Ed Balls - Keynesian Idiot

[dammfoolman]

Mr Balls believes giving those on modest incomes more money to spend would boost growth

Labour shadow chancellor Ed Balls has called for "decisive action ... to boost growth", offering suggestions for tax cuts in next month's Budget.

http://www.bbc.co.uk/news/uk-politics-17087726

The comments are good

Mr Balls, you are an absolute joke! We are flat stoney broke.If I ran my household budget like you would run the country they'd have it repossesed in no time. You can't keep borrowing money, there comes a time when you have to just stop and pay it back.

[Timak]

OK so what is your alternative economic strategy?

[leicestersq]

People use people like Balls as an ad hominem to attack Keynes. If Keynes were alive today, I doubt he would advocate many of the policies his opponents say he would advocate.

[libspero]

As far as I can tell Keynesians will always be right while growth is measured in the domestic currency.

The old example is that of Zimbabwe who's growth has been absolutely spectacular.

If you want to see our real growth look at our GDP measured in dollars (or even better commodities).

[bmf]

As far as I can tell Keynesians will always be right while growth is measured in the domestic currency.

The old example is that of Zimbabwe who's growth has been absolutely spectacular.

If you want to see our real growth look at our GDP measured in dollars (or even better commodities).

Sir I think I love you.

Please continue to tell other people this.

[LJAR]

Leicestersq - spot on the man himself apparently was appalled by what was done in his name during his lifetime.

OK so what is your alternative economic strategy?

Simple

complete free trade (makes everyone's food cheaper - obviously this means leaving the EU)

Allow shale gas drilling (makes energy cheaper in the long run)

Deregulate the planning system (a right to build if you like) to make housing cheaper.

Remove regulations and licensing from most professions excepting medical ones, (to make services cheaper)

Raise interest rates and take a recessionary hit like Iceland did to clear out the deadwood businesses and houses.

sell off the banks and let them go bankrupt.

replace all benefits with a citizens income (not including disability benefits)

simplify all income tax and NI into a flat tax at 35%-40% (with no personal allowance due to citizens income) this would mean that work always paid more than not working.

remove the minimum wage (since the citizens income should be sufficient to keep people in food)

remove all subsidies and tax breaks from the corporation tax code and cut corporation tax to 10%-15% (look to cut this to 0% in the future)

tinkering is not good enough - we need a wholesale change in attitude.

This would hurt like hell, but we need to pull the scab off and clean out the wound, not let it fester into gangrene.

[dammfoolman]

Ok, I'm not an economist but Keynesian stimulus ain't the solution. I spent 6 years in Japan and saw those bridges to nowhere and walked the expensive marbled tiling to Shinjuku station in Tokyo

Tell the people the truth that the last 15 years have been an illusion based on debt and if we keep borrowing the can will be thrown back at us!

Tell the people that to prosper that we need to make things that people want to buy which means a little less service jobs and more manufacturing

Tell the banksters to f-off and let all those that took risks to get their fingers burnt. Stop propping them up and use the money to protect depositors. Maybe then they will make prudent future investments with moral hazard on the cards if they aren't to coin a phrase from Brown *ahem* prudent!

Flat tax rate, reduce corporation tax al la Ireland, encourage business to invest in Britain!

Raise interest rates! Stuff it, if people who have eye watering debts get burnt then so be it. I'm fed up of propping up the system with my savings. Capitalism needs capital from savings and ZIRP ain't doing shit!

I need to put a lot more thought to right the wrongs of recent years but in summary lets do the same as Iceland, take the pain now, the system needs a massive reset and then we can rebuild the economy from the ashes

:angry:

[inflating]

People use people like Balls as an ad hominem to attack Keynes. If Keynes were alive today, I doubt he would advocate many of the policies his opponents say he would advocate.

Leicestersq - spot on the man himself apparently was appalled by what was done in his name during his lifetime.

Simple

complete free trade (makes everyone's food cheaper - obviously this means leaving the EU)

Allow shale gas drilling (makes energy cheaper in the long run)

Deregulate the planning system (a right to build if you like) to make housing cheaper.

Remove regulations and licensing from most professions excepting medical ones, (to make services cheaper)

Raise interest rates and take a recessionary hit like Iceland did to clear out the deadwood businesses and houses.

sell off the banks and let them go bankrupt.

replace all benefits with a citizens income (not including disability benefits)

simplify all income tax and NI into a flat tax at 35%-40% (with no personal allowance due to citizens income) this would mean that work always paid more than not working.

remove the minimum wage (since the citizens income should be sufficient to keep people in food)

remove all subsidies and tax breaks from the corporation tax code and cut corporation tax to 10%-15% (look to cut this to 0% in the future)

tinkering is not good enough - we need a wholesale change in attitude.

This would hurt like hell, but we need to pull the scab off and clean out the wound, not let it fester into gangrene.

Ok, I'm not an economist but Keynesian stimulus ain't the solution. I spent 6 years in Japan and saw those bridges to nowhere and walked the expensive marbled tiling to Shinjuku station in Tokyo

Tell the people the truth that the last 15 years have been an illusion based on debt and if we keep borrowing the can will be thrown back at us!

Tell the people that to prosper that we need to make things that people want to buy which means a little less service jobs and more manufacturing

Tell the banksters to f-off and let all those that took risks to get their fingers burnt. Stop propping them up and use the money to protect depositors. Maybe then they will make prudent future investments with moral hazard on the cards if they aren't to coin a phrase from Brown *ahem* prudent!

Flat tax rate, reduce corporation tax al la Ireland, encourage business to invest in Britain!

Raise interest rates! Stuff it, if people who have eye watering debts get burnt then so be it. I'm fed up of propping up the system with my savings. Capitalism needs capital from savings and ZIRP ain't doing shit!

I need to put a lot more thought to right the wrongs of recent years but in summary lets do the same as Iceland, take the pain now, the system needs a massive reset and then we can rebuild the economy from the ashes

:angry:

+1

[leicestersq]

A simple policy to help would be to cut the top levels of pay in the public sector, and use the money saved to employ people directly. Reducing average pay will reduce savings, increasing the multiplier effect. You will also put more people to work with the same money.

Cutting pay in the public sector so that average pay is below that of the private sector, would do far more for employment and growth than any increase in deficit spending would.

[Georgia O'Keeffe]

I think we need to consider from now on three important things that techocratic economists tend to ignore. Because technically, Balls is, of course, (short term) correct and therefore difficult to argue against nor even disprove in a politician's timescale. And the argument basically goes round in circles because of this.

1. The moral hazards of monetary and taxation policy. Causes and effects long term on people's attitudes and actions.

2. How money is spent. The quality of gdp, not just its short term nominal level. Is money spent going to generate even more than its cost? Wrest back control of the word "investment".

3. Will our action help or hinder the adjustment to the trade balance.

If you have these at the heart of your consideration, I think that is a good starting point.

you can leave out 2 and 3 , they are subsets of 1, it is 1 that will in effect determine any economies long term viability as behaviour adapts to it, of course the age old problem is what is moral? everyone has their own opinion but fundamentally the states opinion isnt generally based in morality but its own, and the actors decidng it, benefit, im sure youd get a much better success rate of morality within the state if all the decision makers, MPs, councillors, whatever players were decided by raffle out of the popn every 4/5 years, but the self interest of the state and its actors would never allow for such, at least not in our lifetimes

Edited February 19, 2012 by Tamara De Lempicka

[goldbug9999]

OK so what is your alternative economic strategy?

Prosperity comes from efficiency (i.e. per-capita output). Efficiency comes from workforce skill level, technology level, automation, economies of scale, commodity and resource (including land) availability etc.

Injecting more money into the economy is only beneficial when specifically to targeted one of these efficiency improving areas. Even then all you are doing is temporarily shifting the overall balance of wealth towards the efficiency improving area in the hope that the efficiency increase will offset the wealth you have effectively sucked out of everywhere else. Simple giving people more "money to spend" does jack sh*t.

Edited February 19, 2012 by goldbug9999

[frederico]

http://www.bbc.co.uk/news/uk-politics-17087726

The comments are good

to be fair whilst he didn't come up with anything much himself, he made a valid point that Osborne is doing very little to promote growth.

It is interesting to note his points about corporation tax and the 50%, obviously due to the availability of off shore accounts, such things will never make any difference.

However David Davies was sort of right when he said lowering VAT wouldn't help either as the proles would by imported TVs, Dave they won't they will just nick them.

The real answer, the real elephant in the room that none of them will mention, costs and cost of living. So to a certain extent Ed was right.

However printing money to sustain house prices and inflation is not going to help.

Edited February 19, 2012 by frederico

[dammfoolman]

to be fair whilst he didn't come up with anything much himself, he made a valid point that Osborne is doing very little to promote growth.

Agreed! Once people realise that neither party has the answer the the brown stuff will hit the fan!

[Georgia O'Keeffe]

to be fair whilst he didn't come up with anything much himself, he made a valid point that Osborne is doing very little to promote growth.

It is interesting to note his points about corporation tax and the 50%, obviously due to the availability of off shore accounts, such things will never make any difference.

However David Davies was sort of right when he said lowering VAT wouldn't help either as the proles would by imported TVs, Dave they won't they will just nick them.

The real answer, the real elephant in the room that none of them will mention, costs and cost of living. So to a certain extent Ed was right.

However printing money to sustain house prices and inflation is not going to help.

no politician of any shade will promote growth because the only way to promote it is to wipe out the malinvestment and cause immense pain, at some point exactly that will happen on someones watch whether they like it or not and rather than been lorded as an economic god they will be castigated as a moron (see Papandreous popularity as he came to power in the eye of the storm), however whoever takes over after destruction of most malinvestment will be set for the growth phase and no matter how imbecilic their economic policy they will be lorded as an economic genius.

For a recent example of this see Mc Doom (but you can go right back to every PM before him), he was only castigated when the economy started fixing itself so that it could if left to do its thing ultimately produce real growth, Everyone was happy as larry when he spent the previous years destroying any possibility of Real Growth

As a politician (who generally only have an interest in how they are viewed at the time) youd have to be a right bellend to try setting up the future real growth now

Edited February 19, 2012 by Tamara De Lempicka

[R K]

He's completely correct of course.

Osborne's 'austerity' has increased the debt at a more rapid rate, forced more people out of work and had a catastrophic effect on growth in what is somewhere akin to the mid 1930s (and he's barely got going yet, so hopeless are his 'plans')

These idiots who equate govt. debt to household debts are empirically wrong and yet so caught up in their own primary school economics they refuse to see it.

Osborne's tried his nonsense for 2 years and it has failed.

Time to grow a pair, admit he's a pygmy and change course, else we're headed straight to the late 1930s.

He thinks it's 1980. Unfortunately for him household debt in 1980 was in its infancy. Thatcher was only just getting warmed up with her financialisation, deregulating of banksters and WTO stuff. Today isn't 1980. Households are still leveraged up 150% of income, only somewhat below the peak fo 170%, corporates are hoarding cash, and so if households are to deleverage back to a position where his policies would make any sense at all, govt debt must fall more slowly, we must have much faster growth and corporates must be forced encouraged to take up the slack by reversing their hoarding and run deficits. Osborne doesn't seem to get this at all, and the nutters in his party of course even less so.

Edited February 19, 2012 by Red Knight

[Chuffy Chuffnell]

The 2010s isn't the 1930s. It's not the same sort of depression. For starters, this decade's will be FAR worse.

If/when Greece departs the Eurozone (and perhaps one or two other members follow) then BoE / government policy will have to change. Probably more money printing, but who knows what they have up their sleeves.

Could be worse. We could be Italy or any number of truly f*cked southern European countries.

[Sour Mash]

People use people like Balls as an ad hominem to attack Keynes. If Keynes were alive today, I doubt he would advocate many of the policies his opponents say he would advocate.

It's certainly strange how there was no sign of Keynesianism when credit was bubbling causing the economy to roar and the government continued to run huge deficits whilst the central banks kept interest rates low. According to Keynes, rates should have been tightened and a surplus built from the abundant taxation revenue.

The bottom line is that our glorious leaders wanted some shred of an excuse to cover the fact that printing their way out of the mess is the only 'answer' that they have and picking up on an element of what Keynes advocated gives them that fig leaf thanks to an uncritical media.

[R K]

The 2010s isn't the 1930s. It's not the same sort of depression. For starters, this decade's will be FAR worse.

If/when Greece departs the Eurozone (and perhaps one or two other members follow) then BoE / government policy will have to change. Probably more money printing, but who knows what they have up their sleeves.

Could be worse. We could be Italy or any number of truly f*cked southern European countries.

Italy have a primary surplus. Their main problem is being stuck in Schauble's currency.

Agree re the other piigs.

Money printing has so far saved the day. But it's what politicians do with the day that's important and Osborne's policies have done nothing but increased joblessness and failed to generate growth. It's not even hypothetical as it was 2 years ago. It's obvious.

[porca misèria]

It's certainly strange how there was no sign of Keynesianism when credit was bubbling causing the economy to roar and the government continued to run huge deficits whilst the central banks kept interest rates low. According to Keynes, rates should have been tightened and a surplus built from the abundant taxation revenue.

Karl Marx lived to say that "If these people are Marxists then I most certainly am not." Christ would surely have said the same of Christians, had he lived to see them.

Time to add Keynes to their select band?

[Georgia O'Keeffe]

Karl Marx lived to say that "If these people are Marxists then I most certainly am not." Christ would surely have said the same of Christians, had he lived to see them.

Time to add Keynes to their select band?

Keynes was a Marxist Christian?

You couldnt make it up

Edited February 19, 2012 by Tamara De Lempicka

[Ascii]

This comment made me laugh.

Growth is the way out of depression, as has been shown many times before.

[/Quote]

[Bruce Banner]

He's completely correct of course.

Osborne's 'austerity' has increased the debt at a more rapid rate, forced more people out of work and had a catastrophic effect on growth in what is somewhere akin to the mid 1930s (and he's barely got going yet, so hopeless are his 'plans')

These idiots who equate govt. debt to household debts are empirically wrong and yet so caught up in their own primary school economics they refuse to see it.

Osborne's tried his nonsense for 2 years and it has failed.

Time to grow a pair, admit he's a pygmy and change course, else we're headed straight to the late 1930s.

He thinks it's 1980. Unfortunately for him household debt in 1980 was in its infancy. Thatcher was only just getting warmed up with her financialisation, deregulating of banksters and WTO stuff. Today isn't 1980. Households are still leveraged up 150% of income, only somewhat below the peak fo 170%, corporates are hoarding cash, and so if households are to deleverage back to a position where his policies would make any sense at all, govt debt must fall more slowly, we must have much faster growth and corporates must be forced encouraged to take up the slack by reversing their hoarding and run deficits. Osborne doesn't seem to get this at all, and the nutters in his party of course even less so.

Yet another party political broadcast on behalf of the Labour Party, complete with the usual "Osborne" references .

[Tankus]

Yet another party political broadcast on behalf of the Labour Party, complete with the usual "Osborne" references .

not forgetting the lefty money shot ...".THHHHHaaatcheeeerrrrRRR" ........................................................... wot ...no milk ?

[Gigantic Purple Slug]

It's certainly strange how there was no sign of Keynesianism when credit was bubbling causing the economy to roar and the government continued to run huge deficits whilst the central banks kept interest rates low. According to Keynes, rates should have been tightened and a surplus built from the abundant taxation revenue.

The bottom line is that our glorious leaders wanted some shred of an excuse to cover the fact that printing their way out of the mess is the only 'answer' that they have and picking up on an element of what Keynes advocated gives them that fig leaf thanks to an uncritical media.

This is the big issue as far as I'm concerned.

The government should act as a moderator on the economy. Saving during the good times and spending during the bad. Balls seems to want to do the second part of that but not the first.

Of course, it isn't quite as simple as that, as most of the "good times" during the late 90s and 00s were due to government spending increases.

[erat_forte]

Prosperity comes from efficiency (i.e. per-capita output). Efficiency comes from workforce skill level, technology level, automation, economies of scale, commodity and resource (including land) availability etc.

Injecting more money into the economy is only beneficial when specifically to targeted one of these efficiency improving areas. Even then all you are doing is temporarily shifting the overall balance of wealth towards the efficiency improving area in the hope that the efficiency increase will offset the wealth you have effectively sucked out of everywhere else. Simple giving people more "money to spend" does jack sh*t.

Have to agree with this.