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Spending Cuts Will Trigger New Recession, Says Tuc Leader

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http://www.timesonline.co.uk/tol/news/poli...icle6832824.ece

Britain faces a "double-dip" recession if future governments try to slash public sector jobs, the leader of the trade union movement said today.

Speaking on the eve of the TUC congress, Brendan Barber, the TUC general secretary, warned that a 10 per cent reduction in the workforce would mean 700,000 more unemployed and push Britain back into recession.

Some areas, including Liverpool, where the TUC meets this week, would suffer an increase in unemployment of more than 40 per cent, Mr Barber said.

Mr Barber added that he had meetings planned with David Cameron, but said that the Tory leader and George Osborne, the Shadow Chancellor, were “profoundly wrong†for planning early cuts to the public sector. Suggestions that the Tories may end national pay bargaining were “very, very damaging".

Research released today by the TUC responds to Conservative think-tanks and commentators who have suggested that cuts of 10 per cent or more are needed to bring the budget deficit under control.

Labour will also have to find cuts to the public sector, although the party's relationship with the unions could make this harder.

Mr Barber said: "Public spending cuts would provoke a double-quick, double-dip recession. Unemployment could exceed 4 million and it would take many years before there was any chance of returning to anything like full employment.

"That would scar for life a whole generation of young people. Spending cuts will hit both public and private sectors. Areas such as Merseyside, in particular Liverpool, which have a high proportion of public sector jobs, would be right in the unemployment firing line.

"A double-dip recession will not just be deeper but also longer. Prologued mass unemployment would not just do economic damage, but would have terrible social effects. I don't think that Britain is broken, but this would be one way to break it.â€

The TUC says that deficit reductions can be achieved by scrapping the Trident replacement programme and ID cards.

This should be the priority, rather than slashing public sector employment, which would result in a 1 per cent cut in GDP, it argues.

Mr Barber painted an apocalyptic picture of the consequences of a dramatic rise in unemployment.

I think that the public sector should have pay rises of 143%, in order to stave off the reccession. The resources for this can come from the Alastair Darlings magic piggy bank of infinite wealth.

Or, to sum up my feelings after reading this piffle another way

Jesus.

H.

Tapdancing.

Christ.

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Blah blah from him, it almost felt like he was threatening the jobs of the frontline nurses, police officers, teachers. On R4 he was going on, are we going to close the nurseries as if he was threatening to do it himself. Propaganda. Nothing will come of this conference as neither of them are in control of either of their situations.

MEH.

Edited by Tonkers

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Some people clearly don't understand how economics work.

This idiot clearly doesn't grasp that if we keep up this deficit spending the interest alone will probably wipe out 1 million public sector jobs.

If only we could just keep spending money that doesn't exist.

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it's nice of these trade union leaders to so generously grant an incoming tory govt a clear mandate to cutback the whole f*cking public sector.

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http://www.timesonline.co.uk/tol/news/poli...icle6832824.ece

I think that the public sector should have pay rises of 143%, in order to stave off the reccession. The resources for this can come from the Alastair Darlings magic piggy bank of infinite wealth.

Or, to sum up my feelings after reading this piffle another way

Jesus.

H.

Tapdancing.

Christ.

I think we should follow your lead on this one Injin. Why not go the whole hog and cancel all public-sector activities completely - we could wipe-out the debt immediately, and we'd have the strong, robust economy needed to climb-out of recession.

Another practical idea from Injin - if only the world would listen.

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I think we should follow your lead on this one Injin. Why not go the whole hog and cancel all public-sector activities completely - we could wipe-out the debt immediately, and we'd have the strong, robust economy needed to climb-out of recession.

Another practical idea from Injin - if only the world would listen.

Spot on. :)

It'd be as close to paradise as you can have on earth in no time flat.

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i think the unionist is right, the UK should retain the PS as long as is possible at its current levels and let bankruptcy take its course as it will do a far more efficient job of cuts than any Govt could, im suprised youre not with him on this one injin

Edited by Tamara De Lempicka

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Why not go the whole hog and cancel all public-sector activities completely

frankly, privatising them would be more effective than cancelling them

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frankly, privatising them would be more effective than cancelling them

Indeed, we could get the student loans company to do it.

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Indeed, we could get the student loans company to do it.

no, because they are public sector.

Edited by Si1

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http://www.timesonline.co.uk/tol/news/poli...icle6832824.ece

I think that the public sector should have pay rises of 143%, in order to stave off the reccession. The resources for this can come from the Alastair Darlings magic piggy bank of infinite wealth.

Or, to sum up my feelings after reading this piffle another way

Jesus.

H.

Tapdancing.

Christ.

I agree, I think someone should send Mr TUC or any union or government official a copy of BAstiats, "That which is Seen and that which is not Seen"...This part is particularly apt I thought...The mistake the Keynesian always makes is to focus on that which is only seen.

II. THE DISBANDING OF TROOPS

It is the same with a people as it is with a man. If it wishes to give itself some gratification, it naturally considers whether it is worth what it costs. To a nation, security is the greatest of advantages. If, in order to obtain it, it is necessary to have an army of a hundred thousand men, I have nothing to say against it. It is an enjoyment bought by a sacrifice. Let me not be misunderstood upon the extent of my position. A member of the assembly proposes to disband a hundred thousand men, for the sake of relieving the tax-payers of a hundred millions.

If we confine ourselves to this answer - "The hundred millions of men, and these hundred millions of money, are indispensable to the national security: it is a sacrifice; but without this sacrifice, France would be torn by factions, or invaded by some foreign power," - I have nothing to object to this argument, which may be true or false in fact, but which theoretically contains nothing which militates against economy. The error begins when the sacrifice itself is said to be an advantage because it profits somebody.

Now I am very much mistaken if, the moment the author of the proposal has taken his seat, some orator will not rise and say - "Disband a hundred thousand men! do you know what you are saying? What will become of them? Where will they get a living? Don't you know that work is scarce everywhere? That every field is overstocked? Would you turn them out of doors to increase competition, and weigh upon the rate of wages? Just now, when it is a hard matter to live at all, it would be a pretty thing if the State must find bread for a hundred thousand individuals? Consider, besides, that the army consumes wine, clothing, arms - that it promotes the activity of manufactures in garrison towns - that it is, in short, the god-send of innumerable purveyors. Why, any one must tremble at the bare idea of doing away with this immense industrial movement."

This discourse, it is evident, concludes by voting the maintenance of a hundred thousand soldiers, for reasons drawn from the necessity of the service, and from economical considerations. It is these considerations only that I have to refute.

A hundred thousand men, costing the tax-payers a hundred millions of money, live and bring to the purveyors as much as a hundred millions can supply. This is that which is seen.

But, a hundred millions taken from the pockets of the tax-payers, cease to maintain these taxpayers and the purveyors, as far as a hundred minions reach. This is that which is not seen. Now make your calculations. Cast up, and tell me what profit there is for the masses?

I will tell you where the loss lies; and to simplify it, instead of speaking of a hundred thousand men and a million of money, it shall be of one man, and a thousand francs.

We will suppose that we are in the village of A. The recruiting sergeants go their round, and take off a man. The tax-gatherers go their round, and take off a thousand francs. The man and the sum of money are taken to Metz, and the latter is destined to support the former for a year without doing anything. If you consider Metz only, you are quite right; the measure is a very advantageous one: but if you look towards the village of A., you will judge very differently; for, unless you are very blind indeed, you will see that that village has lost a worker, and the thousand francs which would remunerate his labour, as well as the activity which, by the expenditure of those thousand francs, it would spread around it.

At first sight, there would seem to be some compensation. What took place at the village, now takes place at Metz, that is all. But the loss is to be estimated in this way: - At the village, a man dug and worked; he was a worker. At Metz, he turns to the right about, and to the left about; he is a soldier. The money and the circulation are the same in both cases; but in the one there were three hundred days of productive labour; in the other, there are three hundred days of unproductive labour, supposing, of course, that a part of the army is not indispensable to the public safety.

Now, suppose the disbanding to take place. You tell me there will be a surplus of a hundred thousand workers, that competition will be stimulated, and it will reduce the rate of wages. This is what you see.

But what you do not see is this. You do not see that to dismiss a hundred thousand soldiers is not to do away with a million of money, but to return it to the tax-payers. You do not see that to throw a hundred thousand workers on the market, is to throw into it, at the same moment, the hundred millions of money needed to pay for their labour; that, consequently, the same act which increases the supply of hands, increases also the demand; from which it follows, that your fear of a reduction of wages is unfounded. You do not see that, before the disbanding as well as after it, there are in the country a hundred millions of money corresponding with the hundred thousand men. That the whole difference consists in this: before the disbanding, the country gave the hundred millions to the hundred thousand men for doing nothing; and that after it, it pays them the same sum for working. You do not see, in short, that when a tax-payer gives his money either to a soldier in exchange for nothing, or to a worker in exchange for something, all the ultimate consequences of the circulation of this money are the same in the two cases; only, in the second case, the tax-payer receives something, in the former he receives nothing. The result is - a dead loss to the nation.

The sophism which I am here combating will not stand the test of progression, which is the touchstone of principles. If, when every compensation is made, and all interests are satisfied, there is a national profit in increasing the army, why not enroll under its banners the entire male population of the country?

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The TUC says that deficit reductions can be achieved by scrapping the Trident replacement programme and ID cards.

FFS, are they up to £175bn a year now?

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I agree, I think someone should send Mr TUC or any union or government official a copy of BAstiats, "That which is Seen and that which is not Seen"...This part is particularly apt I thought...The mistake the Keynesian always makes is to focus on that which is only seen.

II. THE DISBANDING OF TROOPS

It is the same with a people as it is with a man. If it wishes to give itself some gratification, it naturally considers whether it is worth what it costs. To a nation, security is the greatest of advantages. If, in order to obtain it, it is necessary to have an army of a hundred thousand men, I have nothing to say against it. It is an enjoyment bought by a sacrifice. Let me not be misunderstood upon the extent of my position. A member of the assembly proposes to disband a hundred thousand men, for the sake of relieving the tax-payers of a hundred millions.

------------------------- etc etc

The sophism which I am here combating will not stand the test of progression, which is the touchstone of principles. If, when every compensation is made, and all interests are satisfied, there is a national profit in increasing the army, why not enroll under its banners the entire male population of the country?

brilliant ..!! but do the powers that be understand this (incomptetence) or do they pretend not to (treason) ?

Edited by moneyfornothing

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yep, cut front line services wo show cuts are occuring....but not where they need to be...in the civil service, quangos and whitehall.

as well as managers and consultants.

you all know what I propose: 50% off all salaries in Pubsec over 25,000.

instant cuts, no loss to any services whatsoever.

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brilliant ..!! but do the powers that be understand this (incomptetence) or do they pretend not to (treason) ?

Haha, now thats a question. Well, I have a theory that Keynesian policies are much easier to implement politically. These types of policies are great vote winners.

If you think about it, and this is being said in broad brush strokes not exact figures, there is Paretos law or the 80/20 rule. If we take it that 80% of the money is owned by 20% of the rich, but conversely that 20% of the rich, the entrepreneurs the ones who create employment create 80% of the tax income also.

From this loose theory we can assume that the majority of the electorate will be the 80% who don't have the money, these will be the people that will vote based on the popularist schemes that the government love to market in order to preserve their status quo. From this I can observe that our keynesian leaders will find it easier to implement vote winning strategies from these type of economic program.

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I think Barber is correct when he says:

much what has been taken as evidence of recovery is the result of government and bank action

cut the stimulus off and the economy will go into decline again

and we will go into a double dip recession

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The TUC is absolutely right.

If the public sector gets substantial cuts then that's going to have a direct impact on the economy.

Less money going into workers' pockets is going to hit all their spending.

And then there are all the private sector businesses that are reliant on government spending: arms manufacturers, construction, health supplies such as pharmeceuticals, cleaning materials, hospital equipment, IT supplies, vehicles. Not to mention the firms of management consultants.

A recession is exactly the time to be increasing public spending. There has to be some demand from somewhere, or there's going to be complete mayhem in the private sector.

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