Fairness and the recovery: Two verdicts for Mr Osborne

"The yield on a five-year government bond or gilt this week fell below 1.5%, well below Germany's. That has not happened in the past because (a) British inflation tends to be higher than Germany's and (b) Germany's debt is perceived to be safer than Britain's.
The British 10-year yield is still above Germany's, for both reasons. Inflation in Britain is running at more than 3% and is expected to stay there for a while."

And nothing, of course to do with the fact the QE snaps up long term bonds and the new issues go on regardless. Come on !

"The gap between them over the shorter time period has disappeared, not because investors have decided that British sovereign debt is safer, but because they reckon the British economy is going to need all the help from the Bank of England that it can get."

First off, unless you have some evidence of this, I don't think you can speak for investors? You are speculating.

Also I don't understand the reasoning behind your answer. If investors think inflation is a risk, then why would the 10 year stay high but the 5 year fall? If there is more QE then the purchases will likely be for long term bonds which should flatten the curve, but also push up near term inflation.

Investors would be looking to front run the BoE not buy what they won't touch.

Nothing is ever fair: so adjust!

This is not the end of events, it is just another step along a rocky road. Whether or not it is the road to perdition remains to be seen.

Fairness is a useless concept because when money is taken away en bloc the people in the most exposed position are going to feel the pain the most. Tell us something we don't know.

It is what the Coalition do next which is more important, such as how are we going to redeploy half a million people? To rely upon a generalised term of `growth' is not enough. Where is that work going to be located and how much of it will go to the locals? Discuss.

The only way we can stop moaning about how the cake is cut is to bake a bigger cake!

1. At 5:05pm on 22 Oct 2010, MetalGasket wrote:
"The yield on a five-year government bond or gilt this week fell below 1.5%".

'And nothing, of course to do with the fact the QE snaps up long term bonds and the new issues go on regardless. Come on !'

Agreed, the GEMM's are going to have field day again.

We've spent the past few days debating whether the government's budget cuts are fair, not whether they will stagnate Britain's economic recovery. Does "fair" count if the country is headed towards economic stagnation?
British sovereign debt is safer.
Is it?
Have not a lot of derivative bundles and negative default swaps been traded in vigorous activity through London? How do you track these transaction unless you have a Financial Acivity System that captures the trading, especially when some compabnies like Goldman-Sachs have trading computers that literally operate at the speed of light?
Agreed, the tax and spending changes have been regressive - piling additional loads atop weary British taxpayers for a problem they did not create. Is this what the Coalition Government means by "fair"?
Okay, Coalition Government, congrats for choosing to go ahead with Labour's tax increases on the rich, some of which like the National Insurance will require new legislation, but THUMBS DOWN on being so quick to sidestep the EU FTT and FAT. The imposition of FTT and/or FAT uniformly across the EU would have eased the need for social cuts while increasing revenue.
Let's face it, Coalition Government, the wealthiest of the wealthiest pay income tax specialists so that they never have to pay their "fair" share of taxes.
I don't need a complete picture to see the pain of deficit cuts has been unevenly distributed. The picture is not complicated. No matter how they try to paint it, The Coalition Government cannot explain, nor can it call "fair", the spending cuts when they have gone out of their way not even to mention FTT or FAT. Why haven't they talked about FTT or FAT? Is it because the United States would have an apoplectic, economic fit?
The rest of the Health, Education, Community talk is like so much wind. It's distraction. I don't care about all the gibberish. I only care that the innocent taxpayer is being made to bail-out the banks all over again i.e. clean up the economic mess that was originally caused by shoddy, unregulated trading.
Fair is a transaction tax on the banks. Even a moderate tax like .05% would snag billions or taxes/year such is the extent of financial trading.
Why has the "fair" Coalition left this optiuon off the table? Let's ask them, shall we?

For me the problem is how we define what is a 'benefit' from being part of our society.

Consider for example:

Who benefits more from well kept roads? The low income family without a car or the man who owns a haulage firm?

Who benefits more from emergency services? The man sleeping on the street or the man with a 5 bed home to protect?


Who benefits more from education? The man who gets a degree and a decent middle of the road job or the man who's entire workforce is pre-educated for him by the state?

It's not all about the exact figures of tax paid vs. payments received and my own feeling is that any useful scale needs to look at the wider benefits gained from being part of a relatively law abiding society.

These can not be easily quantified but a good first take is that those who have the most are those who have clearly gained the most from having a society with a healthy educated workforce & a decent modern infrastructure.

But more than all this the basic problem with this government (not unlike the last one) is that none of them have ever been close to the reality that 80% of us are part of every day - none have had to scrimp and save for their next jag, none have gone hungry unless by choice, none have wondered if they'd lose their only house rather than the moat on the second or third.

In short can one expect any empathy or fairness from a bunch of people who do not live in the same Britain that almost everyone reading this blog is living - how can we expect them to get it right when they don't know what it is like to be a normal citizen of this nation?

"Fairness" is a subjective concept, important to politicians who have to sell it to the population but the more important question is "will it work"? And if it does work, at what long-term cost?

'But perhaps it's another tribute to the Blair years that we have had weeks of political debate centred around a concept that is almost impossible to pin down.'

Only to the extent that it was the Blair (and Brown) years that got us into this unholy mess in the first place.

We are talking about fairness in terms of imposed cuts applied to a very 'unfair' income and wealth distribution. The fairness of cuts is a little academic in this context. Does the CSR introduce a small correction to the unequal distribution of wealth and income - surely not. Add to this the effects of cuts to services (other than benefits) and increased charges e.g. transport) and the likely rise in unemployment among lower paid workers or further restrictions on pay in the face of 4 to 5% inflation it will be astonishing if at the end of 2015 the mal-distribution of wealth and income has become even more extreme.
The rich have a very high disposable income but most of the poor's income is taken up by necessities and it is the percentage of loss of disposable income that should be an indicator of fairness of the changes.

'For the IFS, that is more or less the end of the story.'

As I think your example clearly demonstrates this would only be the end of the story for a complete idiot. Of course you have to take into account benefits in kind provided by the state. How anyone could seriously suggest otherwise is beyond me.

Stephi- what do you make of Mervy's recent statement that the world economy is a zero sum game? In other words for us to get rich we have to make someone else poor [on purpose].

Although it is china who has everyone by the throat given the big mac index says they are 40% undervalued. Clearly they want more trillions in surplus for which someone else must lose. Hows that for communist 'fairness'?

if fairness is the highest idea then, in a zero sum game, uk living standards have to crash in order to be fair to those states losing out?

There must be a way of weighting family expenses. A cut of 3% to a better off family could be described as taking a little fat off. A cut of 3% to a poor family is cutting into the bone.

#7 zygote
""Fairness" is a subjective concept, important to politicians who have to sell it to the population but the more important question is "will it work"? And if it does work, at what long-term cost?"

The point is that every study on the subject has shown that inequality and economic success (defined as GDP per capita) go hand-in-hand.

https://filipspagnoli.wordpress.com/stats-on-human-rights/statistics-on-gross-domestic-product-correlations/

https://www.visualizingeconomics.com/2006/01/04/gdp-per-capital-vs-gini-index/

All the economies in which one would want to live are top of the equality league tables. If anyone has links to the work the Andrew Glyn did in the eighties I would be very grateful.

By greatly increasing inequality as a matter of policy the Tories are almost guaranteeing that our GDP per Capita will shrink.

#11 jauntycyclist
"Although it is china who has everyone by the throat given the big mac index says they are 40% undervalued. Clearly they want more trillions in surplus for which someone else must lose. Hows that for communist 'fairness'?"

Interestingly reports say that in the next five year plan they will address inequality. It seems that they understand my previous post.

I am glad they are getting rid of the Job centre plus so melined for inefficiency and ineffectiveness.You can thank nick cl-egg for this...

ponder this....

The vat rise will devalue child benefits between 5-7 % for the poorest whilst middle classes only 3-4%.

Petrol multiplier has eroded benefits year on year and is due to erode this further by a further 9% in the next two years.

Rises in ticketed transport precludes further usage by any job seeker.

Osbourne hopes to erode the national debt by inflation at or around 7%.This hits the poor very badly...


May be you are not thinking straight if you think middle class parents will not take to the streets like Greece.

Benefits are not a cost..64%-123% are returned to the treasury...where is the cost??...its the bureaucracy gravy train that surrounds them of course...!!!!

Did he tell civil servants..no benefits no jobs for you??

revolutions come about because the poorest are not been given to land,the law,and to opportunity....


This is where we are......

14

..reports say that in the next five year plan they will address inequality..

They have been saying that for years. its their default mantra. no one believes them. china will never let their trillions become our trillions. they are doing what the israelis are doing. buying time with 'jam tomorrow' statements while making facts on the ground. ie trillions in surplus . money is power.

in a functioning global market china's currency should be the strongest in the world not weaker than gbp. That way the world economy would rebalance and the jobs would come back to the uk. But they don't let it float so it won't. What people forget is china doesn't believe in capitalism. Indeed the communist mantra is that capitalism 'must fall'. And it is proving correct. They are at war with capitalism which is why they feel no need to play by the same rules we do. which is why they not only ignore currency mechanism but also workers' rights, patent law, copyright law,intellectual property rights, environmental standards, human rights etc. They are no different to somali pirates who get rich 'playing outside' the rules of commerce.

they are at war with us and show no sign of stopping their state is god communism. but our hayekian politicians excuse it away as 'market forces'. Is theft market forces?

Fairness? another word hijacked by the left. The BEEB and its leftie media friends wish to define the meaning of fairness. Where was the fairness for our under-resourced troops in Iraq and Afghanistan, the tax payers who were subject to ever increasing stealth taxes to pay for Labours Social Engineering. Watching Question Time transmitted from Middlesborough, the audience were very much still supporting Labour, even though The New Labour project was responsible for allowing our manufacturinbg base to shrink further and smaller manufacturing base means less raw materials required. So Stephanie, Economists refuse to discuss REAL cause and and the people of Middlesborough can't see the connection. Labour love to remind the people that the Coalition cabinet is stuffed with millionaires who can't possibly be fair, beinng so far removed from ordinary people. When Blair was in office he wasn't a millionaire: he is now -IS THAT FAIR and what was he doing in office, plotting his route from "rags" to riches. Labour lackies please drop siren sound of it's not fair. It's just not fair.

5. At 5:57pm on 22 Oct 2010, BluesBerry wrote:
Fair is a transaction tax on the banks. Even a moderate tax like .05% would snag billions or taxes/year such is the extent of financial trading.
Why has the "fair" Coalition left this optiuon off the table? Let's ask them, shall we?

I agree with the sentiment BB, but any tax on financial institutions is going to be passed on to the consumer. It doesn't make me happy either.

'. . . another tribute to the Blair years that we have had weeks of political debate centred around a concept that is almost impossible to pin down'.

Could not have put it better.

Fairness is obviously difficult to define - particularly on a continuum from grossly unfair to really fair - but surely what is far from fair is that the bankers who were mainly responsible for getting us into this mess are about to pay themselves 7bn -- enough to pay for 3 aircraft carriers or wipe out the 7bn additional welfare cuts... and they do this every year?

Fairness should be measured on a scale. Some will think one thing more fair than another. In 4 years time, fairness will be measure on the success or failure of the whole plan/gamble. If not too many lose their jobs/homes and the economy grows enough to keep them happy, the public will decide it was fair. If enough people have at least one member of their family suffer badly as a result of these cuts, then they will deem it unfair and we will get a new government. Although some may care what happens to others and think themselves fair minded, most look at how things affect themselves. At the moment, both sides of the political fence are trying to define fair to suit their own political philosophy.

Stephanie,

Have you or the IFS factored in that the Coalition from the beginning have promised to eliminate tax on the first £10,000 of earned income?

Would that not totally eliminate the regressive impacts of the CSR on your low-income household earning £200 per week and getting £100 of State support as the 'support' would be untaxed and thus were it net of tax would be even more valuable?

Fairness is in the eye of the beholder - a leftie would see regression whilst a rightie would see the changes as progressive.

Personally I see us continuing to be doomed to slavery where the majority of people pay taxes to a central government of elites who dictate how we should all live from birth to death - from smoking, drinking or sexual relationships and the education of progeny to state-sponsored wars where our young people live or die on foreign battlefields at the behest of the elites despite and regardless of the people they supposedly 'represent'.

That is what I consider to be NOT fair!

Er, why do economists so rarely take the trouble to explain the jargon. I'm a bright chap with a PhD, yet I found the 2nd and 3rd paras of this blog entry impenetrable!

It looks like Bluesberry is confused too.

It took three reads and some online research about the relationship between bond yields and interest rates for all to becomes clear (I think): what Stephanie is saying (although other comments seem to disagree with her interpretation) is that in the short (5 year) term, the markets are taking a bet on the Bank of England holding interest rates low to nuture what they suspect will be very weak economic growth harmed as a result of the fairly drastic austerity measures in the CSR. The markets feel that this imperative will be greater than the need to raise interest rates to curb persistant inflation and all this is driving up the market value of UK government bonds, despite the market's general view that the UK gov is more likely to default on our debt than Germany.

I do also understand that the government is buying bonds through quantitative easing (printing money) to free up cash flow in the economy, and this too may be causing bond prices to rise, reducing yield...has the government recently made an announcement on the future of QE (more, or maintained), if not, why would the yield have fallen in recent days? Unless of course the markets are taking another bet that we'll have to do more quantitative easing because of the parlous state of the UK economy, which in a way, is the same verdict on the CSR.

There simple, wasn't it? Or have I got it wrong? If I understand this correctly - there's a useful take home here for Joe Blogs with a mortgame - the markets think interest rates will stay low for a while as a result of the CSR - that's the message that's likely to be relevant to many blog readers???

I'm a scientist by training - and any attempt to portray science in the media is (rightly) laboriously explained - can I appeal for similar standards of non-technical explanation in the media reporting of economics? I'm finding it so hard to understand what is going on and why. Bring back Evan Davies from the Today programme - he had a talent for explaining economics to dullards like me!

During the 1990’s my job involved repossessions.

At first my opinion was, ‘Well you shouldn’t have borrowed it if you can’t pay it back’. Easy to think, rational, and perfectly ‘fair’.

However one Christmas Eve, and I’m guessing now, but I think it was either 1992 or 1993, my last job of the year was to check the condition of a recently repossessed terraced house.

On entering I noted that the large items of furniture were still there, sofa, wardrobes, beds, freezer etc, but personal possessions and easily portable items had been removed.

Last on the list was a check of the roof space area and water tanks.
In the middle of the roof space was a pile of ‘things’ covered by a blanket. I lifted the blanket to reveal the kid’s Christmas presents.

Whoever had been repossessed had presumably ignored, or not realised the gravity of their situation, and left in a hurry. I knocked on other doors in the street in an attempt to find out where the previous owners had gone, hoping that they could come and collect the Christmas presents …… no one knew.

And as I made my way home to a warm house, brightly lit, smelling of mulled wine and pine needles, my opinion began to change from:
‘Well you shouldn’t have borrowed it if you can’t pay it back’.
to
‘If they can’t pay it back you shouldn’t have leant it to them’

There’s bitterness and sadness when homes get repossessed, but the ‘fairness’ of it, rather depends on which side of the equation you sit.

In any event, oddly enough it’s going round them afterwards that tended to sadden me. You see the remnants of family life scattered on the floor, impact damage to partition doors where anger has spilled out, kid’s school achievements and sporting heroes still pinned to their bedroom walls.

Irresponsible lending (behaviour) leads to misery, destitution, fractured families, and in my view, the quiet disintegration of society.

You want us to discuss ‘fair’ Ms Flanders, then explain the creation of money as debt, and maybe there’s a hope that at least some ‘fairness’ will come of it.

Stephanie Flanders quotes Pollytoynbee, and others, as saying that taking away 3% of family public services is not equal to all as family public services are not equal to all in the sense that 3% from the poorest is not the same lose to the higher paid. Whereas the poorest cannot generally afford to replace the lost service, the higher paid can buy the lost services elsewhere (assuming they are all obtainable). However, in purchasing these services elsewhere it is a further lose to income from the better off. So were does that leave the 3% inequality pollytoynbee and others speak of, (which I suspect includes Stephanie Flanders)? It means the poorest have irretrievably lost some aspects of services but will presumably have no means of replacing them, therefore no extra cost involved! Whereas the better off will also have to go without, or have an extra outgoing if they are to replace the 3% benefit lost to them: I would say somewhere there it is not exactly a the 3% lose in the sense Pollytoynbee and others mentioned!

(In the previous blog I examined a equality of pain index)

Just a few observations:

Stephanie wrote: "It may be Tony Blair's great legacy to British politics that we've spent the past few days debating whether the government's budget cuts are fair"

I don't think TB gave a hoot about fairness - just what he could get away with! Else inequality would have cone down wouldn't it ?

Recovery:

For whom - the banks? The balance of real trade in goods that gives rise to real jobs making real things? The housing market!!!!!!?

Austerity depresses the whole economy. Austerity in the country depresses the economy and austerity in the home depresses the economy. The gamble is that something will turn up! Thatcherism proved that the private sector does not take up the slack in the economy it was a total failure, yet for some stupid reason imbecile economists stick to it as an idea. Austerity does not produce a recover it delays the recovery. Just as low interest rates depress the economy and quantitative easing depress the economy. Both zero interest rates and QE create more liquidity, but because of their nature the extra liquidity does not flow into productive capacity when it is combined with austerity.

We need higher interest rates to give investors the confidence that the economy will recover and then they will invest. For so long as the normal sane levels of interest rates are unachievable normal investment will not take place and there will be no recovery. The fools of Threadneedle Street simply do not understand! At these levels (of interest rates) the levers of economic control operate in the opposite direction, just as interest rates fro savers are higher than the base rate indicates that they have lost control the same indicator shows that the levers of economic control operate in the opposite direction.

All the Bank of England is likely to create with present policies is another huge inflationary asset/gambling bubble (probably overseas) - they will not boost the real UK economy! Indeed we must I think assume they know this and this is why the Governor is predicting another decade of depression. He knows he caused the bubble and crash (after the event! more's the pity) but he now also knows that what he is doing will further destroy the economy and push recover further away. He is trapped by his own earlier stupidity and economic ignorance!

Fairness

In talking about fairness we need to distinguish between fairness of opportunity and fairness of outcome!!! This is not about philosophy it is about real life, particularly for our poorest brethren!

In the traditional sense or the narrow sense???.
Look, are the cuts fair? No. Do the cuts put more burden on the low paid and poorest?, yes.

Stop being a politician and say things how they are. First they are regressive, then they are not??. This will have a major impact on many people in this country, then it won't??.

Does anyone actually know exactly what is going on rather than play with words all day?

In the BBC's hype promoting the spending review, "we will tell you how it is and how it will affect you and the country", rubbish!
If that was your intentions, then you have got it totally wrong. I am dismayed at the fact you aren't jumping all over George Osborne, Nick Clegg and others for the spin they are all trying to push.

They say we need to deal with things now and not leave it to the next generation. Well my daughter wants to go to Uni and has done since she was nine. She has 5 years to go before that happens, but now because of the fees at 13 she is already maybe not going. If thats not affecting the next generation, then what is?

What nobody seems to be asking or reporting is other opinions that are not based on the IFS report. The BBC need to be impartial yet are steadfastly ignoring all other sources except those that also waffle on about the IFS report. Not impartial...not 'fair'.

e.g. Mark Littlewood at the Institute of Economic Affairs says that the IFS has made "a woeful contribution to the debate".

"The Institute for Fiscal Studies has done itself – and the wider public debate about the Comprehensive Spending Review – a considerable disservice over the last twenty four hours... ...Far from illuminating discussion about the coalition’s fiscal policy, the IFS has seemingly attempted to reduce moral – not merely economic – considerations to the status of a bar chart... ...The Institute has walked straight into a trap – partly, though not wholly of its own making – of equating a progressive change to tax and benefits with 'fairness'"

"It is hard to know where to begin in exposing the inanity of this proposition.".

Your thoughts Steph?

e.g. #2: OECD

https://www.oecd.org/document/34/0,3343,en_21571361_44315115_46232546_1_1_1_1,00.html

"UK's Spending Review a necessary step toward fiscal stability"

"The measures are tough, necessary and courageous. Acting decisively now is the best way to secure better public finances and bolster future growth"... "The budgetary measures announced by the U.K. Chancellor of the Exchequer correspond to recommendations for a "concrete and far-reaching consolidation plan" laid out in the OECD's May Economic Outlook.

Span Ows; I am not interested in what the IFS has to say or the OECD or anyone else for that matter, that has anything to do with anything related to financial institutions. In my mind not one of them can say what will happen next week, let alone the year after that. If all they want to do is dish out their own statistics with nice little graphs, then let them!.

I am more interested in what is happening on the ground, you know the 'Real World'

I have already seen the devastation these cuts are going to cause and thats in less than 48 hours. With many job losses already announced and now the Police in Lancashire announcing job losses. What do you think that will do to people? And believe me, that is the first of many Constabularies to announce in the next 2 months.

My this coaltion is working fast I'll give them that.

View from the bottom
Fairness is a subjective not objective measure. I work in the public sector and my concern is that the rapidity and aggressiveness of the cuts will not allow sufficient time for those socially/welfare dependent individuals to skill up in order to effectively compete in the workplace and that what help was available will be scaled back as respective agencies independently implement their solutions to their new world. As they contract they leave behind isolated pockets of dependency. Don't get me wrong, things have to change, perhaps one of the greatest failures in the public sector has been our collective inability to coordinate action across the respective agencies and thus save us from repeatedly making the mistake of creating 'million dollar babies'. (Combined agnecy spend about $1M from birth to 18 yrs and we do not move the child even an inch fron the original position of deprivation.) I work across two towns, only 17 miles apart and yet the life expectancy gap between the two is 14 years. I cannot see that gap closing in the forseeable future. Surely fairness should figure somewhere in there.
This budget feels as though it is punishing the 'profligate' public sector and in many cases the vulnerable as well as those who have worked hard, saved, paid ther taxes and done their best to be good citizens, parents or just responsible.
This budget would have been much fairer had there been elements of equality regarding proportionality.

I reckon the word 'fairness' is going to come back and haunt them big time. It will backfire on this lot. People appear to lend their support until it hits them where it hurts. When they lose their jobs and find the benefit system has already faced a hatchet job, we'll see what the Brits are made of. Will they say 'touche' to the French?

3. At 5:33pm on 22 Oct 2010, stanilic wrote:
Nothing is ever fair: so adjust!

This is not the end of events, it is just another step along a rocky road. Whether or not it is the road to perdition remains to be seen.

Fairness is a useless concept because when money is taken away en bloc the people in the most exposed position are going to feel the pain the most. Tell us something we don't know.

It is what the Coalition do next which is more important, such as how are we going to redeploy half a million people? To rely upon a generalised term of `growth' is not enough. Where is that work going to be located and how much of it will go to the locals? Discuss.

The only way we can stop moaning about how the cake is cut is to bake a bigger cake!
Stanilic,
I don't usually take a big issue with a particular comment, but this reminded me opinion heard from an elderly lady which lady I have in great respect, and didn't dare to enter a polemic there and then. Let's start from the end, from baking a bigger cake. To be able to do it you have to mobilize a great part of a society in collective effort. The individuals involved have options of maximising their benefit from this collective effort the range of options is huge and varies from fully cooperative, through mildly competitive into openly destructive. Into the last category might fall (moral qualification suspended) a bank robbery, a ransom demand, a hostile takeover with a goal of liquidation, an industrial action, a property mis-sale. Effective economy, capable of producing “bigger cakes” operates somewhere between mild and moderate competitive mode. Examples first, reasons next: Germany, Japan, to a lesser extent Italy in a post WW II period and China after the cultural revolution, UK after Cromwell, USA after gaining independence – all of them ground into non - existence some prevailing interests of inhibitive and destructive nature and achieved long periods of sustained growth. On the contrary, some countries, that were able to introduce an artificial system of almost full cooperation failed because there were no indicators to check that the direction of imposed growth is right (to simplify – cakes didn't match public's taste). Introducing highest levels of competitive behaviour is counter - productive because it provokes more than proportionate tendency of stalling any potential competitor. (In this way unfettered capitalism kills competition and, “with the same stone” freedom. Contrary to what one Milton Friedman was saying capitalism needs freedom to exist and kills it almost instantly when unchecked – seen with my pair of grey blueish close range 95'-04' in Russia.) These destructive tendencies manifest themselves everywhere, from school (bullying into dumbness), through general non acceptance of differences and well into business games. In a highly competitive system people feel that they would be paid more for restraining from destructive action, than adhering to strictly productive activities. The thereat of disruption to be effective must be real – it has to involve recent examples of successful implementation! It is this irrational expectation of fairness that dampens competition to acceptable levels. I believe, in the bottom of my heart, that most of the people appreciate fairness as an independent moral value, but if anybody need one, the above is a valid intellectual prop-up.

PS I know the names and calibre of thinkers which stand not in line with this flavour of thought to say the least and it is not to our public taste to quote foreigners in what we perceive our domestic issue yet it might be time for a rethink.

What is so disgraceful is that the Government are afraid to cut the quite considerable benefits to pensioners over 65 such as free eye inspections; free prescriptions; free bus passes; winter fuel payments from £250 to £400 according to age. All this to so many pensioners who are either very rich, rich or very comfortably off. Their excuse is supposedly the method of means testing that would be required and which is claimed to be undignified for the poorer that need to claim. This is absolutely nonsense. We are all means tested in some way or other. The working poorer in society are when applying for the various benefits due to low earnings. All those who have need to claim unemployment (job seekers allowance), and not forgetting we are effectively means tested according to what our level of earnings are and it is called income tax! The government are disingenuous when making excuses as to how this is difficult to do. Implying that it would be too costly to administer. This is nonsense as it would relate to amount of income for tax purposes. The real reason is it affects too many Tory supporters on very good incomes, excused by David Cameron saying "these people have worked hard and saved all their lives" To which I'd say many pensioners have never been lucky enough to have had such good well paid jobs allowing for a well funded final salary pension. Not to mention that so many have also accumulated substantial savings and valuable assets. So Mr Cameron everything is not what it appears without an in depth scrutiny!The stated seriousnes of the countries financial position doesn't ring so true when there is to be no attenpt to safe millions in the manner I've suggested.Does it?

If you want to reduce inequality and if that is what you mean by fairness then introduce a Maximum National Income (as I have been proposing for quite some time) Or do you all live in Wayne's World!

David Cameron has suggested that the boss should earn no more than 20 times he lowest paid worker. True, he has so far been scared to implement this egalitarian (fairness of outcome) policy just as was Tony Blair. But perhaps we should stiffen his backbone!

Give us a National Maximum Income NOW! (Easy to implement through the Tax system at say the Prime Ministers Salary - which by happy coincidence is not far off of 20 times the minimum wage).

7. At 6:08pm on 22 Oct 2010, zygote wrote:
"Fairness" is a subjective concept, important to politicians who have to sell it to the population but the more important question is "will it work"? And if it does work, at what long-term cost?
------------------------------------------------------------------------
Worth bearing fairness in mind but much better to work for a robust economy which benefits everyone.

Current problem: too much tax take promoting joblessness, too much tax take preventing economic activity and saving.

Another current problem: inflation and interest rates at an unsustainable level. The first impacts most on the lower paid. Stephanie didn't mention that. The second will impact increasingly on the Government's spending with increasing need for pension support.

Yet another big current problem: overblown housing market and lack of new build.

Don't sit down GO, you haven't finished yet.

Hey! Let's be careful in a truly comprehensive way out there today.

I remember a Calvin and Hobbes cartoon with the complaint "Why is life never unfair in my favour?"

In a purely selfish frame of mind, I look at the past thirteen years as taking more of my hard-earned money and losing it in a system that has produced no extra visible useful output. The number of people in poverty, the standard of schooling, the state of the roads and many other things are not noticeably better for the money taken by the tax system. Worse, it is now obvious that not only were they taking real money, they were borrowing huge amounts as well.

As such, anything that stands a chance of giving me better value for the money I pay in to the system has got to be good. My only worry is that the transformation won't be completed in time and that in 2015 the waste tap will be turned on full again.

Cameron D, Osborne G, Clegg N, and the rest of the over priviliged club would not know the first thing about fairness.
More than 20 of the cabinet already millionaires?
We cannot expect them to get it right, they live in an annexed and protected society which has very little in common with 99% of the citizens of this realm.
Cleggs body language as Osbourne gleefully read out the list of cuts on the House of Commons said it all.
He hung his head in shame, as should the rest of them in reality.
As the father of a severely disabled child, the support that we receive from the State is at a subsistance level, yet makes a huge and very tangible difference to our quality of life.
As yet, we have not been badly affected, but I realise that many disabled and frail people have and suspect that it's only a matter of time before we are in some shape or form.
Yes the deficit has to be dealt with but not at the expense of the innocent, they did nothing to cause any of it.
Yes we all need to maybe lower our expectations a bit, when our daughter was born our household income went down from £60,000 to under £15,000 a year as we both had to give up our jobs to provide 24 hour care.
There are no meals out, no holidays, no expensive clothes.............. but we can survive.
I'm not complaining,life can deal you a blow at anytime, my point is,life is already on a knife edge for those at the bottom of the income scale and is it not a measure of the the civility of a society as to how they treat their weakest?

sagrith@36

"The stated seriousnes of the countries financial position doesn't ring so true when there is to be no attenpt to safe millions in the manner I've suggested.Does it?"

That is where your argument falls down, in order to means test those benefits, a little industry needs to be created, the cost of which is more than the savings. As from my experience of working with the elderly in ensuring they get their entiltlement, you find that a significant number do not take up these universal benefits, whereas for the winter fuel payments it is there to provide access to heat and electricity, it should be paid in the form of a redemption voucher or similar not in cash to ensure it is traded for heat, again it is the cost of sdministering it, then some more affluent over 60's might not use it for the extra week's paid holiday somewhere. Or in the case of my son in laws parents towards their air-conditioning in Spain where they live.

As MetalGasket pointed out at 1, by open market operations the Bank of England can engineer any movement of sterling denominated bond or gilt rates that it desires, or is told to do by the Treasury, because it can create an unlimited amount of sterling. So be would be amazing if these rates did not move in a manner which suited the political purposes of the government.

Much more significant is the movement of exchange rates for the GBP against both USD and EUR. These rates have been sliding since Osbourne made his statement, a sure indication that investors are moving their money out of the UK. So much for Osbourne's claim that the government's cuts have reinforced the confidence of foreign investors in the UK's economy.

Traders in the markets are not as easily fooled as most of the British public appear to have been.

I find this blog excruciating and rarely read it. I wonder if going to Harvard simply rots people's brains. Steph can't seem to understand the difference between greed and self interest, much less recognise we've long moved on from "Greed is good" to the present time "Cheating is good".

"Fair" is what most people think it is. Go find out, Steph. You won't find it in your social circle.

I do always get a bit excited when I'm first and I should point out that my argument in post 1 would have the opposite consequences to what Stephanie was highlighting so Apologies Stephanie.
QE is however a main driver of bond prices and should have had more emphasis in the article.

On the 1st of October inflation was according to this blog.
"With the possible - very limited - exception of inflation expectations, it is hard to identify a single indicator suggesting inflation is about to pick up"
Three weeks later I see that it is.
"Inflation in Britain is running at more than 3% and is expected to stay there for a while."
We could do with an update on this subject as these views seem contradictory and confused to me...

What’s 'fair'? about cutting £20 billion from the Public Welfare budget and brutally attacking and clobbering the most vulnerable: the poor and low paid. the old, infirm, crippled, sick, disabled, mentally ill, children and unemployed in our ‘new’ Tory Liberal Democrat ‘Big Society’ where UK Banks Still Rule Ok!

What’s 'fair'? about giving GREEDY PRIVATE banks £1.2 trillion - so far - in PUBLIC taxpayer liquid cash gifts of £850 billion, loans and loan insurance guarantees of £500 billion for their PRIVATE toxic debt gambles.

What’s 'fair'? about pumping yet even more money PUBLIC tax payers money into the PRIVATE banks and PRIVATE business with £200 billion of ‘funny money’ printing under the Bank of England’s QE help the poor Big PRIVATE banker and PRIVATE business programme.

What’s ‘fair’? about denying children and mothers and fathers earning £37, 500 net of Child Benefit of £1.5 billion while imposing a tiny £2.5 billion on the greedy banks that pay annual £7 billion bonuses and pay their casino bankers £ multi-millions in yearly salary plus annual £multi-million bonuses.

What’s 'fair' about the setting the UK Tory bank tax levy tax rate at a tiny 0.0004% and only cutting 'Big Society' [sic] Banking Business Corporation tax from 28% to 24%! A nice tax cut if you’re a fat cat banker and Big Businessman in the ‘new’ Tory Lib Dem ‘Big Society’ of so-called ‘fairness’!!!

What’s fair? about sacking 490,000 PUBLIC sector workers while paying many tax cheats and tax evading parasite peers in the House of Lords to so sit idly and scrounge off of the PUBLIC purse and PUBLIC taxpayer through their generous daily £250 plus a day Lords’ ‘’Allowance’’ that DOESN’T even count as ‘‘income’’ - allowing the idle rich Lords to claim DWP/SS benefits too in addition to their PUBLIC tax free Lords Allowance!

Hardly ‘fair’ by any stretch of the ‘creative accounting’ Big banker ‘off balance‘ tax avoiding banker friendly vapid imagination of the Tory Lib Dem cynical slogan ‘We’re All in this Together’ tax and attack the Public Welfare budget while giving the ‘Big Society’ tax break to the greedy parasite City of London bankers and banks.

A ‘Big Society’ con from a vapid Coalition Government of charlatans!!

Maxine, Well you certainly have a large chip on your shoulder. Unfortunately yet again the wealth creating sector will have to drag us out of the unholy mess left by yet another spend. spend, spend Labour Government.

Only the private sector truly creates the wealth that will enable us to provide the level of public services we would all like but are now, thanks to Labour, unable to afford. So, Maxine get stuck into your work and think of creating WEALTH which we can all benefit from. If you work for the public sector then find a job in the private sector and create wealth to help your fellow Brits. The Government is going to receive significant profits from the funds loaned to the banks because they immediately applied themselves to create wealth. Now they are doing it so successfully that not only are they competing successfully with international competition but they can pay their staff bonuses. That's great news. Please start working for your fellow brits and stop moaning.

Maxone.......well said Sir, I could not have put it better myself.
I do not understand macro-economics but it seems that from the multitude of opposing opinions on this site and through the media as a whole, neither does anyone else.
It seems to be as unquantifiable and unpredictable as the weather, may as well ask Micheal Fish for his opinion.
What I do know is that economics is primarily about people, not facts and figures and the sooner the West reappraises it's attitudes towards ownership, greed will continue to undermine any attempts to make the system sustainable and safe.
If people wish to spend their lives collecting money, that is their choice,it could have been stamps or beer mats or something equally as dull, but when their obsession takes so much of the fluidity out of the system as to bring it to a halt, then something is wrong.
,

2008 Nobel Economist Paul Krugman is damning in his verdict on the government:

https://www.nytimes.com/2010/10/22/opinion/22krugman.html

While I have no desire to make the poor pay excessive amounts, I am of the opinion that the opinion that those with broader shoulders must take more of the burden is wrong. Expecting the wealthy to pay more simply due to their greater material worth is akin to going out for a meal with some friends, one of whom is richer than everyone else, then expecting them to pick up the tab just because they can afford it.

It's easier to remove a service which may not be readily tangible than to remove money from somebodies pay packet. In the latter case it is a clear figure. So by and large services will be removed out of preference.

It's got nothing to do with fairness, much more to do with what can be implemented with least conflict. The overhang remains voter bloc pressure on a marginal government. So ingenuity will be used to avoid pressing some groups equally.

Percentage measurements are meaningless. The issue is disposable income and service provision.

A declining economy is not a place to be poor. However children have little choice what situation they are born into do they.

The problem remains the issue of growth otherwise the 'Treasury .. best guess' may well be exposed to all that best guesses become exposed to.

The fact remains that long term debt in the economy cannot be dealt with quickly and that sets the scene for some considerable time to come.

'But Mr Clegg told the Guardian newspaper that the IFS's definition of fairness was "complete nonsense".

He said it took account only of tax and welfare and ignored factors like access to public services and social mobility.'

https://bbc.kongjiang.org/www.bbc.co.uk/news/uk-politics-11603419

Okay Mr Clegg please explain what social mobility means to you. Because I don't think you have a clue what it means to social class 5.

46. At 4:11pm on 23 Oct 2010, Maxone

Hear Hear !

Equality, fairness is a complex issue as many on the contributors have found. There is not a clean division between the two kinds of fairness (fairness of outcome and fairness of opportunity).

Personally I believe that in some thing we as a society need to 'impose' fairness of outcome. I include in this equality of treatment by the health service. I do sometimes speculate that all private health care should be banned! Equality of wealth is a complex issue - certainly there are wealth taxes in the UK and they do tend to increase equality, but unlike France we lack a wealth tax making do only with taxing wealth when it is passed between generations.

But today the whole Nation (99.99%) wants to confiscate the wealth of the bankers. But we are not allowed to ask the people if David Cameron's idea of income limit at 20 time the lowest income should be implemented. I think it should be asked. I think that if we were allowed to have a referendum with a box that said should anyone get more than £150,000 a year then that too would get a 90% vote in favour.

This is what real fairness and equality is about not some figure juggling by pundits.

[I would also suggest a viewing the Luis Buñuel film - Le Fantôme de la liberté!]

@50 So you do expect the poor to pay excessive amounts!

Why should the poor pay for the police, when they have nothing to steal. Why should they pay for defence, if society is not worth defending?

In the natural world, there is no such thing as private property. All you own are your genes - everything else you have to fight for - to gain or to keep. Do you want to live in that kind of a world?

The only justification for the inequalities of capitalism that, on balance, it works for the good of all of us. Clearly that is not happening as many people are now to be denied the opportunity of a livelihood. So lock your doors and arm yourself to defend what you have. As Bertold Brecht said: "Erst kommt das Fressen, dann kommt die Moral!" - Those with a well filled belly can afford morals.

https://www.youtube.com/watch?v=QiFFdQUxO1Y

And a translation:

https://www.youtube.com/watch?v=6DSiD5CQ_Uk

I'm not sure I'd like to go for dinner with you: you'd probably expect other people do do the washing up to pay for your caviare.

@52 Quite. And social mobility only makes sense if there is downward mobilty too. This means that inheritance tax is there at significant rates to prevent an embedded hereditary aristocracy. Ie in Mr Cleggs case, economically illiterate sons of bankers who contribute nothing but hot air to the economy should be taxed at a sufficient rate to encourage them to do something useful.

He is like the (deputy) headmaster about to cane you who sanctimoniously declares that "this is going to hurt me much more that it hurts you".

Clegg sounds more like Tony Blair every day - he can't bear the thought that the facts are in conflict with what he'd like to be true. I predict that he will become the most despised politician in Britain.

https://www.youtube.com/watch?v=zDvAFqXmxWA

I am disappointed that J Brigsley and ilk are missing the broader picture. The point is that we live in society and communities and in doing so the agreement is that we seek to help and protect the vulnerable, surely the greater part of our humanity and democracy. As a member of that community that is what we are supposed to do.
Cameron aspires to his big society with the vague expectation that under increasing pressures communities will come together to take on additional responsibilities that the new choices, freedoms and flexibilities bring. Well that seems well thought out. After years in the wilderness you have got to hope that there is some evidence of better thinking and planning to come.

25. At 9:47pm on 22 Oct 2010, Dempster wrote:

Very good post. We should not forget that we are all human beings with similar needs.

I am rather bemused by jauntycyclist #11 + 17 complaining about communist 'fairness' on the part of China. The assertion that "What people forget is china doesn't believe in capitalism" shows how miserably stuck jc is in a time warp. Ever heard of Deng Xiaoping?

China is simply playing the same old capitalist game like everyone else, and unfortunately for the West, has learnt fast to become a formidable player by dint of its sheer size and totalitarian Communist Party rule. That's where they choose to remain communist, in governance and not in the economic system they have pursued like a true zealous convert. They'd try and get away with as much as they can like everyone else looking out for number one.

Can China get us out of this mess? Unless you can expect them to spend for the world it won't happen. The Chinese, arguably the most materialistic nation on earth, don't need to be told. Those who have the money to spend will spend if only to show off, but they won't spend money they don't have unlike in our Western consumerist culture. They haven't quite caught up with us to that point.

You might have a better chance of the private sector in this country absorbing the newly jobless if they win orders from abroad. There's no hope in hell it will come from domestic consumers now. The only problem is the Europeans have converged on the same austerity measures.

These infamous austerity measures as generously and uniformly prescribed by the IMF since the '60s - cutbacks in public services with wholesale redundancies, removal of subsidies, realistic pricing etc. - have consistently led to street protests, riots and bloody crackdowns by the security forces in every Third World country they have visited upon. Now the chickens are coming home to roost.

And this is the time-honoured formula for the system to survive, leaner and meaner to fight another day. Whereas profits accrue to private individuals and groups, losses are socialised among the rest of the populace. It's social engineering and redistribution all the same but in reverse. Only they wouldn't ever call it that, would they? It's what the others do.

Better brace ourselves for social unrest and upheaval, perhaps on the scale of the poll tax riots. I doubt it if the Brits will simply roll over and stoically let their lives wantonly destroyed and sacrificed on the altar of capitalism. This ain't the Third World.

Oh dear! I thought the day that Polly Toynbee is quoted on a BBC blog as a credible economic commentator would never come, but then I shouldn't be surprised as she was also on Newsnight earlier this week. Not only is she often factually wrong in her Guardian column, she confused the economy with the public sector repeatedly on Newsnight this week and claimed the recently announced cuts will shrink the state. This is factually wrong, if the policies are carried through public spending will still increase in cash and real terms, just not at the rate the previous government mandated. On top of being factually wrong Polly Toynbee is also compromised because her husband's job as head of PR job at the audit commission has been axed by this government - a fact she fails to mention. She's also about as representative of the poor as Bob Crow, someone with whom she shares the distinction of a six figure salary.

Please BBC - in future when quoting sources at least be clear about the potential bias in those sources, whichever political hue they may represent. After all, "impartiality is [the BBCs] DNA" - Helen Boaden, 2010.

Barnabas 47 wrote:

"Only the private sector truly creates the wealth that will enable us to provide the level of public services we would all like but are now, thanks to Labour, unable to afford. So, Maxine get stuck into your work and think of creating WEALTH which we can all benefit from. If you work for the public sector then find a job in the private sector and create wealth to help your fellow Brits. The Government is going to receive significant profits from the funds loaned to the banks because they immediately applied themselves to create wealth. Now they are doing it so successfully that not only are they competing successfully with international competition but they can pay their staff bonuses. That's great news. Please start working for your fellow brits and stop moaning.


Barnabas which bank do you work for?

the banks would no longer be in existence since 2008 if govts/public sector i.e. taxpayers around the world had not spent TRILLIONS saving them! (and they have not been saved by the way!)

it is the "wealth" of countries that the banks have used to create "profit" and pay themselves bonuses.

do you not see that the whole public and private sectors are working to keep the banks afloat?

this is why austerity mesures are being taken just about everwhere- bank bailouts and guarantees have exploded the deficit and the only way to slow the rise in deficit (never mind reduce it!) is cuts and higher taxes.

the banks are not "competing successfully with international competition" the banks ARE international competition! it's countires verus banks now.

there is a massive deleverging going on which is sucking money out of the economy, you can't stop it, just a matter of how fast it happens and how much the people at the top are protected while the other 99% of the people suffer.

the banks will have to be bailed out again soon, no doubt, and that's when the 99% will call a halt!

the coalition are just playing for time, trying to postpone the markets calling time, more QE virtually certain now. they won't last very long in any case.

then what?

On the subject of the Big Society, it is ideas like this one that confirm to me that Cameron and Co are living in lala land.
Voluntary sector workers are obviously great people, but their contribution should always be IN ADDITION to, not in place of, a State framework of Social Services. This should not be up for debate.
The idea that Charities should now be going to big business cap in hand for funding which should be coming from Government takes us back 100 years or more.
Any money donated will be money that otherwise would have gone to the Inland Revenue.
People may not always be in a position to give their time for nothing, especially in the coming years and to expect them to is grotesquely misguided.
Another thing to consider is the pride of the people receiving help.
Those that are really in need of help on a daily basis don't want to feel that they are relying on the charity of others, it really is an uncomfortable feeling.
You automatically give the person a sense of pride when any help is seen as a human right.
I believe it is just a smokescreen for the idealogical shrinking of the state.

avulcan@61

Very well put Sir.........I agree in totality.

Then what?

#47 Barnabas,

It appears that you do not understand the concept of wealth generation.

Let's get some facts straight:

The largest part of the private sector do not create wealth. They do however increase the velocity of money within the economy which increases GDP thereby giving illusion of wealth creation.

When the private sector does create wealth, it does so within an environment provided by the public services (health, education, law, etc.)

Not all wealth is capable of being measured in purely financial terms.

Finally, you have to consider who the banks created wealth for.

So stop ranting until you know what you are talking about.

@11 and @17 Jaunty dear fellow:

I KNOW you are a decent human being, so I am not disagreeing to put you down. What the Chinese call themselves matters not a jot; as it says in the Bible: "By their fruits shall ye know them."

In China, Marxism in any meaningful sense died when Deng Xiaoping became the boss. How people start is often not how they end up. After all, Gladstone started as a high Tory: his later career was the negation of everything he once stood for.

I think the Chinese strategy would be best described as neo-mercantilist, with the neo-imperialism which goes with it, not unlike the British philosophy from Cromwell to the beginning of Queen Victoria's reign.

Mercantilism became unfashionable in Britain during the early part of the nineteenth century. But by then Britain's dominant position in world trade had made it an unnecessary impediment to further advance.

This Wikipedia article isn't bad, though I don't entirely agree with the statement that "The theory assumes that wealth and monetary assets are identical."

https://en.wikipedia.org/wiki/Mercantilism

By the end of the nineteenth century, mercantilism had been replaced by what became known as "Classical Theory". In his "General Theory", Keynes argued that this eventually became like a religion rather than a practical doctrine, because it was able to "exorcise the obvious". (GT ch23 §IV).

Now conditions are very different from the heyday of Britain's dominance. I think that globalised so called "free" market capitalism has failed Britain in the modern world. But it has suited some groups within the UK, notably the financial sector, to the detriment of everyone else. Therefore now I believe it makes sense to have a national strategy to broadly provide for our own needs rather than allow our economy to be undercut by countries where life and labour are cheap.

"The yield on a five-year government bond or gilt this week fell below 1.5%".


----------------------------------------------------------------------------------

Inflation is 4% and probably will remain high according to King ,PENSION FUNDS HOLDING GILTS CHARGE 1.5% management fees giving a net return of [calculator out]

1.5%-1.5%= 0% -4% INFLATION COMPOUNDED for decades if not eons .

lolololololololololololololololololrofl

Given that some pension plans are index linked, then one can only infer that the bulk of those retiring will be for QEd like turkeys waiting for christmas pudding in the hope of sucking on the kings schilling.


lolololololrofl


And all because Tony wanted to be the fairyuppy on the top of the christmas tree staring into its downwardly mobile baubles whilst remarking "who's a pretty boy then" and "fairyuppiest one of all"

I do wonder where the idea came from that what you pay in is what you take out, or, to use an overworked word, fair. I understood taxation and the services they provide to be a method of making a five mile long, one in three hill the poor have to climb everyday, a little more like a one in three and a quarter incline, or, put a little differently, an extra leg on the horse.

Since the rich are already at the top of the hill they do not need to climb nor do they need a horse. Fairness would suggest the spending review should have taken the rich down the hill about a mile which roughly equates to Professor Philo's one off twenty percent tax (with incentives).

Of course the Tory Party don't do fair. And it would seem the Lib Dems were lying about their ideas of fair all along too. Whether Blair had ideas about being fair before John Smith died I wouldn't like to guess but, as a Tory at heart, his true colours came out after 1997. I bet he was feeling very sorry for himself after the terribly unconvincing exhibition Cameron, Clegg and Osborne have made of themselves in the last few days.

#65 Sasha Clarkson,

Oh dear, oh dear, oh dear, Sasha my friend, you nearly used the dreaded 'P' word!

Stand by to be attacked by the 'free' market enthusiasts who will only tell you that protectionism will kill innovation and lead to either stagnation or war. However, they can never provide evidence to sustain their argument.

Just for the hell of it. Your tale of the development of the Classical Economists maybe a little inexact. They would claim that their ideas had direct links to both Roman and Greek philosophy.

Lots of bellyaching from the patronising righteous left over what is fair for the 'poor', being in that low bracket I'm offended that you lot are continually deciding what is good and bad for me.

I am Sick and tired of leftist pillocks trying to create strife and tension when there clearly isn't any yet, militant unions trying to create public unrest, yeah, good call, just what we need when we're trying to get back on our feet, sounds to me like some people just enjoy making out that they're downtrodden.

I'm in the lowest bracket and I'm proud I voted conservative, I did it for a reason, I really had had enough of the labour party just chucking everyones money away. Then when it ran out they just took more AND WE LET THEM. Not anymore.

If you talk to genuinely poor people you'll find that while a lot of us are skint as hell we're actually intelligent enough to know when enough really is enough.

From my point of view I haven't been able to understand for years how this level of handouts was ever going to be sustainable.

I only wish the conservatives had been strong enough to take control at the previous election, we would probably have avoided a lot of the mess we find ourselves in (taking the global financial meltdown into account).

I know its not fair that the middle class are continually having to pay for another pet project for the failed labour government via one tax after another.

I know its not fair that taxpayers should foot the bill for ridiculously high rents in certain areas just so someone has a right to live in a certain area.

Fairness isn't having first time/low wage house buyers priced completely out of buying because of total disarray in the housing market and insanely poor housing policy.

I blame the classsickall acornowemists with only one ball for the shortage of OK'S at this time in the AAA roulette cycle.

Know more bets please!


That'll be the day !

We need a new international currency with shawn the sheep on one side and Tony the oragetan on the other ,plus I 0 ewe X woolly balls [the basic unit of currency being the ball with the bank of Inklands stamp on it]

1,5% INTEREST BARING GILTS IN A 4% inflationary environment is apparently good enough to be used for tier one bank capital .

That's like building a house on quicksand, not even the first two pigs did that ,whats the wolf going to say !

I'll huff and i'll pu....oh for QE me ! where's it gone!"

No doubt the tier one piledriver [wont need much driving] capital ie gilts will continually have to be augmented as they inevitably sink into the bog in an inflationary environment to keep up with basel 111, % capital requirements , with ,you guessed, more regular deposits from the saving publics pension funds minus caretaker[lol]fees.



Who writes their material.

ROFL

#68 - The consequences of protectionism would more importantly involve considerable falls in our standard of living and inflation (after all protectionism leads to more expensive imports and via trade wars to reduced export markets).

We can't internalise our economy due to our need for imported raw materials and our addiction to cheap consumer goods produced using what if it occurred here we'd call slave labour.
As it is, we sell financial services (and a few other things, e.g. pharmaceuticals) and get food, consumer goods, etc. etc. far in excess of what we could produce for ourselves.

The problem is that in recent years we've decided we deserve everything, earned or not, and have got carried away by cheap finance and notional wealth based around speculative bubbles on both a personal and national level.
Our economy is massively out of balance (you only need to look at the current account, our total debt burden or our massive dependence on financial services), and we've been in denial for years, putting off the inevitable by trying to keep the bubble inflated rather than address the underlying structural issues.

Whilst reckless banking played a part in our recent problems, people trying to blame all our problems on those awful bankers epitomises the denial of reality and the desire to find scapegoats to avoid placing responsibility anywhere inconvenient.
Uncomfortable as it is to admit this, but the banks provide a huge proportion of this country's income and the vilified rich provide a huge amount of tax revenue.
Whilst the increased banking revenues and cheap finance we're inflating the bubble we were happy to benefit from it, yet when that overgearing resulted in a force multiplier effect when the economic cycle hit a downturn a lynch mob mentality was adopted.
It could be argued that we are now nearer to our economic reality with some of the Emperor's new clothes of our "economic miracle" being revealed for the sham they were - although some would say we're still riding a bubble, just not as over inflated as before.

The big question is what do we do as a country and as individuals to deserve the standard of living we seem to believe we're entitled to?

Until we get past looking for scapegoats and look at the real challenges, our underlying economic structure will continue to decline in comparison to much of the rest of the world.
Unfortunately bad news tends to be politically damaging, so some would prefer to reinforce the denial; but whilst to do so might be appealing in the short term, if you don't accept and recognise a problem its almost impossible to deal with it (and its a hard enough challenge anyway).

So, does anyone have any answers?
What can we do to pay our way in the world?

73. At 03:32am on 24 Oct 2010, Reaper_of_Souls wrote:"So, does anyone have any answers?"



--------------------------------------------------------

That's simples

We are for QEd, what part of" we are for QEd" don't you understand?.


If we the Anglo Saxons play our jokers left, then everyone else on the plannet will be for QEd aswell and we can charge them interest on it and forclose on their pound of flesh if they don't pay barer on demand.

On any view it appears that there is at least a good chance that the spending cuts are regressive.

That seems a very odd result from a Coalition that

- continually repeats the mantra of "we are all in this together" and "fairness" and "those with the broadest shoulders".

- includes the LibDems who supposedly consider improving fairness as "part of their DNA".

Seems to me we have a new bunch of political spinners in power. I also wonder who will vote for the LibDems in future, at the national level at least.

49. At 7:11pm on 23 Oct 2010, Sasha Clarkson

Thanks for the link. It is good to know that Britain came into the international Credit Crunch with relatively low public debt and that Gordon Brown did not cause the economic problems here or in the rest of the world. He was awarded the international Statesman of the Year award for what he did internationally for reducing the impact of the Credit Crunch.

75. At 10:29am on 24 Oct 2010, Cassandra

Overall, it s much worse than spin. Nick Clegg and the Lib Dems have obtained jobs on bare faced falsehoods. They should be sacked. I think breaking contracts is in Nick Clegg's DNA. He just can not help himself.

The question is, what is fairness! Should someone who has worked all their life and saved or someone who has been industrious and made a good living be expected to support the one who haven’t?
You could say the people who made it have been lucky but I believe a better way would be opportunistic. You have to ‘get on the bus’ sometimes and move around the country or world to better you life. The ones that stay at home any say there is nothing to do a frankly talking bo...cks. Why have so many immigrants come in and done OK for themselves? Because they were prepared to move where the work was and do jobs that other people wouldn’t do!!!
So going back to fairness, what is really fair. Should there be a top rate tax so every 10k extra you earn 5k goes to the government or does that reduce enterprise? Would it be fairer to have a flat rate of tax (25%) with a higher tax free allowance (10k). In that case a low earner on 20k would pay 2.5k tax and a high earner on 100k would pay 22.5k tax. I don’t expect the high earner would demand more from the public services, quite likely it would be less; I believe it would be fair but the government wouldn’t go for it!!!
So cuts to the welfare budget, they are fair. If the population can’t be bothered to do sometime for themselves, why should the state look after them? The alternative is communism!!!
Next to recovery, that will be my next post!

Foredeckdave. Clearly one of the less widely read of our contributors. I suggest you get a copy from your librray of Adam Smith's "The Wealth of Nations" and learn a little basic economics. In the society we live in - in fact that which most of the world lives in - if you do not create wealth you do not have any resources to provide succour etc to the less able or the infirm. China and India are creating welath at an enormous rate and all the time dragging the less well off into some form of more acceptable exsitence. They have an awfully long way to go but at least they are well along the path. Create wealth for your country and in the process you will gain wealth for yourself AND most importantly have sufficient to look after the caring services.

Your title "foredeckdave" suggests you are quite happy to be one of the crew instead of the captain or owner who provides the funds to make and build th ship you are on or to manage it. You are in a rut. Try some positive thinkung and drag yourself upwards and generate wealth to help the less well off.

#73 Reaper_of_Souls,

As predicted, you produce statements that are unsupported by any evidence (historical or otherwise).

Protectionism does not mean the end of international trade. It is a re-bablancing activity. The addiction to cheap consumer goods that you refer to needs to be more closely. Is it the cheapness that excites the addiction? Studies on consumer behaviour suggest that they are looking for value and not cheapness. Further, this addiction to imports has ultimately led to a loss of choice (try finding a UK made tv).

Now you can continue to cling to your 'free' market principles (which are not in the least 'free'). The ultimate conclusion of which would be that UK workers would ultimately have to accept the terms and conditions of say China or India. That is just not acceptable to the vast majority of European workers. Hence we must adopt startegies to ensure that this does not happen.

At the present time, over 50% of the UK's exports go to EU countries. If the whole of the EU adopted protectionist policies then we already have an export market.

So, to continue, how to fix it!!!

Agree with #73

The only way we can get things back on track is to start producing goods that the world wants and try a re-address the balance of trade. If the trade deficit continues we will never survive, once money leaves the country it rarely comes back!

Without natural recourses to fall back on we have to start with British industry, change tax rules to encourage investment in the UK by multinationals as the manufacturing base for Europe and we may have half a chance. Most recourse for manufacturing are imported and we have a good infrastructure of ports and rail so we should have a advantage to much of Europe. We also have the technology of advanced manufacturing that should allow us to compete with goods from Asia but we have to move fast. The rest of the world is catching up.

Financial services are currently the biggest export but we have all seen what happens when we rely on them, they are also risky to rely on now the world is becoming a village. If London loses its crown as the financial centre of the world and with the advent of electronic trading
Our final saviour will be its people, or brains. With our universities we could lead the world. I believe it is right for student to contribute towards their education, it will motivate them to study hard and also pick a course that will give the opportunities for a successful career going to other countries as immigrants, sending money back to the UK and saving us all

So we have to move fast, invest in people and manufacturing but don’t give handouts for nothing!

17. At 8:19pm on 22 Oct 2010, jauntycyclist wrote:

===============
The problem you have is that 'Socialists' here see China as their vindication, their Fairness is a concept so different from mine, and maybe yours, that you cannot argue with them.

I have said elsewhere and many years ago, that China is in the 'Business of Politics' and the West, particularly the US, is in the 'Politics of Business' - and, about the only area of agreement between me and the Socialists on here is that this is a 'stupid' system, because it has seen the West export jobs and knowledge to China whilst all the time knowing what they are doing but blindly believing that they had now become Capitalists, the West has, almost fulfilled (or, if not yet, may have gone so far along the route to fulfilling it as to make no difference) the prophecy of Karl Marx

"The last capitalist we hang shall be the one who sold us the rope"

Our recent Governments have blindly let business not so much sell the rope, as donate it, railing against the Coalition may be satisfying, but if it hadn't been them doing the cutting it would have been someone else, you see the problem is we have too many people that do not contribute but take, and they now demand lifestyles that are not the 'bare minimum' but lifestyles to match the top 10% of the country, yet they provide nothing, they have knowingly squandered their abilities, yet have aspired to increase their needs (although I would say ‘wants’) - and that, in the end is disaster, but that is the 'Fairness' that Socialists mean - no relation between effort and reward, which is the fairness that was once prevalent, in fact I will go further and say that now fairness is deemed as the matching of 'wants' not 'needs' to the ability to of the state to provide and not the ability or effort of the individual to obtain them for him or herself. In fact the biggest scandal, disaster and crime suffered by this country is the State Education system, some day it may be come to light just how this Socialist Sacred Cow has done more damage to the poor and this country than any or all Capitalist Bankers put together, in fact IF there is any excuse for the Welfare lifestyle so many have embraced, it is that thy were subjected to a system that was designed to enable them to fail, a system designed to produce a ‘level playing field' although even that failed, usually if you want a playing field you want topsoil, and if there is a dip that ‘scraping off topsoil’ would not solve, more is brought is, but that doesn’t happen in education, if anything it dug out everything so that it levelled off at the bottom for many in sink comps, and all the top soil was removed and we are left with a level sterile level surface. I have no doubt this will be decried and I will be pilloried by Socialists – yet how many of them have actually worked in these schools? I have, how many of them have seen children as smart and often much smarter that the private school pupils I also taught (and no I did not find private or state school children that different at heart, the difference was that the dross, the ‘destroyers’ and disrupters in the private system were not prized and allowed to destroy the education of the able or even not so able but motivated) pilloried, picked on , bullied, humiliated because they had the temerity to be different, they had the temerity to think that a book was there to be read and not used as a missile, they wanted to learn and were keen, they behaved in a civilised manner to staff and fellows – but they got little help or protection from the system – all I ever heard was excuses and platitudes – which is why is one of the main reasons I hate Socialism and so often despise Socialists, they sacrificed children to their ideals, AND what is worse, it was and is RARELY their children, it is not mine either, I pay for mine NOT to attend the school I worked at. Here it seems interesting to note that one of the most often used insults on such pupils was that they were ‘snobs’, that ‘they thought they are better than us’ – look through these blogs at the comments on Cameron and Osborne and how many are in the same vein, the insults often were replaced by physical assault and intimidation. What I found most interesting was how often the bullied child came from a poor home with ‘values’, where one or both parents were working, not very well paid, but both wanted their children to ‘do better than us’ to go onto University or College and get better jobs and have a better life, so often the ‘bullies’ were clothed in the uniform of the street, designer clothes (maybe fakes who knows, but generally they didn’t take kindly to wearing fakes, they had to be the real thing!) and whose attitude was that anyone who opened a book to read was a ‘nerd’ or, an odd phrase, a ‘keener’.

If I were you, I wouldn't bother writing on here, I now and again come on to see if we have any amusing quotes from the Middle/Upper class Socialists who live in the Metropolis, and lecture those who live in the areas they deign to avoid, amongst the dross they support, at least as long as they stay out of their haunts, but now they have lost the election they are less amusing. You (and they for that matter) might spend time better reading Dickens, it hasn't changed much in all that time.

By the way, I was lucky, had I had to suffer my local comp, I suspect I would have been one of the dross - fortunately in my day, it wasn't tolerated and I was kept on the straight and narrow, but it took hindsight, and years of it to realise that.

Those people who want a free market want what they themselves define as a free market. One that suits them and gives them a lot of money. How would they ‘police’ a free market. Who decides what the ’rules’ of a free market are? If we could agree what a free market is, even though it cannot be a free market if we have to set limits in order to agree it, we would have to go to year zero where all existing wealth is spread out to allow the free market to work.
Similarly, with wealth creation, can there be a definition that is accepted by everyone? People use these words as though they were words defined and given a blessing by some god, perhaps the god of capitalism. But has the god of capitalism defined wealth creation?

And before you all start going on about the lucky ones that have it, I grew up in the poor house on the street with no car or TV in the ‘70’s. Parents where always skint and had to go for a assessment on spending from the bank!!!

I have never been given any substantial cash or inheritance, I did go to University but had to contribute towards my education by working part time to survive but I have done OK for myself.

The point is I didn’t have any greater opportunities than the ones who are moaning now, possibly less, but I know if you try in life rather than waiting for something to be given to you, doors will open.

If the rest of the UK tried they could be in the same position.

80. At 11:31am on 24 Oct 2010, foredeckdave wrote:
"At the present time, over 50% of the UK's exports go to EU countries. If the whole of the EU adopted protectionist policies then we already have an export market."

How would this work. The EU as a whole is a massive exporter to the rest of the world and this would be damaged.

Exports (by EU countries capable of making the right goods) to the Bric countries is booming and to jeopardise this just so UK manufacturers can once again make TV sets sounds foolish.

'Studies on consumer behaviour suggest that they are looking for value and not cheapness' This conclusion is correct and comes back to climbing-up the value-added pole which is predicated by R&D, Investment and State Education.

What exactly does 'protectionism' protect.

It protects...

the inneficient
the un-enterprising
old industries from being replaced by new ones

It deprives consumers of choice.

It causes international tensions that lead to war.

In the end 'protectionism' only really hurts the country that applies it.

The EU has many regulations that exporters to the EU have to comply with, if they don't they can't export (regulations governing the materials used in toys for example). This, and forms of political pressure, is the way to deal those countries that more or less use slave labour (by our standards) to make cheap goods. This is not protectionism, nor are anti-dumping laws.

' that UK workers would ultimately have to accept the terms and conditions of say China or India'

If a country can make a TV (or car, laptop,etc) that is cheaper than an indigenous manufacturer it does not always follow that it is down to cheap labour. Look at the investment, R&D and automation that are found in factories in the far east.

So the UK can't be bothered to invest properly, can't compete with goods from countries that do invest, and to re-balance things UK slaps a tarff on price of said goods. Madness.

82. At 12:19pm on 24 Oct 2010, DevilsAdvocate

You are using the same terminology about people, dross, that you accuse the other of using. People are neither lifestyle choices nor dross. When Cameron posed for public pictures of himself with his new baby were we just being asked to admire his lifestyle choice?

All people are human beings but, like Hitler did, it is useful to some people to denigrate them so that we see them as less than human beings so that they can be dealt with. So people use descriptions like lifestyle choice, benefit cheats, benefit scroungers, lazy unemployed and greedy pensioners so that others will accept the final solution. Yet, year after year, there are people who do not claim the benefits for which they have contributed and to which they are entitled. Of course, those of a right-wing tendency never mention those courageous people. Is that because greed is good and these people wrong?

#79 Barnabas,

So, according to you we should all base of economic thinking on the conditions that existed in 1776! I hate to inform you that society has moved on a lot further since then. But obviously your ability to increase your economic understanding hasn't.


As for my username, you are making some very large and totally incorrect assumptions. Those readers who do actually know me, would recognise the joke - fortunately they do not include you.

Would it be correct to say that one of the main reasons..
1. taxes remain as high as they are is because of the dishonesty in paying them by many ?
2.the cost of social care benefits remain as high as it is, is because of the dishonesty in claiming them by many ?
Would it also be correct to say that one of the main reasons...
3. the cost of goods and services are as high as they are is because of theft from the industries providing them,by means of the individual and organized crime ?

Crime, dishonesty, cheating, getting away with it,Puts a huge burden on use all because these actions are pervasive in all of society everywhere and and at all levels.
So what if you are a scrupulously honest person who all there adult life has always worked and paid taxes and (apart from a brief period of 3 months) never received a penny from the state?
It's not fair boo hoo!!

87. At 1:03pm on 24 Oct 2010, foredeckdave wrote:
#87
all base of economic thinking on the conditions that existed in 1776!

Until something better comes along, yes.

In any event how were situations different then. We had trade, we had countries that could produce cheaper and we had prople who advocated 'protectionism'.

Adam Smith's work is even more relevant to-day, not less.

No problems with 1666 and a certain apple which led to an understanding of gravity.

#78
Whoa there, before making that comment about those who only want to take, please get your facts right.

As a person with slight Aspergers Autism, I would love to be a productive member of society.

Problem is that employers shrink from that due to having to provide support facilities for Autistic people, be they mildly or more so.

In Denmark, one man, Thorkil Sonne has had the nouse and vision to set up a compnay that tests software; employing 75 people (25 support people; 25 trainees; 25 fully trained).

It is a great success, and it may open a branch in Scotland.

All too often though, the autists of this real world are the inconvenient truth; and as such become, through no fault of their own, second class and vulnerable citizens.

They are not spongers or takers, but are just looking for a way to survive, and live.

So before you stick labels on them, kindly have the civility to get your facts right!!!!!!

Alot of people seem to confuse the concept of wealth, with the concept of money. Here's my take:

Money is not wealth, it is merely the opporunity to purchase wealth (spending), or create wealth (investment) at some time in the future.

Wealth is simply real goods/services or resources, and can be created by both the public sector and the private sector:

The private sector creates wealth (through investment) by generating goods and services that are in demand by the public (tractors, TVs, ready-meals, haircuts etc). These are purchased directly (spending) by the household consumer or other private sector agents.

The public sector creates wealth (also through investment) in goods / services the public desire (roads, hip operations, security service (police) etc). The government purchases them on-behalf-of the household consumer (government spending).

Either way, what constitutes something as 'wealth' is determined by whether their is demand for it - directly in the private sector, or indirectly through government spending - Money is not wealth, goods and services purchased are!

People also misunderstand Tax (and government spending)! Here's my take:

Some people think that tax is a way for the the private sector to purchase public goods / services / resources (wealth) - I think not.

Some people think that the government needs tax revenue to spend - I think not.

Tax exists to enable the government to induce appropriate flows of money through the economy, consistant with 'public purpose' :-

Government spending creates and injects money into the economy to places where it is useful for either, achieving the government's agenda (Public Purpose), or maintaining aggregate demand;

Taxation extracts and destroys excess money from the economy from places in the economy where it is useful for either, achieving Public Purpose, or preventing excessive inflation.

There is a good part of economic academia and a huge following whom I dare to suspect of doing the old boxer's trick - positioning the weak partner for a beating.

So, just to make sure: Barnabas, I took Smith's "Wealth of Nations" copy from my book shelf only to find with dismay that a whole chapter that I wanted to refer to is missing there. I went to the PDF on my hard drive and that's the quote that I found for you:

"The legal rate, it is to be observed, though it ought to be somewhat
above, ought not to be much above the lowest market rate.
If the legal rate of interest in Great Britain, for example, was fixed
so high as eight or ten per cent. the greater part of the money
which was to be lent, would be lent to prodigals and projectors,
who alone would be willing to give this high interest. "

Do you think it right to put the burden of risk on consumer while cornering the SME to fight for money thus introduced to the market?

And what do you generally think of what happened in the science of economics since - say, what do you think of Leontief's negative prices? Can you think about being ever forced to accept a reward of this kind? It does happen!

Adam Smith nearly as much as Marx has been quoted out of context, misinterpreted and misrepresented for so long by so many 'faithful followers' and detractors alike, their reputation get tarnished in their own different ways. Indeed religion is not immune to this. Even Darwin's name is associated with Social Darwinism that the right tends to favour.

Fairness in an anomalous system that Britain is i.e. a capitalist economy that endeavours to provide a socialist health care and other benefits is of necessity a controversial concept. It is nothing short of a miracle that it has managed to deliver as much as it did to so many so far. Its inherent contradictions however meant that there will always be a right wing backlash on the welfare state periodically and ultimately something would have to give, and it certainly is not going to be the economic system that underpins it. It is bound to make any number of sacrifices it deems necessary to make, and no prizes for guessing what that's going to be.

Champaign Socialists and thoughtless equalisers who believe in rights without responsibilities aside, the actual concept if it needs reminding of socialist fairness is "from each according to their ability, to each according to their contribution". Only communist society aspires to the goal "from each according to their ability, to each according to their need". But even now, human nature being what it is, want is constantly being redefined as need, especially in this country where you no longer have to worry about where your next meal is coming from. When things are literally free without so much as a nominal charge the system is open to widespread abuse, and will be sorely missed by the needy when it's done to death for want of proper sustainable reforms given a good excuse like we have today.

The abject failure of Labour administrations has been in raising the level of not so much the material living standards as of intellectual, cultural and political consciousness of the nation. Granted the Nasty Party has no incentive in doing that because it is not in the interests of the Establishment. But Labour has no excuse to behave like any selfish ruling elite once they get into office. Unfortunately they are far from being immune to the corruptive miasma of office, not just every other leftist administration that comes to power everywhere in the world.

The very nature of capitalist competition precludes any genuine cooperation and collaboration for the greater good. Fair to a certain extent and purpose after it has evolved a set of rules over a few centuries, it sets an example to the rest of us for better or for worse. Its innate unfairness remains and these days gross inequality is an inevitable historical product of its latest incarnation - globalisation.

Free trade and protectionism and all the rest of it become acute problems once again as more and more states embrace and join in the only game on the planet, whereas in the past today's advanced economies made it by employing double standards through protecting their own native infant industries and proclaiming free trade for their share of the market in every other country. The City has always represented international finance capital first and the British economy second, hardly a patriotic institution. Globalisation has left us completely exposed to the vagaries of international capital that now enjoys a free rein to raid, retreat and lay waste at will and also a labour market spoiled for choice with cheap migrant workers willing to undercut the natives, not just a matter of churning out cheap goods from China or various other outposts of the world. The chickens are all coming home to roost. We are in deep proverbial mess mainly of our own making.

84. At 12:38pm on 24 Oct 2010, Voiceofhardwork
Of course, anyone who has done well in a particular system is unlikely to find anything wrong with that system and is likely to consider others who are complaining just to be moaners. I don’t mean that in a derogatory way. It is just a natural bias. Actually, our form of capitalism does not reward hard work. For example, does a person on the minimum wage necessarily work less hard than a banker. Statistically, some probably work harder but are paid less. It is not just a matter of hard work. It is also a matter of luck. You, and perhaps I, have been the lucky ones.
Democracy is a system where we have agreed not to fight for our fair share but to have representatives who will ensure that we get our fair share. That does not mean that we will receive a fair share for doing nothing but it does mean that we will receive a fair share for doing what we can do. So, figuratively speaking, the system has said that people will be paid if they jump ten feet. Many people have jumped their best but failed and have received nothing. You have been able to jump ten feet and get the money. Also, as I have said before, if I am walking down the street and meet a man twice my size, I do not expect him to use his superior physical abilities to frighten me into giving him money. Neither, however, should I use my superior intellectual (theoretical) abilities to con less able people out of their money. Yet that is happening all the time in Britain but we prefer to call them idiots for being inferior intellectual beings .
If a government runs a system that does not provide true equal opportunity as described above, then it needs to use a tax system to provide for those that have not been enabled to provide for themselves.
As regards immigrants, several have done well but many others have not. I thought that the complaints of the right-wing press were that immigrants were coming here and living off our benefits without having put anything in and getting council houses before existing residents. Irrespective of what immigrants may or may not do, the democracy pact is that each person will be enabled using his talents to obtain a fair share. If we have a system that makes it impossible for some to obtain their fair share while others such as bankers are getting many times their fair share, then the democracy contract has been broken.

Social health care is Bismarck's answer to a threat of social revolution (1870 depression, communist manifesto etc.etc.) and might be considered one of the reasons that Prussia of that time overtook GB. All the following developments were answers to organized social pressure and competition with a system able to achieve over a period of about 40 years an average of 4% annual growth while loosing about 20 million of its population and unimaginable material resources in the meantime. (Giving a moral evaluation of what had happened there might be premature as the interested party is far from sure of their own judgement.)
Times have changed, labour force is not needed any more to perpetuate economic growth. In fact one of the assumptions of the "New Normal" is prospering without growth. This means much more acute competition, much higher intellectual demand for qualifying as a middle class and a strategy of "watching the fight from above" - one of interpretations of "divide et impera". This sounds very much like introduction of social Darwinism squared, as people are mis - taught into intellectual cul de sac, where their chagrin (a mild word, isn't it?) is used to make them zealous defenders of the system that betrays them.

Summarizing - the system is capable of delivering acceptable levels of cooperation (if past performance is anything to go by), but only under immense pressure.

Fairsfair@76
"It is good to know that Britain came into the international Credit Crunch with relatively low public debt and that Gordon Brown did not cause the economic problems here or in the rest of the world."

I suggest you read Krugmans link again, it is because of Gordons over reliance on taxes etc from a Finacial bodies, with light regulation, the bubble burst a bit harder here in UK, America the same, if you look at Germany & France for example who did not rely so much on Financial Institutions, the effect has been less.

The other problem of perceived low public debt is the treatment of debts such as PFI off balance books by Gordon, which you cannot do anymore.

Gordon did not cause the crash alone, but he had one hand on the steering wheel.

For further reinforcement of Paul Krugman's view on the coalition going about it the wrong way, this analogy at IF YOU TOLERATE THIS has legs.

https://ifyoutoleratethis45.wordpress.com/2010/10/24/nobel-taking-the-piss-prize/

Firsfare @95,
technicalities, technicalities...
Democracy needs generations to take its root and only a couple of decades to be uprooted. I'm not good at maths, but it seems to me that the theory of choice (the impossibility of warranting consensus of more than 4 subjects on a choice out of more than 2 alternatives and what followed i.e. "representative agent" and manufacturing of consensus here versus other paths of continental democracy) formed different types of awareness of and sensitivity to political process. Superficial individualism goes hand in hand with tribal behaviour with subjects unsuspicious or pretending lack of awareness of the contradiction.

95. At 6:32pm on 24 Oct 2010, Fairsfair wrote:
If we have a system that makes it impossible for some to obtain their fair share while others such as bankers are getting many times their fair share, then the democracy contract has been broken.

Yes something is seriously out of kilter.

But don't blame the banks. Blame the last government; the bailout took the away the only sure way of of re-calibrating. It prevented justice.
There would have been fallout had there been a meltdown but we would have dealt with it. We would also have a new banking system with a new humbler culture.

The banks are doing what they do best banking. Can't blame them for taking another chance.