Cable disagrees with Osborne on the crash

by Sunny Hundal    
June 12, 2011 at 3:50 pm

Vince Cable has written a very significant article for the Financial Times today, which expands on a recent interview with the Guardian:

He says:

There are those who believe this is essentially a crisis of public finance; the state spends too much. Dealing with the deficit is undoubtedly a major, unavoidable responsibility. But it is also a consequence rather than the cause of the recent crisis. There was a deeper problem with the very structure of our economy that has manifested itself in our huge fiscal deficit. What we have is a crisis of finance capitalism rather than a crisis of social democracy.

The economic model previously pursued was seriously flawed. It rested on a naïve belief in the capacity of the banking sector to drive economic growth and in property appreciation as wealth creation – financial alchemy instead of economic chemistry. A liberated financial sector fed an extraordinary asset “bubble” and soaring household debts. The wealth effects of the “bubble” enabled household spending to fuel demand growth. Increasing inequality played a part in boosting subprime borrowing.

He points out that other countries had elements of this model, “but the UK was the most extreme manifestation”.

This much is true. And even the Labour party is coming around to this point of view – with John Denham recently admitting Labour failed to rebalance the economy.

On the other hand, this view is at odds with the Conservative narrative that the crash (and subsequent stagnation) is the result of Labour over-spending. This is despite the fact they backed Labour spending plans till as late as 2009.

Ben Chu at the Indy points out:

There is a dividing line in British politics. It runs between those who believe that 2008 was a crisis brought about by rampant financial markets and those who think it was a crisis of excessive government spending. The line runs through parties as well as between them.

I disagree on one small point – Tony Blair might scoff at the idea that the British economy was too skewed towards the financial services, but most of the Labour party isn’t. There is absolutely no conflict between Labour MP or its supporters that I can see on this.

Looks like Labour and Libdems are more closely aligned on the future of the economy than Libdems and Tories are.

This is significant for another reason. George Osborne’s way out of the current slump will be to simply get the economy to back where it was pre-crash.

That is not where Vince Cable will want to take the economy back to, because he knows its just a recipe for another disaster down the line.

Why businesses have no choice but to reject Milton Friedman

by Guest    
June 12, 2011 at 12:30 pm

contribution by Matthew Taylor

There is a view, most famously articulated by the economist Milton Friedman, that the role of business begins and ends with maximising shareholder returns. “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game,” he said in one of his most famous pieces of work, Capitalism and Freedom.

Anything else, he said, was a “fundamentally subversive doctrine.” There are several problems with this argument.
continue reading… »

Three ways we can face up to ‘green energy’ backlash

by Guest    
June 11, 2011 at 4:39 pm

contribution by Andrew Pendleton

One front page does not a crisis make. But the malcontent over climate change policy is growing and, with rising energy prices, can only become worse. While the science and economics of climate change may largely be settled, the politics are not.

Thursday’s Daily Mail splash was a mash-up of two stories, both essentially from the same source; the Global Warming Policy Foundation.
continue reading… »

The biggest argument in British politics is the economy not the deficit

by Sunny Hundal    
June 11, 2011 at 11:30 am

The Guardian today publishes the speech David Miliband would have given if he had won. The resentment of defeat that some D Miliband fans still feel burns brightly I guess; Don Paskini rightly compared them to die-hard Thatcherites.

But, the speech gives an interesting insight into the elder brother’s thinking. It also illustrates why it’s better for Labour that Ed Miliband won. I would say that wouldn’t I? But hear me out.

David’s immediate concern was that of strategic positioning:
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Labour should take a stand on its principles

by Guest    
June 11, 2011 at 9:30 am

contribution by Ivo Petkovski

Earlier this week, Liam Byrne outlined the results of a new policy review to the Labour front bench.

While the results are fairly predictable, the recommendations Byrne is making should cause alarm to anyone hoping that Ed Miliband won’t follow the New Labour approach of trying to be all things to all people. As Don Paskini pointed out on LC, the views expressed in the review aren’t really aligned with New Labour policy or ideology.
continue reading… »

The 1981 Irish Hunger Strike: 30 years on

by Guest    
June 10, 2011 at 4:05 pm

contribution by Sean Oliver

The victory of Sinn Fein’s Paul Maskey in the West Belfast by-election was such a foregone conclusion it barely made the news. Mr Maskey pledged to continue the `proud and strong legacy’ of predecessor Gerry Adams.

This vote marks the latest success for Sinn Fein’s electoral strategy, and a legacy of an earlier watershed moment of recent Irish history — the 1981 hunger strike which took place thirty years ago. Indeed, it is an astonishing contrast – the then seemingly intractable and bloody with the power sharing arrangements and forward moving political process today.
continue reading… »

Economist blogger: pvt healthcare is worse

by Sunny Hundal    
June 10, 2011 at 1:30 pm

Even bloggers at the Economist magazine are come out against private healthcare! If you know the Economist, you’ll realise how astounding this is.

On the ‘Democracy in America’ blog, M.S. takes a shot at the New York Times columnist David Brooks for claiming governments cannot control rising healthcare costs.

Mr Brooks doesn’t seem to have an instinctive understanding of how it can be possible for unregulated free-market health-care systems to cost more and deliver inferior care than strongly regulated systems with heavy government involvement

He gives an example of private medical companies spending tens of millions of dollars just to market their product.

But beyond the added expense, why would anyone think that a system in which marketing plays such a large role is likely to be more effective, to lead to better treatment, than the kind of process of expert review that governs grant awards at NIH or publishing decisions at peer-reviewed journals?

Why do we think that a system in which ads for Claritin are all over the subways will generate better overall health results than one where a national review board determines whether Claritin delivers treatment outcomes for some populations sufficiently superior to justify its added expense over similar generics?

What do we expect from a system in which, as ProPublica reports today, body imaging companies hire telemarketers to sell random people CT scans over the phone?

The blog post ends by saying:

Health care is different from buying shoes. Which is why it wouldn’t be at all surprising if a board of 15 experts could play a major role in reducing expenses and improving care outcomes in the American medical industry. That’s what corresponding boards of experts in France, Germany, Britain, Canada, the Netherlands and so on do, which is why their health-care systems cost half what ours does, cover everyone in their countries, and generally provide better care.

Well at least some free-marketeers can have a sensible discussion on the issue.

Leave them kids alone: on sexualisation

by Guest    
June 10, 2011 at 11:36 am

contribution by Reni Eddo-Lodge

My four year old sister has a pink pair of plastic high heeled shoes. She also has a red scooter that she rides along the street, picking up and collecting the elastic bands that postmen drop on their rounds. She wears those shoes and collects bands just for fun.

Yet when I first saw her teetering about the house in these heels I panicked. In my grown up mind, a high heel is a shoe designed to make the leg look elongated and sexually appealing. My instinctive protectiveness made me want to snatch away the shoes, to have her running around in trainers again.
continue reading… »

Government’s own report admits welfare cuts will reduce incentives to work

by Sue Marsh    
June 10, 2011 at 9:27 am

After weeks of asking and several Freedom Of Information requests, I’ve finally unearthed the “assessment” the DWP did into Time Limiting (to one year) the Employment and Support Allowance (ESA)!

Clearly I use the word assessment in much the way ATOS do: pick a policy and then write some stuff that proves what you want to say.

Just in case you are not an uber-geek like me and can’t stay awake long enough to plough through 16 pages of fairy stories, here’s a quick summary:
continue reading… »

Nadine Dorries: I don’t expect Tories to deliver on the NHS

by Sunny Hundal    
June 10, 2011 at 9:00 am

Conservative MP Nadine Dorries does not expect the Conservatives to deliver on the NHS.

Yes, you heard that right.

The MP for Mid-Bedfordshire was a guest on BBC Radio 4′s Any Questions programme this week.

20 minutes into the show she is asked about the NHS bill.

Below is an extract from what she says:

Complaints about the quality of care delivered to patients seems to be.. appear to be more frequent – almost graded on the vulnerability of the patients.
…
Now I don’t actually trust any government to deliver any service, actually any government of any party, to deliver any service, particularly one as big as the NHS.

Fair enough she doesn’t trust Labour to deliver proper quality of care on the NHS. But she doesn’t even expect her own party to be able to deliver. She wants it all privatised!

Listen to the whole show from here. This segments starts exactly 20 minutes in.

Nadine Dorries MP also once said Trident was not a weapon of mass destruction.

I wonder how David Cameron and Andrew Lansley will react to one of their colleagues saying she has no faith in their abilities to deliver services?

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