Sunday, Oct 18, 2009

When the Old Etonians rule

Observer: Cameron's Conservatives will repeat economic mistakes of 1930s

Highlights some of the tried and tested and failed policies that those spiffing chaps have planned for us.

Posted by letthemfall @ 01:25 PM (2098 views)
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1. taffee said...

and ben bernanke printing money is okay?.......fact is there is little choice but to take the pain as what should have happened is we never got here in the first place

Why not just nationalise the economy and give everyone £20k a year

Sunday, October 18, 2009 02:17PM Report Comment

2. enuii said...

Never believe anything an economists says as they are tainted by politics.

Neither school has the answer and no doubt a new one will emerge from the economic ashes of the trail of destruction that both schools of economic thought have left behind them to date.

We are in uncharted waters and neither Cameron's Conservatives or Brown's so called Socialists have the answer leaving us the passengers helplessly puking over the sides of a wallowing boat with a clueless captain at the helm sitting there with his fingers crossed hoping that the storm will just blow away.

Sunday, October 18, 2009 03:09PM Report Comment

3. icarus said...

enuii - are you saying that Britannia no longer rules the waves?

Sunday, October 18, 2009 03:34PM Report Comment

4. bidin'matime said...

Can anyone take someone with a moustache like that seriously..?

But seriously... he's just calling for another round of drinks to be put on the credit card, so people don’t start having to sober up and suffer the hangover. The problem is that socialists are looking no further than the next election, whilst that is precisely where the Tories are looking.

Sunday, October 18, 2009 04:01PM Report Comment

5. shipbuilder said...

I don't believe that QE has achieved anything but temporary optimism in the stock market and housing market, this being reflected in the headline statistics. The underlying fundamentals in the economy and housing markets are still as screwed as they were a year ago, as far as I can see. This confidence will wear off eventually and we will see the next crash, whether QE continues or not.

Sunday, October 18, 2009 05:47PM Report Comment

6. enuii said...

Icarus; perhaps it's time we realised it and got on with a less expensive, quieter and altogether more relaxed way of like. It seems to me that the working part of the population is working harder and longer to just stay still. Instead of putting excessive demands on one half of the population to keep a good proportion of the other half in a government funded non-jobs perhaps we should all work less hours and spread the productive work out better over the general population for the better good of all.

I remember a prediction made in the early 1970's that people would be only working a three day week by the year 2000 as the spread of computers would mean we would have more leisure time. Unfortunately leisure time and extended 'education' has unevenly distributed and insane house price rises (probably near double 1970 levels) have consigned those that do to 40 years of debt slavery into retirement!

Economics my @rse.

Sunday, October 18, 2009 06:56PM Report Comment

7. letthemfall said...

I suspect the majority of the non-jobs you refer to create more value than those which require long hours and offer excessive pay. As you say, the leisure time is unevenly distributed - as unevenly distributed as the wealth. Bear in mind the typical pay of many important public sector employees (many PhDs do little better than the average wage), then contrast this with financial service employees, where many of these long-hours, high paid jobs are.

Sunday, October 18, 2009 07:22PM Report Comment

8. icarus said...

enuii - they had the same ideas of three-day weeks and economic security for whole populations back in the 19th century. The reason it never happened boils down to unproductive organisations gouging out their wealth from the productive ones. The economists of that time, who have a better hold on reality than modern ones, called it economic rent (formally, this is what the parasitic organisations receive for their input over and above what it would normally - under non-monopolist conditions - require to buy that input or to bring it into play). We often think of economic rent flowing from artificially inflated land values but it's much wider than that. A lot of what is called legitimate profit is in fact economic rent. Fuels and minerals, privatising of the broadcast spectrum and other 'natural' monopolies, and finance and insurance are examples. Intellectual property rights are a major source of economic rent (think of Monsanto and Microsoft and pharmaceuticals). Instead of technology enriching society some of the biggest economic rents go to those with a legal claim on the rights to the technology. One of the innovations the classical economists never dreamed of was innovations in rent-seeking - discovering a legal gambit that directs rents to those who first exploited the gambit and created a monopoly for themselves by doing so. Corporate raiding and greenmail (buying enough shares to threaten a takeover, thereby forcing the owners to buy back those shares at inflated prices) are other major rent-seeking activities.

The problem goes far deeper than government non-jobs.

Sunday, October 18, 2009 07:49PM Report Comment

9. crunchy said...

A higher power that is beyond our David Cameron. Heres one for the diary.

Sunday, October 18, 2009 07:50PM Report Comment

10. Dozobod said...

Fact of the matter is that every labour government do everything in their power to destroy the economy and the Tories basically have to mop everything up. It seems to happen time and time again.

Sunday, October 18, 2009 08:13PM Report Comment

11. enuii said...

letthemfall; 'those which require long hours and offer excessive pay', never crossed my mind, I was just thinking of Long Hours as I have never been blessed with excessive pay. Personally I would view 'excessive pay' as a chance to work less rather than more, perhaps I haven't really got the so called work ethic!

Sunday, October 18, 2009 08:15PM Report Comment

12. bidin'matime said...

Let’s look at the bigger picture. The working population are in debt to the banks, prompted by the politicians. The banks and the politicians don’t want the workers to go broke, lose everything and so (more importantly) give up working, so they keep interest rates low.

At the same time, the West is in debt to the East. The East doesn’t want the West to go broke, lose everything and so give up working, so they keep interest rates low.

But then what? Something has to give eventually - people in the East generally work harder and have a lower standard of living than those in the West. So the question is, how are they going to exploit their position of financial strength and manage the transition from them working for our benefit to us working for theirs?

The answer has to be in the exchange rates – these have to be adjusted until one hour of Eastern working lives is worth at least the same as one hour of Western working life. Now, I have no idea what the average wage is in either ‘the West’ or ‘the East, but let’s guess – if the average wage in the UK is around £27k for around 1,800 hours a year, that’s £15/hour or £120 per 8 hour day – so let’s use that for the ‘Western’ average. Then what is it in the ‘East’? – well we hear that millions are on less than $1 a day, but let’s guess that they enjoy a standard of living that similar to someone living on state benefits in the UK, say £100 a week, working six days a week, giving them around £15 a day.

On this (estimated) basis, ‘the West’ enjoys a standard of living around 8 times that enjoyed in ‘the East’. That sounds entirely feasible.

So, if the increasingly powerful East is to achieve equality of living standards, they have got to put pressure on Western currencies until £/$/€ fall to a level one eighth of their current values. Chinese imports become 8 times more expensive – the £100 TV becomes £800 and the £2 DIY tool becomes £16. This might sound crazy, but I can’t be the only person to wander round the shops amazed at how cheap things are – so many things in the shops are cheaper today in £s than they were 25 years ago. Okay, some of this is down to technological advances, but not all of it.

So what is the effect of this on UK house prices? Well, if Sterling is falling, they will be losing money on their UK loans, so they will want more interest to compensate. But this conflicts with the desire to keep rates low to avoid the UK economy collapsing – can they get the balance right, so that Sterling sinks steadily, rates are high enough to compensate them for the exchange losses on their loans, but not so high as to collapse the UK economy completely? It won’t be easy. Expect a prolonged period (generations..?) of steadily declining living standards, interest rates that apply pain but not disaster, increasing prices of imported goods (such as consumer durables), falling disposable incomes and… falling house prices…

Sunday, October 18, 2009 09:32PM Report Comment

13. shipbuilder said...

Icarus, the reason the 3 day week never happened is because increases in productivity are always used to increase profit and fuel expansion, remember the economy must always be expanding. If one remembers that the economy is not run for the benefit of the citizens but the benefit of a few, it all falls into place.

Sunday, October 18, 2009 09:44PM Report Comment

14. mark wadsworth said...

@ Bidin, yes, hopefully wages all over the world will one day become much more equal. That might make tellies more expensive, but it makes it more economically viable to build tellies over here.

@ Ship, in the book "1984" excess production was diverted into warfare, nowadays it's diverted into house prices. In relative terms, the amounts that these bankers creamed off in bonuses is trivial compared to the additional wealth that home-owners accrued. There is no shadowy "them" it's the Home-Owner-Ists who want it to be like this. The same people who believe that 50% of the surface area of England is already built on or urban.

Sunday, October 18, 2009 09:51PM Report Comment

15. shipbuilder said...

bidin'matime - makes sense, although since the powers that be reside in the west, you can be sure that everything will be done to keep the situation as it is, or the corporations will just move to the next low-cost country, or continent.

Sunday, October 18, 2009 09:52PM Report Comment

16. shipbuilder said...

MW - I don't see any shadowy 'them' in the conspiracy sense - the home-owner-ists, landowners and the 'elite' are all the same thing really - those at the top of our society holding the majority of the power and wealth, stored in land and the control of land and resources. The Inner Party, to use your analogy. Of course what keeps them in position is the aspirations of the rest of us to be like them in some small way, even though we never can be, or the American Dream, as it is otherwise known.

Sunday, October 18, 2009 09:59PM Report Comment

17. Disciple said...


If your going to vote first understand sound economics, once you understand this you then know who is the better candidate. So what is sound economics??? Simple look at your own household finances.

1) Too much debt is bad for your health, it will make you bankrupt 2) Too much spending means you have nothing saved for a rainy day! 3) Are cash poor? Then your on your way to gutter street. 4) How is the family silver? Have you accumulated any? If not then your finances aren't anchored!

Sunday, October 18, 2009 10:38PM Report Comment

18. crunchy said...



Sunday, October 18, 2009 10:44PM Report Comment

19. Phil S said...


The tories did a good job themselves destroying the economy last time they were in power!

Monday, October 19, 2009 01:00AM Report Comment

20. This comment has been removed as it was found to be in breach of our Blog Policies.


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