LESSONS IN THE BLEEDING OBVIOUS...
Friday, November 21, 2008 at 07:21PM "Alistair Darling may be forced to set out details of future taxes rises to pay for a short-term boost to the economy, the BBC understands. The chancellor is expected to announce a package of tax cuts and public spending funded by borrowing in his pre-Budget report on Monday. But he will have to put taxes up in 2011 or 2012 to pay for it, BBC Business Editor Robert Peston has said."
Oh really? And just how high will those taxes have to soar to try and pay back the massive debts he will rack up? Oh - hang on, suppose the Conservatives come to power in 2010, why that means THEY will be forced to raise taxes to pay back Darling's fiscal bingeing. And I guess that might make them unpopular and open to Labour attack mid-term. And then again that wouldse the stage for a Labour return to power in 2015 on the basis that they would bring the Conservatives taxes down! Politicians are a conniving class, and Darling is setting up a future conservative administration.
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Reader Comments (14)
But he will have to put taxes up in 2011 or 2012 to pay for it
So it's deferring tax, not a cut at all.
Here's a tip to the next government - cut spending.
Pete, the best way to recover from a Economic Recession is not to cut spending but to invest money in the Economy.
It could all go horribly wrong for Labour, if they happen to win the next election and have to clean up their own mess.
Seamus,
How simple it would be if that was the case. Just who should do the spending? - the Government, but it doesn't have any money of its own, all the cash it has is that which it raises from taxes, and if it hasn't got any 'in the bank' when needed, it will have to beg, borrow, steal, or increase taxes to settle the debt.
Perhaps if we had not been so heavily taxed and burdened with pointless red tape, our wealth producers would be in a position to start the recovery from a position of strength, as it stands, they in their turn, have been forced to borrow, in many instances, just to survive.
Now if our socialist masters had the wit they were born with and had provided for a rainy day, instead of wasting billions on utterly stupid, bound to fail, hare-brained schemes.
Alistair Darling, might have been in a better position to lecture us all into 'spending more', as it is, his 'spend, spend, spend' mantra is more like the crowd calling for the man on the roof to 'jump,'jump'jump', and equally as contempitble.
We have ten years of debt to clear out of the system before there can be any attempt at a meaningful and lasting recovery. Placing your hopes on stocks and shares? take a look at the indices from 1998, those are the levels that will have to be touched before stability can be achieved, with maybe a small adjustment 'for inflation'.
Meanwhile all Brown is trying to do is to 'restore confidence', which equates in his tiny mind, is turning the clock back twelve months, to when the debt laden boom was in full swing.
'C'mon lads and lasses, load up those credit cards, buy that 'starter home', - spend, spend, spend' - you know it makes sense, - your country needs you!' Kitchener was very wrong in 1914, Brown is very wrong in 2008...
The point I am making Ernest is that Keynesianism is the way for a country to work its way out of an economic downturn. Yes there are problems with Labour's spending but cuts are not the way to fix things.
Seamus -
Taxation is taking money out of the economy!
Good grief.
Left with our own money, we'll either spend or invest it. Even if we put it in a bank it'll be invested.
Keynesian spending absolutely is not the way out of a recession when we have so much debt. Keynes himself explained that his overarching idea was that surpluses were built up in the good times and spent out on the boost supply in the bad times.
Well we don't have a surplus. The worst Chancellor in history blew it all in the good times, and more.
Brown's plan is tanking. The only way out is the only sensible thing for any government to do at any time - spend low, tax low and then go on a long holiday.
There is no problem, none at all, that government intervention will not make worse.
Seamus,
Yes I realise that I did wander from your original premise that State spending was the way to go. The point I was making, in a roundabout way, is that there isn't enough money in the bank to be effective, despite what Keynes may have thought, the purse does have a bottom, and we reached that years ago.
If people cannot earn enough to live on, how can they earn enough to pay all that Tax that Darling is piling up, to be paid in the future. Unless, of course, he visualises tax rates so high that penury will be the norm...
The time for a Keynesian spending spree is long past, Nu Labour has been on such a spree for the past ten years, more of the same is not the answer...
They read the history books and see that state spending was credited with dragging America out of the 30's depression, many would argue that it prolonged it! That our current depression has nothing in common with the 30's completely bypasses those, such as Brown, who are looking for the quick fix. The damage to the UK was done long ago, and now it is time for a complete rebuild, not just another shoddy refurbisment!...
"The time for a Keynesian spending spree is long past, Nu Labour has been on such a spree for the past ten years, more of the same is not the answer..."
They haven't really spent much on the economy. They have spent it on other things, like 40,000 administrators for the NHS or invading two countries or other useless wastes of money. Keynes' Theory is that if you invest in jobs it will kick start the economy again.
Probably the best example of Keynes' Theroy in practice was in Germany. Between 1930 and 1933, the German Economy did precicely what Pete is arguing for. Cuts, Cuts and More Cuts. Heinrich Brüning, Reichskanzler between 1930 and 1932, was called the Hunger Chancellor. In 1933, Germany's Economic Policy was put in the hands of Hjalmar Schacht who instantly put Keynes policies into practice. The result was that by 1935 Germany had gone from being the weakest economy in Europe to the strongest. If it hadn't been for Hitler's opsession with re-armament and waging war, then the German Economy under Schacht would have continued to grow.
"If people cannot earn enough to live on, how can they earn enough to pay all that Tax that Darling is piling up, to be paid in the future. Unless, of course, he visualises tax rates so high that penury will be the norm..."
That is the beauty of it. Keynesianism causes a growth in Employment, which causes a number of things. Firstly, there are more people paying tax thus less need for very high levels of taxation. Secondly, it cuts the number of people on unemployment benifit. So the Government is automatically collecting more revenue and decreasing benifits payments without cutting them.
Seamus -
Fewer jobs will be created by the spending of tax than will be destroyed by the tax in the first place.
And if you believe that the unemployed will take up these new, thoroughly uneconomical and unwanted jobs instead of yet more immigrants, you haven;t been watching for 11 years.
For Heaven's sake, learn a simple lesson for once. Wealth and jobs are created where government is least intrusive. That's the unarguable lesson of history.
"For Heaven's sake, learn a simple lesson for once. Wealth and jobs are created where government is least intrusive. That's the unarguable lesson of history."
Pete, I have already shown an example of history were Laissez Faire Capitalism was allowed to run in a country and when Keynesianism was introduced in that country there was almost instant economic recovery.
You've done no such thing. Economies were moving into recession in the early Thirties (though short-lived in Great Britain, where the government took less of an interventionist role than elsewhere). If Germany had followed suit, Germany would have been fine.
Ironically, in the preface to the German edition of his General Theory, Keynes stated that his theory was particularly well suited for totalitarian regimes and lamented that it was less fit for the conditions prevailing in more free societies.
Keynesian economics have always appealed to the authoritarian mind, strangely enough.
Seamus, - or should we call you Gerry?
You showed an example where Keynes theories worked, but you are assuming that one recession is pretty much like another, - it isn't. Keynes visialised from within a socialist ethos, and more along national rather than international or global perspectives.
This one happens to have a global element, and involves more than just one government, and is more than just about unemployment and the state's welfare role.
This time it is a 'perfect storm', and about an already overheavy burden of debt, and the very system of financial and political governance.
How does a debt burden globally of some ten times the total GDP of all countries, grab you? and that was at the end of last year, it is probably much larger now.
There is a limit to how much even governments can borrow, as Iceland found out.
"Seamus, - or should we call you Gerry?"
Firstly, as unfortunately seen during the Election Campaign for the Dail last year, Gerry doesn't seem to know what his economic policies are.
"You showed an example where Keynes theories worked, but you are assuming that one recession is pretty much like another, - it isn't. Keynes visialised from within a socialist ethos, and more along national rather than international or global perspectives."
All recessions are different but the basic principle is the same. Generate growth and jobs, which puts more money into the economy, which causes the need for more consumer goods, which causes new industries to open, which causes a growth in employment, which puts more money in, needing more consumer goods, and so on and so forth. While the causes of recessions might be different the way out is the same. The reforms of the City should be done to ensure that this sort of crisis never occurs again.
Secondly, I think Keynes was many a thing but Socialist was never one of them.
It now looks like the Labour party has had it's members list 'revealed'.
Richard Littlejohn in the Mail writes about the contents:
Many of them have never had a proper job in their lives and harbour dubious histories, in some cases descending into outright criminality.
They include a significant number of extremists, including plenty who previously belonged to an assortment of Trotskyite and Communist organisations - facts they have tried to conceal from the public.
Some people may be shocked at the news that one of Labour's most senior figures had been involved in a massive pensions swindle and is also wanted in connection with the disappearance of billions of pounds' worth of Britain's gold bullion and foreign exchange reserves. (End)