Sunday, Oct 26, 2008
New labour spending machine turned on full power
Telegraph: Brown’s Keynesianism is bankrupt – and will bankrupt us
But now, with the UK in the grip of the credit crisis New Labour has revealed its true statist colours. “We are spending more to get the economy moving,” said Brown last week. “That’s the right thing to do.”
More spending from where - future earnings (tax) - previous earnings (inflation)
Posted by matt_the_hat @ 07:25 AM (695 views) Add Comment
17 Comments
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1. jimmy_joe said...
Brown wants to "bring forward" public spending from future years. Keynes advocated spending in the bad years what was saved during the good years. Brown is not a Keynesian and the author hasn't got a clue what he's talking about - unless he wants to rubbish a system that could replace the broken model of free market capitalism, before it's even been tried.
2. dohousescrashinthewoods said...
Apologies for double-posting this comment but it is relevant for this thread too. It may be that they are not only bankrupting us (and future generations) but that they are making the problem worse:
I chewed through some of the mises.org article about the Japanese depression and the difference between Keynsians, Monetarists and the Austrian school of economic thought. A bit heavy on the academic economic language, but from what I could gather, the theory is that depressions are caused by loose money and a bust is then necessary in order to unwind the malinvestments of the boom.
A key tenet seemed to be that the way to do this is to let the market correct itself and that government meddling (e.g. spending on public works or propping up failed businesses - both cases in point) actually prolong the bust. The conclusion seemed to be that this is why Japan is still in recession, because the government has continued to attempt stimulus packages, and amassed 200% of GDP in debt in the process.
Sounds familiar. Japanese Uncle, do you have any input on this?
3. Fjcruiser said...
The myth of keynesian pump priming is evil. It may work short term certainly not long term (see Japan). Most economists believe it saved America in the 30s. It did not, poverty,starvation and unemployent were still at amazing levels in 1939 and increasing. What saved the US from the Great Depression was the war unfortunately, as they started also exporting food and weapons particularly to England from 1940 and then to defend themselves from 1942.
4. dohousescrashinthewoods said...
I think Brown is very much a Keynsian now, despite the fact it's a hiding to inflation (then again, maybe that combats deflation).
I also think he couldn't have saved anything in the boom years if he tried, because it was all borrowed money. When you're in debt, you have to pay your creditors and there's nothing left for the piggy bank.
Which presumably means things have recently taken a big turn for the worse because borrowing has exploded.
5. mark wadsworth said...
This would be the golden opportunity for a gummint to sack a few million quangista and meddlers - as a temporary measure, of course - and have emergency tax cuts (temporary, of course) like waiving VAT and National Insurance for a year.
A year later, we would see that the experiment had worked, everything is getting back to normal, and so hopefully the waste cuts and tax cuts would be permanent.
6. mken said...
I think the view on Japan's story in the last years will
become more positive as the extent of the disaster
in the "anglo" model becomes clear.
As for the "will bankrupt us" headline, we are already bankrupt and Monetarism did it.
7. goweresque said...
I'm glad someone is writing these sort of articles in the press. It should be the Tories but I think you'll have to wait a long time for that. They are nearly as far behind the curve as Brown........
8. dohousescrashinthewoods said...
Yes, why have the Tories given Mr Brown so much easy room to manoeuvre. You'd think that if even one of them was reading here they would have enough ammo to take down our Dear Leader from here to Timbuktu (or Zimbabwe).
Are they blind, economically illiterate or complicit?
9. Gardeniadotnet said...
>Are they blind, economically illiterate or complicit?
Ask George and Mandy if you really need to answer that question.
10. gardeniadotnet said...
>Are they blind, economically illiterate or complicit?
Ask George and Mandy if you really need an answer to that question.
11. planning4acrash said...
For the opposite of Keynesian lies, "For A New Liberty: The Libertarian Manifesto," by Murray N. Rothbard, as read by Llewellyn H. Rockwell, Jr. Its a long read, but a comprehensive Libertarian manifesto.
12. planning4acrash said...
Oops, here's the link: For A New Liberty: The Libertarian Manifesto, by Murray N. Rothbard, as read by Llewellyn H. Rockwell, Jr.
13. dohousescrashinthewoods said...
> Ask George and Mandy if you really need an answer to that question.
I suspect any answer from those two would set back the cause of understanding reality further than not knowing at all.
14. letthemfall said...
I think gardenia means they are political bedfellows.
15. matt_the_hat said...
There's only one set of public works thats worth doing and thats mass privatization of the transport system in this country. Free efficient links via high speed rail to London should dissipate wealth to the rest of the country. Appears to me that the biggest problem facing the UK now is mobility of labour.
16. dohousescrashinthewoods said...
Development of the regions has got to be good for the UK. We are dreadfully capital-myopic.
17. letthemfall said...
"The young left-wing firebrands who sneered at Callaghan’s brave admission now run the country. To gain power, they had to bury their beliefs, shave off their beards and parrot a faith in free markets."
Left-wing firebrands?? Hardly. This polemic fits well with the Telegraph's political leanings but I don't suppose the private equity barons and bankers are cursing the left-wing suppression of the free market these last 11 years.