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macfarlan

Tories Economic Fairytale

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I like this guy, I'm currently reading his book '23 things they dont tell you about capitalism'.

Ok, he's left leaning, but his arguments make lots of sense and chime with some of the sentiment on the forum.

In this article he touches on the origins of the deficit and highlights a ' bogus recovery largely based on government-fuelled asset bubbles in real estate and finance, with stagnant productivity, falling wages, millions of people in precarious jobs, and savage welfare cuts.

http://www.theguardian.com/commentisfree/2014/oct/19/britain-political-class-tories-economic-fairytale

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Neither the US nor the UK has had capitalism for a very long time. That's probably the first thing they should tell you about capitalism.

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I think we have super capitalism now myself.

Private companies own most things, and - by and large - they also own the majority of our politicians and laws. Ergo they own the state(s).

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I think we have super capitalism now myself.

Private companies own most things, and - by and large - they also own the majority of our politicians and laws. Ergo they own the state(s).

That is why they want TTIP. To seal the deal and stop any possible going back.

Edited by fru-gal

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I stop reading any left leaning writers when they claim "savage welfare cuts".There have been no cuts in welfare at all.The budget is going up every year.They class a savage welfare cut as benefits going up 12% more than wages over the last 5 years.

For some reason the left can never see that high welfare spending can and is leading to flat-lining productivity.Its more cost affective for a company to hire workers on the minimum and let the state top up their incomes than invest in new machinery etc.

They also fail to see that we arent in a capitalist society.We are in a corporate one backed up by socialism funding the workers through benefits.

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I stop reading any left leaning writers when they claim "savage welfare cuts".There have been no cuts in welfare at all.The budget is going up every year.They class a savage welfare cut as benefits going up 12% more than wages over the last 5 years.

For some reason the left can never see that high welfare spending can and is leading to flat-lining productivity.Its more cost affective for a company to hire workers on the minimum and let the state top up their incomes than invest in new machinery etc.

They also fail to see that we arent in a capitalist society.We are in a corporate one backed up by socialism funding the workers through benefits.

+1

The article made some good points especially:

"The success of the Conservative economic narrative has allowed the coalition to pursue a destructive and unfair economic strategy, which has generated only a bogus recovery largely based on government-fuelled asset bubbles in real estate and finance, with stagnant productivity, falling wages, millions of people in precarious jobs"

But is diluted by too much left leaning mumbo-jumbo non-sense.

The fact is the country was living beyond it's means and enjoying a higher standard of living than it should by borrowing from future consumption. That re-balance towards a more acceptable level of current consumption is always going to be painful.

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Neither the US nor the UK has had capitalism for a very long time. That's probably the first thing they should tell you about capitalism.

Its pure financialization with rampant expansion of debt under the illusion of the free market. Neoliberalism has been deliberately conflated with the Austrians. However Von Mises, Rothbard, Hayek would have insisted wall street paid the price and that the giant squid, JP Morgan and Merrill Lynch should have gone the same way as Bear Stearns and Lehmans. However we now have a system of rich socialism, with billions of dollars paid out to the needy on wall street whilst main street gets to go feck itself.

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That re-balance towards a more acceptable level of current consumption is always going to be painful

When it eventually happens ...

Next door Ireland took the pain, and may have come out the other side. I guess the Euro gave them the best discipline since the Gold Standard fulfilled the same role. Of course, any such discipline gets unpopular when things get tough ...

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Neither the US nor the UK has had capitalism for a very long time. That's probably the first thing they should tell you about capitalism.

Yes.Exactly.This corruption and theft is not capitalism.

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Yes.Exactly.This corruption and theft is not capitalism.

How so?

Surely corruption and theft is at the very heart of capitalism?

When hadn't it been?

It's always been about making money, pure and simple. Morals have no part in that. Corruption and theft is a big part of corporate life. It certainly plays a massive part in most private financial institutions.

I struggle to think of a big successful company who haven't got there by either nicking an idea or three, gaming the system to suit them, or twisting what needs to be twisted in order to achieve the ultimate aim (which is to make more money than the competition).

Capitalism is still very young, but I really do think people who claim this isn't capitalism any more are missing the point. It certainly is capitalism. It's capitalism grown up. It's capitalism the way the capitalists who control the most capital (and therefore the world's power structures) want it.

If it wasn't they'd change it fast.

Edited by byron78

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I find it disturbing this guy teaches economics at Cambridge. Its a complete irrelevance the budget was somewhat nearer balanced until 2003...its systemic debt that matters. Not public debt. Focusing on public debt is ignoring 4/5ths of the economic sphere. Lines like 'its safe to say the rise of the deficit came from the recession itself, not Labours economic mismanagement" For fecks sakes...recessions don't just materialize out of thin air Chang...they are the result of years OF mismanagement. If labour want to take credit for the growth between 1997-2007, then they have to take responsibility for allowing the driver of that growth...credit...er, debt!

Its hilarious how the left simply plead ignorance to how the economy outside of the public sector is doing - they'll say its due to their stewardship if its growing, but abandon it if ever something goes wrong.

I also wonder where he gets the revenue figures. The guardians tax receipts since 1963 - and every other publication I've seen show it as being consistently around 35%, never anywhere near 42%. Is he including investment income as well - naughty boy.

However, I don't think 'a large part of the British voting public' has bought it. Despite moving to the centre and having the media on his side, despite having Miliband being useless, the tories poll results are dismal. As low as 1997 in some polls. Only the media establishment has. The average person can see quite well their wages getting whittled down to nothing as printed money and immigrant labour pushes purchasing power down. Many of them believe, perhaps mistakenly, UKIP will at least tackle one of these factors. So its not tories getting much traction from their lies, its rather Labour isn't really capitalizing much. And why would they. Not one labour proposal on monetary reform...the one area aside from immigration that would offer a chance of improvement.

He's right about the current situation. But his revisionism of the world prior to 2010 stinks, and the degradation of job quality isn't related to the UK specifically, its everywhere that allows mass immigration and allows banks to play a significant role in the economy. There is no synergistic relationship in globalisation. Wealth is simply transferred from west to east.

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Neither the US nor the UK has had capitalism for a very long time. That's probably the first thing they should tell you about capitalism.

It is pretty much the first thing he says.

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....the system will collapse in its entirety if the money stops flowing....throw them a few crumbs to keep them fed, docile and dependant....while others close to the money run away with the main chunk of bread......another name for a breadwinner, those who win by having first access to the easy profitable pickings. ;)

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I'd guess he refers to public debt because he's talking about the general public falling for the deficit-fear and everything that emanates from it dialogue, much like this forum of late.

Well one thing that eminates from it is this guy's salary (assuming he teaches at Cambridge) in the quasi public sector, based on the rest of us guaranteeing student debt on the never never. Sure he's going to defend it...he's probably getting multiples of the £12,000 per capita Government spend.

Hell I'd defend the two trillion debt to the hilt too if I was in the pay of the unborn. For those of us that have to get the scraps off the Professor's table sure we are going to want the deficit down.

Edited by crashmonitor

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I stop reading any left leaning writers when they claim "savage welfare cuts".There have been no cuts in welfare at all.The budget is going up every year.They class a savage welfare cut as benefits going up 12% more than wages over the last 5 years.

For some reason the left can never see that high welfare spending can and is leading to flat-lining productivity.Its more cost affective for a company to hire workers on the minimum and let the state top up their incomes than invest in new machinery etc.

They also fail to see that we arent in a capitalist society.We are in a corporate one backed up by socialism funding the workers through benefits.

I appreciate you're making a general comment about left leaning writers, but without reading his stuff you're making assumptions. Chang sees we aren't in a capitalist society and argues for better wages, not more welfare.

Besides, if wages and benefits arent keeping pace with inflation then the people recieving them are both worse off, and a real term reduction in incomes for the poorest families has a real effect on their lives.

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I'd guess he refers to public debt because he's talking about the general public falling for the deficit-fear and everything that emanates from it dialogue, much like this forum of late.

Ok, lets get one thing straight. Deficits are evil. They are immoral, they are unnecessary and act to enslave the unborn and unrepresented into paying interest to banksters and the wealthy indefinitely. For that reason alone I think this Chang is a prize c*/t and his claim to have any kind of moral argument is empty

You want stimulus but don't want taxes. Fine. Print money unbacked by debt. Deal with all the inflation upfront. You still get to steal money from savers, purchasing power from earners and get to transfer as much wealth as you want to the goddamn bottomless pit that is the NHS.

But don't try and tell me national debt has any place in a society that claims to have any level of basic decency.

/rant over.

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Capitalism has a fairly narrow definition as in "privately owned means of production". However we usually assume that it comes along with free markets and freedom of competition which we certainly don't have at the moment. And thats where the problems stem from - not the capitalism part.

Edited by goldbug9999

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Capitalism has a fairly narrow definition as in "privately owned means of production". However we usually assume that it comes along with free markets and freedom of competition which we certainly don't have at the moment. And thats where the problems stem from - not the capitalism part.

I don't think you can have capitalism and political democracy - or at least free market capitalism. Really we need to do away with democracy and re-apply the rule of law.

Take the GM 'bailout'. The way in which it was structured screwed the bondholders, but made the UAW whole. This flys in the face of the chain of who gets first dibs in event of default.

The politicians frame it as saving jobs, even though in the long term it will cost jobs.

People still need cars. GMs market share would have gone to Ford, Nissan, whoever. They would have likely recruited more workers at affordable rates. Constructive destruction would have meant cheaper cars for consumers as the inefficient GM is eliminated...its technology and resources sold off to competitors at knock down rates.

If they had any decency or free market instinct, Ford would have said 'bailout GM and we'll move all manufacturing away from the US'

They don't. They want the implicit guarantee the govt will bail them out in due course.

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Capitalism has a fairly narrow definition as in "privately owned means of production". However we usually assume that it comes along with free markets and freedom of competition which we certainly don't have at the moment. And thats where the problems stem from - not the capitalism part.

Yep. Spot on.

But I've no idea why we make those assumptions.

Capitalism itself is far far too young to "assume" anything really. We're living it now. We're finding out how it works out.

To make assumptions it will always operate in an idealistic or unchanging manner would be to make the same mistakes Bolsheviks did when they assumed communism would function in the same way under Stalin as it did Lenin.

I'm not even sure a truly free market ever existed in the first place either.

The competition part has been dying for years as well, and that's part and parcel of capitalism's "survival of the fittest". At the end, only a few companies will stand. Even now, don't a handful now own most things between them? Perhaps we're closer to the end than most think.

Edited by byron78

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Well one thing that eminates from it is this guy's salary (assuming he teaches at Cambridge) in the quasi public sector, based on the rest of us guaranteeing student debt on the never never. Sure he's going to defend it...he's probably getting multiples of the £12,000 per capita Government spend.

Hell I'd defend the two trillion debt to the hilt too if I was in the pay of the unborn. For those of us that have to get the scraps off the Professor's table sure we are going to want the deficit down.

Ok, lets get one thing straight. Deficits are evil. They are immoral, they are unnecessary and act to enslave the unborn and unrepresented into paying interest to banksters and the wealthy indefinitely. For that reason alone I think this Chang is a prize c*/t and his claim to have any kind of moral argument is empty

You want stimulus but don't want taxes. Fine. Print money unbacked by debt. Deal with all the inflation upfront. You still get to steal money from savers, purchasing power from earners and get to transfer as much wealth as you want to the goddamn bottomless pit that is the NHS.

But don't try and tell me national debt has any place in a society that claims to have any level of basic decency.

/rant over.

I probably don't need to reply, because you both underscored my point. But I will.

Why is it a bad thing he's employed at Cambridge?

Why is the deficit bad?

What caused the deficit?

What are the logical consequences of targeting deficit reduction over other options?

What realistic alternatives are there to deficit reduction?

Is deficit reduction the most 'democratic' option? etc

I'm sure everyone would much rather read comments on those sort of questions than ones that continue to demonstrate an unwillingness to understand how things work. Or maybe they wouldn't. Perhaps this forum has also now evolved into the same media led, economic cherry picking circle jerk seen elsewhere. You could start by actually reading the article and progressing from there to a basic economics textbook.

And 'I' haven't advocated anything in particular, I just replied to a point on 'why public debt'.

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I probably don't need to reply, because you both underscored my point. But I will.

Why is it a bad thing he's employed at Cambridge?

Why is the deficit bad?

What caused the deficit?

What are the logical consequences of targeting deficit reduction over other options?

What realistic alternatives are there to deficit reduction?

Is deficit reduction the most 'democratic' option? etc

I'm sure everyone would much rather read comments on those sort of questions than ones that continue to demonstrate an unwillingness to understand how things work. Or maybe they wouldn't. Perhaps this forum has also now evolved into the same media led, economic cherry picking circle jerk seen elsewhere. You could start by actually reading the article and progressing from there to a basic economics textbook.

And 'I' haven't advocated anything in particular, I just replied to a point on 'why public debt'.

Thank you. I think they would.

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I probably don't need to reply, because you both underscored my point. But I will.

Why is it a bad thing he's employed at Cambridge?

He's filling influential people's head's with false narratives that perpetuate the existing order, simply tinkering at the edges rather than accepting the need for monetary reform.

Why is the deficit bad?

Because it incurs interest payments when their need be none. It redistributes from productive to unproductive. It is rent seeking.

What caused the deficit?

Trying to replace the unsustainable and unproductive past borrowing by the financial sector with borrowing elsewhere in order to prop up a system that, unless past mistakes are defaulted on, must have exponential growth.

What are the logical consequences of targeting deficit reduction over other options?

One would hope restoration of positive real purchasing power growth. If productivity is positive, but wages falling, id argue there is too much credit in the system. This is a relative issue...you can actually have deflation and still too much credit. When Krugman et al say 'inflation is low', they really are missing the point. Wage destruction over the past 5 years has been higher than in the 'high inflation' 70s.

What realistic alternatives are there to deficit reduction?

Non-debt backed money.

Is deficit reduction the most 'democratic' option? etc

Does it matter?! Personally I'm no great fan of democracy/mobocracy. If we did move to unbacked money creation, the only way of distributing it fairly would seem to be via a citizens income guaranteed by constitution so it cannot be used in 'investments' that are susceptible to being targeted by lobbyists.

I'm sure everyone would much rather read comments on those sort of questions than ones that continue to demonstrate an unwillingness to understand how things work. Or maybe they wouldn't. Perhaps this forum has also now evolved into the same media led, economic cherry picking circle jerk seen elsewhere. You could start by actually reading the article and progressing from there to a basic economics textbook.

And 'I' haven't advocated anything in particular, I just replied to a point on 'why public debt'.

Edited by Executive Sadman

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Whether debt is a bad thing or not depends on what the money is used for. After all, the coalition has made students run up huge debts for their university education on the grounds that their heightened earning power will make them better off even after they pay back their loans.

This is an interesting observation- why is the national debt bad for the future well being of our children while loading them up with debt personally is seen as ok?

And if avoiding indebtedness is such a high priority for the Government why are they adding to the deficit by spending money on schemes like Help to Buy that serve to prop up house prices and so lead to people taking on more debt to buy a home?

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