Balls' bloodlust gets the better of him
Fraser Nelson 6:09pm
Ed Balls’ problem is his killer instinct. If he were a Twilight vampire,
he’d be a Tracker: someone whose uncontrollable bloodlust takes him to places he should avoid. His position on the
deficit is so extreme — more debt, more spending — that he’s pretty much isolated now. People are mocking him. John Lipsky, the acting IMF chief came two weeks ago and rubbished
Balls’ alternative (as Tony Blair did) — so Balls, ever the fighter, has today given a long speech where he sinks his fangs into Lipsky and says (in effect) "I’ll take on the
lot of you!"
But Balls is brilliant. Often George Osborne seems not to bother arguing, and instead seeking approval from an alphabet soup of external agencies ("I must be right, the ABCD says so!")
Balls is in the old-fashioned business of making arguments. Good for him. But he can’t resist stretching the truth, sometimes until the elastic snaps. So a lot of what he says is
intentionally misleading. We had a lot of it in a speech today. It was so long that you almost lose the will to
live by the end of it. But we at Coffee House do love a bit of Balls — whether he’s telling outright lies, stretching the truth or just being outrageous. Say what you like about him
(and we do), he often sets the terms of debate. That’s why his claims are worth examining.
i) The fake "fork in the road". Balls, like Brown, specialises in drawing dividing lines. He claims there is a fundamental difference between Labour’s plans, and
the course Osborne has adopted. As he says: "There was a choice. On the one hand, to continue with Labour’s economic plan: maintain the emphasis on jobs and growth, while continuing
a steady and balanced approach to halve the deficit in four years. On the other, a political decision to eliminate the structural deficit in a Parliament — a fiscal tightening of such scale
and severity that it would have to begin immediately."
Demonstrable junk. Osborne has simply adopted the Brown/Darling deficit reduction plan (slow cuts spread over four years), and yanked it up a notch. In total, he’s cutting less than 1 per
cent a year more than Brown/Darling’s published plans. But Balls makes this sound far more dramatic saying Labour would have "halved the deficit" over the parliament and Osborne
would have "eliminated the structural deficit". This makes it sound as if Osborne is going twice as fast. In fact, the "deficit" and the "structural deficit" are two
different things. This is the "false comparator" device beloved of the Brown era. The "deficit" is straightforward: the difference between spending and taxes. The
"structural deficit" is an estimate of what the deficit would be if the economy had recovered. The first is fact, the second is opinion. But the OBR has published its estimate of the
structural deficit. Seeing as Darling published his five-year plan, we can compare it with what Osborne proposes:
So, the honest comparison? Labour’s economic plan was to cut the deficit by 61 per cent over five years, and Osborne now proposes to cut it by 74 per cent. Or Labour would have cut the
structural deficit by 66 per cent against Osborne’s 87 per cent. This is the only honest way of quantifying the difference between the two. Balls intends to mislead — hoping no one will
make the above calculation. He later tries this fake comparison again: nice and simple, so broadcasters can understand it. “George Osborne is trying to eliminate the deficit rather than halve
it”. It’s rubbish. There was no fork in the road. Osborne is heading only slightly faster in the same direction.
ii) The "frontloading" myth. “George Osborne’s plan was primarily about electoral politics — rapid tax rises and spending cuts chiefly designed to
fit a political timetable that gets the pain over early." This is the myth of the front-loaded cuts. Balls laughably claims that "George Osborne did not hesitate in making a rash
and headlong lunge down the path of rapid deficit reduction." Luckily, state spending figures are released every month — so let’s see how rash and headlong Osborne has been in
his cuts.
Contrary to the Ed Balls fantasy, Osborne has so far succeeded in outspending Labour by an average 5.1 per cent. He does intend to get a little bit more ambitious — but the
"sharpest" cuts are happening in year three. But there's not that much difference: like Darling's plan, it is pretty evenly spread.
For Balls to continue this fake line of attack, he needs to pretend that Tory cuts are urgent and fast — as opposed to what he later calls his "fair, gradual spending cuts". Osborne
is cutting state spending by a total (yes, a total) of 3.7 per cent over four years. If that’s not gradual, then I don’t know what is. Osborne should be getting the pain over early. But
he isn’t
iii) Balls horror at long-term welfare dependency. He says the 1980s recession was a time when, if “adults and young people out of work for months, which turned into
years, and left a permanent scarring effect on their skills, their health, and their ability and willingness to ever work again. How many people in this room would feel confident about their job
prospects if you’d been out of work for over a year and had to compete against other candidates with an unbroken employment record?” Indeed so. If Balls is angry about this now, he
must have been apoplectic during the 13 years his boss Gordon Brown was in Downing St. Here is the number of people who had been on out-of-work benefits under Labour, by duration:
At least Thatcher had an excuse: a recession, an industrial realignment. To the shame of Labour economic policymakers (e.g. E. Balls) they kept millions on benefits during a boom.
iv) Balls claims he ran Britain. It’s worth nothing the way that Balls now portrays himself as a puppet master, lumbered with a big Scottish puppet. Slowly, he is taking
personal credit for the handful of things Gordon Brown did which don’t look like an utter disaster. This passage is worth noting: “Setting out tough fiscal rules just before the
1997 election and sticking to Tory spending plans for the first two years; delivering Bank of England independence; ensuring that in 1999 all the proceeds from the 3G mobile license sale were used
to repay the national debt; and resisting UK membership of the Euro … they all show that I’m not someone who shirks tough decisions.” Consider the vanity required for a
special adviser to make such claims, and that he expects to be thanked now. Here we were thinking it was Blair and Brown running Britain when, in fact, it was the great Balls all along! All hail!
v) Balls appears to disown Brown legacy. “So when I am asked in interviews, what would I be doing differently to cut the deficit, the first thing I say is that — in the words of the old farmer being asked for directions by a passing driver — I wouldn’t be starting from here.” Really? We can only assume that the deficit would be even bigger if he’d has his way. And remember, he was all set to replace Darling in 2009 — and was only stopped when it became clear Cabinet members would resign in protest.
vi) Balls' incurable statism. “With the £2 billion that could be raised this year from repeating the bank bonus tax, we believe the Government should provide £1.2 billion to fund the construction of more than 25,000 homes across the country. This would generate more than 20,000 jobs and several times more in the supply chain, and as many as 1,500 construction apprenticeships” Even if the maths work out (which they don’t), witness how Balls thinks the only way you can grow an economy is by taxing people, and using the confiscated money to hire other people. The idea that a government should cut taxes, and then let job creation happen — as it always does — seems alien to him. Balls was born too late, and in the wrong country. He’d soar in 1970s Moscow.
vii) Balls is right to suggest tax cuts. Balls is right to focus on the unnecessary and ill-timed VAT hike, and right to say “the fiscal hit to demand and growth in Britain this year is unprecedented”. He wants a temporary cut (I’d call for a permanent one) which he says “would be a boost for consumers who are feeling the squeeze from rising prices and rising taxes.” Only here does he make a modicum of sense. If Balls had stuck to this line of attack — focusing on cost of living, and denouncing the VAT line for compounding the pain — he’d have more plausibility.
But unlike Balls, I'd fund the VAT cut by finding more savings in state spending. If that's not an option, an emergency income tax cut for the low-paid would be a more effective stimulus. As Sweden showed, this can be self-financing by luring people off benefits. It's the obvious next step — but Balls' own ideology forbids him from such conclusions. For him, the sole source of employment growth is state spending.
viii) Balls has the audacity to complain about the debt burden passed to the next generation. He talks about “those who have worked all their lives but for whom flat wages, the fear of unemployment, higher fuel and food prices and growing debt means they’re seriously worrying about their futures — and those of their children — for the first time. As Ed Miliband has said, this is a threat to the Promise of Britain — the promise that the next generation will be better off than the last.” Words fail. Balls’ entire logic — cuts are bad, borrow now — means knowingly saddling the next generation with billions upon billions in debt. He talks about Labour’s stewardship of the financial crisis without ever mentioning the price: trebling Britain’s national debt. The below graph shows the debt burden in 2007 — and the projection for 2020 made after Brown’s post-crash debt binge. Balls was by Brown’s side for those 13 years. The below is their one and only legacy:
Previous
Hugo Chav
June 16th, 2011 6:56pm Report this commentFraser,
Ed Balls keeps calling it badly, very badly. Where is his double-dip? He is an economic loon, without a doubt.
Since the crash of 2007 there has been one guy who I have followed who has called the UK macro scene to a tee, here is his latest missive:
"We just seem to have completed the rapid bounce back of a "v" recovery they said we wouldn't have and are now easing back to modest balanced growth from what I can see (as opposed to some kind of debt-driven bubble growth). I always said growth would be weaker and more inflationary (particularly for the US which might dip back into slight contraction now and then due to its dependence on oil) after the recession since BRICs are gaining share in resources and pricing us out. The last 3 years have been pretty much as I suggested they would be. I always said we would make it through without meltdown, though I thought it could be worse next time. My fears for the next recession around 2013 are abating, though. The lack of resumption of manic lending and talking down confidence is generally letting the economy rebalance and put it in a better position. I'd guess the next recession for the UK is more likely to be around 2016/17 now. I just can't see the distortions building to generate another recession, although the growth outlook here is not strong in my book."
He is just a guy from Yorkshire who lives in a terraced house. He's bloody good!!11
If the Libservatives had a radical supply-side plan then growth could be quicker.
If my man is right then Ed Balls is going to act and look more demented as the economy putters along.
Steve
June 16th, 2011 7:05pm Report this commentYou're not wrong on the Moscow link - Ball's approach to operational politics is homage to Laventry Beria - Uncle joe's notorious puppetmaster, until the sword that he lived by ultimately claimed him. Just give it time..........
HJ
June 16th, 2011 7:10pm Report this commentFraser,
Excellent analysis. However:
Point (iiv) - What "unnecessary and ill-timed VAT cut" are you referring to?
Carl Jones
June 16th, 2011 7:15pm Report this commentThis is an interesting battle. One that the poor public have not grasped, but was pointed out by Cameron.
The coalition (cabal) cannot and has no intention of restarting the economy. Balls wants a VAT cut...Cameron says that is the worst thing you can do..the trade deficit will get worse!!
Did Cameron really say that??
Yes he did and this is the reason why the economy will be in lockdown for years, if not decades! Our trade defict was £3.9 billion in Jan. 2011...that`s in a recession and our slowest trading month. So just imagine what would happen if you put money in their pockets??lol
I don`t believe that UK plc can be saved...we don`t make anything...just like the US.lol If I didn`t laff, I`d cry!
There is a way out. WW3 and just as the fianacial collapse was planned by the elite, so will the next world war. And all the players, no matter what side they bat for, will be willing in their slaughter.
Kennybhoy
June 16th, 2011 7:17pm Report this commentLoved the picture and the first two paragraphs Maister Nelson! They are up there with the previous characterization of Balls in your "Labour is working towards a decade of Opposition" post. Doing over Balls seems to bring out the humerous and satirical best in you sir!
Thank you for the belly laugh!
Sally Chatterjee
June 16th, 2011 7:20pm Report this commentSuperb work Fraser.
I sometimes think it's not worth bothering with the rantings of Ed Balls, as if it dignifies him when someone responds.
But dismantling his claims like this is essential because too many in the media seem to take his wild assertions at face value.
Peter King
June 16th, 2011 7:21pm Report this commentYou keep building Ball's comments up as if they were significant. In fact he is chasing the game, the rule of which are being set b y Cameron and Osbourne. Please get some perspective.
David Ossitt
June 16th, 2011 7:33pm Report this commentAndrew Neil on the Daily Politics program today discussed Ed Balls’s speech with Labour Peer Robert Winston.
Winston fell to pieces when Andrew Neil pointed out that our % of debt was very similar to that of Greece but we were paying less than 4% interest whilst Greece was paying over 15%, because George Osborn was being judged by the world financiers as doing the right thing.
Poor old Winston waffled a lot then said “well you can get over 15% if you buy Greek bonds, I thought Neil was going to go for his juggler but instead said simply “if you were mad enough to buy them”.
Balls is a fool.
Robert Eve
June 16th, 2011 7:43pm Report this commentBalls by name .........................!!
Fony Blair
June 16th, 2011 7:48pm Report this commentThought you said life's too short!
Good work. We have to do all in our power to stop Balls. I'm hoping Guido or someone will set up a paypal fighting fund come the next election so we can direct mail his consituents with his lies.
@fonyblair
Simon Stephenson.
June 16th, 2011 7:49pm Report this comment"But Balls is brilliant ... [he's] is in the old-fashioned business of making arguments. Good for him."
He's not brilliant, Fraser. He's a forty-something who's not learned how to develop his argumentation from that of a half-educated teenager. You know the sort - they involve themselves in rational and reasoned discussions, but are only content to follow the measured probabilism of rationality so far as it serves their purpose. As soon as their position is threatened, they deny the legitimacy of using probability as a measure of superiority, arguing instead that "proof", or certainty, is required for one position to be considered superior to another, and that without certainty no position can be argued to be superior to any other.
He's not engaging in discussion in any sort of constructive way. He is temperamentally incapable of accepting that there could be a better way of doing things than that which is compatible with his view of the world, and so however much the evidence piles up against him, he must defend his position, and the discussion-wrecking insistence on certainty is the means by which he's always able to do this.
AJK
June 16th, 2011 7:55pm Report this commentActually Fraser I think he has a point. The high street is on its knees. A tax cut now would boost confidence a bit. everyone now knows that austerity is here to stay, but we need a psychological boost. Cutting VAT would cut the headline rate of inflation. That or a cut in NI would boost spending for the lower paid. If the economy doesn't grow, none of the other reforms will work.
Hugh
June 16th, 2011 7:57pm Report this commentMore B!ll*cks from Balls
Hugh Janus
June 16th, 2011 8:12pm Report this commentExcellent article. The graph in para 8 is particularly alarming.
I had the misfortune to listen to the Deficit-Denier-in-Chief on the Jeremy Vine show on R2 this morning (well, there was nothing else on at the time). I listened to lie after lie being issued, with very little by way of any real challenge. For instance, he trotted out the usual 'dire inheritance' line from the Conservatives in 1997, stating that the position then was worse than the position is now. Unless my memory is playing tricks, John Major's tenure as PM actually resulted in a surplus - which McBust set about squandering in the first two years. After that it was all downhill, with the spending accelerating for virtually the whole of that period (in real terms) to be completed with an additional £90bn spree towards the end.
If only those who interview this con man would do even the most basic homework....
Chris Stapleton
June 16th, 2011 8:16pm Report this comment"So a lot of what he says is intentionally misleading."
He is a liar.
That's THE problem with Ed Balls.
Yarnefromhorsham
June 16th, 2011 8:22pm Report this commentCopy this to BBC News Desk
SJH
June 16th, 2011 8:30pm Report this commentGreat Meat Loaf album cover
REPay
June 16th, 2011 8:31pm Report this commentThe fact is the Coalition don't do enough explaining. Balls half-truths appeal to the many British who think they can find an easy way out...or who don't care because their jobs and pensions are guaranteed by the taxpayer.
Simon Stephenson.
June 16th, 2011 8:36pm Report this commentWithout considering the whole impact of a VAT cut the argument is b*llocks. VAT was increased as part of the policy to reduce the budget deficit. If this decision is reversed without compensating measures that restore revenue-neutrality then the deficit reduction policy will be impaired. Of course, it may well be the case that in overall terms a VAT reduction now is the best policy, but it would be asinine to consider it without assessing the likely impact on interest rates and international confidence of a deliberate weakening of the deficit reduction programme.
les
June 16th, 2011 8:38pm Report this commentAre you sure that picture is of Balls - looks more like Bob Crow!
oldtimer
June 16th, 2011 8:45pm Report this commentThank you for the deconstruction of the Balls version of the UK`s economic situation. Someone has to do it. Unfortunately it will not play to the audience for his sound bites on the BBC - unless it is when Andrew Neill is the interviewer.
TGF UKIP
June 16th, 2011 9:38pm Report this commentTrouble is, Fraser, that even allowing for the fact that it's now the Balls Broacasting Corporation, he does dominate the news while your lot continue to have no comparable media voice. That absence, together with my mate's brilliant Big Society diversion, helped to ensure their failure in May 2010, and will go a long way to ensure Labour's task is even easier than it already is next time.
Keith
June 16th, 2011 9:48pm Report this commentGood analysis. But the reason why you have to do it is that the BBC won't. If Balls's comments were treated to proper sceptical examination by the mainstream media he would be finished. As it is he flourishes.
Jules Wright
June 16th, 2011 9:50pm Report this comment... however Fraser, he is a friendless, charmless, dysfunctional twat.
TootingToryInfidel
June 16th, 2011 10:00pm Report this comment"...all the proceeds from the 3G mobile license sale were used to repay the national debt" - more Balls, they weren't, that course was explicitly ruled out and they were placed in a short-term money market fund so Brown & Balls could piss them away shortly afterwards without hitting headline taxation or borrowing.
David Raynes
June 16th, 2011 10:21pm Report this commentFraser, your understanding of the effects of a VAT reduction is as flawed as that of Balls.
A VAT reduction and the huge loss of revenue that would result is not worth the risk.
The peculiar arrangements in the UK where food and childrens clothes are zero rated and heating has a lower rate, means that the very essentials of family life are low or tax free. The impact of VAT on the poorest familes or pensioners, is modest. Balls seems not to understand. No surprise there.
Even at 20% VAT, VAT has only a modest effect on anything but big ticket items and most of those are imported. It is extremely doubtful if anyone who can truly afford a new TV is deterred by the impact of VAT on the price and bigger ticket items like cars are much more affected by commodity prices, metals, rubber (and the pound) than they are by VAT.
Of far more importance to the price of those big ticket imported items is the value of the pound which might easily come under sustained pressure if Balls got his way. He is barmy. He helped get us in this mess. Do not join him.
The not often mentioned advantage of the Osborne VAT rise, was the way it caught the truly wealthy. Caught the (relatively) booming south east economy and the way it catches spending by tourists and visitors. We are going to get a lot of those next year!
If one agreed (and I do) that Balls has a small point about a little modest stimulation, the one area where minor tax adjustments might give economic activity dividends, is in helping the struggling housing market.
That market with people moving home, both up and down the market, is stagnating. Not just because of the mortgage difficulty but because of the great difficulty of new entrants funding all the initial costs especially Stamp Duty. It has been amplified by the larger deposits now needed.
Some housing movement is important, some people NEED to move for work or retirement reasons and taking over a new property stimulates economic activity in DIY, building work, kitchens, carpets, solicitors, estate agents, surveyors etc.
I say (and I would like to see reasoned arguments against me) that the Chancellor should set to work smoothing stamp duty and reducing it or eliminating it on lower value property with steep rises over say (£1 million value) to stimulate the bottom of the market.
Loss of revenue on Stamp Duty would be wholly or partially replaced by VAT on the stimulated trade, which note includes some service industries.
Ralph Jolly
June 16th, 2011 11:22pm Report this commentBalls, like Brown, like Blair, is a sociopath.
What upsets me about being English is that much of the population takes him seriously. & that's my point. While I agree with much in your clever article, there is a large minority in England that identifies with Balls nonsense. Dare I say that is a failing on your part.
As for all the recent Balls headlines -is he getting his knickers in a twist because he wasn't invited to the last Bildberg conference??? How dare they...
Bill Quango MP
June 16th, 2011 11:31pm Report this commentThankyou. A superb summary of the Balls position, which i believe is drawn in the karma Sutra as man behind, knife in hand.
I've had to endure Balls all day, on every media outlet blabbering on about his brilliance and how he has been undermined by a right wing media conspiracy led by the Telegraph.
Oddly it was Radio 5 that, albeit gently, didn't allow him to get away with that.
chrisg
June 17th, 2011 12:10am Report this commentAs my dear wife would say "short man syndrome"!
Miike Isaacs
June 17th, 2011 12:25am Report this commentBalls is full of bluster and thinks that if he argues for long enough people might start to believe him. If he was so clever and successful why was the economy left as it was in May 2010?
He has yet to learn to stop digging when you are already in a hole.
Paul H
June 17th, 2011 12:33am Report this comment(1) George Osborne SHOULD be seeking to eliminate the deficit. (2) The way in which you Tories are being blamed for savage cuts when the cuts are by no definition "savage" is an unbelievably poor piece of political positioning on your part.
Yes, Balls is brilliant. But only in the sense that Stalin, Hitler, Pol Pot, Castro, Kim Jung Il, etc. are/were brilliant. It should not be said with any admiration attached.
Fatbloke on tour
June 17th, 2011 12:34am Report this commentTrevor - aka "Fraser" the fastest spinner in the Nelson family even although my brother is a DJ.
Their is tripe and then their is Beer Bar, bools in the mooth, MOD subsidised education tripe.
And you are definately in the second category, the only question I have is where to start?
Lets start at he beginning, Point 1.
You talk about the deficit and draw a big colourful graph in crayon.
Unfortunately you do not understand the details behind the issue and you do not explain how changes to the models used to generate the figures have re-shaped the argument.
Starting at the top with the deficit you manage to find a £10bill difference in the 2010 figure between the AD actuals and the Sniffy plans.
What the Sniffy plans were for 2009/10 will make interesting reading as he seems to have invented time travel.
However using the AD actuals and the Treasury model as defined at that time we can split the 11% / £156bill deficit into three constituent parts:
Cyclical = 3.4% / Based on a 6% output gap.
Structural = 4.2%'ish
Investment = 3.5%'ish / from memory.
The Treasury had been quite scandously forecasting a 12.5% deficit in Dec 2009 leading to a Structural Deficit of 5.6%. This figure was an 8+4 projection based on real data and involved an increase in the 12.3% deficit mentioned in the 2009 Budget.
The fact that it turned out to be 11% suggests that the Treasury were playing games for political purposes.
However the main thing is that the Structural deficit is a secondary number, it is the number that is left after the Cyclical deficit has been calculated. And the cyclical deficit is calculated using the output gap - the difference between hat the economy can produce and what it is producing.
We went into the Credit Crunch with Treasury figures showing that the the economy was running at less than 1% over its equilibrium output.
We lose 6.5% of GDP and lose 2 years long term trend growth of 2.5% pa, 11-12% in total from the economy and the Treasury thinks the output gap is 6%.
Some would suggest that this figure is a bit low and flies in the face of the unemployment figures and the short time working.
Consequently AD is looking at cuts 5.5% of GDP starting in April 2011. The joker is the 3.5% investment spend that can be managed when the private sector starts to invest to make sure the Civil Engineers amongst us don't get too greedy once the good times start to roll.
Compare and contrast Sniffy and his need to eliminate the structural deficit over the life of the parliament or 7.8%.
Or he was until the Three Brothers Grimm turned up and with their first OBR forecast cut the output gap by 33% to 4% of GDP which in turn reduced the cyclical deficit to 2.3% and raised the structural deficit to 8.8% in total.
And all using the stroke of a political inspired pen.
Sniffy's cut of 7.8% of GDP = 87% of the "structural" deficit.
AD's plans of 5.5% of GDP = 63%
Your slightly higher figure is incorrect because it uses the higher deficit figure of the 2010 budget and not the actual outcome figure, £10bill that the Treasury got wrong over the space of 10 weeks.
AD wanted to cut 5.5% and had a 3.5% investment figure to help him work his numbers.
Sniffy wants to cut 7.8% or a difference of £45bill approx in 2015.
You can provide quite a lot of benefits to cancer sufferers with that kind on money.
The issue you cannot or will not see is that AD / GB wanted to rebalance the economy, kick start private sector manufacturing and sweat the public sector to deliver the resources to make it happen.
Sniffy and the dog boilers just want to cut for cuttings sake. They and their establishment friends do not want to pay taxes to provide world clas public services for everyone.
Theirs is a world of top up fees, co-pays and individual accounts. They will pay but only for themselves.
The £9K pa student fees is only the start, a blatantly political move to keep the plebs out of higher education.
Better to fill the hallowed halls with the thick end of the middle class than try and attract those with the talent but not the family background from the labouring classes.
1905 here we come.
Fatbloke on tour
June 17th, 2011 12:40am Report this commentTrevor
Love the big crayon graph for Point 3.
Proof positive that you are a crack shot -
One bullet.
Both feet and ...
... a ricochet up your left nostril.
Are my eyes deceiving me or do you see a downward trend developing in the 2-5 years claimants?
Maybe TB / GB were doing the right thing after all?
I fear that the 5 years and over were the hard core put on the scrapheap by Maggie and insitutionalised by Shaggers indifference.
Looks like 4 out of 6 ain't bad.
Dimoto
June 17th, 2011 1:27am Report this commentA couple of points:
1) The VAT rise was fully justified. This is not just about the "national debt" and current deficit, personal indebtedness is just as frightening. If the VAT increase helps moderate spending and borrowing, that's all good.
A few retailers (of mostly big-ticket/branded, imported items), failing, is no big deal.
But we do need much better incentives to save.
2) Mr Nelson overlooks the other big Balls lie - that he endorsed the Darling plan.
He didn't.
He persuaded Brown to remove Darling to enable B&B's mad borrowing and spending to continue (thankfully Darling wouldn't play ball(s)).
Does this tosh matter ? Not really.
His audience at the LSE were either dyed in the wool socialists, or benighted foreign students.
No serious student wishing to study economics would go to that odd 1950s era institution.
El Sid
June 17th, 2011 2:11am Report this commentFraser - good post, but I'm astonished that you're supporting a VAT cut, when you were rightly pointing out the folly of the Brown VAT cut with that study from Oxford Economics. It's a hugely expensive way to get a really marginal, short-term boost to the economy. If we're going to burden our children with more debt, at least use the money to boost the economy in ways that will endure.
The big problem at the moment is the SouthEast is doing OK, but huge swathes of the country are not. It's mebbe no coincidence that they are the same bits of the country where the State dominates the local economy. We need the whole country to get its entrepreneurial mojo back. That means stuff like the long-promised bonfire of red tape, simplifying the taxation of the self-employed, perhaps a return of the Enterprise Allowance Scheme, at least find a way for "trying to start my own business" to qualify as "jobseeking" for the purposes of the JSA. But if you read the stories of people who started businesses under the EAS it wasn't just the money, it was the specific help on starting your business, and the more general encouragement to just get out there and do it, which were almost more important. Osborne really doesn't seem to be doing as much as he could on the entrepreneurial side - he really needs a grocer's daughter from the provinces to be pushing him in the right direction. Still, you would have thought that helping the economy in areas with so many marginal seats would be right up his street.
Sir Everard Digby
June 17th, 2011 7:16am Report this commentFatBloke,
As a member of Spheroids team,I am sure you believe 100% what he is saying.After all you would not have a job if you didn't. The problem you seem to be having,like your master, is that you cannot articulate an argument on the subject which is accessible to anyone else. Actually that is impossible for you both because that would expose the fallacy of what you are saying very clearly.
Plan B is to paint everyone else on the planet as too thick to understand,or part of some form of conspiracy to misrepresent you.
Many of us left the playground years ago and would like to engage in a reasoned adult argument. I do not mean the 'my dad is better than your dad' one which you continue to promote. I therefore suggest two further steps for you to consider:
Grow Up
Think
Holly ......
June 17th, 2011 8:24am Report this commentReduce VAT.
Okay.
Here are a few questions for Balls when you next bump into/try to avoid him.
1.How much will this will cost us?
2.Will it have a negative affect on debt interest?
3.Who will have any 'spare' wonga to buy more?
The better off/rich are still buying.
4.Why do you keep coming out with stupid solutions?
Harry Lime
June 17th, 2011 8:33am Report this commentGreat analysis of Balls' speech and the sleight of hand in comparing the deficit to the structural deficit. But it would be interesting to see the graph on the legacy of Balls and Brown extended backwards in time to the 90s to test Balls' claim that, prior to the global financial crisis, Labour had accumulated less debt than the Major government.
The Laughing Cavalier
June 17th, 2011 8:33am Report this commentIf Balls is "brilliant" as you continue to maintain, how is it that he has made an orchestra stalls of everything he has touched?
Simon Stephenson.
June 17th, 2011 8:59am Report this commentBagehot (*) writes well on this subject, but, to me, makes a most depressing assessment:-
" ... the luxury of opposition is that Mr Balls does not have to explain how he would fund his tax cut. He just has to assert that growth would be higher if his plan were adopted, then sit back, wait for the next set of economic numbers and accuse Mr Osborne of making them worse."
Surely, surely, surely opposition should be pitched a bit higher than schoolboy sniping? What conceivable purpose is there in letting it continue at this level?
* http://www.economist.com/blogs/bagehot/2011/06/shadow-chancellor
Jess The Dog
June 17th, 2011 9:41am Report this commentA very good article that nails down two issues:
1. The Tories are barely cutting public spending at all...they are cutting the growth in public expenditure.
2. The biggest economic issue is long-term worklessness.
A temporary VAT cut is unwise as it is unlikely to stimulate expenditure growth in the face of the increase in the cost of living we are seeing, and at some point it would have to go back up.
wmcht
June 17th, 2011 9:57am Report this commentHow do we reconcile all the bad news trumpeted at us daily by all the media with the actual record on job creation over the last year.
Reducing VAT would lead to a sovereign debt downgrade, banks and pension funds would have to sell off government debt and therefore we would be exactly where Greece is.
Occasional Ostrich
June 17th, 2011 10:06am Report this comment@The Laughing Cavalier:
You don't 'get' rhyming slang, do you?
Fatbloke on tour
June 17th, 2011 11:00am Report this commentDigby @ 7.16
What don't you understand?
AD / GB had a plan and it was working.
The Dangerous brothers and their dog boiling friends are out of their depth and have managed to de-rail the economy and scare the plebs fartless in 12 short months.
The question has to be asked what will make you ask for a Plan B?
3 million unemployed?
Double dip recession?
Deficit starting to increase?
Sniffy is even worse than I thought he would be, he is all slogans nd no understanding.
Unfortunately we now live in interesting times.
michael
June 17th, 2011 11:09am Report this commentF BOT
"However using the AD actuals and the Treasury model as defined at that time we can split the 11% / £156bill deficit into three constituent parts:"
1. we're spending too much
2. we're spending too much
3. we're spending too much
By the "ish" suffix.. do you mean:
4. somewhat confused
5. trying to confuse
6. confusing stats to evade empirical facts...points 1, 2 & 3 .
All's not lost though.
In their infinite wisdom, one of labours regeneration companies bequeathed to Bradford have been busily employing structural engineers to create a 'moonscape'. Having taken the blame the council has now become Labour, who are busily advertising for structural engineers to continue the dig ... bring your spade.
JamesH
June 17th, 2011 11:12am Report this commentNothing to add except that I also enjoyed the casual changing of the "I wouldn't be starting from here" joke from an Irishman to a farmer. A bit of North London political correctness to add to the dodgy stats.
George Young
June 17th, 2011 11:44am Report this commentWell, I'm just glad that Peugeot has resurrected our 1979 hit 'Walking in the Rain' in its new 308 telly ad. I formed Flash & The Pan and my little brother Angus formed AC/DC. Well, you can't win 'em all.
Ed Balls? If I can quote our own great Paul Keating, what we have here is a dead carcass, swingin' in the breeze - but nobody will cut it down to replace him. Christ, what a drongo.
Tom Donnelly
June 17th, 2011 11:48am Report this commentIncome Tax = Tax on Production = Bad
VAT = Tax on Consumption = Good
Fatbloke on tour
June 17th, 2011 12:19pm Report this commentMicky @ 11.09
Compare and contrast the social carnage generated by Maggie during her 80/81 recession and the effect of the global credit crunch.
One of those events was the largest financial shock to the system in 135 years and the other was political spite to destroy unionised manufacturing industry.
If you want a re-run of the social disintegration of the early 80's then you won't be disappointed, Sniffy and the Dog Boilers are well on their way to revisiting that disaster.
Tom Pride
June 17th, 2011 12:30pm Report this commentLikewise nothing to add except Guido’s Comment of the Day:
“Goodness gracious great Balls of liar”
. . . . . and, I’d drop the hyphen. Brownballs – pejorative shorthand for the fiscal and economic incompetence and irresponsibility in the period 1999 – 2010.
TrevorsDen
June 17th, 2011 1:36pm Report this commentFatbloke continues to talk gibberish Quite why he thinks Mr nelsons middle name is Trevor is a mystery.
The bottom line is that there is not much difference between Labours policy and the Coalition one. Osborne is being firmer on the cuts and deficit reducing measures than labour and is not particularly cutting too fast too soon. As Mr Nelson points out in numbers terms spending continues to rise quite nicely.
Since this lie was the basis of Balls' speech and the essence of Mr Nelsons critique then one wonders what fatman is going on about.
Balls seems to think that lowering VAT and taxing bankers will some how stimulate the economy. How does giving 2 billion with one hand and taking 2 billion with the other actually stimulate anything?
A serious politician and prospective Chancellor and PM might in fact be making the point that due to the depth of years worth of overspending we could not afford not only the next 4 years will be tough but getting on for the next 10 as well.
We will need a relentless downward pressure on spending because clearly the one thing the Labour experience tells us is that (thanks to the failure of post neo classical endogenous growth theory) we cannot anywhere near afford the levels of spending the coalition inherited.
PS
We can note that fatman ignores Labours biggest disgrace - the parking of millions on benefits at the expense of millions of cheap and cheerful immigrants.
PPS
I still swear Balls said halve the 'debt' - but if people heard him clearer thats fine.
TrevorsDen
June 17th, 2011 1:39pm Report this commentOh and PPPS - how many other people found fatbloke's assertion that the '80 recession was all down to Thatcher perfectly charming? The tories only took over (yet another) labour mess in 1979.
Simon Stephenson.
June 17th, 2011 2:05pm Report this commentFatbloke on tour : 11.00am
"AD / GB had a plan and it was working."
There you go again. Utterly meaningless opinion-shrieking masquerading as a serious comment.
As I wrote two days ago, if this assertion is to be worth anything you have to demonstrate that "this "recovery" would have continued under a post-2010 Labour government; that it would have been more vigorous than what has actually happened under the coalition; and that any credit-level adjustment inducive of prosperity in the future would be proceeding at no slower a pace than has taken place under the coalition."
Moreover, and this is a very big moreover, considering the history of Labour and its adherence to immediate pre-election "plans", you have to demonstrate that if Labour had been re-elected in 2010 the hard-left leadership would have allowed the Darling "plan" to continue. Or would the promise of 5 years in government have given them the green light to resume the systematic wrecking of the structures essential to the health of the private section of the UK's mixed economy?
Not that the hard-left would behave ideologically, you understand, because as we well know this type of behaviour only happens from those on the right.
arnoldo87
June 17th, 2011 2:15pm Report this comment@ Hugh Janus 8.12 p.m.
"Unless my memory is playing tricks, John Major's tenure as PM actually resulted in a surplus - which McBust set about squandering in the first two years. After that it was all downhill, with the spending accelerating for virtually the whole of that period (in real terms) to be completed with an additional £90bn spree towards the end."
This constitutes talking out of your large asset, Hugh.
These are the facts (which you clearly have NOT remembered):-
Under John Major, the Debt as a % of GDP climbed from 27% to 42%. This is referred to by some Tories as a "Golden Economic Legacy" for New Labour. (Good job Tories don't indulge in spin, or who knows what they would call it)
When NuLab took over they immediately reversed the trend such that the Debt % was down to 29% by 2002.
At that point Brown did commit to more spending such that, by 2008 (just prior to the Banking Scandal) the figure was up to a scandalous 36%.
This was still lower than the figure that Major left in 1997 by some 6%. God alone knows where you get your figures from Hugh - I don't think even Conservative Central Office has ever issued such biased nonsense as your claim.
Fatbloke on tour
June 17th, 2011 2:26pm Report this commentFailed Blogger @ Lunchtime
If you didn't exist then you would need to be invented, you make the progressive critique of Sniffy's dog boiling so much easier with your Maggie love dressed up as fact.
DA / GB = 5.5% reduction with a 3.5% investment spend to ease the transition.
Add in a slowdown to public sector pay and a bit of hard negotiation with the private sector and things would have ben tough but not unbearable.
Sniffy wants to cut 7.8% come hell or high water. Add in the base politics and the the poor, the unemployed and the sick will need to consume the family pet to see them through the hard hungry years of the ConDemNation.
No matter how "Trevor" wants to shape the numbers the fact is that AD / GB had some fat to cut into, Sniffy is trying to win WeightWatchers by cutting off a leg.
He may win but he better be good at hopping.
Your £2bill comment fails to take into account behavioural economics -
Tax increase will lower the savings rate.
Investment spend will increase confidence and have a multiplier effect.
Consequently bit of win regarding economic activity in the here and now.
Regarding the levels and quality of public services, we can afford them but the sale of 50' boats, £1mill mansions and supercars will suffer. The issue here is that you want world clas public services for you and yours but you do not want to provide them for everyone specifically the poor.
PS - please look at the diagram!
TB / GB made some progress but not enough to turn back the Maggie inspired disaster of the early 80's and 90's.
It would be interesting to see that chart in its full context - 1970 onwards.
PPS - Cheap shot, slip of the tongue?
Compare and contrast with Dave the Rave's continual use of "terminal" when Milli-E asked about recovery.
PPPS - You really are having a laugh.
1978/79 was bliss compared to the economic vanadalism that Maggie brought in.
Something a bit fishy with the union events of 78/79, too many Trot middle class grandstanders leading he charge and who can forget the ex RM QM lover who wanted to do his bit for Henry and Essex.
Maggie is the only polititian who was gifted huge oil revenues and made the country poorer.
That takes some doing, what a muppet.
Consequently ...
away and thro' shite at yersel ya walloper.
TrevorsDen
June 17th, 2011 2:50pm Report this comment'Your £2bill comment fails to take into account behavioural economics -' Ha you are a laff fatman.
2 billion from one had and 2 billion into the other is sill zero and all the behavioural economics in the world only means that spending is transferred from one group to another and the benefits of that spending likewise. Benefit to the nations numbers zero.
How dare you say I do not want public services for the poor. My 95 year old father in law is in a care home. We pay a good chunk to his care thanks very much as do his council. Or are you not talking about me - its hard to judge just what you are talking about.
So who's "Trevor" - you cannot even tell us that dumbhead.
Arnoldo - when Brown took over they followed tory plans.
In 2002 the national debt was £315 billion in 2008 it was £525 billion, and this despite years of so called growth. The nation was unable to afford labours spending and our GDP itself was inflated by labours years of over-spending.
TrevorsDen
June 17th, 2011 3:00pm Report this commentOh fathead you are brilliant - at being a dipstick. So the winter of discontent was a tory inspired plot?
You and your mates must make a hilarious group down the pub.
'I remember that that Callaghan - wot a genius he wus - an' scupperin' "In Place of Strife" wuz a masterstroke.'
You excel yourself or should I say exhume yourself.
Labour unleashed a massive burst of inflation on the country - no wonder we had a recession after 79.
Simon Stephenson.
June 17th, 2011 3:57pm Report this commentarnoldo87 : 2.15pm
As a matter of interest, since you seem to be au fait with debt/GDP figures, what do you have to say about the record under Mrs Thatcher, which saw a fall from 44% in 1979 to 27% in 1990. Pretty good, eh? There must have been a genius at work to achieve this reduction, surely?
Or would you argue, more reasonably, that the application of automatic stabilisers means that the stark comparison of debt/GDP percentages, without reference to the stage of the economic cycle, is likely to give a false picture of the economic competence of the government at the time? And if so, don't you think you should mention the cyclical differences between 1990-97 and 1997-2008?
Fatbloke on tour
June 17th, 2011 4:53pm Report this commentSimpleS @ 3.57
As you say, lets be reasonable -
Just how long did the debt stay at 27% in 90/91?
How much did Maggie steal from the plebs using the smokescreen of privatisation?
How often has the UK been handed a windfall of the scale of North Sea Oil?
How much of the state's income was being provided by said windfall at its peak?
What effect did inflation have in the debt "miracle"?
Finally never mind the economic cycle how about the state of the public realm regarding debt levels and the level of public sector investment?
Maggie was in charge when the focus was on private affluence and public squalor.
Regarding the cyclical differences how about you explain the situation regarding the 2001/02 global recession and how it affected the UK?
While you are at it you can look at
Asian Flu
Russian defaults
LTCM implosion
Dot com bubble
Latin American wobbles
High oil prices
High raw material costs
And all the stuff I have forgotten about.
In your own time but please no bold
arnoldo87
June 17th, 2011 6:22pm Report this commentSimon Stephenson
Remarkable that a "Mandela type libertarian" should have such admiration for Right Wing Margaret Thatcher.
And as for the economic cycle factor please refer to FBOT's comment on 2001-2.
Simon Stephenson.
June 17th, 2011 7:08pm Report this commentarnoldo87 : 6.22pm
What admiration is that eh? All I used the Thatcher figures for was to demonstrate how misleading is it to use cherry-picked statistics as supposed support for generalised conclusions.
But then, you and Fatbloke already know this - that's why you do it.
Simon Stephenson.
June 17th, 2011 7:30pm Report this commentFatbloke on Tour
Lot's of tractor statistics - thanks.
Have you any thoughts about justification of your assertion of the superiority of the Darling "plan", as set out in my post of 2.05pm? And what comfort can you give those of us who are sceptical about the base intentions of Brown/Balls/RedEd and co. - are they really working to promote prosperity in this country, or is it conditional on this being achieved under the umbrella of state dictation? Which is more important to them - the nurturing of wealth-creation, or the destruction of the structures which allow the private-sector to contribute to this?
Fatbloke on tour
June 17th, 2011 10:34pm Report this commentSimpleS @ 7.30
Oh no I have been underlined ...
As for the original question, AD's plan was working, the economy had started to grow and progress was being made.
Lots to do of course, the patient was very weak but on the road to recovery.
Sniffy turns up shouting the odds about the need to get back to basics, all that was required was a good old fashioned leeching and that no matter how good the care the medical profession always produced casualties and sub-optimal outcomes.
The patient is now shell shocked, anaemic and losing weight ...
... much like the current UK economy.
Sniffy is a wee boy in a man's world, not so much out of his depth more a case of acting the part without understanding his lines.
davidb
June 17th, 2011 11:22pm Report this commentVAT only applies to domestic consumption of goods. Exports are taxed in the destination markets, but leave here VAT free. So if we intend to rebalance our economy to export more the effect of VAT on that is zero. Almost any other tax raised to cover the state's funding shortfall is an overhead. Excise on liquor, fuel ( transport cost ) duty, business taxes,local rates even income taxes all deter exporters.
Any stimulus to retailers will benefit foreign producers, as we run a huge trade defecit and many of the consumer goods we buy are imported. Capital goods for industrial expansion are VAT deductable by businesses so again the VAT rate has no impact on productive investment.
When the rate of VAT was cut under the previous administration, as predicted many retailers kept the discount to boost their margins. Prices of many goods are based on price points. A forgoing of the exchequer of say 10 billions would not result in the intended consumers seeing 10 billions in price reductions, but rather in a boost to retailers margins.
We would best just swallow this medecine and forget semantics about a few billions here or there in revenue. We spend 25 pence more which is borrowed for every pound we pay in tax. This is not sustainable.
arnoldo87
June 18th, 2011 9:15am Report this commentSimon Stephenson @ 7.08 p.m.
Simon (or may I call you Madiba). You say:-
" All I used the Thatcher figures for was to demonstrate how misleading is it to use cherry-picked statistics as supposed support for generalised conclusions."
Well, if you cherry-picked to mislead then it is good of you to admit it.
As for my stats, I referred to ALL of the debt figures from 1990 through to 2008 to counteract the ridiculous claim of Hugh Janus that Major had "created a surplus" and that New Labour "squandered it in the first two years".
Whereas, in fact, the exact opposite was true.
No cherry-picking here, Bapu. Just the facts - and they appear to have caused Hugh Janus to disappear up his own nom-de-plume.
Simon Stephenson.
June 18th, 2011 10:41am Report this commentFatbloke on tour : 10.34pm
Well there's a surprise. No rational argument whatsoever, just the "my dad's better than your dad" screeching that Sir Everard Digby referred to above. Maybe you just don't have the capacity to contribute any more than this.
TrevorsDen
June 18th, 2011 11:08am Report this commentFatbloke's insistence on the Darling Plan working is flawed because the Darling Plan never got going; he was thrown out of office.
What we had was the benefit of 'stimulus'. ie in labours terms 'bringing spending forward' By that definition there is a void in spending afterwards. So the Darling Plan was only based on seeing Labour through to the election.
All stimulus did was create false pre election spending; all the VAT cut and the car scrappage scheme did was benefit the South Korean car industry. The VAT cut blew billions down the tubes for nothing.
The thread is drifting down the pages so lets remind ourself - swapping a VAT cut for a tax on bankers created no stimulus. And despite what both Balls and Osborne say the coalition cuts are barely different from Labours at this time so its nonsense to talk about cutting too soon and too deep.
The slow growth is an inevitable consequence of what has gone before - and the economic climate is not so bad as to stop millions screaming blue murder that they have not got Olympic tickets, despite collectively investing millions.
Fatmans anti-Thatcher rants show how ignorant and bigoted he is. Inflation was let rip by Labour in 79; the recession was all theirs. Privatisation did not steal from the 'plebs' - it created a wider share holding democracy; something Labour conspicuously did not repeal when in power (although they did rob BR shareholders); nor did labour repeal Thatchers labour laws.
Fatman should realise that 'we are all Thatcherite now'
Simon Stephenson.
June 18th, 2011 12:40pm Report this commentarnoldo87 : 9.15am
It just shows how wrong you can be. I had you down as someone who'd grown out of the teenage discourtesy epitomised by Fatbloke's namecalling.
Fatbloke on tour
June 20th, 2011 2:43pm Report this commentFailed Blogger @ 11.08
You prove beyond reasonable doubt that Maggie Love is the Stupid Party reincarnated.
The VAT cut helped out the High Street.
Car Scrappage from the EU helped out Nissan in Sunderland before the the UK version had even started.
As for EB's plans, you can't even get that right.
1) Bankers bonus tax = Housing and other job related plans
2) VAT cut as an emergency move to try and stave off of a severe slowdown.
Sniffy is shouting from the rooftops how bad things are going to be, no wonder the plebs have stopped spending.
AD's cuts did not include political spite, decimation of the development corporations or a badly timed VAT increase. His cuts were smaller and beter targeted and he had built up that most valuable political commodity - credibility from what he had done before.
Sniffy is a wee boy in a man's world.
Out of his depth, political cheapshots might get you noticed but they will not sort out the economy.
Olympic tickets prove one thing - that there is a surplus of middle class chancers out their trying to pull a fast one with touting for beginners.
As for the anti Maggie stuff - welcome to reality - that is what happened.
She was a political vandal who got lucky. Love the bit about inflation, as if the near doubling of VAT did not have anything to do with it.
Her brass neck to complain to the EU about the state of the UK contribution which is related to the VAT rate was pure political cheek.
Privatisation - How did that go?
Owned by the people and sold to those with excess capital. The Enclosures Act meets UK industry.
As for tnhe bit about the BR shareholders issue, I will leave that to you to explain as it is beyond comment from the real world.
Sure we are all Thatcherite now -
Dave the Rave is hiding behind the NHS.
The railways are a growth industry.
The Big Bang is now an orphan.
De-mutualisation is a dirty word.
The utilities are now foreign dominated.
The MOD budget is heading for 2% of GDP.
Nelson Mandela is a living saint.
Climate change is now the state religion.
Maunfacturing is now centre stage.
Yes we are all Maggie lovers now ...
... not!
Lucybmarale
June 21st, 2011 10:01am Report this commentWhat an outrageous load of tripe.
1. Everyone agrees the deficit needs reducing but how? I think the argument is that Osborne (and yes 74% is still more than 66%) has cuts which target the poorest in society whilst leaving banks and the wealthy virtually unscatched.
2. Comparing 2009-2010 figures (during global recession) with 2010-2011 figures is madness. You would hope that spending did increase. All this shows is that labour was not the money blowers claimed. Osborne will be spending an awful lot more I imagine due to greater amounts of the population reverting to benefits (in the wake of no jobs), rising military costs and higher borrowing rates as well as a failure to reap e.g. vodaphone's tax bill.
3. Some people are on benefits because they simply cannot work. This is a welfare state, where people should not be entirely measured by monetary value. You are never going to get benefits down to O. These unemployment figures are simply a product of an capitalist society which views people as expendable, and puts markets and profits before decent human life. Why should someone in benefits work in wage-slavery contract in some grotty supermarket in appalling conditions? I would rather be on benefits.
Not only this but real worker's wages have stagnated and declined since the 1970s in this 'boom' which in fact only benefitted a wealthy few. As a result there is little difference between working wages which are extremely low, and benefits, which is the absolute minimal amount a person can live on today.
I find the insinuation that tax cuts lead to job growth unbelievable when this is an article complaining about the scale of the deficit and that the unemployed should be punished. Also that the burden is being passed onto the next generation, conveniently forgetting coalition policies of higher tuition fees, cutting of the future jobs fund and other attacks on young people who now cannot find a job
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