Memo to Johann Hari: this government isn't planning to "pay off our debt rapidly"

Liz Brown

Saw him on the telly once - years back - he was a total arse then and obviously is still a total arse now.

John Montague

The fiscal deficit is indeed the issue that could see HMS United Kingdom pushed onto the rocks by the bond markets.

But when asked if we should not be building hospitals rather than paying off debt interest, any businessman will think in terms of whether the return on capital invested is not likely to be higher than the cost of borrowing.

As usual, the devil is in the detail, and the question is whether limiting current levels of stimulation of the economy in order to reduce the debt burden is not likely to aggravate the main threat we both agree on, namely the inadequacy of the tax take to meet government expenditure, including rising unemployment costs.

It's wasteful government expenditure that's the real problem. How much capital we can afford to divert to paying off the national debt is dependent on efficientcutting of that expenditure, which is far more costly than just debt, especially given today's interest rates.

Chris lancashire

Is this bloke Hari downright stupid, economically illiterate or plain dishonest?

What would be interesting to see sometime is a graph of interest payments over , say, the last 10 years and projected next 5. as you rightly point out £67bn interest charge is an astounding amount and a tribute to Brown's waste.

Alex Deane

Chris - they're not mutually exclusive.

Tom

Yes, there is a difference between debt and the deficit but I notice Hoskin ignores the main point of Harri's article which is that even deficit reduction (as opposed to debt reduction) when performed at an overly rapid pace can put the brakes on the economy.

Hugo Chav

Here's a piece by the best economic blogger in the UK:

Britain Going Bankrupt? by Nadeem Walayat

http://seekingalpha.com/instablog/128631-nadeem-walayat/63756-britain-going-bankrupt

John Montague

"What would be interesting to see sometime is a graph of interest payments over , say, the last 10 years and projected next 5."

Why not over the last 65 years, Chris? The real cost of the national debt has to take inflation rates into account as well. It's an overstated problem. The budget deficit is the key.

2trueblue

Another muddled person who fails to clarify between the deficit and the debt. This enables Liebore to peddle their lie. We do need journalists to be clued up and distinguish betwen the debt and the deficit. It is clear that analysis is not always well done. The coalition are missing opportunities to clearly state what the debt is, what our borrowing on PFIs for our infastructure currently are, (mostly set up by Liebore) and what the deficit is. It is worrying that journalists fail to communicate the facts.

Chris lancashire, he is for Liebore who got us into this mess, and is probably all three.

startledcod

Mrs Cod has threatened me with the garden shed if I scream once more at a deceitful politician who purposefully mixes up deficit and debt or an inadequate interviewer who fails to upbraid them for doing so.

Ed Balls talking about 'paying down the deficit' brings on advanced apoplexy; how can one pay down (back, pay back, we're English, Balls went to a good public school, he should know better) borrowing? He knows what impression he wishes to give and the failure of interviewers to press him on this is galling.

One day we will repay what we have borrowed, probably no in my lifetime though.

Ping

It's about time the elite woke up to this crisis and stopped throwing tantrums, I include all the parties!!! As to the Guardianistas, you are a disgrace and a bunch of hypocrites!!!

Cutting spending through the ages

28th March 2011

ALLISTER HEATH

BEWARE, dear reader: this is a trick question. Which Chancellor of the Exchequer cut spending the most in a single year? Was it George Osborne in his Budget last week, which if this weekend’s protesters are to be believed is pushing through the most “reckless” reductions imaginable? Or was it the great Tory chancellor Nigel Lawson at the height of Margaret Thatcher’s premiership in the 1980s, the Tories’ Ken Clarke in the 1990s or even the 1970s socialist stalwart Dennis Healey?

Courtesy of the Office for Budget Responsibility, which has released all of the data, adjusted for inflation, we can finally calculate the answers. Lawson cut by 2.6 per cent in 1988-89, at the height of his very own inflationary bubble; but the reductions were painless as they were caused by a slump in unemployment benefits. He cut in more difficult circumstances by 1.4 per cent in 1985-86. Spending grew slightly in the following two years – but expenditure over the four-year period fell by 3.1 per cent. Spending only returned to the levels of 1984-85 in 1990-91 – and remained lower as a share of GDP.

Remarkably, Labour’s Healey was the joint second biggest one-year cutter: he slashed total public spending by 2.2 per cent in real terms in 1977-78, after a bankrupt UK was forced to take orders from the IMF. This was almost exactly the same as the 2.2 per cent chopped by Clarke in 1996-97 –though Gordon Brown stuck to his Tory predecessor’s spending plans and went on to cut another 0.5 per cent or so in 1997-98, taking the total two-year reduction to 2.7 per cent.

And what of Osborne? He will be cutting by just 0.6 per cent in 2011-12 (barely any more than Brown managed, and less in cash terms than Healey), followed by 1.1 per cent in 2012-13, 1.3 per cent in 2013-14 and 0.8 per cent in 2014-15. Overall, spending will be reduced by 3.7 per cent. The reason these figures are lower than the ones usually cited is that they take all spending into account – not just a few selected departments. So Osborne’s one year-cuts are modest compared with those of his predecessors – but his reductions are spread over four years and go slightly further than any Chancellor has achieved in the past 40 years. It might have been better politically as well as economically for Osborne to spread the cuts over just two years, and not to backload them in the way he has done.

The worrying reality is that Osborne’s austerity package is the minimum required to stabilise the public finances. The most likely Plan B would be more tax hikes and more cuts. There is simply no way that global investors would accept huge increases in spending, Keynesian-style, in the current climate – and any boost to demand from a slight reduction in cuts (as advocated by the more realistic Labour opponents of the Chancellor) would probably be cancelled out by higher rates. The OBR calculates that every percentage point rise in gilt rates would cost the taxpayer another £5bn in 2015-16. Debt interest spending in the first ten months of the year was up 48 per cent.

Revenues are also uncertain. The OBR is predicting a 10 per cent fall in the cash value of City bonuses in 2010-11, compared with a previous assumption of 5 per cent growth. This will cut tax receipts by £1bn a year, as the war on the City backfires. One thing is certain: smashing up a few bank branches and shops will resolve nothing.

TrevorsDen

He is all 3 Mr Lancashire. Typical thick socialist. Typical lying socialist.

Publius

This is Labour's dishonest line and it has been for some time.

Without ever quite saying so -- and while preserving "deniability" -- they are putting it out that the "cuts" are unnecessary, that the spending can go on just as before.

Boris nailed Labour on this. That's why they are so cross with him. But it won't stop them continuing with this particular piece of spin.

Just a tiny bit of extra tax on the "fat cats", and somehow the problem will just vanish. Idiots!

Mike

You say that Harri undermines his from the start off.

You undermine yours at the end, when you say: "is [it] better to spend £66.8 billion on interest payments than on hospitals, schools, jobs or whatever?"

Is that what you really want, money available as a result to be spent on public services?

Tony Young

And Hari had the nerve to Tweet me this little gem - @tonywonderfire "Look up the phrase 'argument from authority'. Using that logic, I offer you a range of Nobel Prize winners on my side" !!!

oldtimer

Listen carefully to PMQs last week - Cameron let slip some incautious remark about paying off the "debt". No one picked him up on it at the time. Osborne, in the recent past, has talked about paying of the nation`s credit card - when we are doing nothing of the sort.

Much more of this and people will start to suspect that someone somewhere really is trying to establish a new Big Lie. You are right to draw our attention to this latest "slip".

TrevorsDen

Looking to Hari's original post (which does not allow comments) he claims to write for one of Britain's leading newspapers - thats right --- The Independent, circulation 180,000. The Peoples Friend has twice that (OK its weekly but effectively hits 2ce as many people).

bojimbo

To whom is the deficit owed ?

REPay

This is why one can never vote Labour. Watch his appointment as the BBC's economics editor! The coalition does little to explain a crisis that most people believe is the banking sector's fault.

TrevorsDen

Your most interesting graph is the 'Historically Bad' one. And it shows why Hari was so unwise to rely on propaganda from Ed Balls as a source.

it also shows how unwise Brown (led by balls) was after 2001/2 when after letting debt fall under tory plans they allowed it to rocket up again. All the hard work and pain as the graph edged down - all undone by hubris.
The problems caused by the ERM were of course Tory problems - all egged on by Brown and Kinnock.

Sean Haffey

Put the debt another way: The interest is more than we pay on Education. Or Police. If we weren't paying down the damn debt, we'd be able to afford more or have lower taxes - or both.

TomTom

Johann Hari is simply not credible. He scribbles for a vanity publication and is superficial in everything he does. The real question with National Debt and its annual accretion the PSBR is to whom the money is owed.

In a country with a strong savings ratio like Italy or Japan high debt levels may well be financed internally; but basket-cases like Britain or the US with huge external deficits are running up trade imbalances because their economies are consuming beyond capacity.

Paying interest to foreigners adds to the exchange rate problem especially if you have no physicals to export; then you either sell your infrastructure or deflate your living standards to bring the external sector into equilibrium.

It is not as if Britain has been borrowing to build Class A infrastructure in terms of roads or ports or factories - it has simply been Consumerist. Britain has borrowed to buy the output of Chinese and German factories and pay their investment costs.

Johann Hari really makes King's College Cambridge look to have dropped its standards - he is exactly a coherent economist

TrevorsDen

Ping - if Osborne is cutting by less than 1% this year why is my local authority cutting by 25% over 4 years? Even allowing for ring fencing you have some enlightening to do.

PS
the notion that Gordon Brown is only the 3rd worst disaster to hit Britain following WW1 and WW2 is I must say charming (irony alert).
It of course ignores the millstone round our necks that paying off the debt of those 2 events were.
How much better off we would all be if those debts had not been incurred.

Paul

An interesting response . I think half the problem for those of us who are not economists is understanding what is really going on. There is a fog as dense of the kind found in war here, and it seems that language is chosen very carefully by all parties to ensure that there are manageable amounts of confusion.

One criticism in this article - some of the graphs start in the 1970s, some in the 1950s. To me that looks selective, and I would really like to see them all start at a common date so that there is a clearer picture.

toni

oldtimer. "Osborne, in the recent past, has talked about paying of the nation`s credit card - when we are doing nothing of the sort"

You mean we haven't maxed out the nation's credit card after all?
Why then do we continually hear Minister's telling us that's the problem? And it wasn't being stated in the recent past, it's become the Tory every day mantra.

Hugo Chav

Mad Dog Ozzy Osbourne has really screwed up the North Sea with his budget:

Bloomie - 29/3/11

Statoil ASA (STL), Norway’s biggest energy producer, put on hold a $10 billion plan to develop the Mariner and Bressay fields in the U.K. and said it will be less likely to buy British assets after a tax increase.

Statoil was developing the Mariner and Bressay heavy oil fields off the U.K. and had scheduled production to start by 2017. The Stavanger-based company paid Nautical Petroleum Plc (NPE) 87.5 million pounds ($140 million) for 21 percent of Mariner in September, raising its stake to 65.1 percent.

The new taxes “are tremendously negative,” Peter Mellbye, Statoil’s head of international development and production, said yesterday in an interview in Oslo. “We had a concept that was profitable, but a large part of this profitability has now been lost through the tax increase, so we have to rethink whether we can proceed with these projects.”

Tom B

As always, whenever I read from a socialist or somesuch that "this government is planning to create laissez faire, big cuts in taxes, or whatever, my response is always: "Bring it on!"

Fatbloke on tour

PH

Memo to all the usual suspects, you know all the right wing, dog boiling economic illiterates that inhabit SpeccyLand, look at the PSBR graph and tell me that GB / AD were spendthrift before the global Credit Crunch came along?

Maggie and Sha**er were much more spendthrift with the cash as they drove the public sector into the ground.

Consequently look and learn.

Ping

TrevorsDen,

Spending on the NHS has gone up from £40bn in 1997 to £120bn in 2010. There are no cuts for the NHS, in fact spending will increase marginally.

Because of this spending in other departments is getting hit much harder.

The Tories won't touch the NHS as it's too politically toxic.

Mark M

See the thing idiots like Hari don't understand is that while 52.7% GDP debt isn't actually all that bad, but in four years time debt won't be 52.7%, it will be 70.9%. That IS bad (remember when Gordon said borrowing shouldn't be more than 40%?).

Baron

Whoever it was who let this chap Hari out ought to be pensioned off.

John Montague and Mike, spot on boys, we should not only aim at slashing annual deficits, getting down to a tax-spend equilibrium, then as gilts mature rolling over smaller amounts, hence reducing the debt mountain.

Any money saved should not go towards any existing or new avenues of state expenditure, it should be left via lower taxes with the wealth creators. One cannot multiply wealth by sharing it.

TrevorsDen

Net public debt fiscal year 2011 was £932 billion. Interest payments £43 billion
For 2012 it will be £1059 billion; interest payments £47 billion.
Hardly visceral cuts.

http://www.ukpublicspending.co.uk

Defence in 2011 was £46 billion
by 2015 it will be £55 billion

My maths is as shaky as Gordon's but I reckon that ring fenced health increases less as a %age than defence.
Where am I going wrong - ? Why are the backwoodsman in the Tory party up in arms?

Richard Webb

UKuncut:
Why aren't you protecting the public sector?
UK Business:
Son, we live in a world that needs wealth, and that wealth has to be created by people in business.
Whose gonna do it? You? You, Ed Milliband? We have a greater responsibility than you could possibly fathom. You weep for the public sector, and you curse business people. You have that luxury. You have the luxury of not knowing what we know. That public sector cuts, while tragic, probably saved our country. And our existence, while grotesque and incomprehensible to you, creates wealth. You don't want the truth because deep down in places you don't talk about at parties, you want us making money, you need us making money. We use words like competition, risk and reward. We use these words as the backbone of a life spent creating something. You use them as a punchline. I have neither the time nor the inclination to explain myself to a man who rises and sleeps under the blanket of the very wealth that we provide, and then questions the manner in which we provide it. I would rather you just said thank you, and went on your way, Otherwise, I suggest you take responsibility, and create a business you believe in. Either way, I don't give a damn what you think you are entitled to.
(apologies to Aaron Sorkin)

Dimoto

The fact that Hari is in gainful employment, rather than trolling away on some obscure left wing blog, tells you all you need to know about his employers.

I would love to know what his colleague Hamish McRae thinks of this silly piece.

Most of the public will, unfortunately, never understand Peter Hoskin's graphs.
The message for them should be blindingly simple:

The country can't afford this bloated level of public spending and waste.

That's all. Then repeat ad infinitum.

Paddy

Fatman: Welcome back.

Did you have problems convincing the constabulary of your innocence.

Right On

It's scary that nobody seems to have grasped that we really have no idea what it means to run debts of this size. We have no plan to pay it off and are still squabbling about what we're overspending not what we owe.

We are saving up an almighty crash for sometime in the future - the kind that will make Weimar Germany look like a holiday.

Every economist of every discipline seems to be focused on how do you please your own constituents. To me it seems simple, sound economic policy and big government doesn't work.

The Oncoming Storm

Everytime I see or hear of Hari my first reaction is to look for slug pellets.

Nick

The likes of Hari also fail to take into consideration the impact that higher borrowing would have on the currency.

Continue borrowing 10% of GDP for another couple of years and watch sterling fall 10%. That just ramps up inflation as the price of imported oil, petrol and food soar.

sirenofbrixton

The government are actively pushing a line of spin to the general public that we need the cuts to pay off the national debt. There are many, many examples and some of the commenters have mentioned some from Osborner & Cameron so there's no need for me to provide links. That's the lie that Hari's referring to: the spin. In arguing that this Govt are NOT trying to pay off national debt, this article is actually making Hari's point for him: you're proving what a lie it is.

Victor Southern

The amount of interest that the nation pays on the National Debt is almost exacty £1000 per annum per head of population.

Look at that when related to an average family of, say, 4 people. £4000 a year. One way or another that has to be paid for. Those who do not have the means don't pay it so those who do pay double.

This is not necessarily reflected on your income tax assesment but in the VAT you pay, in the fuel duty you pay, in the council tax you pay. And not a penny of what you pay to service the debt will reduce the deficit by one iota.

Lay people such as me and my neighbours do not care at all how this state of affairs compares with what happened in 1865 or 1965 or even 2005 - it is what it does in 2011, today.

I have never seen, read or heard anything from Johann Hari that was anything other than the straight Labour line as discussed over the after-dinner liqueurs in Islington.

Percy

Don't spend another second writing about this dickhead, life is too short.

TrevorsDen

In fiscal year 1998 spending was £325 billion.
The national debt was £353 billion.

Not good.

But in fiscal year 2015, after prodigious govt cuts (we are told) spending will be £740 billion...
...whilst the national debt will be £1284 billion.

So in '80 debt was about 9% more than spending and in 2015 it will be nearer 75% more.

Since spending has been - and will continue to be for some time - more than revenue (ie ability to pay) then you see the tsunami of debt that has piled up and crashed over us.

Some of the gravity challenged amongst us may be sanguine about this. But for me I would prefer not to add to my burden with this millstone.

Cynic

@Chris lancashire "Is this bloke Hari downright stupid, economically illiterate or plain dishonest?"

He's a left-leaning journalist who writes for the "Independent" and the Guardian. Has that answered your question?

Occasional Ostrich

@REPay 4:35pm

"This is why one can never vote Labour."

Indeed. One should add, "or cause them, by neglect, misjudgment, misguided tactical voting, or supporting AV, to be in a position where they might be involved in government.

Frank P

It's possible that not just standards were dropped

Fatbloke on tour

Ping @ 4.18

Thanks for the article by Arsewipe, another of the Brillo clones keeping real people out of a job.

Don't you just love him?

Need a Tory puff piece to order?
Need a couple of sly digs at the BNP?
Need some Tory cuts propaganda?

Who are you gonna call?
The fresh faced Mr Arsewipe.

Love the bit about the Tory / Maggie cuts.
Nothing in context of course just some raw numbers.
Love the timing which seemed to pass Mr AW by.
Tory election strategy, buy votes in the run-up.
Cut with a vengeance after the election.

As for the rest of his political propaganda dressed up as analysis, complete and utter tripe. The cuts are coming, the cuts are huge and they will hurt.

Now what did they say about:

Lies, damned lies, and Tory propaganda?

Finally a word for Auld Rab, the appeasers bag carrier who invented the pre-election give away that you had to return.

Waverider

@Paddy 5:49pm

Or raising bail?

Frank P

Tom Tom

"Johann Hari really makes King's College Cambridge look to have dropped its standards - he is [not]exactly a coherent economist"

In that case we can but speculate about what Joannie might have dropped in order to pass muster.

Simon Stephenson.

""As a proportion of GDP," he writes, "Britain's national debt has been higher than it is now for 200 of the past 250 years.""

This is a completely worthless statement unless taken jointly with the fact that for the last 250 years we have spent most of the time either engaged in, or paying for, major wars. The graph and the chart can be seen here:-

http://www.ukpublicspending.co.uk/downchart_ukgs.php?year=1692_2011&chart=G0-total&units=p

As you can see, there was an almost continuous decline between the end of the Napoleonic Wars intil the outbreak of the Great War, a plateau in the 1920s followed by a decline in the 1930s, and then another almost continuous decline from the end of World War II until 2008, with some wobbling in the 20 years since 1988. In no peacetime period during this 250 years has the debt percentage increased by two thirds, such as it has between 2008 and 2011.

Fatbloke on tour

Failed Blogger @ 6.43

Why don't you look at the numbers regarding the cost of financing the national debt?

Just the last 50 years will do.
I can assure you, be prepared for a surprise.

GDT

Johann Hari,
is suspect if you read and agree with his articles then you're of a communist persuasion. Let Boris Johnstone loose on him. He seems to have a way of getting under the skin of Commies!

Steve Tierney

I can't remember the last time that I read such an ill-conceived, erroneous and quite frankly dangerous piece of claptrap as this one written by Johann Hari. The man is clearly a fool. But worse than that, he's a Keynesian fool. The worst kind.

Simon Stephenson.

Looking through my 7.13 comment, I realise that the final sentence:-

"In no peacetime period during this 250 years has the debt percentage increased by two thirds, such as it has between 2008 and 2011."

is a leftie-standard claim as spurious as Hari's about which I was commenting. Of course 2008 is a relatively low base, so a two thirds increase from here, from 36% to 60%, is a lesser calamity than, say, a two thirds increase from 150% to 250%. Sorry if anyone has been misled by this.

What is quite true, however, and is a fair comparison, is that in no other 3 year period in the 250 years has the percentage gone up by 24% of GDP, other than during a major war, or in the immediate aftermath of one.

Charles Barry

What I find most infuriating about his article is his naieve and simplistic understanding of the development of economic thought.

Hari makes out as if "Keynes said we should defict-spend to lift us out of recession, and all was good" is an accurate history. In fact work in the 60s and 70s went a long way to refuting this. Firstly there was the undermining of some basic Keynesian theories - such as the breakdown of the Phillips curve. Secondly there was the ground-breaking research by Milton Friedman which showed that poor monetary policy was a decisive factor in causing the great depression.

But this of course is all too much for Mr Hari. I remember him being in favour of the Iraq war. In this article he seems to want Mr T Blair locked up.

Simon Stephenson.

TomTom : 4.46pm

"In a country with a strong savings ratio like Italy or Japan high debt levels may well be financed internally; but basket-cases like Britain or the US with huge external deficits are running up trade imbalances because their economies are consuming beyond capacity."

I know this is the received wisdom, but as far as the UK is concerned, is it actually true? In Net International Investment Position terms, the UK is on a par with Italy, with net foreign liabilities of 20% - 30% of GDP. This figure hasn't changed dramatically for five years, and I should have thought that if we were really a basket-case with huge external deficits through consuming beyind our capacity then this would show in an obvious worsening of our NIIP statistic. But there is no sign of this.

"Johann Hari really makes King's College Cambridge look to have dropped its standards - he is [not?] exactly a coherent economist"

Kings was a haven of lefties during my time at Fenland Poly in the early-70s. I doubt that much has changed. And lefties are too cemented to their prejudices to be much good as economists. Vide Ed Balls.

John Moss

Simple way to understand the difference.

The deficit is the Government's annual overdraft. This gets transferred to the debt at the end of the year and the debt is all our collective mortgage - one day it has to be repaid!

Simon Stephenson.

Fatbloke on tour : 7.29pm

You threw this one into the ring a month or two ago, and then went into a tantrum when it was pointed out to you that the evil Mrs Thatcher presided over a reduction to the lowest level since 1916.

Just admit it - the interest cost to GDP is dependent upon both debt levels and the interest rate on outstanding debt, and that the more indebted we are, the more sensitive we are to upward movements in interest rates, and the more likely that interest rates will actually go up.

Fatbloke on tour

SimpleS @ the edge of reason

Timing dear boy, timing.
A couple of years inflation and lots of issues can be sorted out.

Pity her good luck never carried over to Sha**er.

The difference between his deficit record and hers was probably down to the fact that oil was expensive in the early to mid 80's and she had first digs on the family silver.

As always my main point still stands as you have said lots but unfortunately you have not answered the question.

She wasted huge amounts of money, on the dole, on debt interest, on replacing the ships that were lost in the Falklands ...

Oh the Cumberland, sitting on the front line with nothing but a P45 and some memories.

Major Plonquer 1

Hey Fatbloke. When are you going to pay back the 20 quid you borrowed?

Sir Everard Digby

FatBloke,

I trust you are aware of the myth of Sisyphus? Given that you continue to demonstrate a singular lack of ability to communicate effectively,yet rage that no-one understands whatever point you are trying to make,perhaps you should study what happened to him to avoid wasting your time in future.

I am of the opinion that your posts consist of a series of slogans which you have presumably written on placards used at various demonstrations. Sadly,joining them together does not constitute an informed argument.

Your use of various monikers for politicians may have been midly amusing initially, however you have now invented so many,I think no-one has a clue who you are talking about.

And who,may I ask is the 'they' who commented on 'Lies, damned lies and Tory statistics'?

Before we begin to address that could you confirm what time period Gordon Brown's economic cycle actually covered ?

PS -Ed said on Saturday he was on my side - why do you take against me so? Or was he being a little inexact?

'The

John Dubai

So fatbloke, the difference between Thatcher's debt record and ours is that her spending was predicated on the ability to repay it, whereas Brown's...

Kilowat

Some stats on top of this point - just to help people when challenged by any of hari's points.

Roosevelt - in the years when FDR inflated the US economy, the biggest deficit he ran was 4% of US GDP. That's half of the deficit we're running before any reinflation argued by Hari and his ilk. The US economy at the time routinely ran at a surplus or with a deficit below 1% of GDP.

Japan is running a huge deficit and a huge debt. People are worried about it. But the situation is vastly different because most debt is into form of bonds bought by the Japanese people. So, though there may be no medium term hope for Japan of getting back on course, barring a mass act of hari-kiri, there isn't going to be a big sale of debt/loss of confidence so Japan can soldier on for a while. It's kind of the international equivalent of being up to your ears in debt, but your husband's the bank manager.

euzie

Odd, to most people who speak English, the phrase "As a proportion of GDP,Britain's national debt has been higher than it is now for 200 of the past 250 years." means the opposite to "our debt being at dangerously high levels", i.e that there have only been 50 years in the last 250 where the debt has been higher, and that we are not in a debt crisis", this being the lie that is peddled (according to Hari).

I would say that if you are going to post a rebuttal, argue against what he says, not what you want him to have said.

Fatbloke on tour

Filthy. sorry Fildy John @ 7.45

Second attempt at this.

Maggie was lucky on the debt front.
She ran big deficits but ultimately inflation and the Lawson boom helped her out.

Of course the North Sea oil money and the privatisation receipts played a huge part but she squandered the money of paying unemployment benefit and debt financing.

Work the numbers:

Debt = 40% of GDP.
Inflation / GDP deflator = 10%
Real growth = 2.5%

Consequently money growth of the economy = 12.5%

These figures mean that unless Maggie ran a deficit above 5% she would reduce the debt in terms of GDP.

This is how she reduced the debt as a % of GDP, inflation and selling the family silver. With a little help from a housing bubble and a financial services mirage.

Maggie: 11 years in power - 9 years in deficit.
Sha**er: 7 years in office - 7 years in deficit.
TB / GB: 13 years in power - 9 years in deficit.

The 11% deficit in 2009/10 was caused in the main by the global Credit Crunch. It included a lot of work to keep unemployment low and keep consumption high.

2008/09 - State = Lender of last resort.
2009/10 - State = Spender of last resort.

AD / GB = Had a plan, it was working.
Sniffy = Not got a clue.

Even I am surprised at how much damage he has managed to do in 10 months. Complete and utter muppet.

Simon Stephenson.

Fatbloke on tour : 11.10pm

Not answered the question, eh.

Well, let's look at what the question might be. Your argumentative standpoint derives from the following:-

* Socialism = Good

* Everything else = Bad

* Advocates of socialism = heroic, truthful, infallible

* Critics of socialism = evil, deceitful, self-interested

* Good/acceptable outcomes under socialism = triumph for socialist policies

* Bad outcomes under socialism = malign influence of outside agencies

* Good outcomes under non-socialism = luck, misrepresentation

* Bad outcomes under non-socialism = inevitable failure of non-socialist policies

So any question you ask that relates to this subject, however it may be worded, can always be distilled into the fact that agreeing with you means acceptance of the above, while disagreeing means rejection of all, or some part, of it. You take your particular formulation of how things are, and then invite people to challenge your conclusions, knowing full well that within your framework there is no valid challenge. It's akin to Dubya's language of substitution in "You're either with us or you're with the terrorists", because it doesn't allow room for the view that one is against both the terrorists and the administration's plan for dealing with them.

The problem we have with people like you, and with people on the right who construct their worldview similarly, is that the most acceptable way forward for mankind doesn't come close to the formulations of either of you. Somehow we have to devise a means of convincing you that it is a very drably dressed society that prohibits mix and match, restricting it's choice of organisational attire to one or other of the off-the-peg portfolios from the extremities of the political spectrum. It's as illogical as the argument "There are several of Marks and Spencer's shirts that I like better than any other shirt that I have seen, therefore not only are Marks and Spencer the only people who can make good shirts, but they are the only people who can make good clothing of any sort."

Sir Everard Digby

FatBloke,

Keep pushing that rock up the hill.....

Fatbloke on tour

SimplyS @ 11.37

How about you try less flannel and more analysis.

I am only looking for a detailed and reasoned investigation of present and past economic issues. The dog boilers in SpeccyLand and the spotty youths who write for them struggle to put anything out apart from the usual CCHQ propaganda.

The questions are out there.
Please try and answer them.

For the record I have no respect at all for Maggie. She was a mutant, small town, small minded liberal who was 100 years out of her time and out of her depth on the big issues of today.

If IMcL had lived she would have been a non entity, a KJ acolyte without his intellect or depth.

Sha**er on the other hand ...

... He at least was an interesting politician with uninteresting back story but terrible taste in slappers.

Simon Stephenson.

Fatbloke on tour : 12.59pm

Try re-reading my 11.37am post, if you ever read it in the first place.

I'm in the business of answering questions that are posed in order to further knowledge, by questioners who are respectful to answers that don't fitin with their view of things. Questions by people who are open-minded enough to accept that there is a level of knowledge and understanding that is higher than the one they're currently inhabiting.

I'm not in the business of answering questions that are posed as disguised assertions or traps, structured so that any answer given can only add weight to the illogicality or fallacy that the questioner is promoting.

Keep those for the muppets in the student's union, I should.

JaneS

Has Mr Hari amended his article or was it wrongly quoted?

Mr Adequate

Yes, of course you are right. But there is no point in arguing with the likes of Hari, nor any necessity.
No point, because he is an imbecile. No necessity because he writes for the Independent, the most miserable and pathetic excuse for a newspaper in the UK. By highlighting his blog entry here you'll have increased its readership tenfold, although if he's posted a similar argument on the indy site another ten people may have seen it.

mattzarbwww

I think Johann's point is implied here. Keeping up public spending is not bad economics, which is why we have a deficit. The argument from the right is that we can't borrow anymore, but the justification for that is high levels of debt. By historical standards, as Hari points out, we don't have a high level of debt. So why the right have thrown Keynes out of the window is beyond reason.

Simon Stephenson.

mattzarbwww : 6.21pm

Er .... the right haven't "thrown Keynes out of the window". If anyone has done this, it's Brown, Balls and RedEd, who failed to follow Keynes formula of running fiscal surpluses in the good times, so that one could safely run fiscal deficits in the bad times, without the bond markets taking fright, jacking up interest rates, and thus negating the stimulus to aggregate demand generated by the deficit spending.

So if Mr Hari can demonstrate that we are overstating the fear of greater public-spending causing an unhelpful interest-rate hike, he's entitled to write an article in which he condemns the re-balancing measures as totally wrong. If, on the other hand, he chooses to bury his head in the sand, and just assume there would be no adverse interest-rate effect of higher spending, then he should button his beak about economic matters, and focus on something about which he has the authority to write.

Simon Pringle

Sir,

Hari and co keep bringing up 1929 and 1945...then the UK and the rest of the world did not have Japan,nevermind China and the rest of the "emerging" countries to content with...even Africa is getting into the arena!Yes,Keynes was a genius but from here on it's a "raw numbers" game be it global wages,patents or labour.As for youth and a PPE from Oxford?!please,give me a break!

Ammadeus

Monetarism has failed. Deregulation of the financial sector has failed, and with it the entire idea that unrestricted free markets are the route to prosperity. Neo-liberalism is a great idea in theory, but it can never work in practice.

The only solution I can see is a centrally planned economy, with a 100% income tax band for any earnings over a certain amount.

Simon Stephenson.

Ammadeus : 1.54am

"The only solution I can see is a centrally planned economy, with a 100% income tax band for any earnings over a certain amount."

This is because you are unable to see that subordinating the free imagination and entrepreneurship of 60 million people to a committee of nepotistically appointed worthies cannot do other than suffocate human progress. You fail to appreciate that it's possible to recognise humanity's bad traits, and to deal effectively with them through regulation, without putting the kibosh on the engagement and utilisation of the good traits of 99.999% of the 60 million.

But maybe you do see all this. Maybe, for you, your natural sense of order is too disturbed by immersing yourself in a society where progress may come from anywhere, undiscussed, unapproved, unannounced. Perhaps you, personally, are happier being obedient and subordinate to an authoritarian hierarchy, no matter how stiflingly unimaginative life may be to great tracts of the population, under such a regime.

Frances Coppola

Just to clarify matters: Hari amended his article after a twitterstorm complaining about his confusion of debt and deficit. The article was then reprinted in the Guardian (I think).

Brilliant

I've picked up the Independent a few times and started to read an article to stop in wonder who could write such rubbish, it's always Hari.

It's a shame, because his headlines are always interesting, it's just that the intellect he portrays quite simply doesn't exist ... even if he can write quite well.

AdsHalvo

It seems everyone involved in this argument is picking what they want to demonstrate their point in the best way.
I am not claiming that Hari's story is bullet proof, but I do think his wider point made sense, regardless of political leaning and what the difference between deficit and debt is.
It amazes me that intelligent people cannot use arguments and debates like these to stay on point rather than making socialist or lefty references or starting party based slagging matches.
Yes Hari is a social democrat, but actually his point isnt really based on this and the pointless insults at his leaning and credibility are simply ridiculous.

I felt the most important take away from what he was saying is that the strategy at the moment is wrong, and the problem is being spun in the wrong way to suit a political agenda.

Surely the main point is that the cuts being made are going to take money out of the system. Prices are going to up, people will have less to spend and he is right to point out that these same mistakes have been made time and time again.

I agree using comparisons to the likes of Japan isnt correct because its a totally different situation, but comparing the strategy to Spain and Ireland surely does make more sense, and Osbornes commitment to following this tactic through regardless of the lessons is concerning.