POLITICS CORNER

[Bruff]

‘Deficit’ or debt? I might make a bit of sense to reduce the deficit during the good times so that when things get tough, there’s a bit of a float so to speak. But so long as you have a deficit, that is unless you run a surplus, you will never, ever reduce the debt. One could counter that we should therefore run a surplus. But running a surplus implies we are spending less than we receive in tax. And so there would be enormous pressure for tax cuts (or sharing the proceeds of growth as it’s termed). One reason why we’ve hardly ever run a surplus.

We are a sovereign country, with a functioning Government and our own currency and our own central bank, and a people and institutions that (by and large) pay and collect the tax owed. Our debt is essentially fine at the moment. The biggest con trick this Government has pulled (a strong field of contenders here) is to convince too many that we ‘were like Greece’ and about to ‘go bankrupt’. Total nonsense.

I would agree though that there has been a marked lack of any serious action on the excesses of some in the banking sector. Nor might I add any seeming contrition on the part of the major players.

Richard Broughton

[chinatyke]

Inflation effectively reduces the debt, as does devaluation of the currency. Deflation does the opposite - is this why the Government is terrified of it happening?

[chinatyke]

I see things being produced in Asia that were traditionally stamped 'Made in England', manufacturing being transferred to the East because of the cost of EU legislation. This represents lost jobs and lost wealth to the community.

Once again HSBC is thinking of moving its HQ from London.

HSBC moving on?

[plaques]

Once again HSBC is thinking of moving its HQ from London.

The suggested move would be back to Hong Kong. It would be interesting to see what would happen to the bank's top brass if they were caught manipulating foreign exchange and short changing investors. More than a slap on the wrist I think.

[Stanley]

"And it’s worth noting that as a percentage of GDP the debt now is at about average for the last 100 years."
That's the key phrase in Richard's admirable analysis. Every large business knows that if they can borrow money at a lower interest rate than their net profit they can borrow to finance production. If interest rates are low, they are even safer. Interest rates are very low at the moment, some countries are actually borrowing at negative interest rates. Classic domestic example was paying a mortgage based on purchase price when house values were rocketing. Many of us were in that position in the past.
If you are running a country the biggest expense is supporting the essential mass of workers who actually provide the bedrock of wealth by adding value. In general, the more Right Wing a party is the less it sees itself under a duty to improve the position of these workers, all that is necessary is to maintain the numbers and control them. In the days of empire this was largely done by pursuing the policy of Empire Preference which was a trading system that kept imported food prices low. If you can achieve that and provide cheap houses (like slums) you could keep wages down. This improved the bottom line of the business owners. In order to justify this Thatcher had her famous basket of groceries and her analogy of the household budget. In the 1920's the Chancellor had his 'cloakroom theory', you couldn't take more umbrellas out of a cloakroom than you put in. These 'Sound Money' theories were the basis of the Gold Standard debacle of the 1920s, the subsequent financial melt down ad the great Inter War Depression. We climbed out of this due initially to increasing levels of global trade and then the deficit financed spending necessary to fight WW2. 'Keynesian Economics'. Under this system we rebuilt the country, introduced a proper welfare system and all prospered until in the late 1960s the Chicago School won the argument about 'sound money' again and released the banks from the regulations they were 'suffering' under. That was when the foundations for 2008 were laid. In 2010 the Tories again went for 'sound money' with simplistic economic arguments and started austerity (inequality). What they failed to see was that this reduces productivity, growth and the rise of the GDP. This meant that the tax take was lower than it would have been otherwise and we went into the downward spiral for the lower income earners we are still in now.
So my vote goes for the party (parties) that advocate sensible borrowing and investment to raise levels of economic activity. We know it works.....

[chinatyke]

According to these figures the Government debt to GDP is about twice the average of the last 20 years. http://www.economicshelp.org/blog/334/u ... onal-debt/
The UK has now got higher government debt/GDP (89.4%) than the basket case country Brazil (58.91%), hardly inspires confidence. [Dec 2014 figures]

Borrowing to buy yourself out of debt doesn't sound right to me. Like you point out, if interest rates are low then it becomes possible, but as soon as interest rates return to normal levels then the debt becomes unmanageable. If the spending is crucial then the money must be raised, for example, in times of war and national emergencies. Are we in one of these episodes now?

What was right in Charles Dickens times still seems right to me: Mr Micawber's famous, and oft-quoted, recipe for happiness:

"Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."

Charles Dickens, David Copperfield

[Stanley]

That's the case for 'sound money'. Like 'a rising tide floats all boats' it sounds plausible but all modern economists have realised that both theories are wrong, wealth 'trickles down' too slowly to be affective yet it is still an argument used by the large capital holders to justify their increasing wealth. Micawber had it right, 'sound money' is the best way to run a household economy, I do it myself having no need for a mortgage or hire purchase but if large businesses or governments use that principle they are not economically efficient. The crucial difference is that household economies are not geared to profit or adding value, they are pure consumption. This is the trap Osborne's economic theories fall into. Sorry, but in general, Keynes had it right.
I see that Cameron got his football clubs mixed up while trying to give the impression he was 'one of us'. Serves him right.... Liars need good memories and agile brains, he appears to have neither. Bit like eating a hot dog with a knife and fork but he got away with that one.

[Tizer]

Radio 4's `More or Less' is back next Friday, don't miss it!
"`The Election in Numbers'...On the eve of the UK's general election, Tim Harford examines some of the biggest statistics discussed by politicians in their campaigns. From zero hours contracts to the benefits of scrapping non-dom tax status, we attempt to demystify and unpick some of the figures behind a number of policies announced. Plus, how will people vote on the night? We give our thoughts on trends to watch for on the night."
http://www.bbc.co.uk/programmes/b05sfd0r

[Stanley]

I cannot remember a time when as much reliance was placed on dodgy statistics. After all they are, apart from being skewed by each party, all based on estimates and take no account of 'events Dear Boy'. Add to this the modern myth that there is such a thing as complete safety and certainty and you have a recipe for obvious but totally wrong 'solutions' to the equations. Add to that the blissful ignorance of many in the population and their predilection to cling to the old 'certainties' and you have a recipe for confusion. (Then of course there is apathy)
I think my views are somewhere near the truth but that is a danger also. I feel as though I have been dumped in a sledge and pushed down the Cresta Run! All I can do is watch and hope. What bothers me are the dire consequences for the young but then again, that's a fear of the future that has been a given throughout the ages. I often think that the last Roman soldier to leave Britain must have spat over the side of the boat and observed that 'things will never be the same again'. Funny thing is that if he did, he was right!
On local politics, I have a question for David. I read the latest election flyer from him (printed and produced entirely in Barlick by the way) and I am puzzled by the statement that there will be no election of the Town and Parish councils because only the Liberals have put up candidates. Does this mean that these candidates get a walk-over? Also, when I vote for Richard Milner on the basis of his sterling worth to the town am I also opposing Jennifer Purcell? I hope so.......

[Stanley]

Noticeable that Cameron has turned the 'passion' knob up several notches. He's responding to criticism from his own backbenchers who I think are getting the uncomfortable impression that all is not going to plan. The Noble Lord Ashcroft's constituency polls are not always helping... He has been very active and often doesn't paint a rosy picture. There are rumours inside the party of a leadership election if the Tories don't retain power.
What does become fairly clear is that on the evidence we have at the moment, Labour is losing ground to the SNP and this could be a game changer when the horse trading starts after what is probably going to be a very close election. Funnily enough, the smart money at the moment is going on a minority Labour administration surviving on fear of another election and supply votes from the anti Tory elements in parliament. One good thing I see coming out of this is that the backbenchers will gain importance in such a situation and whilst it may be confusing, this will in the long run be a good thing.

[Tripps]

" Noble Lord Ashcroft's constituency polls are not always helping... He has been very active"

I'm surprised no one has mentioned the fact that he has "resigned" from the House of Lords. When he says resigned - he still gets to use the title, and has full access to the premises -including no doubt the staff canteen. Despite being a billionaire - I'd guess he will still claim the attendance allowance? So he resigns the work, but keeps the perks. Nice.

One of the parties has suggested three year leases with no rent increases on 'Buy to let' properties. A caller on a phone in programme, pointed out the mortgage lenders would only lend on such properties if the were let on an 'assured short hold tenancy', with an initial six month period. I'm sure that had not been thought of by the policy makers.

A fifteen year old called the same programme, and wisely asked, why all these new policies were being announced now? - when they have had five years to suggest them. Remember - everyone was to do 3 days ' voluntary' work per year. That went up like a rocket - sparkled for a day or two, and is now largely forgotten. Lived only for a few days. It's interesting that I can't remember which of the parties proposed the measures above.

I have heard two separate vox pop interviews, where the person said they were undecided between UKIP, and the Green Party! Makes you wonder whether universal suffrage is such a good idea.

And finally - isn't it nice to have somewhere to get things of your chest.

[Tizer]

We've just come back from a week in a tiny coastal village in Cornwall, no internet, no news, no politics...bliss. My first impression on entering back into the unreal world was that it was all done and dusted, election over, minority Labour government in, and Nicola Sturgeon pulling the levers. Or perhaps I had a brief glimpse of the future?

[Stanley]

David, you and the young lad are both right. Amazing how they all suddenly find the way to the Promised Land when they are putting their job applications in..... Your point about Universal Suffrage is pertinent but most of the predictions now minimise the success of both Greens and UKIP. Personally I think Farage is a busted flush.... Everything the Noble Lord does is predicated by what's good for him. He still has a very complicated tax position. I wonder how easy a ride he will get if someone other than the Tories gains power and really goes after tax avoidance....
Tiz, that's certainly Nicola's view and is becoming more and more likely. She has made it quite clear she will be calling the shots if this happens and not Salmond. I note that all the parties are playing down the 'red lines' during any horse trading on cooperation to validate a a minority government or coalition. That is pragmatic, none of them will refuse the chance of influence if the opportunity arises. I reckon the Tories are getting quite worried, especially after yesterdays financials which start to indicate some of the cracks appearing in the 'economic miracle'. They sound more and more desperate while I think Milliband is gaining confidence, he is certainly the best debater of the three major parties.... (Whoever they are!)
07:10. I had logged off and was on my way into the shed when I remembered the latest crazy Tory 'pledge', that if re-elected they will within 100 fays enact legislation to lock tax , VAT, and National Insurance rates for five years. This is fantasy land because in effect it ties the chancellor's hands in any emergency that might arise. The other concomitant of this is that all the cuts necessary will be from core public services like the police, transport etc, and welfare cuts. This is bad news for the majority of the population but do the public actually realise this?

[Tizer]

...when I remembered the latest crazy Tory 'pledge', that if re-elected they will within 100 days enact legislation to lock tax , VAT, and National Insurance rates for five years. This is fantasy land because in effect it ties the chancellor's hands in any emergency that might arise.

They all seem to think the voters are idiots - but many of us will remember the past pledges to not raise VAT, which were soon broken, as described here:
` How the Tories and the Lib Dems broke their VAT promises. David Cameron insisted that the Tories had “absolutely no plans” to raise VAT.' News Statesman LINK January 2011.

Personally, a pledge to not raise taxes turns me off completely. I would prefer a pledge to raise taxes to pay for the NHS, education defence etc. We're still trying to live on fairy dust.

[plaques]

From your link. "Both parties (Tory and Liberals) have since attempted to justify the VAT rise by arguing that "things were even worse than we thought". But this claim does not bear scrutiny.
This comment has just been repeated on Jeremy Vine's lunch time programme. As with most of Mr Cameron's statements it was wrapped up other totally unrelated figures giving the impression that it was the last thing he wanted to do but essential if we had to get the economy the right track. Half a hour of verbal diarrhoea without any real purpose. Not impressed!

[Stanley]

There were some interesting comments on the fine print of the statement yesterday, mainly about the weasel language and the freedom it gave them to get round the promise. There is also the question of what the sanctions would be if the 'law' was broken. The worse seemed to be embarrassment....
I'm beginning to think that the most powerful factor guiding voters in this election is the negative one of keeping the Tories out..... The recent flurry of fantasy pledges has reinforced this, I don't think that many have fallen for it.

[Bruff]

‘…still seems right to me: Mr Micawber's famous, and oft-quoted, recipe for happiness..’

I don’t think there is an equivalence between a household’s budget and a Government’s. If there were then one would for example impose a tight regime of personal and household austerity to ensure that the mortgage was paid off as soon as possible. In addition, it would also for example imply there is a household equivalent of setting a VAT rate, and for the life of me I can’t think what that would be. I get bothered about this as well, just the other night, on the latest BBC Radio 1 Newsbeat debate for youngsters, the Tory on it was banging on how we were ‘like Greece’ and on the ‘verge of bankruptcy’. Let’s not beat about the bush: this is an economically illiterate lie.

He also mentioned the infamous ‘there’s no money left’ note. This was a joke. A joke in arguable taste, but a joke nonetheless. All Ministers leave a note for their successor, typically some wry self-deprecating commentary on the time and demands of office we are led to believe. Mr Brown would have left one for Mr Cameron, as Mr Blair would have left one for Mr Brown. Mr Cameron one assumes will leave one for his successor whether he goes next week or sometime after. This isn’t just a tradition here. If anyone has watched the great US drama The West Wing, the very last episode has the running story where President Bartlett must leave the note for his successor as he leaves the White House after 8 years. He keeps saying ‘I’ll write it, I’ll write it’. We see him writing and the viewer is drawn in to wondering what he writes. The penultimate scene is his successor opening it, and……………..all the viewer sees is a wry smile. We never know what Bartlett has written.

You can call me old-fashioned but the privacy and mystery of these matters to me. That almost the first thing the egregiously charmless Mr Laws did on reaching Ministerial office was to make political capital out of his predecessor’s note as somehow a statement of fact rather set the tone for this shabby administration’s term.

Richard Broughton

[Stanley]

I agree with you Richard. Possibly the greatest lie used by this administration has been the constant blaming of Labour for the melt-down of 2008. For a start I don't remember the Tories offering any alternative action and in other places Godron is recognised as the architect of the policy everyone else followed, bail the banks out and print money. I didn't agree and still don't but that's my personal opinion and I made it known at the time. Cameron kept stum and thanked his lucky stars that he wasn't in Godron's shoes. In truth as we all know now the culprits were the greedy and short sighted policies of the financial institutions given the freedom to act that way because of the deregulation supported by almost all parties since the 1960s. The real elephant in the room is that nothing adequate has been done to reform our version of Capitalism and as good men like Stiglitz and Piketty point out, the resulting inequality is forcing us inevitably into another, even greater crisis down the road.... When the dust settles and the history is written the whole litany of privatisation and refusal to accept responsibility by governments all over the world for better governance of the financial markets and wealth distribution is going to be seen as a massive and self interested mistake.
Never forget the importance of maintaining government control of the 'commanding heights' of the economy. One of the most significant political statements of all time. Fancy accounting to get debt off the books doesn't cut it.

[Tizer]

The political parties are throwing up such a baffling and unappetising set of proposals that I'm beginning to think that none of them really want to be in power. Especially Tories and Labour, it's almost like they're trying to say "Please, please, don't vote for us, we don't want to get lumbered with the responsibility".

Listening to the Radio 4 `Today' programme this morning broadcasting from Plymouth about what folk in the West Country think about the parties and the election promises. Suddenly, zap, no radio - one of the familiar power cuts. I felt like shouting "What we want in the West Country, and especially in the rural areas, is a reliable power supply!"

[Stanley]

I think it was in 1992 that Norman Tebbitt actually said that it would be an advantage to the Tories if they lost the election as whoever came in was in for a hiding to nothing. They got in and Tebbitt was proved to be right, Labour got 13 years.... There could be a lot in what you say Tiz, the 'economic miracle' is an illusion, remember what Mark Carney said about it and then went quiet....
I argued in 2008 that what we needed was a National Government on a war footing because the crisis we face is, though different, equally as dangerous as what faced us in 1940. We face an entirely new set of threats and need an entirely new solution. There is no room for the luxury of outdated attitudes based on inter party rivalry, class warfare and political DNA. A 'government of all the talents' would perhaps avoid most of these flaws. The pressing need is to raise the domestic incomes of the lower 85% percentile and let this feed through into domestic consumption and a consequent raising of productivity and GDP to get the tax take up. Keynesian economics and wealth distribution. I might be totally wrong but unlike the present policies we saw it work in the war years.....

[Tizer]

Too right. We're having ludicrous promises thrown at us while the storm clouds gather on the horizon. And in that storm we might also see the SS European Union founder as Greece knocks out the seacocks.

Did you hear Shirley Williams this morning warning that we'll end up with a mixed bag government where all concerned are exhausted by continuous bargaining and squabbling with no time for solving the real problems?

[Stanley]

Or so elated they have retained their jobs.....
Question is, do they fully understand what the most pressing matters are?

[Tripps]

I was thinking about the election on Thursday, and it occurred to me that Labour supporters should perhaps acknowledge, that all that the founding fathers (and mothers) were seeking had probably been achieved.

I looked up Keir Hardie (about whom I know little, except his name), to see what they had fought for originally, and was surprised to see this on wikipedia. Can this really be genuine - or has some from UKIP, edited it for a laugh?

"Keir Hardie, in his evidence to the 1899 House of Commons Select Committee on emigration and immigration, argued that the Scots resented immigrants greatly and that they would want a total immigration ban. When it was pointed out to him that more people left Scotland than entered it, he replied:

'It would be much better for Scotland if those 1,500 were compelled to remain there and let the foreigners be kept out... Dr Johnson said God made Scotland for Scotchmen, and I would keep it so.' According to Hardie, the Lithuanian migrant workers in the mining industry had "filthy habits", they lived off "garlic and oil", and they were carriers of "the Black Death".

Doesn't do to stereotype anyone does it.

[Stanley]

Hadn't come across that one David but there was widespread antagonism to the Irish in particular in the 19th C. Have a look at the Reach papers on the site. He constantly runs the Irish down.
I was reading the list of pledges 'carved in stone' and they repay careful analysis. Like all the other party pledges they are all amorphous aspirations, not specific policies that they could be held to. This applies to Cameron's 'tax law' as well, plenty of omissions and get out clauses. They all rant on about their 'red lines' but come the horse trading a way will be found round all these.... All these late 'appeals' and strategies are aimed at the uncommitted voters who are, by definition, most likely be those who are not capable of in depth analysis of what is on offer. Two things about the Tories, their attacks on the SNP will come back to haunt them and this obsession with the referendum on Europe is already doing damage to relations with the EU. It's exactly the same form of blinkered prejudice that Tripps reports above.
I have never seen such a mess......

[Tizer]

Jim Naughtie was in Carlisle this morning and it was obvious there how worried the locals are about Scottish independence and the SNP business. It's all so much more intense when your living near the border. Nick Clegg pointed out in a Times interview this weekend that we should remember it won't be Wee Nicola who does the horse trading in Westminster (she's not an MP), it will be Wee Alec. Good point, I don't trust him an inch, he's an empire builder and will say and do whatever he wishes to gain that end.