the two letters to the FT reported on 18 February and what they say:
http://www.ft.com/cms/s/0/9fe18c22-1cdc-11df-8d8e-00144feab49a.html

@13: “I wonder if that is actually a directly useful comparison”

Labour markets reflect many factors, including the balance between demand and supply as well as monopolistic fators and relative bargaining strengths between employers and employees – which is why I posted the report on how well doctors are paid in the NHS, a state-owned, verging-on monopoly supplier of healthcare services in Britain which is funded by taxpayers. Bankers do well too but then it’s widely considered that we need more competition between banks.

In the early 1990s, Professor Jeffrey Sachs was one of the leading advocates of instant shock therapy to revive the Russian economy.

…

By linking up with Jeffrey Sachs, Osborne is flashing a clear signal of what’s in store for Britain if he becomes Chancellor in a Conservative government with a working majority.

Well, I suppose Sachs might be advising that we sell off nationalised industry, end price controls, liberalise trade and float our currency. But that would hardly be disastrous, given that we did all that in the 1970s and 80s. Two more general points occur though. The first is that Sachs would argue that his advice worked pretty well in Poland, and that he has argued that its failure in Russia was a failure of implementation rather than conception.

http://www.washingtonmonthly.com/books/2000/0003.sachs.html

The second is that damning by assocation is a pretty silly game – especially when the links get so distant. It’s like arguing that because Gordon Brown has sought the support of Paul Krugman and since Krugman was an advisor to Enron, that Brown’s economic policy has therefore been to shift liabilities off-balance sheet, to lie about prospects for growth and to defraud his investors.

Hey, wait…

Tim J – good point. These missives by various economists – think it was about 200 to 50 ish or something getting a bit partisan is a bit tenuous. I blagged an Economics degree back in the triassic period and even by the end of it me & my closest chums never agreed fully on details – broad themes sure but detail (in a younger Ian Paisley voice) NEVER! It really is the most lovely subject around though.

@14

Britain’s industrial progress through the 19th century was achieved through free-trade and a mostly laissez-faire policy regime at home, albeit diminishingly so as Parliaments came to better appreciate the pitfalls of unbridled markets. Not so the industrial development of the US (with trade barriers) or Germany (with trade barriers and state intervention).

Increasingly, the failings of Britain’s schooling system, run by charities and the churches, became evident:

“We have noted a substantial body of original research . . . which found that stagnant or declining literacy underlay the ‘revolution’ of the late eighteenth and early nineteenth centuries. . . Britain in 1850 was the wealthiest country in the world but only in the second rank as regards literacy levels. [Nick] Crafts has shown that in 1870 when Britain was world economic leader, its school enrolment ratio was only 0.168 compared with the European norm of 0.514 and ‘Britain persistently had a relatively low rate of accumulation of human capital’.”
Sanderson: Education, economic change and society in 1780-1870 (Cambridge UP, 1995) p.61

As technology became more complex, the need for a better schooled workforce became apparent so Parliament passed the 1870 education act to ensure all had access to a basic primary education.

“Kuznets observed in 1963 that innovation at any given time tends to concentrate in a small sector of industries and countries and argued that such differences help to determine differences in rates of economic growth across countries. Economic history supports these claims: Germany’s focus on chemical innovations is widely understood to have enabled Germany to replace Britain as the industrial leader in the late 19th-century. Edwin Rothbarth (1946), H.J. Habakkuk (1962) and Rosenberg (1972) argue that America’s growth rates overtook Europe’s at the beginning of the 20th century because American innovations focused on labor-saving innovations in machinery.”
http://web.mit.edu/moser/www/pat501.pdf

@17: “The second is that damning by assocation is a pretty silly game”

C’mon. Why exactly did Osborne choose to team up with Jeffrey Sachs, when there are plenty of other economists around even if the signatories of the letters to the Sunday Times and Financial Times aren’t volunteering support for his draconian fiscal prescriptions?

After all, Osborne could have invoked the the Green Budget of the IFS:

“Whoever forms the Government after the forthcoming general election should put in place a fiscal tightening more ambitious over the next Parliament than that set out in the Pre-Budget Report (PBR), but without putting the recovery at undue risk with significant extra tax increases or public spending cuts in the coming year . . . ”
http://www.ifs.org.uk/pr/gb2010pr.pdf

The full IFS Green Budget for 2010 is here:
http://www.ifs.org.uk/budgets/gb2010/gb2010.pdf

His failure to do that and his selection of Jeffrey Sachs can only mean that he regards the IFS as weaseling out of “tough choices” and believes that we really need Sachs’ shock therapy.

Of course, a charitable and credible alternative explanation is that Osborne really doesn’t understand what he is doing.

His failure to do that and his selection of Jeffrey Sachs can only mean that he regards the IFS as weaseling out of “tough choices” and believes that we really need Sachs’ shock therapy.

Which is, as set out above, floating the currency, selling off nationalised industries, abolishing price controls and liberalising trade. You’re being a touch hysterical about this. Jeffrey Sachs is not proposing to float the pound, people might laugh.

After all, Osborne could have invoked the the Green Budget of the IFS

The Tories have invoked the IFS repeatedly. However, I doubt whether the IFS would agree to a co-authored piece for the FT, given that they are scrupulously neutral in party politics.

19. Bob b. Agree with you . The Royal College of Science ( Imperial ) started in the mid 1850s because there was a realistion we need the training of chemists to compete with Germany. I think the first professors were German. If we are to compete industrialy we need the investment and the skilled labour. When it comes to employment, think you will find most engineers from a Grade 4 department with a reasonable degree can obtain inviations to an interview because there are so few of them. Dyson has commented on the lack of engineers being produced in this country.

The Dissenting acadmies set up the Non-Conformists from the end of the 17 Century seem to have fizzled out by the mid 19 C. Many of the industrialists of the 18 and early 19 were educated in these academies in which science , mathematics, modern languages and book keeping were taught.

The Soviet Union was a empire which broke up: China is a country dominated by the Han with minorities. Historically Russia has had very little business expertise, perhaps St Petersberg and the Crimea. China has experienced 32 yrs less of commmunism and there is still a part of the populace with entrepreneurial expertise: where this is lacking, it has been absorbed from Hong Kong( largely Cantonese). The Cantonese and Shanghainese have thousands of years of business expertise. In Singapore, Malaysia, Phillipines and Indonesia there are large Chinese business communities, largely Cantonese.

@22: “Dyson has commented on the lack of engineers being produced in this country.”

Those with insider knowledge of academia know that university engineering departments, at least for most of the time since WW2, have found it challenging to attract the quality of applicants that physics, astronomy or, latterly, computer sciences departments could attract and with all requiring much the same subjects at A-level. For reasons no one fully understands, reading engineering at uni is not well regarded by school leavers. This could partly be because undergrads tend to look down on engineering students – believe me, ask undergrad students.

As for China, some observers have remarked that ethnic Chinese are among the most entrepreneurial people on earth. Reportedly, one of the factors that motivated Deng Xiaoping to make that epoch changing remark about cats catching mouse is that he came to notice the huge differences in living standards between the Chinese living in China and the overseas Chinese. But don’t think I’m holding up Deng as a paragon – he wasn’t. As a retired supreme leader, in 1989 he was consulted about Tiananmen Square and gave the nod to what happened there.

Regarding Jeffrey Sachs’ shock therapy for Russia in the early 1990s and its consequences, we can also see that the China’s government is being immensely more successful in promoting a transition to market capitalism. Occasionally, I browse in my local PC World and note how many products of Japanese electronics companies are manufactured in China.

23. Bob b. I think we ignore culture, both the Tory landowner and then the left wing middle class arts graduate since the mid 30s have despised engineers.
Engineering requires a cautious, patient if not conservative outlook which requires vast amount of calculations , prototype development and testing to produce a safe , practical and cost effective solution to a problem: be it constructing a bridge, ship, chemical factory, electronic piece of equipment, plane, train etc, etc.

“23. Bob b. I think we ignore culture, both the Tory landowner and then the left wing middle class arts graduate since the mid 30s have despised engineers.”

I don’t think it’s quite as straight forward as that.

The A-levels needed for university places to read engineering are much the same as for physics, astronomy etc but engineering departments found it challenging to attract the best – and that as well as declining numbers over a long period of A-level candidates taking physics and maths.

The problems are therefore more complex than just the sentiments of Tory landowners and middle class lefties. Listen to undergrads and they often explain away uncouth behaviour in student bars by saying the culprits were engineering students. There are entrenched expectations about how engineering students tend to behave.

Another part of the equation is that financial institutions have been able to attract graduates with strong maths skills by offering huge salaries. I recall noting a couple of decades back the recruitment of theoretical nuclear physicists away from research posts at esteemed universities for jobs modelling financial markets – “rocket science”, in city jargon. And recall that manufacturing in Britain – the natural working environment for many mechanical and electrical engineers – has long had a downbeat reputation, partly because of the endemic industrial relations problems and perhaps also because of this as well:

“Up to 12 million working UK adults have the literacy skills expected of a primary school child, the [HoC] Public Accounts Committee says. . . The report says there are up 12 million people holding down jobs with literacy skills and up to 16 million with numeracy skills at the level expected of children leaving primary school.”
http://news.bbc.co.uk/1/hi/education/4642396.stm

In all, for those with the aptitudes and computational skills to become engineers, there are other more attractive working environments which pay better or as well.

But none of this explains why Osborne would want to team up with Jeffrey Sachs, the leading advocate of shock therapy for Russia in the early 1990s.

8…#Oh joy, Earnest Ernest/Chairman Moo/Imsocool is back to snipe and offer nothing.

w00t#

Oh joy, the Liberal poodle is back to snipe and point out that I’m offering nothing.

w00t

If there is one thing more pointless than offering nothing, it’s going to the trouble of writing a post which draws attention to the fact that another post offers nothing. You cognitively-deficient buffoon.

I’m welcome here, you ain’t, simple as that and if comment 26 is an example of the best you’ve got, all I can say is you’re weaker than I though.

Bye now, my job is done, although no doubt you’ll have to try and come back…ha, don’t worry bitch, you can have the last word and hopefully it’ll keep you warm at night.

“I’m welcome here, you ain’t, simple as that”

It’s my ball…and you’re not playing…let me guess: you weren’t too popular as a kid?..bit of a mummy’s boy?…got teased by the big, bad boys? Lots of latent anger?
Sort yourself out eh Dan Dan?

“Bye now, my job is done”..er what job?

“although no doubt you’ll have to try and come back”…try?…all I do is type something and press “Submit Comment”..really, it’s no trouble…there’s no ‘try’ about it

“ha, don’t worry bitch, you can have the last word and hopefully it’ll keep you warm at night.”

I leave this to speak for itself…bad boy, Daniel…and just when I thought you were getting better. Btw..what happened to the apology you owe me for accusing me of impersonating you?..presumably your in-depth IP investigation unit has cleared me by now? Did you ever discover who the culprit was?

Wow, that’s a pathetic come back even from you bitch. Must try harder next time troll.

‘Contra stimulus!’ sounds like a Harry Potter spell for curing erectile dysfunction among Nicaraguan counter-revolutionaries.

#Wow, that’s a pathetic come back even from you bitch. Must try harder next time troll.#

er…Daniel..might I refer you to this…”you can have the last word and hopefully it’ll keep you warm at night.”

I thought I was getting the last word..and yet you chose to try and steal it…do you actually ‘mean’ anything which you say?..on top of the self-absorption, delusion and poor syntax…are you an inveterate liar as well?

This is all I have to say….don’t reply and make a liar of yourself…again…unless you intend to give me the apology I’m still waiting for…that would be quite alright..if long overdue.

Keep it coming bitch, I like to see how low you’ll go.

Seriously, that can’t be all you got?

“Keep it coming bitch, I like to see how low you’ll go.

Seriously, that can’t be all you got?”

Nope…can’t place that one..I’ll say…either…something by Tarrantino or the porn you’ve just been watching?

Weak, weak, weak. Surely even you can do better than that? Must try harder!

#Weak, weak, weak. Surely even you can do better than that? Must try harder!#

Really?…so why are the veins on your forehead close to rupturing?

In your dreams darling, keep it coming though.

Sorry DHG..been busy

er..what was it you were saying? Oh yeah: “In your dreams darling, keep it coming though.”

right…here goes..you smell

The fact you keep coming back merely to attack me speaks volumes about you.

Glad you care but really, you ain’t got a thing on me.

#The fact you keep coming back merely to attack me speaks volumes about you.#

Do you think about what you’re typing? Are you completely unaware of your own actions? Read the whole thread. Read who ‘came back to attack someone’.

And where’s my fuckin apology btw?

#Glad you care but really, you ain’t got a thing on me#

No can’t place it…er?..Jay Z?..Emimem?…why are you so fuckin saturated in popular American culture Danny boy?..you wanna make it big in Vegas?

Wow, looks like I got to you. Bless you troll, bless you.

#Wow, looks like I got to you.#

Oh..how’s that then?

# Bless you troll, bless you.#

Who are you now?… the fuckin Pope? If so…never mind the benedictions matey…let loose with the apologies. Never done one before? I’ll give you a couple of tips:

a) include an acknowledgement that you were entirely wrong.

b) make a clear statement that you will try and stop getting hysterical and throwing slanderous comments about.

c) try and stop being a dick.

Bullet points now?

Wow, keep it coming, you looking great…