Why the cuts won’t make this government unpopular


8:50 am - February 3rd 2012

by Sunny Hundal    


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It has been one of the most pervasive dictums of the last 18 months – that massive cuts to public services will make this government unpopular and halt them in their tracks. It has been echoed not only by lefties but also Tories, who are over-joyed that despite the cuts they are riding high in the polls.

I bought into this theory initially, but I don’t any more. My point is to say that raising expectations in such a way can be counter-productive.

Furthermore, this is a call for a different approach to fight the cuts.

Over the last 18 months the left has notched up some victories. voters mostly agree the impact of the cuts is ‘unfair’ and they are ‘too far and too fast’.

We also eventually won the economic argument – that austerity would hurt the economy and make closing the deficit harder. Right-wing economists making the case for ‘expansionary fiscal contraction’ (Osborne’s policyd) are silent. The likes of Paul Krugman and Martin Wolf have been shouting ‘told you so!’ almost continually.

But a majority of the public still think the cuts are necessary. This is the clincher because people are expecting the pain and the cuts to services but have rationalised it.

Why? Well, there are lots of connected factors.

1) S significant proportion of the public believe Labour spent too much money and didn’t save enough
You can blame Liam Byrne’s note, the Tory / Libdem discipline in endlessly repeating this or the power of the right-wing media – this accusation has stuck with a significant proportion of the public. Labour have fought against this accusation hard but made very little progress.

Obviously, an objective look at the facts shows this is rubbish, but it doesn’t matter. People believe it. And trying to change their minds via graphs or discussions of the GDP/debt %s is not going to work. It doesn’t matter how many times you say ‘but the Conservatives pledged to match Labour spending plans until 2009’ – it doesn’t reach enough people.

2) The govt narrative is simple and clear, Labour’s isn’t
Whether you use the credit card analogy or simply say “you can’t spend more money to pay off debt” – the government’s lines are clear and understandable. Labour’s counter-explanation of using a stimulus to revive the economy and reduce debt makes economic sense but is confusing for ordinary people.

Even focus groups for unions have shown that people resist the idea of spending money to cut deficit, which is why you aren’t hearing loud calls from them to pump billions into the economy. Labour cannot oppose all cuts because a significant % of Labour and swing voters buy point 1. So their stance on the cuts itself is somewhat muddled. There’s no escaping this, and it will remain like this.

3) The left is mostly talking to itself
Denouncing the cuts in the Guardian or the Daily Mirror isn’t enough. The BBC has comprehensively bought into the austerity agenda so that avenue is also limited in scope. Besides – a lot of people who didn’t vote Labour don’t want to listen to the party for the time being. So the influence they have is limited.

4) There is a big partisan split
This point is under-appreciated: there are two parties in government. And the leaders of both those parties echo the same narrative. This means core Conservative and core Libdem voters (already over 50% of the electorate) are very difficult to influence. They believe their own leaders much more than Labour leaders or left-wing organisations.

5) Most people affected are Labour voters
Just makes it more likely that Conservative and Libdem voters think we are scare-mongering.

6) We haven’t pushed the right messages
Most of our emphasis is still on saying the cuts are unfair and will hurt people. If people think the cuts are still necessary and aren’t too affected (pt 5), they won’t be persuaded by our arguments.

I think we have to focus on making two arguments:
– these cuts are false economy and won’t save much money (and show this via research)
– they will make economy worse (with examples)

7) We don’t have the mass media on side
Even if we make the right arguments above, the message won’t be easily conveyed.

In a sense the public is like the frog sitting in boiling water – with some parts (Labour) hotter than others. It will take a huge tipping point for them to realise something is wrong, otherwise they might just be willing to sit there and bear the boiling water all the way to 2015 and beyond.

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About the author
Sunny Hundal is editor of LC. Also: on Twitter, at Pickled Politics and Guardian CIF.
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Reader comments


1. So Much For Subtlety

The real reasons the cuts are unlikely to make any impact is because we have not seen any yet. The Tories promised cuts, but they are not within a light year of actually delivering any. As someone pointed out elsewhere, here are the three countries with the highest budget deficits in 2011:

1. Egypt 10% of GDP

2. Greece: 9.5% of GDP

3. Britain: 8.8% of GDP

Just how long do people think Britain can go on p!ssing away money we don’t have before someone notices we ain’t going to be paying it back?

“But a majority of the public still think the cuts are necessary”

Which particular public are you refering too? Scotland? England? Wales?

There is vast regional differences in opinion, largely related to who is suffering the most from cuts, and the inability of people to understand these differences is why the UK will fall apart.

Sensible article from Sunny.

Doesn’t mean we should give up pointing out the sheer folly and evident failure of the coalition approach.

But expecting sudden shifts in opinion is for the birds. Only time will do that, and that time should be used to think up convincing ways to convey what needs to be done from that point onwards.

Osborne perhaps has an Autumn statement and a half before people wake up to the colossal idiocy of the cuts strategy.

A Tory wipeout in 2015 is not an impossibility if they go into that election having to pledge more and more cuts.

The current UK government will still spend far more than they take in. In my eyes, that’s not a cut, it’s the continuation of over-spending: http://andreasmoser.wordpress.com/2010/11/15/uk-budget-what-cuts/

If you protest against specific cuts in a specific budget, then I will only take you serious if you suggest other cuts of the same size or come up with some revenue plan or suggest that we amass a huge debt and finally default.

This means core Conservative and core Libdem voters (already over 50% of the electorate) are very difficult to influence.

I agree that Labour isn’t going to be able to influence core voters for other parties to any significant degree (and therefore shouldn’t waste time on trying to), but I think your maths is a bit off on the 50% figure.

Only around 2/3 of the electorate voted at all last time, and that’s so far not changing.
Looking at the polls, only around 50% of the people who intend to vote currently intend to vote either Conservative or Lib Dem.
While the Lib Dems might be down to near enough their core vote, the Conservatives certainly aren’t (though Labour aren’t going to pick off many of the floating Conservatives directly, either).

So that’s probably only a third at most of the electorate who are unreachable for Labour, rather than over half.

(If Labour could regain the voters they lost to “no vote” between 1997 and 2010 [1] – who are likely to be the most Labour-sympathetic voters in general – they’d get an extra 5% or so in the polls, which would give a substantial majority and one that the Conservatives would find virtually impossible to beat)

1. See, for instance, Scott Sumner on this:

Think about the Keynesian model you studied in school. If you are three years into a recession, and you slightly reduce the deficit to still astronomical levels, is that supposed to cause another recession? That’s not the model I studied. Deficits were supposed to provide a temporary boost to get you out of a recession. At worst, you’d expect a slowdown in growth.

To get a sense of just how expansionary UK fiscal policy really is, compare it to France (5.8% of GDP), Germany (1.0% of GDP), or Italy (4.0% of GDP). Lots of people blame ECB policies for the recession, but Britain is not in the eurozone. Outside the eurozone you have Denmark (3.9% of GDP), Sweden (zero), Switzerland (1% surplus).

http://www.themoneyillusion.com/?p=12891

All horribly plausible. But I live in hope that some crunch event – a new recession, a year in which the deficit does not fall at all – will wake people up to the fact that the Tories’ ‘simple and clear’ narrative must be wrong.

And I think the simplicity and clarity of the Tories’ narrative can be overstated. The advantage they have is not that their position is inherently simpler and clearer than Labour’s, but that they’re in government and therefore their position is seen as the ‘default’.

Imagine that UKIP were in power and pushing through a programme designed to eliminate the deficit in two years, wholly through spending cuts.

The Tories, with their policy of eliminating the deficit in 4 years via 80% spending cuts and 20% tax rises, would then be in precisely the position Labour is in now. *They’d* be having to argue that the government was going too far and too fast, was choking off recovery, was actually making it *harder* to eliminate the deficit, should be cutting less and taxing more, and risked doing permanent damage to the economy that might mean the next government was not in a position to reverse cuts it had opposed at the time they were made. *They’d* be the ones being mocked for believing that you can solve a debt crisis by borrowing more money.

But their position/narrative in reality is no different. It boils down to their plan being the ‘Goldilocks’ option: “We’ve got things *just right* in terms of how fast you go and what balance you strike between growth, tax rises and spending cuts”. And Labour’s narrative is that *their* plan is the Goldilocks option.

Yes, because the Tory position is seen as the ‘default’, it’s Labour who end up having to make the counterintuitive points about how it’s possible to go too fast, how higher borrowing in the short term can lead to lower borrowing in the long term, etc. But that doesn’t mean their position is inherently more complex or less clear than the Tory position.

Tim, the stats are interesting and would be informative for a discussion on whether the strategy for austerity was the correct one. But in explaining public opinion they do little. The vast majority of the public won’t have a strong opinion either way (apart from on public services they actually do use!). Opinion thus I think comes down to more basic analogies of household budgets and optimism about the future; if you belive economic growth is just around the corner you are probably less likely to support austerity – in the same way as somebody who is unemployed but gets a job will use a credit card to go out and celebrate getting a job knowing the debt will be covered by the first paycheck.

On the other had if you believe the economy is fucked and is likely to be for some time – not exactly an unusual position – then you are probably more likely to support austerity. If we really are in for a decade of stagnation then borrowing large sums will appear extremely risky. If you know you’re income is going to be low for the foreseeable future you don’t max out your credit card.

Thus if labour wants to win in 2015 it need to be optimistic about the future – concerns about deficits and debts will reduce if labour is able to explain how it will grow the economy. It is precisely because it is warning of a decade of stagnation that people don’t think it’s position is credible.

So are they to continue their craven policy of trying to regain power by shadowing and confirming the need for cuts? They have been shambolic so far, when they should have admitted they were (to paraphrase Mandleson’s odious vow) ‘too at ease with the filthy rich.’ Too afraid of frightening business away, too keen to let business claim state benefit in the form of child tax credit’s to subsidise low pay or in bank bail outs, and letting vile DWP PR undermine claimants, and punishing hapless tenants for private landlord/buy to let profiteering. Is that what people would advise?

There are a few things that stick out to me though. Reading your points, I would suggest:

1) Labour’s strategy has been to agree with the narrative. Labour spokespeople are on the telly saying ‘Blame us, blame us, blame us’ and then wonder why the polls are not moving in their direction.

2) I agree, it is easy to put up binary ‘cause and effect’ problems and solutions. It is too easy to say increasing sentencing will reduce crime or better tax allowances will encourage marriage. The Left’s solutions are based on evidence, not mere prejudice, fair enough. A significant problem the Left has is that we have allowed myths about certain situations to go unchallenged. Get the ‘scroungers back to work’, is a great slogan and easy to understand, but it does not exist in a vacuum. WE have allowed to people to be labelled as scroungers and that work is abundant.

3) A total disengagement with the electorate. Spot on here Sunny. We need to start engaging with the public on their terms. Again, this comes down to looking at what the public are saying. Look at the ‘British jobs for British workers’ debacle. The Left (rightly or wrongly) detected a racist element to it and promptly ignored that movement. That anger did not go away, however, the Right took that anger and turned it into something they can work with and the Left look like they are out of touch and on the wrong side of the debate and ‘on the side of the immigrant’ (we have all been told that, BTW). How did that happen? How do the Left end up opposing people locked out a factory? Why not channel that anger into something WE can use? Why not use that as a springboard to oppose temp/agency staff doing full time work? We not turn that into greedy bastards undercutting hardworking people? Nope, the strategy appears to be disengage with racists for a couple of years then become a racist to win them back.

4)Sunny, you joined the Labour Party, fair enough and all that, but the Labour Party and the Left in particular need to learn one thing, namely, not everyone is our friend. We are not the Borg, we do not need everyone to like us our be on our side.

There are people out there who hate us, what we stand for and whom we represent. There is no point in being nice or polite to these people because they are never going to win them over. If ever you have had a conversation with a Global Warming denier, you will never get to the point where they say ‘Oh, now I see’, because they are not interested in the truth, they are interested in flying round the World without a second thought. There are no form of words that we can use to explain it. There are people who will openly lie and misrepresent facts to get what they want. We need to concentrate on the people who are open to us. They may have voted Tory in the past, but they area bit liberal, though disenchanted with the direction the Left was going.

We need to create gaps with the ‘decent’ people who have hitched their wagon to the Right of the c. People have said that disabled people in the country should be paid less than the minimum wage. They want people with Downs Syndrome to lose money that they are legally entitled to. No decent person believes that, do they? We should not be afraid to say ‘That is Nazi ideology’, because it is and most of us would recognise it as such, if we were being honest. The Left seem obsessed as downplaying obviously despicable remarks. We need to start making the worse offenders of this type of thing pariahs. Let see if we can make the ‘Nasty Party’ label stick again. Lets see if we can make being a ‘Tory’ the thing that people were ashamed to admit.

5) Again, not quite true. I doubt that many of the most directly affected by the benefit cap people even bother to vote. However, unemployment is rising, I wonder how many people who have been shouting loudest for a benefit cap are about to be on the wrong side of rough justice in the near future? How many people are about to be diagnosed with a serious illness in the next year?

6) I would add a couple of more things. ‘Workfare’ will mean sacking working people to make room for these ‘dole scroungers’, Poundland for example. Local businesses are closing because of the cuts too.

7) Finally, someone else has noticed that. The Right own most of the media outlets and use them to tell lies about people, yet some on the Right use places like this to tell the same lies and hurl abuse at the disabled. Why? Sue Marsh often has apost on here and within minutes a Tory comes on and calls here a liar and a scrounger. These people own every outlet in the Country, so why are they allowed to use this the same way?

I am all for people questioning a blogg entry or taking someone to task, debate is healthy, but surely it is reasonible to keep the debate within our own terms of reference?

Look, we know that DLA fraud is very low, so if someone says it must be about a quarter of all claims, why are we not questioning that? If they repeat that lie without evidence, by all means challenge them, but if they will not retract or back up that claim, delete it.

Global Warming is fabricated? Sure delete that too, why not?

We are a Left Wing blogg, Sunny, not a media outlet, no one is being censored here, the Daily Mail publish liars without rebuttal, so why are we so worried about denying SMFS the ‘Right’ to call Sue Marsh a scrounging bastard?

SMFS/1: before someone notices we ain’t going to be paying it back?

The yield on 10-year government bonds hit a record low of 1.97% in January 2012. Investors are that desperate to get hold of UK government debt that they’re practically paying the UK for the privilege of holding it. Even the 30-year rates are only just over 3% (you couldn’t get a 10-year one with that low a yield 5 years ago).

That the rates are so low does not reflect well on the economy in general – deflation and stagnation are pretty likely – but the idea that we might not pay off our debts is really not a concern for investors right now.

@ Andreas Moser:

“The current UK government will still spend far more than they take in. In my eyes, that’s not a cut, it’s the continuation of over-spending:”

This is simply a false dichotomy. If you’re overspending by £50 pounds a week and then cut your spending by £25 a week, ceteris paribus you will still be overspending by £25 a week. Anyone who wants to maintain that you have therefore not cut your spending needs to explain how it is that your overspend is £25 lower than it used to be.

“If you protest against specific cuts in a specific budget, then I will only take you serious if you suggest other cuts of the same size or come up with some revenue plan or suggest that we amass a huge debt and finally default.”

That simple, eh?

So in your view, cutting spending means immediately eliminating any overspend – i.e. reducing next year’s budget by c. £130bn.

Yeah, we could do that – e.g. we could halve all benefits, including the state pension, and shave 20% off the NHS, education and police budgets.

Of course, the UK would be transformed overnight into a riot-strewn, recessionary wasteland, with hundreds of thousands of people living in cardboard cities and scavenging for food in bins. Tax revenues would drop off a cliff, and – oops! – you’d have an overspend again.

If the recession was no worse than the last one (unlikely) and we hadn’t allowed spending to rise in any areas – e.g. we hadn’t awarded benefits to any newly-unemployed people, and had capped hospital admissions at their pre-recession rate – that overspend might be as little as, erm, £130bn.

Never mind though – we can just eliminate that overspend though a £130bn spending cut, right? Let’s stop all remaining welfare spending, reserve NHS hospitals for emergency admissions only, put schools on a 3-day week and replace policemen with volunteers.

Hmm… now the recession seems to have got worse. Tax revenues are even lower and the bodies are starting to smell. Oh well… time to close the A&E departments and disband the army.

Repeat until we are a third-world country with no overspend.

(NB: no, I’m not suggesting this is what the Tories have in mind. I’m just pointing out the absurdly simplistic nature of the view that eliminating a deficit is as simple as refraining from spending money you don’t have. It’s a plain fact that you can only go so far and so fast before you get into a spiral of deeper recession > lower tax revenues > higher borrowing > deeper cuts >deeper recession. Hence it’s ludicrous to demand that anybody who wants to eliminate the deficit has to agree with you about how much you need to cut and when; it’s a judgement call that depends on your view of what you can get away with before you’re into that spiral.)

@ Jim

There are people out there who hate us, what we stand for and whom we represent. There is no point in being nice or polite to these people because they are never going to win them over.

Rarely a trap you fall into, Jim.

We are a Left Wing blogg, Sunny, not a media outlet, no one is being censored here, the Daily Mail publish liars without rebuttal, so why are we so worried about denying SMFS the ‘Right’ to call Sue Marsh a scrounging bastard?

I would be surprised if he has done that, but to deny him the right to express his view would be censorship. To impose such censorship would make Sunny a Stalinist- the discussion would become boring and nobody, with any sense, would be bothered to come here.

And you would have no targets for your foul mouthed invective and nobody to listen to it.

So that wouldn’t do, would it?

I think what’s vital here is that this is the calm before the storm. As many Tories are always quick to point out, much of what is to come hasn’t actually taken place yet (therefore what’s everyone complaining about), whether it’s cuts or redundancies.

I think for the ‘squeezed middle’, ‘alarm clock Britain’ or whoever to really understand what’s going to happen things will have to really start to kick in – and they will, not just for the spongers, the feckless and those that have made ‘poor life choices’. A lot of people will suddenly realise that there’s not quite as many jobs available as they’ve always claimed and that a life on benefits isn’t all 50 inch plasma TVs and foreign holidays. Conversely, those who stay in employment, manage to stay in the house they’re in now and only to cut back a bit on outgoings, it really will be ‘what’s the fuss about’. What’s important is employment (ie real employment, not temporary part-time jobs, not agency work and certainly not ‘workfare’).

I daresay there will be a lot of people who, facing the reality of a lot of rightwing propaganda will feel as betrayed by the Coaltion as they felt by New Labour. Not all of course: as long as there’s an orchestrated media voice to continually blame New Labour, some will still continue to vote Tory even whilst they’re deciding whether it’s soup or the heating on for half an hour.

On the otherhand, as a week is a longtime in politics, 2 years in power (come May) will seem like an even longer time indeed and I think a lot of the people affected (particularly the floating voters that all political parties seem to fawn over) will be questioning how long New Labour can be blamed for everything. They won’t feel like they owe the Tories anything but they will always feel like the government in power owes them something, at least in terms of jobs and services etc. I’d say that’s far more true than the ‘scrounging scum’ who tend not to engage with politics in any scenario.

I’m not sure what the solution is to any of issues mentioned in the OpEd, but I think it’s pointless anyone on either side of the political fence claiming anything concrete for another 12 months when things will really be different.

Pagar @ 13

Rarely a trap you fall into, Jim.

Pagar that is correct. Never say never, but I am unlikely to vote Tory, ever. I have little interest in what they are pitching…

…And the Tories are happy with that. They have no interest in winning me over, they have no need for my vote. They concentrate on the type of people their ‘simple bigotry’ (as I see it) or ‘common sense logic’ (as they would describe it). They never bother telling me that if someone is fit one day that automatically means that they will be healthy every day of the week. Instead, they aim their fire to people that can only see a disability if the person concerned is completely paralysed from the eyebrows down. They go after people who believe snow disproves global warming and that Poles are harder workers therefore no one in Poland is unemployed.

They stick to their happy hunting ground, for good reason too:

http://www.dailymail.co.uk/sciencetech/article-2095549/Right-wingers-intelligent-left-wingers-says-controversial-study–conservative-politics-lead-people-racist.html#comments

And it works, too. Ask Tim J. He rarely lies in bed at night saddened that he has not won me over. Or that he has won millions of us over. He has won enough people over to drive through his ideology through and that is all he needs.

To impose such censorship would make Sunny a Stalinist- the discussion would become boring and nobody, with any sense, would be bothered to come here.

What censorship? No one is denying anyone the right to say anything, all I am suggesting is he say it elsewhere.

I doubt you would support moves to force the Daily Mail to publish opinion pieces of people who they dislike. I bet you would be against Sue Marsh being foisted, by Law, onto the leader column of the Mail to provide ‘balance’ or that Global Warming scientists would be quoted correctly, you would expect the Mail to publish what they want. So why is this blog any different? It is not some kind of ‘blogg of record’, it is just a few folk blogging.

And where is point 9, 94% of depatmental cuts still to come. Kind of collapses all your previous points which is no doubt while you ‘conveniently’ overlooked it.

I generally agree with this article – but I think it’s important to point out that the media and main political parties have done quite a bit to shape public opinion. I’d argue that if Labour had been clearer on the cuts (and policy more generally) public opinion might look very different.

As it is there has been a consensus across the media and political spectrum that cuts are essential and the differences are on how fast, how hard, and where to cut. It’s a miracle that anyone thinks that we could take a different approach – one that echoes Keynes and looks to investment rather than undermining the entire economy.

btw “This means core Conservative and core Libdem voters (already over 50% of the electorate) are very difficult to influence.”

Not only do the polls suggest that those intending to vote C or LD are around 50%, making it 1/3 of the electorate – I don’t think we should actually term these people *core* voters as it is the total number of people who intend to vote that way.

Many of those people *are* eminently reachable with a confident and clear line, although I agree that the core of those voters are not.

Obviously, an objective look at the facts shows this is rubbish, but it doesn’t matter.

=============

Is it? I notice you don’t post any numbers so lets start the ball rolling.

1.05 tr in borrowing – Gilts

1.3 trillion for civil service pensions. You do want your gold plated pension? If its not a debt, it doesn’t have to be paid.

2.4 trillion for accrued state pension rights …

State second pension, PFI, guarantees, …

Total 7 trillion.

Not included. Welfare. 50% of the population has less than 5K in savings. What happens when they ‘retire’?

Ask Tim J. He rarely lies in bed at night saddened that he has not won me over. Or that he has won millions of us over. He has won enough people over to drive through his ideology through and that is all he needs.

I think you might, just possibly, be assigning me with more power than I actually possess.

If I were able forcibly to convert people to my way of thinking, the idea I’d like to implant is that the majority of people with whom you disagree (whichever side of the political divide you are) are decent people, who are usually trying to do the right thing. They may be mistaken in their methods, they may be mistaken in their aims – but almost always they aren’t acting out of general malignity.

Anyway, I usually lie in bed wondering which of the two year old and the one year old (or, God forbid, both as happened last night) will get me out of bed in the middle of the sodding night.

Jim:
We are a Left Wing blogg, Sunny, not a media outlet, no one is being censored here, the Daily Mail publish liars without rebuttal, so why are we so worried about denying SMFS the ‘Right’ to call Sue Marsh a scrounging bastard?

SMFS can say what he wants within the posts code of conduct, but it doesn’t mean we’re listening. Sue is still amazing and I’ll continue to publish her. I don’t think many people will pay as much attention to his rambling comments. that’s not the main concern.

Labour spokespeople are on the telly saying ‘Blame us, blame us, blame us’ and then wonder why the polls are not moving in their direction.

Not when it comes to ‘did you spend too much money?’ – but people still think it

@ Nick

You forgot to add the costs of educating all those unborn children, incarcarating those future criminals, and the war we’ll be fighting with Argentina in 2029.

Next, lets look at the increase in debt of the last year.

150 bn on borrowing – the deficit.

350 bn on the off the book debts. Pensions – linked to inflation.

Total 500 bn.

Compared with government taxation of 550 bn, its absolutely clear it is going all Greek.

Blame? Labour certainly

Condems? Certainly. If you look in the Red book, spending is up each year since they too power.

Why are so many people arguing over the good of cuts (or their very existence) or otherwise? Sunny is quite right here – the narrative of cuts has popular support, and will not be derailed by hopefully thinking it will change.

Appeals to the disabled or whatever simply won’t work – not unless you address alongside them the issues of spending lots (regardless of whether it is justified) and those who are (however few of them there are) playing the system – because that is now the popular narrative.

And one other point – why do people assume that Labour voters in 1997 are natural Labour voters? Surely Labour voters in 1992 would be a better baseline, if not 1983?

hink about the Keynesian model you studied in school. If you are three years into a recession, and you slightly reduce the deficit to still astronomical levels, is that supposed to cause another recession?

=========

Quite. 150 bn a year of Keynsian spending. Effect? A depressed economy.

The cause was too much borrow and spend. The Voodoo solution – more borrow and spend.

How can the cause and the fix be more of the same?

Hmm… now the recession seems to have got worse. Tax revenues are even lower and the bodies are starting to smell. Oh well… time to close the A&E departments and disband the army.

Repeat until we are a third-world country with no overspend.

==========

OK, so look at what happens when you implement Labour’s policy.

150 bn on the deficit, 350 bn on the off the books debt.

Next year – what happens.

375 bn on the debt. Deficit? Not going to change much is it.

The debt has tipped. The government can’t pay it.

So the government is going to default, particularly on those off the book debts it has been hiding.

State pension, state second pension, civil service pensions, … All will start to go, partially at first.

Take one example, state pension.

Raise retirement age one year – 5% off everyone’s pension, on average. If you are poor and die early an even larger loss. That’s a partial default.

CPI, not RPI – that’s a partial default.

Point 3 “The left is mostly talking to itself” is the key point – too many on the left bury their heads in the sand if they hear something that doesn’t fit their narrative.
It’s the 80’s all over again – if you’re convinced you’re in a battle of good vs evil, actually engaging, listening and seeking common ground is a treachery, for which you’ll be cast out of the ever-diminishing pool of pure souls.

Tim @ 19

The thing is, that you do not everyone to vote Tory, all you need is around forty percent. Nothing wrong with that, BTW, but your Party tend to produce policies that target people who think like you do. You will devise a policy that sets me thinking ‘hmm, that sounds good’. You know your audience and what you want to achieve, you don’t really care if me and people like me think you are ‘scum’, because as long your core vote is happy, your party will remain in power. You are quite happy to label the unemployed as ‘lazy’, because it is what your core vote want to hear.

Again, fair enough, nothing wrong with that either, but Labour feel they have to convert everyone. They seem to want to devise policies that will appeal to everyone that actually appeal to no one.

You will never vote Labour and therfore having a policy that appeals to you is a waste of time.

Sunny @ 20

Just as long as you accept that the lies and smears are having an effect on the public. Attidudes are hardening against the disabled and lies regarding fraud gain traction, the Left are losing because we cannot dispell myths.

A bit like benefit fraud. See saints and sinners on the BBC. One ‘saint’ one ‘sinner’, fair? No, because convicted fraudsters make up half a per cent, so a more accurate programme would be one sinner two hundred saints. Make that programme and you will have ‘Left wing bias’ on the BBC.

Why? ‘Everyone knows’ that benefit fraud is about thirty to forty per cent. Why? because that is what the media says!

Okay, fair enough we are one blogg on the middle of nowhere, but the fact that everyone allows the lies to continue, doesn’t mean it is right.

The sun has topless models on its site, why not do that too as if enough people read it, it must be okay.

You will never vote Labour and therfore having a policy that appeals to you is a waste of time.

I might well have voted Labour in 1997 (a couple of months too young), and I very nearly did vote Labour in 2001 (I voted for fatty Soames in my parents’ constituency, because I like him). As Conservatives go, I’m pretty soggy.

I admit that it’s very hard to envisage a scenario in which I vote for Ed Miliband, and there was literally no chance whatsoever of my voting for Gordon Brown.

@ Nick

“If its not a debt, it doesn’t have to be paid.”

So just to be clear then, does this mean that:

1 – I’m in debt to ASDA to the tune of £150 for next week’s shopping?

or

2 – I don’t have to pay for next week’s shopping?

Or, just to go out on a limb here, could it be that:

3 – you are bending the concept of ‘debt’ out of all recognition, so that it encompasses not just money you’ve borrowed and are obliged to repay, but also money you plan or expect to spend one day?

You forgot to add the costs of educating all those unborn children, incarcarating those future criminals, and the war we’ll be fighting with Argentina in 2029.

===========

Nope. That is spending. No one has paid up front for those things, and there is no contract to supply them.

Debts.

1. Borrowing.
2. Contracts such as services now, pay later. Civil service pensions and invoices.
3. Money now, pay later with interest. Just as with a bank. If they accept money on deposit, its a liability. If the government takes the money now, and agrees to pay a pension later, it creates a debt.
4. Expected losses on contracts. If you insure 100 homes, and take premiums, then you have a liability. The correct number to book is the expected losses on the insurance contract.

The government only does 1. Everyone else has to do 2,3 and 4. Try it on with HMRC is you doubt me.

The problem is that 2,3 and 4 are massive, too big for the tax payers of the UK to pay.

This excludes all the items mentioned, such as wars, education, …

However, where it is relevant is that those future tax payers will want defense, education … for their taxes. Are they going to agree to no services, and all their taxes going to pay past debts? I think not.

So the question is the, who is going to lose.

It won’t be the rich, they will have buggered off.

It will be those reliant on the state.

It will be the mugs in the middle who get no services but all the taxes.

As always.

3 – you are bending the concept of ‘debt’ out of all recognition, so that it encompasses not just money you’ve borrowed and are obliged to repay, but also money you plan or expect to spend one day?

===============

No. See the previous post for what is a debt and what is spending.

If you bought last weeks shopping on a credit card, you have a debt. Isn’t that the case?

@ Nick

“If you bought last weeks shopping on a credit card, you have a debt. Isn’t that the case?”

Erm… yes. As distinct from the spending obligation I have in relation to next week’s shopping.

If you don’t think I’ve got an obligation because I haven’t entered into a contract, here you go:

“I promise to do £150 worth of shopping in ASDA next week”.

What’s changed? According to you, I think, I’ve just taken on a £150 debt. But it differs from expected spending in name only; the checkout girl won’t even notice that I’m paying off a debt rather than doing day-to-day spending.

Anyway, we could spend all day arguing about terminology. The question is whether we will, in future, be able to afford to spend what we would like to spend (whether or not you describe that spending as consisting of debt repayments). And just throwing large numbers around doesn’t establish much.

I could decide to ‘take on £1,000 of debt’ each and every day for the next year by sending you little notes saying ‘I promise to spend £1,000 on biscuits’ or ‘I promise to spend £1,000 on socks’. Wow, scary! But without setting that in the context of the timescale on which that ‘debt’ is to be ‘paid off’, the income I expect to have during that time, and the non-debt spending I expect to be doing, you just can’t take anything from those figures. And the same goes for the figures you give for ‘off-the-books debt’.

OK. So if you use a credit card, its a debt.

“I promise to do £150 worth of shopping in ASDA next week”.

Not a particularly good analogy.

How about, you go and work for ASDA, and they say you can have 150 quids worth of food next week.

Does ASDA have have debt to you?

34. Can Of Worms

The issue of austerity vs stimulus is really a smaller issue than the one of the creation of the money supply in the economy. The fact is that almost all money (97%) in the economy is produced as an interest bearing loan. Money has effectively been privatised and we are renting in from the banks!

The simple inescapable truth of our current system is:

If you want more money (necessary for growth) you have to have more debt

If you want less debt, you have to have less money (recession)

The fact that so few people understand this makes most debates on the economy mostly pointless (bald men and comb springs to mind) although some MPs do get this and are pushing for this to be recognised (Tories – Steve Baker and Douglas Carswell; Labour – Michael Meacher are those that I’m aware of)

I recommend watching this 20min presentation by Positive Money which are trying to raise awareness of how the current banking system is crippling the economy working alongside the above mentioned MPs

http://www.positivemoney.org.uk/whats-wrong-with-banking-today/the-problem-with-the-banking-system-video/

here’s Steve Bakers speech at the same conference
http://www.youtube.com/watch?v=JFrSyydyA5A

and Michael Meacher…
http://www.youtube.com/watch?v=TsPnuXWQnXk

I could decide to ‘take on £1,000 of debt’ each and every day for the next year by sending you little notes saying ‘I promise to spend £1,000 on biscuits’ or ‘I promise to spend £1,000 on socks’. Wow, scary! But without setting that in the context of the timescale on which that ‘debt’ is to be ‘paid off’, the income I expect to have during that time, and the non-debt spending I expect to be doing, you just can’t take anything from those figures. And the same goes for the figures you give for ‘off-the-books debt’.

So put some numbers to the debts.

Note that I’ve been very careful. I’ve omitted the future spending part.

I’ve only included debts that any company or individual would have to book into their accounts.

ie. In the case of civil service pensions, there is a contract. Quite a clear contract.

In the case of the state pension, state second pension, there is also a contract. You can ring up the DWP and they will tell you what rights you have accrued. The government states quite clearly what the benefits are, and how they will increase.

Ditto with the guarantees. They are contracts too.

Future spending, is all omitted.

Now, you can’t ignore future spending. For a non financial organisation, there is lots of ‘core spending’ Spending that you cannot cut. For example to pick up on your case, spending on food. For a government, police, defense, legal.

The problem for the UK is that tax revenues cannot meet the accrued debt payments. So the problem is that you won’t get payouts under the contracts.

It can’t afford the major two items of spending either. 50% of people in the UK have less than 5K in savings. They will demand a ‘reitrement’ or end up on benefits. It doesn’t matter either way, the cost is the same. However, there isn’t the money to pay out this welfare, and the free NHS on top.

The reason you’re deluding yourself, and its the right word to use, is that you’re in denial that its a debt. You need to total up these debts, and compare it to government income less core spending. You need to put numbers to it. When you do, you will be horrified.

Now the real problem is that the Condems cannot even solve this. Neither can Labour. Growth cannot fix the problem, its become too large.

That means its going the way of Greece.

“In the case of civil service pensions, there is a contract. Quite a clear contract. ”

Which has been changed on several occasions. And pension age is rising to 67, and probably beyond. If you think a civil service pension is a contract equivalent to a private sector agreement enforceable by a court then I suggest you offer your services to the public sector unions who would be delighted to know that government plans to change pensions can’t be carried out as there is a contract the courts will enforce.

“the UK is that tax revenues cannot meet the accrued debt payments. ”

What tax revenues will there be in 2040? We do not know what the rate of inflation will be, what economic crises will occur in between, how technology will transform the economy etc.

Which has been changed on several occasions. And pension age is rising to 67, and probably beyond. If you think a civil service pension is a contract equivalent to a private sector agreement enforceable by a court then I suggest you offer your services to the public sector unions who would be delighted to know that government plans to change pensions can’t be carried out as there is a contract the courts will enforce.

================

Now follow that thinking through. This has happened because the government can’t get the taxpayer to fund it. ie. Promises/contracts are to high a percentage of the tax revenues.

================

“the UK is that tax revenues cannot meet the accrued debt payments. ”

What tax revenues will there be in 2040? We do not know what the rate of inflation will be, what economic crises will occur in between, how technology will transform the economy etc.

================

Well, how about starting off by listing the size of the current debts. I bet you won’t, but that is from repeatedly asking the question of the left/liberals.

Now if the you take the debt, and the annual interest on the debt, you can work out now if its going to grow above growth levels.

What if growth goes negative?

Growth has been flat for 10 years.

What we have is borrowing at inflation plus to get growth of 1%.

So 7,000 bn of accrued debt. It can’t be paid. That ignores future spending such as welfare too. If you add that on top its horrendous. 20 tn linked to inflation. Around 1 trillion a year compared to current income of 0.55 trillion.

So the consequences are that the promises won’t be paid. Pure and simple. State pension – means tested. State second pension confiscated. Large cuts for civil service pensions. NHS going to an insurance model, with a cut down service for the poor. I would also suggest that all private and company pensions will be confiscated for the public good. Oh, and no tax cuts. They still need the cash.

You can challenge this by posting numbers rather than opinion.

38. Rob the crip

It depends on who mind your trying to change, if your trying to change my mind being disabled not well off and at the bottom, I believe you. If your trying to change the mind of a tax payer then Miliband is not helping using the new Labour mantra of work shy cheats and scroungers.

and I’m sick to death of hearing about the squeezed middle, now we are hearing labour squeezed middle are people earning £12.000 a year, they are nowhere new the middle they are not squeezed either they people on £12,000 are bloody crushed.

Labour cannot now say they are the party of the poor after the last few months can they, for god sake labour is a middle class party of the working class or the hard working.

The reason nobody will believe you any more is because you told them not to.

39. So Much For Subtlety

10. Jim

1) Labour’s strategy has been to agree with the narrative. Labour spokespeople are on the telly saying ‘Blame us, blame us, blame us’ and then wonder why the polls are not moving in their direction.

Which ought to tell you something. Like, there is no rational case to be made for any alternative. Red Ed is not a Tory-lite. If he thinks there is no alternative then perhaps, maybe, there really is no alternative.

Why not channel that anger into something WE can use?

How do you go from an anti-immigrant slogan to something “you can use”?

If ever you have had a conversation with a Global Warming denier, you will never get to the point where they say ‘Oh, now I see’, because they are not interested in the truth, they are interested in flying round the World without a second thought. There are no form of words that we can use to explain it. There are people who will openly lie and misrepresent facts to get what they want.

It is ironic you make these claims as Europe shivers in the midst of some conspicuous non-warming, when the world has long since stopped warming, when the warmist e-mails have shown even they know the world is not warming and their campaign rests of lies, intimidation, stacking journals and so on. It is not the Global Warming deniers who have a problem with the evidence. The evidence is solidly on the side of their being no warming at the moment, what we have seen being a natural cycle, and the world probably turning out a better place if it did warm a little.

People have said that disabled people in the country should be paid less than the minimum wage.

I think they have said that the employers should pay them less than the minimum wage but that the government should top up their wages to an acceptable level.

We should not be afraid to say ‘That is Nazi ideology’, because it is and most of us would recognise it as such, if we were being honest.

Asking people who can work to work is equivalent to gassing them? Go on Jim, don’t be afraid to say it. By all means, dishonestly exploit the Holocaust for a cheap political point. See where it gets you.

Sue Marsh often has apost on here and within minutes a Tory comes on and calls here a liar and a scrounger.

When has anyone ever called Sue Marsh a liar and a scrounger?

These people own every outlet in the Country, so why are they allowed to use this the same way?

They own the Guardian? The BBC? News to me.

We are a Left Wing blogg, Sunny, not a media outlet, no one is being censored here, the Daily Mail publish liars without rebuttal, so why are we so worried about denying SMFS the ‘Right’ to call Sue Marsh a scrounging bastard?

And here’s the problem Jim – you are a liar. I have never called Sue Marsh a scrounging bastard. Not once. Not even anything close. As I have pointed out to you before. You are lying. Because you are a liar. Sad really.

40. So Much For Subtlety

cim

The yield on 10-year government bonds hit a record low of 1.97% in January 2012. Investors are that desperate to get hold of UK government debt that they’re practically paying the UK for the privilege of holding it. Even the 30-year rates are only just over 3% (you couldn’t get a 10-year one with that low a yield 5 years ago).

They are actually paying the Germans.

That the rates are so low does not reflect well on the economy in general – deflation and stagnation are pretty likely – but the idea that we might not pay off our debts is really not a concern for investors right now.

No, I agree. We have too much savings floating around in the system at the moment without a home to go to. But how long can we continue to run up deficits of Greece’s magnitude before people start to worry? The problem is not a big one now because yields are so low. But once the economy starts to recover, those investors will want real returns for their money. Rates will go up. And we will be holding a large debt we will have to service. This is bad. Very bad.

Someone is going to notice. I guess it just helps to be the one-eyed king.

@ Nick

“The reason you’re deluding yourself, and its the right word to use, is that you’re in denial that its a debt.”

If I *am* deluding myself, that’s not the reason – because (as I’ve said) what we categorise as ‘spending on debt repayments’ (e.g. on pensions) and what we categorise as ‘spending on things other than debt repayments’ (e.g. on pension credits) is irrevelant to the question of how much we can afford to spend altogether (e.g. on providing incomes to retired people).

“So 7,000 bn of accrued debt. It can’t be paid. That ignores future spending such as welfare too. If you add that on top its horrendous. 20 tn linked to inflation. Around 1 trillion a year compared to current income of 0.55 trillion.”

OK, now we’re getting somewhere – there’s a claim here about the annual spending required to service our debts and maintain spending on welfare etc., rather than just a big number. So can I ask:

1 – what’s the rationale behind the 20-year timescale (20tn debt + spending obligations = 1tn a year)? (I mean, some of our overall stock of debt is due to be paid next week and some of it in 100 years’ time, when the last surviving spouse of someone who enrolled in the civil service pension scheme yesterday dies). Which 20 years is this supposed to be? 2013-33? 2063-83?

2 – what % of GDP should we expect that 1tn a year to represent by the time that 20-year slice of time rolls around?

I mean, you might be right, but none of the numbers you’ve mentioned actually demonstrate that. If anything the figure of 1tn a year compared to 0.55tn currently looks quite reassuring, depending on when you expect spending to hit that level; if we’re talking about 50 years in the future, say, we can reasonable expect GDP to have more than doubled by then.

Why don’t we drop the debate about what counts as debt, drop the big-raw-numbers tactic, and you can show me why the % of GDP we have to spend every year, in total, is set to rise unsustainably above, say, 45%?

Nick, let’s make this simple. I think the crucial figures here are:

1 – Projected real-terms increase in current spending requirements and cost of servicing debt (over the next 50 years, say)

2 – Projected real-terms GDP growth (over the same period)

Any figures I gave would only be a guesstimate, but presumably you have some figures in mind showing that the former figure is significantly higher than the latter; so why don’t we start with those?

First, do you both understand what is meant by present value of a debt?

1 – what’s the rationale behind the 20-year timescale (20tn debt + spending obligations = 1tn a year)?

I never mentioned 20 years. Where did that come from?


2 – what % of GDP should we expect that 1tn a year to represent by the time that 20-year slice of time rolls around?

What’s GDP got to do with it? It’s a government debt. What matters is government taxation and government spending. What is left over is available for the debts. Or are you saying that we are owned by the government? Serfs or slaves, whose purpose is to work for them, not for ourselves?

@ Nick

“I never mentioned 20 years. Where did that come from?”

From here:

“20 tn linked to inflation. Around 1 trillion a year”

That’s the closest you’ve come to spelling out a link between the total value of our future spending obligations, including debt repayments, and the annual cost of meeting those obligations.

“What’s GDP got to do with it?”

What a strange question. The government’s ability to spend money, on debt repayments or anything else, depends on how much it raises in revenue. How much it raises in revenue depends on how high GDP is and how high the tax burden is.

If GDP were 3tn and the government had to spend 1tn a year, it could reduce the tax burden to 35% and run a healthy surplus. If GDP were 2tn and the government had to spend 1tn a year, it could meets its obligations with the tax burden at 50%. If GDP were 1tn and the government had to spend 1tn a year, we’d be in a bit of a pickle.

“So the consequences are that the promises won’t be paid. Pure and simple.”

Expected future demands on the NHS and pensions are not the same as debt though – which is my point, and they are certainly not contracts enforceable by law – the uk system of government is clear that parliament can’t bound future parliaments (human rights laws being a muddled exception – but then an act of parliament could technically real that anyway).

I know that at some point in the next 20 years I will need to replace my car (not expecting to need for at least 10 mind), we can estimate the cost of a small new car in 20 years will probably be 15-20k. This does not mean I have a debt of 15-20k. There is a key difference.

Pretty much everyone knows that demographic and technological changes mean the likelyhood is there will be a high bill for NHS and social care by 2030, and there are several proposals to deal with this ranging from privatisation to changing how the service operates and entitlements. It really isn’t the same thing as a debt problem.

Secondly the idea we can be precise as to the cost is absurd – estimates at best. Richard Blogger has an excellent piece on the cost of diabetes – in the 1970s life expectancy for diabetics was around 50 and there were all sorts of gloomy predictions about the cost of diabetic medicines in the future and the related health conditions that the NHS would need to pay for, and the cost timebomb that was entailed. The reality was the cost of the medicine came down, new cheaper treatments were developed and better ways of managing the condition all helped to reduce costs.

How many people in 1980 would have been able to – with a great deal of accuracy – predict how the economy in 2012 worked?. If you’d have said one of the most valuable companies in the world would operate like facebook does – a service free to users and paid by advertising – you would have been asked where you got your drugs from.

“20 tn linked to inflation. Around 1 trillion a year”

Inflation 5%. Over 20 years, what’s the size of the debt when its starts at 1 trillion?

You can’t just say 1 trillion / 5%. Interest rates don’t work that way.

I know that at some point in the next 20 years I will need to replace my car (not expecting to need for at least 10 mind), we can estimate the cost of a small new car in 20 years will probably be 15-20k. This does not mean I have a debt of 15-20k. There is a key difference.

Look, take out a loan, buy a car, and then burn it. Set it on fire before you insure it or use it.

You have a debt, and you don’t get any services from it.

It’s the same problem with government.

Future taxpayers will not get any services for their payments, because those payments are going on non services. For example, paying for past services where people now haven’t paid the full price.

That’s the definition of debt.

For example, if we say the borrowing of 1050 bn has a term of 30 years at 5%, its close to 70 bn a year. None of that is going on services. Nothing is for the NHS. [It’s a little worse because lots is linked to RPI, offset against current low rates, and that can change – fast]

550 tax less 70, leaves 480. Just for one part of the debt.

You also need to be careful too about the structure of debt. You can have the equivalent of the mortgages that cause the financial crash were people didn’t pay their loans. If its low interest up front (like now), and high payments later, then you can get screwed. A good example is the state pension. It’s all on the back end.

So I’ve quantified the borrowing bit. 70 bn a year at 5% over 30 years. If you think that all the debt is at current rates, think again. You can get all numbers at the DMO (debt management office) website.

You’re wrong that the left has won the economic argument: You’ve lost it. And that’s the reason why people aren’t upset (or, in many cases, are positively overjoyed) about the cuts.

@ Nick

“For example, if we say the borrowing of 1050 bn has a term of 30 years at 5%, its close to 70 bn a year… 550 tax less 70, leaves 480.”

Yes, I understand the principle that the higher the cost of servicing your debts, the less you have available for spending on services (for any given level of income). But you still haven’t spelled out why we should expect the cost of servicing our debts to exceed levels at which the government can continue to provide services. You need to come up with three rough numbers – the projected cost of providing the desired level of services at time t, the projected cost of servicing our debts at time t, and the projected value of government revenues at time t (for a tax burden at a certain % of GDP).

And again: the distinction you make between money needed to repay borrowed money and money needed to provide services is fair enough, but it becomes useless when you start counting things like pensions as ‘debt’, because by paying that money you’re providing a service as well as repaying a debt. (The same way I’m both repaying a debt and meeting my current housing costs by making mortgage payments.)

Well, lets walk through it slowly. If you want, we alternate spending and debt.

I’ll do the debt, you can do the spending.

I suggest the big items are taken first.

The idea is to produce a spending figure, and a debt figure with the interest rate on the debt, and hence the level of spending to support that debt. We can do the same with taxation. [Negative growth included]

If the total at the end comes to more than government taxation, then you can explain what gets cut, or who gets taxed by how much? ie. Numbers not waffle.

We’ve covered the borrowing. [I’ll produce an accurate figure for the average term, and average rate, that in itself is an interesting number]

How about you doing the NHS, plus the expected growth in the NHS.

If you want more money (necessary for growth) you have to have more debt

===================

Or more saving and less spending.

Nick

“ie. Numbers not waffle”

Yes please.

I don’t see the need to start from scratch here. You’re the one making the claim that the cost of servicing our debts (including paying pensions etc.) is likely to hit levels that mean we will either have to default on those debts, or drastically cut back on spending elsewhere. Presumably you’re basing that on certain conclusions you’ve reached about the future costs of servicing debts, the future cost of providing services, and the future level of tax revenues.

Now I’m not claiming to have figures that prove you wrong; I’m just expressing scepticism and asking you to spell out, in broad strokes, what those conclusions are and what assumptions you’ve made in arriving at them.

(I can see the sense in what you say about raising the pension age etc. amounting to a ‘partial default’, I ‘d just like you to give me some sense of the big picture here.)

Lets take the state pension then.

What matters is accrued rights. That determines the debts. If someone has 15 years out of the 30 needed for a full state pension, they have 50% entitlement.

So how do you determine how much it costs to provide one state pension? For that we can look up the cost of an equivalent annuity. After all annuities are backed up by gilts. Both the annuity company and the government have the same expenses in administering them.

http://www.annuitybureau.co.uk/resources/rates_rpi.html lists the rates (for RPI)

Best deal for the nearest to the state pension, 3,178.80 of income for 100,000 of money.

State pension is 102.15 a week or 5311.80.

That’s the direct equivalent of 167,100.79 pounds of debt. The government has agreed to pay 167K’s worth of income, present value, in exchange for taking money up front.

With me so far?

Yes, but Nick, there’s walking through slowly and there’s walking through s-l-o-o-o-w-l-y. We don’t need to go item-by-item, especially if at the end of that process we’re just going to be left with another one of those big numbers that’s supposed to represent the total value of our current debts. I’ll take your word for it that their value is 7tn, as you suggest; I’ll even take your word for it that the cost of servicing that debt plus meeting spending obligations is one day going to reach 1tn. What I want to know is why you think we won’t be able to afford that; i.e. what assumptions you’re making about how much the economy will have grown between now and then and hence what the government’s annual income will be at that time.

I’m not trying to put you on the spot here and force you to crunch a lot of complicated numbers – just to say what estimates, however rough, have led you to conclude that in the year 20XX, when the cost of servicing our debts and maintaining services hits 1tn, the government is only going to be raising 0.Xtn (cycliically adjusted) in revenue and therefore will have to default or cut spending.

(I mean, I’m sure if someone had sat down in 1950 and calculated the total value of our debts, and the real-terms cost of servicing those debts and meeting spending obligations in 2000, the figures would have looked absolutely mind-boggling. But they wouldn’t have meant anything until viewed in the context of assumptions about real-terms growth in GDP and hence in government revenues over that period.)

Perhaps it is time for Sunny Hundal’s pacifier.

I have it here:

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8262037/Bank-bail-out-adds-1.5-trillion-to-debt.html

Do some research on Iceland whilst you are sucking on it.

BTW, followed the link from Old Holborn.

I’ll even take your word for it that the cost of servicing that debt plus meeting spending obligations is one day going to reach 1tn

===========

That’s 1 trillion linked to inflation. If it were 1 trn today [It’s back end loaded. Low payments to start rising ….] it would be 1.05 trilllion next, year, …

That’s why I talked about present value, and if people understood what present values means.

===========

I’m not trying to put you on the spot here and force you to crunch a lot of complicated numbers – just to say what estimates, however rough, have led you to conclude that in the year 20XX, when the cost of servicing our debts and maintaining services hits 1tn, the government is only going to be raising 0.Xtn (cycliically adjusted) in revenue and therefore will have to default or cut spending.

===========

It’s 1 trillion plus inflation, each year compounded.

That ignores welfare.

50% of the UK population with less than 5K in savings.

Now where in part you are right, is that it doesn’t matter, debt or spending, it looks the same. It passes the duck test, if both are forced spending. That is why the concept of core spending is important. Optional versus non optional.

So on top of the debt payments, pensions etc, for accrued rights, just what’s your proposal for the bail out of those that have no savings.

MIG is 7K a year, housing say another 4K a year, free health care. Around 14K a year that someone else has to pay. For 50% of retirees. Rising with inflation, and that assumes they get health care spending under control.

You need to add that on top.

For Mr Roshan on bank debt.

It isn’t a good idea just considering bank liabilities without looking at the bank assets that should match them.

ie, the government is on the hook for the difference between assets and liabilities, if that goes negative.

That’s a far smaller number. It’s the present value of the expected losses.

The same doesn’t apply for government pensions, unless people can say what can be sold to generate the money.

Some on the left think that we should be owned by the state, and hence our earnings are the states, and therefore we can be booked as an asset. Same argument applied to slaves, and there the owners kept a stud book of breeding. The UK government already does that bit.

@ Nick

…and again, I’m seeing lots of big numbers relating to future government spending obligations, but no numbers relating to future goverment revenues. So again, I can’t conclude anything about affordability.

I must have asked half a dozen times for whatever ballpark, guesstimated figures you’ve based your conclusion about future (un)affordability on, and you’re obviously not going to.

So go on then, I’ll get the ball rolling with some made-up figures of my own, just for the sake of argument:

Projected (average) real-terms annual rise in government spending inc. debt servicing costs, 2012-62: 2.5%

Projected (average) annual real-terms annual rise in GDP, 2012-62: 2.6%

Conclusion (assuming government revenues rise about as fast as GDP): we’re laughing.

Go on, throw me a bone. Is the first number way too low? The second number way too high? What?

‘We’ didnt win the economic argument – there has been very little economic argument – which is why most people still believe the ‘cuts are necessary’ rubbish. If some of our ‘left’ leaders (those in the labour party) hadnt already sold out completely to neo classical economic theory then perhaps they could convince others to challenge the dominant economic orthodoxy, but essentially they are part of it – so they can’t.

The ‘core voters’ you speak of are no such thing. They are those who currently intend to vote that way. Victims of the media and the lack of convincing intellectual leadership from the opposition. Many of these people will be affected by the cuts – we need to continue to try and reach them, at the right time, with the right arguments.

Someone else in this thread points to the vast numbers of disillusioned non voters – many of these are people abandoned by new labour, and although they may largely be situated in safe labour seats, they could still be a massive progressive force if they weren’t so cynically written off by virtue of our parliamentary system. Who is trying to reach them and engage them in this debate?

So what do you suggest Sunny? Because frankly you aren’t doing enough. You should be publishing more analytical arguments which contain facts and that interrogate stats, and which could be used to support the arguments against the mainstream economic orthodoxy.

Things change, opinions change, all influenced by the availability of information and persuasive argument. Your opinion is vaguely interesting, but that is all it is – your opinion, and one thats and really not reinforced by the intellectually and analytically lightweight articles you choose to publish on this site.


Reactions: Twitter, blogs
  1. Liberal Conspiracy

    Why the cuts won't make this government unpopular http://t.co/zLSwY1Nq

  2. BevR

    Why the cuts won’t make this government unpopularLiberal Conspiracy http://t.co/GD5GK7nF via @addthis #WRB#SPARTACUSREPORT#ATOS#UNUM#ESA#DLA

  3. Julian Rowley

    Why the cuts won't make this government unpopular http://t.co/zLSwY1Nq

  4. Doug James

    Why the cuts won’t make this government unpopular | Liberal Conspiracy http://t.co/7d3MFsGY – A view from Sunny

  5. CampbellX

    Why the cuts won't make this government unpopular http://t.co/zLSwY1Nq

  6. sunny hundal

    Seven reasons why I think deep spending the cuts won’t make this government unpopular http://t.co/IBCKEmjG

  7. Ruwayda Mustafah

    Good-read: “@sunny_hundal: Seven reasons why I think deep spending the cuts won’t make this government unpopular http://t.co/arLpPnlX”

  8. Harry Scoffin

    Seven reasons why I think deep spending the cuts won’t make this government unpopular http://t.co/IBCKEmjG

  9. Matt Halsey

    Seven reasons why I think deep spending the cuts won’t make this government unpopular http://t.co/IBCKEmjG

  10. House Of Twits

    RT @sunny_hundal Seven reasons why I think deep spending the cuts won’t make this government unpopular http://t.co/mWOfgr9Q

  11. eleanor

    Why the cuts won't make this government unpopular http://t.co/zLSwY1Nq

  12. aliqot

    Why the cuts won’t make this government unpopular | Liberal Conspiracy http://t.co/Y4w37D42 via @libcon So what is to be done??

  13. Patron Press - #P2

    #UK : Why the cuts won ’t make this government unpopular http://t.co/TIjFGUDz

  14. Jason Brickley

    Why the cuts won’t make this government unpopular http://t.co/eNcsJL6i

  15. Jess Steele

    "the public is like the frog sitting in boiling water" Why the cuts won’t make this govt unpopular http://t.co/MUPlkvvw via @PatronPress

  16. punkscience

    This deserved more rage and swearing but my heart's just not in it tonight. http://t.co/rTwdfYAC #LabourScum

  17. VirtualResistance

    Seven reasons why I think deep spending the cuts won’t make this government unpopular http://t.co/IBCKEmjG

  18. mao zedong

    RT @PatronPress: "#UK : Why the cuts won ’t make this government unpopular http://t.co/aT0DMyCy" #ows

  19. leftlinks

    Liberal Conspiracy – Why the cuts won’t make this government unpopular http://t.co/7cOQctFy

  20. Nick E Woodfine

    Liberal Conspiracy – Why the cuts won’t make this government unpopular http://t.co/7cOQctFy

  21. Keri Facer

    "the public is like the frog sitting in boiling water" Why the cuts won’t make this govt unpopular http://t.co/MUPlkvvw via @PatronPress

  22. Owen Blacker

    MT @sunny_hundal Seven reasons why I think the cuts won’t make this government unpopular http://t.co/QBFpDW29

  23. George Powell

    Here are the reasons why I think deep spending cuts won’t make this government unpopular http://t.co/IBCKEmjG

  24. Eddie Robson

    Here are the reasons why I think deep spending cuts won’t make this government unpopular http://t.co/IBCKEmjG

  25. Roger Thornhill

    Here are the reasons why @sunny_hundal is at least partly deluded http://t.co/QEsA2lpx

  26. Daniel Byles

    "We (the left) also eventually won the economic argument…" MT @sunny_hundal: http://t.co/JZK7gsIZ #weatheronplanetlefty?

  27. The Fat Councillor

    Nope & Nope "using a stimulus to revive the economy & reduce debt makes economic sense but is confusing for people" http://t.co/CQCwEGuj

  28. InterUncut

    Why the cuts won’t make this government unpopular | Liberal Conspiracy http://t.co/tbkBPZsW via @libcon

  29. Dawn Mckenna

    Why the cuts won’t make this government unpopular | Liberal Conspiracy http://t.co/tbkBPZsW via @libcon

  30. Lucy Bailey

    #UK : Why the cuts won ’t make this government unpopular http://t.co/TIjFGUDz

  31. Morgan Dalton

    Why the cuts won’t make this government unpopular | Liberal Conspiracy http://t.co/KzynmoRJ via @libcon

  32. Britain: a nation of muddlers? « Representing the Mambo

    […] This over at Liberal Conspiracy is well worth a read. Sunny Hundal makes the point, and backs it up […]

  33. Scott Seaman-Digby

    Here are the reasons why I think deep spending cuts won’t make this government unpopular http://t.co/IBCKEmjG

  34. Katie Storey

    "the public is like the frog sitting in boiling water" Why the cuts won’t make this govt unpopular http://t.co/MUPlkvvw via @PatronPress

  35. CAROLE JONES

    "the public is like the frog sitting in boiling water" Why the cuts won’t make this govt unpopular http://t.co/sFrOkvW3

  36. Christine Burns

    Sunny Hundal maps out clearly "Why the cuts won't make this government unpopular" http://t.co/1myE325G (and the bind Labour is in)

  37. Rory O'Donoghue

    "the public is like the frog sitting in boiling water" Why the cuts won’t make this govt unpopular http://t.co/MUPlkvvw via @PatronPress

  38. Dr Adam Mbewe

    "the public is like the frog sitting in boiling water" Why the cuts won’t make this govt unpopular http://t.co/MUPlkvvw via @PatronPress

  39. Paul Anders

    "the public is like the frog sitting in boiling water" Why the cuts won’t make this govt unpopular http://t.co/MUPlkvvw via @PatronPress

  40. Kate Woodrow Cheong

    "the public is like the frog sitting in boiling water" Why the cuts won’t make this govt unpopular http://t.co/MUPlkvvw via @PatronPress

  41. Mark Doidge

    "the public is like the frog sitting in boiling water" Why the cuts won’t make this govt unpopular http://t.co/MUPlkvvw via @PatronPress

  42. Loundsley Green CT

    "the public is like the frog sitting in boiling water" Why the cuts won’t make this govt unpopular http://t.co/MUPlkvvw via @PatronPress

  43. Simon Redding

    "the public is like the frog sitting in boiling water" Why the cuts won’t make this govt unpopular http://t.co/MUPlkvvw via @PatronPress

  44. Echoing David Miliband: why lefties should be sceptical of the state | Liberal Conspiracy

    […] is in light of these flaws that we should read Sunny’s claim that spending cuts won’t make the government unpopular. Very many working people are not opposed […]

  45. Scott Redding

    RT @sunny_hundal: Seven reasons why I think deep spending the cuts won’t make this government unpopular – http://t.co/XSwWURnw

  46. Wendy Hibbs

    Here are the reasons why I think deep spending cuts won’t make this government unpopular http://t.co/IBCKEmjG





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