ImperatorFish: To Save We Must First Kill

Written By: - Date published: 1:19 pm, April 26th, 2012 - 40 comments
Categories: economy, uk politics - Tags:

Scott at Imperator Fish has kindly given us permission to syndicate posts from his blog – the original of this post is here.

The United Kingdom is in recession again. 

This was entirely predictable. The right convinced themselves that severe austerity measures would somehow magic up growth. It didn’t work. Any student of history could have told them it wouldn’t work.

They wouldn’t listen, because their hearts told them that the solution to the nation’s woes was to implement savage measures against the have-nots, while protecting the wealth and privilege of those at the top.

Something similar has been happening in New Zealand in recent years. Our austerity measures have been less severe, and the effects less dramatic, but the result has been little or no growth. The British situation is a reminder to us of the folly of slashing government expenditure during a downturn.

So what now for the UK? Their austerity measure didn’t work, so what’s to be done?

More austerity, dammit! The British economy must be brought back from the dead, but first they must kill the patient.

40 comments on “ImperatorFish: To Save We Must First Kill”

  1. Draco T Bastard 1

    More Cuts

    So, it looks like the government will no longer meet its arbitrary target of surplus by 2014/15. Their answer? More cuts! So not only are we looking at a zero-budget this year, but next year as well.

    It certainly does seem as if NACT are out to kill the economy – except for their rich mates who are getting government subsidies and sweetheart deals.

  2. ropata 2

    Prof Steve Keen:
    Austerity policies are setting up exactly the same conditions that existed in Europe in the 1930’s. Europeans haven’t learned anything from history

    • Draco T Bastard 2.1

      We don’t seem to have learned anything from history – we keep using capitalism and then get surprised when inevitably fails.

      • The Gormless Fool formerly known as Oleolebiscuitbarrell 2.1.1

        Well do something about it, man. Go and start a workers’ collective.

        • Gosman 2.1.1.1

          He doesn’t need to because apparently there are already heaps of them out there which work swimmingly. Fonterra is one of them, although I would argue that it is more an Employers collective than employee. An Oligopoly if you will. Funny how DTB supports employers banding together to get more out of the consumer.

          • Draco T Bastard 2.1.1.1.1

            http://usa2012.coop/about-co-ops/cooperatives-around-world

            And, no, I don’t particularly support Fonterra. As you say, it’s more an employees association than a cooperative.

            @stalebiscuit
            Working on changing the system, ie, getting rid of the capitalism.

            • Gosman 2.1.1.1.1.1

              You realise you would probably have better luck with changing the system if you developed successful alternatives to the current approach. The old system would eventually wither and die as people simply stopped participating in it. However I suspect that is a little too much hard work and you are pushing for some global revolution which would replace things in one ‘big bang’ fashion. Might happen I suppose just as they might genetically engineer flying pigs.

              • ropata

                The only ones who are interested in creating instability are the bankster robber barons, just as they did before Glass-Steagall stopped their market manipulated bubbles.

                The system of infinite debt is a house of cards, reality must be faced someday

            • The Gormless Fool formerly known as Oleolebiscuitbarrell 2.1.1.1.1.2

              Working on changing the system, ie, getting rid of the capitalism.

              By bitching on blogs.

        • Colonial Viper 2.1.1.2

          Well do something about it, man. Go and start a workers’ collective.

          First to get my hands on a billion dollars worth of capital. Even if it is hyper-rehypothecated.

          • Gosman 2.1.1.2.1

            Can’t you just borrow, (i.e. mooch), some off your in-laws? They seem to have more than enough to waste on causes with no hope of success.

            Why do you need a billion dollars by the way? Is this like the ‘How do make a multi-million dollar Socialist business?’ question? The answer being of course’ Take a Billion dollar business and give it to a Socialist’.

            • The Gormless Fool formerly known as Oleolebiscuitbarrell 2.1.1.2.1.1

              Oh, I see. You want to be given all the money to start the collective. That will take all the hard work out of it and probably explains why you have not started actually doing anything yet.

    • vto 2.2

      I agree completely and utterly ropata.

      The next humungous depression is on top of us. God knows why people are still taking on debt and buying houses.

      I now feel quite lucky to be in Christchurch – at least we are still going to have something to do when the capitalist and monetary system driven collapse comes. I remember back in ’05 saying to my bank manager that a massive collapse would come along around 2012-2015 following a double dippity thing where govts intervened to save their arses but quite clearly did not have the scale to do so……

      Bets anyone?

  3. Carol 3

    I heard Cameron on AlJazeera this morning wittering on about how the solution was more cuts to the public services and more stimulation of the private business “wealth creators”, through increasing exports.

    This clip doesn’t include that bit, but it does include a response to the export “solution” related to limited manufacturing in the UK. And a clip from the IMF saying austerity may be jeopardising growth . (“Growth” sigh…. and the logic of eternal growth?)

    http://www.aljazeera.com/video/europe/2012/04/201242519201267396.html

    But I’ve never understood the logic of “creating wealth” and improving economies by all countries exporting to each other. Sounds like shonkey spin to me. There’s a limit to the niche markets each country can promote.

    • Gosman 3.1

      Possibly because you’ve never understood Adam Smith’s ‘On the Wealth of Nations’.

      • Draco T Bastard 3.1.1

        Understood it perfectly which is why I realise that the free-market that it promotes doesn’t work.

        • Gosman 3.1.1.1

          I’d say it has worked pretty well for over 250 years. Human standards of living and health have improved out of sight in that period largely as a result of increased trade. Countries who have placed greater restrictions on trade in that period have tended to stagnate.

          • Draco T Bastard 3.1.1.1.1

            I’d say it has worked pretty well for over 250 years.

            Well then, you’d be wrong. If it worked well then there wouldn’t be any poverty.

            • Gosman 3.1.1.1.1.1

              That would be predicated on the assumption that working means people have equal wealth levels. I reject that as being unrealistic and largely unobtainable in a free society.

              • McFlock

                No it wouldn’t. Going by common metrics of “poverty”, it would require that all people receive at least 60% of the median income. This does not equate to “equal”.
                    
                Nice slide, though

              • framu

                increased trade doesnt equal the free market
                eliminating poverty doesnt equal everyone having exactly the same amount of wealth

                sure if you made some venn diagrams there would be some overlap but your being deliberately simplistic (i think its on purpose)

          • Colonial Viper 3.1.1.1.2

            Fantasy stories mate.

            Workers had to fight the capitalists for every gain in wages and living standards made, and most of those fights were made and won by worker organisations aka unions.

            The same ones you hate, asshole.

          • Carol 3.1.1.1.3

            Try watching the first episode of Call the Midwife on TVNZ ondemand – it provides a good indication of what life was like in the east end of London after the war, and the difference the welfare state and National Health started to make to women and families there.

            And that was after about 190 years of capitalism by your timescale.

          • Liberal Realist 3.1.1.1.4

            “I’d say it has worked pretty well for over 250 years. Western standards of living and health have improved out of sight in that period largely as a result of increased exploitation. Countries who have been exploited in that period have tended to stagnate.”

            ^^ Fixed it for you.

            • Gosman 3.1.1.1.4.1

              Really?

              What was the average life span of sub saharan Africa pre modern times?

              • McFlock

                lol.
                 
                If you knew what you were talking about, you would have actively supporte your assertion “I’d say it has worked pretty well for over 250 years. Human standards of living and health have improved out of sight in that period largely as a result of increased trade”, rather than deflecting with a question.
                 

      • bbfloyd 3.1.2

        gossamer… is there ever going to be a time when you get past the “nasty sarcastic” stage? it might save you from humiliating yourself, repeatedly, by exposing your own lack of understanding when it comes to what people like adam smith, and ayn rand were promoting as realistic economic theories when it is rather obvious, to those with iq’s above room temperature that they were simply pushing yet another set of “theories”… the only real hook they possessed (a deliberate move) was to encourage the isolation of people(units of consumption), even to the extent of weakening familial bonds if there was profit to be made, self centredness, and unfettered greed….hardly a recipe for societal health….

        an inability to judge others thinking isn’t balanced by leaping to half baked conclusions, usually insulting ones… it makes you look small….

  4. LoveIT 4

    And the US returns to the same nebulous-bubble fiat-currency ‘prosperity’ it had pre-bust.

    Yeah…

  5. js 5

    Of course it doesn’t mean those in power have to make any cuts to their own wealth and privilege. Austerity is for others not themselves.

    • Gosman 5.1

      Ummmmm… here are some of the key points for the 2012 UK Budget


      STAMP DUTY

      “From midnight tonight, we will introduce a new Stamp Duty Land Tax rate of 7 per cent on properties worth more than 2 million pounds.”

      “I am increasing the Stamp Duty Land Tax charge applied to residential properties over £2 million bought into a corporate envelope. The charge will be 15%. And it will take effect today.”

      BANK LEVY

      “I am also increasing the rate of the bank levy to 0.105 per cent from next January, so that the additional corporation tax cuts do not benefit the banks; and so our levy will raise the 2.5 billion pounds a year that we said it would.”

      Those are directly targetting the wealthy so I’m not sure your statement is accurate.

      • bbfloyd 5.1.1

        laughable … truly laughable…. do you truly think that this will even be noticed by those targeted ? and what measures have been left open for the stamp duty to be bypassed? if you are so well informed, then you should know what safeguards have been put in place to stop avoidance behavior….

        so what are they einstein?

        • Gosman 5.1.1.1

          If the Stamp duty changes don’t raise the 500 milllion pounds revenue target that Osborne has set because of any loopholes then he should be rightly pulled up on them. It is hard to argue that they aren’t targetting wealthy people like himself though.

          • rosy 5.1.1.1.1

            The rest of the story would be good – the stamp duty is to clawback the money lost from reducing the top tax rate. That’s all.

            He’s expected to claw back the money lost from lowering the top rate by clobbering buyers of £2m homes with a new 7% stamp duty band.

            Oh – and the budget announced larger that expected reductions in corporate tax.

          • Kevin Welsh 5.1.1.1.2

            Ahhhh, faith-based economics. Keep believing Gos.

      • Jeremy Harris 5.1.2

        I keep hearing about austerity in the UK but am waiting to see it. A drop from government spending of 51% of GDP at the end of Labour to 48% now is hardly “austerity”. Especially when you consider that the UK tax take is 38% of GDP – the higgest it has been for decades. If it smells like socialism, looks like socialism and sounds like socialism, it probably is…

        Honestly, even Keynes didn’t promote deficit spending more than 7 years or so years – the UK is at over a decade and a deficit of 10% is above anything Keynes would have abided. The tax take cannot be raised much more without going over the edge of the Khaldun-Keynes curve (also known as the Laffer curve).

        So you have a structural deficit of 10%, limited ability to raise taxes and government to GDP spending of almost 50%, yet, according to you lot, it’s all “Capitalism” and the “banksters” fault.

        On another note, the stamp duty is very hard to avoid unlike CGTs or inheritance taxes. I note it says “bought into a corporate envelope” which mean it likely could be avoided by the owners of a company by paying the shareholders dividends, pooling them, and buying the applicable properties through a trust – just another entity layer and an increase in inefficiency. The best structure would be to set up two trusts, an offshore trust in a 0% tax jursdiction and a UK trust. Place the capital in the offshore trust, which lends to the UK trust to buy the property, the interest paid from the UK trust to the offshore trust is therefore tax deductible against UK income tax and profit accumulates in the 0% tax jursidction.

        *awaits howling*

  6. marsman 6

    Bill English mismanages the economy, then to fix it he mismanages the economy a bit more. Then he goes ‘ oh woe is us, we have to sell State Assets to my chums so we can pay back the debt I created’. Horrible little man.

  7. Draco T Bastard 7

    And there’s this one from Scott as well:-

    A Prediction
    I’m usually wary of making economic predictions, but here’s one I am happy to make.

    We will not have a budget surplus in 2014/5.

    Here’s another prediction: over the next 12 months Treasury growth forecasts will continue to trend downwards, and Bill English will continue to blame every government failure on what is going on overseas.

    If this government is so powerless to influence the course of our own economy, why did Key and English so boldly pronounce a return to surplus in 2014/5?

    And here’s the proof that he was very close.

  8. Kiwi Pete 8

    Nice one Draco. Here’s another prediction

    National will tip us back into recession with their balanced budget bollocks. When you’re just coming out of a deep recession it is not the time for the Government to balance a budget or even worse go into surplus. Just ask the Japanese. Their pols tried this and sunk their economy more than once in the last 20 years.
    Cullen paid back the debt in the boom times so it could be borrowed again in the bad. That’s how Keynsian economics is supposed to work. The fact that the dumbass Euros borrowed right the way through the boom has left them unable to borrow further in the bust. Hence their need for austerity right at the wrong time. They have completely screwed the pooch! Our pols don’t need to follow that bankrupt model thanks to Cullen and Clarke (who let him pay down the debt rather than give the tax cuts that so many were clammering for).

  9. ropata 9

    horrible? other adjectives come to mind; greedy, venal, incompetent, economical with the truth

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