Bring on the serious economic debate

TrevorsDen

Mr Bathgate Canada and Australia do not have the BBC.

They do not have Andrew Marr they do not have Nick Robinson ...

As Labour gloss over the scale of the cuts even their half hearted measures will entail the BBC keeps mum.

At a vital time in Britain's economic future the Chairman of the BBC's flagship Question Time programme treats it like he is taking part in a pantomime.

Short the UK

Mark

I think Matthew Parris's piece in the Times yesterday was the dog's bollocks. Janice Turner's piece was fluffy and twee.

Here's some proper red meat:

"It’s astounding that people can’t grasp the simple concept that wealth (as opposed to money) does not grow on trees. We, individuals and governments, have consumed more than we produced, for a long time, or in simple terms we spent more than we earned. Now we, individuals and governments, must earn more than we spend, for a long time. Yes, that will cause a depression. It can’t be avoided because the consumption has already occurred and payment is due.

Our previous debt-bubble-fueled-overconsumption will be paid for, either by those who consumed, those who provided the goods, those who provided the credit, or the taxpayers. No matter which group pays, that group will consume less because they are paying for prior consumption. It doesn’t avoid anything if the government stimulates using more borrowed or printed money, just shifts the burden from one group to another. Creating future tax burdens by running large govt deficits just shifts the blame down the road a bit. Creating inflation is a tax on savers, which subsequently reduces their ability to consume. Defaulting on debt will be ruinous to creditors.

The “mother of all depressions” is still coming. We’re just rearranging the deck chairs and deciding who gets first dibs on the lifeboats."

Addenda

"When an entity/ enterprise / person goes bankrupt, the wealth that was formerly "owned" is now reassigned and actually used productively by someone who wants it, needs it and knows how to use it. It doesn't somehow disappear, "poof!". But when a trick like QE attempts to artificially prevent an undercapitalized asset (e.g., Brit Real Estate) from being appropriately reallocated, the result is zombie assets, lying around doing nothing. The expression "moral hazard" does no justice to this situation: "economic suicide" is better. This is the Japanese story from the 90s. Every pound spent on deluding Northern Rock's accountants is a pound taken out of a teacher's pay-cheque."

Anon

=====

GBP: Reserve Currency-->Industrial Currency--->Hard Currency--->Hedge Fund Currency--->????? Currency.

It seems these are the options:

A. Deflationary depression.

B. Stagflation.

C. Stagausflation (stagflation + austerity).

D. Depflation (depression + inflation).

A - would be the best as the creditors would take a haircut and the balance sheet would be viable for future growth, only Thatcher has taken this course in modern British history. Remember the whole elite came out against her, 364 economists wrote to the Times, including Mervyn King.

B - is impossible because the deficit has to be cut. We are in this phase at the moment.

C - is where we are going next, if the political elite start cutting then this will be our lot for years, and years, and years. It is a reverse parallel experience of the Irish but worse.

D - this is the darkside where we will go if the political elite don't tackle the deficit. The Pound collapses and the UK is seen as a basket case.

*Option C: is slow "economic suicide".
*Option D: could reach a tipping point with a Brown & Balls win; human & capital flight.

denis cooper

But who's going to take part in this serious economic debate?

Noa Zrk

Thank you Mr Bathgate for a thoughtful and challenging article.

Holly ......

Britain does not fall for the financial spin!
YOU LOT do!
YOU LOT then force feed it to us on an hourly basis!
Britain has come to loath the MSM as much as the politicians...mistrust does not come into it any longer.

emil

When BBC's St. Vince of Cable gets treated as some sort of expert for actually not having predicted anything but being the first to say "I told you so" it tells you everything you need to know about the "debate".
ps Labour cuts good cuts, Tory cuts evil, the state broadcaster official line in a nutshell. Honest debate my arse.

Alfred T Mahan

I so hope you're right, but the problem lies very deep - and it isn't just the media to blame, as there has been no effective financial opposition for years. Cameron and Osborne acquiesced in Labour's trashing of the economy with their slogan "sharing the proceeds of growth" and failure to criticise government policy. That has not only destroyed much of their credibility but it also infantilised the debate. The sidelining of more thoughtful politicians such as John Redwood has been a great loss for the country.

"The duty of the opposition is to oppose" rings very clear as you look at the past few years.

John Moss

Please, please, please can we get in to a serious economic debate. One which, perhaps, might start with an honest assesment of Brown's record and some facts.

Maybe like the fact that from 2001 he never balanced a budget and had to borrow between £25 and £40 billion every year for six years, before even we entered recession.

Of course, that was just the warm up and since he became Prime Minister, he has really got going and run up the national debt at an even faster rate. £90 billion last year, £180 billion this.

Stevie

It would be electoral suicide for the Tories to spell out how utterly, utterly dreadful the next decade will be. And that is simply because the MSM are still in the thrall of the liar who is PM and his thugs, CampBell, McBride, Draper etc. We should ALL be told what a mess we are in, it wants drumming into peoples minds 24-7 for the next two months. Fraser et al-get bloody busy before we sleep walk into the disaster of 5 more years under Brown.

Right On

Goes to the heart of the problem with the Tories at the moment - they refuse to make the case for why supply side economics and the free market can help create opportunity for everyone and that we want a society that encourages enterprise and entrepreneurship.

I don't think this is entirely the fault of Cameron/Osbourne - unfortunatley the legacy of the past 13 years is that most people have been (wrongly) convinced that Brown's approach to economics is sustainable.

strapworld

Mr Bathgate. It is time we had grown up politics. It is time we had politicians that spoke the truth in plain english.

However we now have a leader of the conservative party who is attempting to gain power without being straight with us all on just what his economic policies are. One day cuts next day a different story the day after that yet another variation.
He is not being honest and straight with the people, and they have rumbled him.

I, and many others, have written many times that we need the likes of John Redwood, whose own blog has been totally open and honest in what is needed for the Country for many months.

But Cameron appears not to enter the road of openness and honesty with the people.
It is only when he lays the awful truth out to the people, who do believe in the money tree at the moment because no party leader will tell them the truth. Even the awful Clegg!

Sadly, I do not think the people are ready for the Canadian and Australian way. I fear that the facts will have to be brought to them brutally, when they are faced with the dire choices 'Short the UK' writes about above.

I will be in Australia later this month for my yearly visit to my son. I know that he is appalled by the level of political debate in this country and cannot understand that the people may well vote the incompetent Brown back into power.

That says as much about the people, the level of debate and the shockingly poor job Cameron has done.

Richard

There is another way!

Involves minimal pain for the majority of people and deals with the debt very quickly.

In order to recover 178 billion we could cease the assets of the top 10% of the people and become a republic like France...off with their heads....could bring closure to the bankers greed culture quite quickly too.

If only there was a party ready to put this to the country.

John Moss

In response to Short the UK, I would say that there is another alternative, which is to sharply cut business taxes to attract investment, create jobs and generate growth. Laffer will tell you that this will not reduce tax receipts, but will in fact increase them.

In parallel with sensible reductions in public spending, this can keep inflation under control, return us to surplus and start to reduce the debts Brown has left us with - albeit that task will likely fall to our children and grandchildren.

Holly ......

Off topic sorry.
Richard..here's the breakdown you asked for
PART ONE(So you don't get too overwhelmed or confused)
.How are Labour going to reduce the deficit
in four years,yet continue to spend for the next twelve months,then square it with the public and the markets.
.How do Labour explain the fact that parents
and the tax payer has to PAY AGAIN for extra
tuition,because children are not getting the same quality of education I did..at my local comp?
.How are Labour going to tackle the mass of immigrants already here and why did they allow mass immigration from outside the EU
in the first place?
.How are Labour going explain to the voter why they have ensured the criminal is protected more than the victim?

In answer to your previous comment I do not drink either,but you don't have to buy alcohol just because you're down the pub.
I am 100% certain of my preferred party's position and I do trust them completely.
They have never betrayed me like Labour have
their core vote.
Shame you have not noticed that before now.
Working class folk do not trust Labour any more.

Mark Bathgate

Countries have been in trouble before - Finland's situation in the early 1990s was pretty horrific as an example. 5 years later they were homing in on the world's richest country lists, driven by a world class group of export companies - Nokia, Instramentarium, Metso, etc - that emerged from the depression they had suffered.

It is no necessity that a long depression and decline in living standards has to happen. What does need to change though is the direction of economic policy - to come up with ways for us to dig our way out of this hole - find smart ways to do more for less in Government, find new products and markets we can compete and earn a living from, etc.

Highly educated, developed economies can bounce back from shocks very quickly when policy sets them back on the track to do so.

oldtimer

To TrevorsDen`s list of culprits I would add the ever growing payroll vote so assiduously cultivated and expanded by Brown. They will only be weaned off the state teat when it no longer produces the sustenance they crave without lifting a finger.

I have no great expectations of a great conversion to financial prudence either by the politicians or the public at large. It is clear that the politicians hope against hope that phoney growth, based on QE-fuelled inflation, will float them out of the worst of their problems. We have already heard the weasel words from politicians of both the main paries say as much. I expect further flight of people and capital from these shores. Bolton`s about to be floated China Fund will be a useful bellweather.

Short the UK

John Moss,

I think your ideas would fit within the Deflationary Depression. In this scenario there would be a clear out of the malinvestments, leaving capital to be allocated to new productive capactity. It would be the rebuilding of the UK economy.

Ireland are slashing the State but keeping taxes on low on business. They are having the Deflationary Depression.

There is no escaping a depression, its just a matter of whether its Deflationary or Inflationary. Which is more iniquitous, offers the prospect for sound money and growth?

Chuck Unsworth

@ Richard

Is English your second language? Or maybe you do mean 'cease'.

Zoo keeper (Elephant House)

Short the UK @ 7.34pm

Once more... keep up the good work Short.
Keep it monosyllabic.

In 1997, Doctor Gordon said that smoking was good for my health. In fact he recommended smoking at least 20/day.
I often wondered if I had misunderstood.
In 2010, I was diagnosed as suffering from lung cancer, and Doctor Gordon naturally recommended increasing to 25 cigarettes/day.

That nice young Doctor - the one who told me to Call him Dave - well... I'd like a second opinion, but no-one can find him. In fact, one of the nurses says he's on some sort of course or other... for W D & H O Wills. Whoever they are.

But I trust them. Well... you would do. Wouldn't you?
They're doctors.

Boudicca

I have no idea what the Australian or Canadian education systems are like, but in the UK, teaching of arithmetic, maths and economics is dire and has been for several generations.

Most people don't really need too much in the way of maths to get by in the adult world, but they do need a good grasp of basic arithmetic. A large proportion of the electorate is basically innumerate. They are not taught financial management and even more have never learnt any kind of economics.

Until that is rectified any Government that is inclined to lie and distort financial truths for its own benefit will be able to do so. Unfortunately, for a large number of the electorate, money might just as well grow on trees for all they really understand about it.

TomTom

In the 1980s Australia had a huge overseas debt burden created by Alan Bond, Robert Holmes a Court and John Elliott. Canada currently has a huge speculative property bubble in Toronto and Vancouver and a government which is highly secretive.

Harper simply prorogued Parliament until March rather than debate issues. Maybe Brown should follow his example and rule without Parliament ?

Beer Moth

Mark

Highly educated economies might very well have the ability to bounce back. But, seriously, we are not highly educated. As a nation, we are muppets. We are muppets because that's how successive administrations have arranged things.

The no-tech economy, remember?

Short the UK

Mark

"t is no necessity that a long depression and decline in living standards has to happen. What does need to change though is the direction of economic policy - to come up with ways for us to dig our way out of this hole"

Do we actually have the political leadership to do what needs to be done? Labour are tax & spend; businesses and wealth are leaving the UK for lower taxed jurisdictions. The Tories have had almost three years since Northern Rock, have we seen them on high profile visits to India, China, Japan, Singapore, etc. What have they actually produced that adds real substance?

If you are looking at UK plc as a multi-national:

~Deficit c.£170bn
~House prices overvalued by c.50%
~Personal & private debt to GDP c.400%
~Stagflation morphing into Stagausflation.
~Government spending to GDP c.53%.
~Some parts of the UK have more State support than Cuba.
~Growth of the past decade was built on a debt-merry-go-round: The City, Property Speculation, Retailing and Government Spending.
~Incredible debt levels.
~P*** poor management.
~Over valued assets on the balance sheet: housing stock.
~Very high and uncompetitive tax rates.
~Top sales people leaving: Ineos last week.
~Mediocre infrastructure.
~Rising input costs due to weak currency and inflation: unsound money.

This is a root & branch restructuring and turnaround. Do you see an elite that fully understands the situation and what is required? Most importantly are the public ready? The 70s were a train wreck but it took until '79, then Thathcer became a serious hate figure. Have the elite and public got the will and stomach for a sharp, shocking depression?

It looks like the public will need a Sterling collapse, higher interest rates and inflation, before they truly wake up to Labour's appalling economic mismanagement. Maybe then the public will turn Right and vote for sound money.

tonyp17

Mark

You are right. The majority have yet to be hit with the inevitable pain to come from the spend, spend, spend policies and the lies and deceit we hear daily.

The press must stop being taken in and explain in words of one syllable that there has to be an alternative approach or we are all doomed.

It is time this started now - there is no time to waste.

2trueblue

Who are you going to have the serious economic debate with? We have a government that is totally incompetent when it comes to finance. Gordos budgets were clever in that they needed 3 or 4 days to decipher them, the devil was always in the detail.

We, as yet, do not even know what sort of state the finances are in.

What we do know for sure is that Liebore are incontinent with money. They have never made anything work in that area and only understand spending our money. They do not understand what budgeting means.

They have spent the past year in a slash and burn mode and will leave us with massive problem that we all know our children and grandchildren will inherit.

So, who is going to engage in this debate? Liebore say that we can't cut this year but will get the defecit down to half in 4yrs. More smoke and mirrors. The BBC and our supine press have have let them get away with it so we are all ignorant of the facts. That does not mean that we are all ignorant in money management, that some of did get our money out of equities, commercial property and into cash in early 2007. There are a lot of people who saw it coming, but the vast majority believed the big lie, and thought it would never end.

There were no politicians in late 2006 and early 2007 who were warning that it was about to implode, not here, in Europe, or in the US. There were about 4 economists who said it was not good and they were derided and acused about talking the economy down. M king said there was too much personal debt and the housing was overpriced, but hey, who wanted to hear it? Your house was worth thousands more each month. In July 2007 one of the great investment banks were advising people to buy Northern Rock shares! In August it all went bang. No one wanted economic debates in late 2006 and early 2007.

Gordon Brown increased our debt continually throughtout his tenure in no 11 and no 10. Gordon Brown and his sidekick Balls got a very easy ride and refuse to clarify what state our finances are in. It was not their money, their pensions are gauranteed by us, whereas they destroyed all of ours. They do not pay taxes on all thier monies, CGT when 'flipping' houses, and are protected by their parlimentary privilage from abiding by the law that we have to abide by for tax purposes.

The great debate????? Get real, there will not be one.

What has Brown got to offer after 13yrs of estroying our economy? We will simply pay the price for their incompetence and the rest is history.
The Tories will eventually have to fix it and then the electorate will whinge and complain about paying for the mess that their wonderul Liebore dumped us in. There are too many vested interests not to say it how it is.

Major Plonquer

I suspect it might have something to do with the fact that many of the honest and intelligent people have already departed the UK and emigrated to Australia and Canada.

I mean the ones who are left in Britain actually voted in a Labour government. Three times.

Frank P

Seems a fair summary of this debate can be summed up in two words: we're fucked! Except that's actually three words.

mitch

So this election is really about who will pay for browns financial stupidity, will it be the people Cameron doesn't like or the people Brown hates.
Some choice that is!

Holly ......

Richard..PART TWO..
. How are Labour going to explain why the NHS has become so bloated and top heavy,yet the wards are filthy with patients going into hospitals with minor treatments are dying.Also how do they explain why the elderly are left in disgusting conditions and suffer from malnutrition/starve to death?
. How are Labour going to tackle the fact that businesses are no longer happy with the
churned out illiterate/innumerate school leavers/university students?
. Why are the government putting up fake shop fronts instead of lowering business tax and forcing councils to lower rents for a while?
. Why did Gordon Brown lie at the Chilcot enquiry about troop funding?

Ian Walker

Hear hear, Holly - it's the poorly-educated, lobby munching, soundbite regurgitating media that stifle the debate, not the public.

Publius

Richard writes:
"cease the assets" etc.

-- With fitting irony, he illustrates the problem.

Richard

@HOLLY
Break it down to reasonable chunks you are like a scattergun....just take a deep breath pick you questions in order of priority and then put them one or two at a time.
And try to put questions not sound bites.

Yarnefomhorsham

Strapworld - it also says so much about the level of education in this country - doubt if many people can get beyond a level of insight that goes above Cory and the Vic.

JR

This wasn't my experience when I visited the Canadian government and a couple of provences not so long ago.

There were huge unexploaded fiscal bombs all over the place and there was no clear consensus for going forward particularly because a lot of the spending associated with an ageing population was province based. And as has been pointed out the Government were willing to act genuinely undemocratically to not debate policy in Parliament (far far worse than anything Brown, Blair or Thatcher got up to).

Their economy was also heavily reliant on their neighours across the border and is currently experiencing a 1980s type reduction in the manafacturing.

Climate changes have left them facing some of the harshest winters in their history leading to huge levels of fuel/energy related poverty. There is also massive disparities in unemployment, health care, education and service standards between provinces. On the positive side they were hugely welcoming to immigrants from any part of the world and the big cities were as multi-cultural as London.

Simon Stephenson

"Why does Britain fall for financial spin so often?"

With respect to Boudicca (9.56pm), and those others who specifically lament the poor quality of numeracy teaching, I think the cause of the problem is deeper than this. Where we fall down, and open ourselves to spin and manipulation, is in the reluctance over many years to teach our children basic logic and argumentation - our failure to give them the tools to smell rats in what they are being told. It is a problem for many that they've never been taught how to distinguish substantial argument from horsesh*t, and yet there is substantial social pressure upon them to make such qualitative judgements. The outcome is that they make the convenient assumption of the quality of the argument being comparable with the quality and impact of the way it is presented.

Bearing this in mind, it's hardly surprising that those who want to "win" have chosen to focus their attention on the marketing and appearance of what they are trying to "sell". Nor indeed that the people who have become most influential are those who are adept at manipulating current opinion, rather than those whose strengths lie in optimising policy.

We've ended up with national policy being decided by a group of people with skill sets that are inappropriate for the purpose.

denis cooper

I watched Kenneth Clarke on the Daily Politics with Andrew Neil.

The latter was trying to raise the level of the debate a little bit, but Clarke preferred to keep it as dumb as possible.

At one point when Neil mentioned gilts, Clarke responded by saying:

"I don't want to get into the technicalities of the bond markets"

It reminded of his infamous admission, all those years ago, that he hadn't actually read the Maastricht Treaty.

Sevo

I have an idea: let's let the Prime Minister debates be run by Canadian, Australian and US journalists, proper ones asking tough questions and actually badgering the speakers until they get a specific answer to the specific question posed. Now THAT would make great television!

Forrest

Having an unstable economy makes some people to rely on payday loans. It's very simple to find yourself in debt, actually, it's encouraged by banks, credit card companies, and their marketing – which seems quite perverse. If you've found yourself into debt, using some sound debt management will help you out. It starts with sound budgeting, and allocating more towards paying off credit card debt, student debt, whatever it is, so you have a timeframe and goal of debt relief. Lay off the plastic devils and save up for things – there are sources of help if you considerably need it like payday loans, if necessary, but the point is to pay for your debt off faster, so that you can stay clear of getting into debt again.

Suchi Agarwal

Strapworld - it also says so much about the level of education in this country - doubt if many people can get beyond a hiv symptoms level of insight that goes above Cory and the Vic.

Dave B

One year later, Alasdair Heath writes an editorial lamenting the poor quality of media coverage in the UK public debate.

http://www.cityam.com/news-and-analysis/allister-heath/media-failing-public-many-ways

Nothing has changed.