DEM not gonna CON dis NATION: Rolling UK politics in the short-lived Cleggeron era

Apologies for the long post but it's interesting reading that you have to register for. Not pretending to understand it all, but after hearing several beeb interviewers virtually screaming "there is no alternative" at anyone who suggests otherwise it's good to read.

Spare Britain the policy hair shirt

By Martin Wolf

The UK should tighten fiscal and monetary policy now, in the depths of a slump. That, in essence, is what the Organisation for Economic Co-operation and Development calls for in its latest Economic Outlook. I wonder what John Maynard Keynes would have written in response. It would have been savage, I imagine.

The OECD argues: “A weak fiscal position and the risk of significant increases in bond yields make further fiscal consolidation essential. The fragile state of the economy should be weighed against the need to maintain credibility when deciding the initial pace of consolidation, but a concrete and far-reaching consolidation plan needs to be announced upfront.” Furthermore, monetary tightening should begin no later than the fourth quarter of this year, with rates rising to 3.5 per cent by the end of 2011.

Let us translate this proposal into ordinary language: “If you are unwilling to starve yourself when desperately ill, nobody will believe you would adopt a sensible diet when well.” But might it not make sense to get better first?

Here are some facts, to keep the hysteria in check: the UK economy is operating at least 10 per cent below its pre-crisis trend; the OECD estimates the “output gap” – or excess capacity – at slightly over half of this lost output; the UK government is able to borrow at a real interest rate of below 1 per cent, as shown by yields on index-linked gilts; the yield on conventional 10-year gilts is 3.6 per cent; the ratio of gross debt to gross domestic product was 68 per cent at the end of last year, against 73 per cent in Germany and 77 per cent in France and an average of 87 per cent since 1855; the average maturity of UK debt is 13 years, according to the International Monetary Fund’s Fiscal Monitor; and, yes, core inflation has risen to 3.2 per cent, but that is hardly a surprise, given the large – and essential – sterling depreciation.

Above all, the private sector is forecast by the OECD to run a surplus – an excess of income over spending – of 10 per cent of GDP this year. On a consolidated basis, the UK’s private surplus funds nearly 90 per cent of the fiscal deficit. Thus, fiscal tightening would only work if it coincided with a robust private recovery. Otherwise, it would drive the economy into deeper recession. Yes, that is a Keynesian argument. But this is a Keynesian situation.

I agree that there needs to be a credible path for fiscal consolidation that would lead to a balanced budget, if not a surplus. That will be essential if the UK is to cope with an ageing population in the long term. I agree, too, that the path needs to be spelled out. Given the high ratios of spending to GDP – close to 50 per cent – the best way to proceed is via tight, broad-based, long-term control over expenditure. But a substantially faster pace than envisaged by the last government might threaten recovery: the OECD, for example, forecasts economic growth at 1.3 per cent this year and 2.5 per cent in 2011. Even this would imply next to no reduction in excess capacity.

Of course, one might argue that ultra-loose monetary policy should be used as an offset. But the OECD wants to remove that support, too. Why the OECD makes this recommendation is beyond me.

A good argument might be that monetary policy is a damaging way of refloat the economy, since it tends to weaken the exchange rate (and so raise inflation), increase prices of houses and other assets, and encourage borrowing by a grossly over-indebted private sector. But if one took this line, one should surely argue against rapid fiscal tightening. Thus, while the conventional wisdom is that the best combination is tight fiscal policy and ultra-loose monetary policy, that might be a mistake.

Against the background of rapid fiscal tightening, even ultra-loose monetary policy might prove ineffective. The growth of broad money and credit remains very low, for example. Moreover, sterling’s real effective exchange rate has stabilised since early 2009 and the pound has recently strengthened against the euro. None of this suggests that monetary policy is now too loose. That would be still more true after a big fiscal contraction. If there were a sharp monetary tightening as well, the chances of renewed recession are very high, particularly now that the eurozone seems likely to be more feeble than hoped a few months ago.

The OECD seems to take the view that the only big risk is a loss of fiscal and monetary “credibility”. It is not. The other and – in my view, more serious – risk is that the economy flounders for years. If that happened, eliminating the fiscal deficit would be very hard.

If, as the OECD and Britain’s coalition government believe, fiscal tightening must be accelerated, the corollary is ultra-loose monetary policy, until recovery is established. If, alternatively, monetary policy is ineffective, as it may be, fiscal tightening should be announced, but implementation should be postponed until recovery is secure. I have now lost faith in the view that giving the markets what we think they may want in future – even though they show little sign of insisting on it now – should be the ruling idea in policy. So now should the OECD.

I trust Martin Wolf to talk sense about economics more than anyone in the government. You can't cut the deficit if public spending sends the company back into recession, that much seems screamingly obvious.

Assuming that cutting the deficit is the Tories' main motivation here, which I doubt.

Floella Benjamin is being given a peerage. Floella Benjamin!

See what happens when you let Liberal Democrats in government? She's a big Lib Dem supporter.

You can't cut the deficit if public spending sends the company back into recession, that much seems screamingly obvious.

That's Scylla. Charibdis is if there's no job growth, and the private sector isn't ready to fill the gap left by a retreating fiscal stimulus, that also will send the country back into recession.

Or actually looking again I may have misread you.

Assuming that cutting the deficit is the Tories' main motivation here, which I doubt.

And the Lib Dems? Other than the obvious, we've-got-power-now-so-we-don't-care?

No, I just phrased it badly, I meant you can't cut the deficit if CUTTING public spending sends the country back into recession. It's been a long week.

Clegg is pretty anti-statist from what I understand.

Oh yes, I'm wondering what Vince Cable is saying about it these days

It's disheartening watching him try not to apologize for things on Newsnight.

And Simon Hughes is being given the Deputy Leader role, so that should keep him sweet

Good start.
Treasury Minister David Laws apologises over expenses

Full story in the Telegraph, natch.

Although we were living together we did not treat each other as spouses. For example we do not share bank accounts and indeed have separate social lives. However, I now accept that this was open to interpretation...

Interesting bit of dissembling going on there I think.

The Daily Telegraph was not intending to disclose Mr Laws’s sexuality, but in a statement issued in response to questions from this newspaper, the minister chose to disclose this fact.

Question No.1 - Are you a gay?

Although we were living together we did not treat each other as spouses. For example we do not share bank accounts and indeed have separate social lives. However, I now accept that this was open to interpretation...

fucking tell that to the government when you ever phone them up and they ask 'do you life w/someone as if married'

if I live 'w/someone as if married' where's my fucking tax benefits

/bitter

Anyone see Newsnight last night? The argument between Will Hutton and the other economist...anyone know him? Just seemed to be channeling a moralist's anger that I'm sceptical about, Will hardly got a word in - but I really wanted that to go on.

Nassam Nicholas Taleb - I have to say he lost me.

"This is not about David being motivated by money," he said.

I don't understand this, if it wasn't about money why did he claim at all? It's not like he needed the money. His relationship was an open secret in parliament, this arrangement was bound to come out eventually.

that black swan guy is an effing moron who *doesn't even understand the concept of black swans*

have u read the book

please

david law resigns.

yikes

well

...

wonder if this is a tory power-grab in some way

haven't read enough but (e.g.) how has this only come out now? did the telegraph figure he wasn't wurf it (being a mere lib dem) during the original expenses scandal?

seems like the telegraph held this back and timed it for maximum impact -- quite murky.

danny alexander becomes new Chief Secratary.

...who has no financial background.

No need. A phone call or two from Mervyn King is all these guys need right now.

wonder if this is a tory power-grab in some way

haven't read enough but (e.g.) how has this only come out now? did the telegraph figure he wasn't wurf it (being a mere lib dem) during the original expenses scandal?

― English: The Money Woman (history mayne), Saturday, 29 May 2010 19:50 (25 minutes ago) Bookmark

think the tel just didn't know that his landlord was his bf until now, and there's no story until you've got that element. would be surprised if tories are behind it, they're been spinning on his behalf all day.

this must be the quickest fall from grace of any uk minister though, right? congratulations on yr new politics, libcons.

“This government is going to persuade you to put your faith in politics once again.” - Nick Clegg, ten days ago.

Did catch Max Hastings (former Telegraph ed) on Q time saying that Clegg would be 'toast' after this was all done. They must really hate this coalition? Not that would stop a pro-Tory paper from publishing this story...

And yeah, Laws seemed to be regarded well (unlike Cable), someone they could work with.

Yeah the idea that the Tories would want any Cabinet minister to resign over a scandal two weeks into a new government is ridic.

Laws was the minister who was supposed to appear on QT with Alastair Campbell, but was pulled.

Kind of astounded he didn't realize that you can't claim a reimbursement if the money will benefit a partner or relative, as millions of people on benefits - or needing to be, but unable to claim because they're living with partners in the same way Laws does with his - find to their frustration.

Apparently he (or a Minister) would have appeared only if Campbell was 'bounced off'. Only watched the last 10 mins but he showed a framed photo of Laws at the end. V funny.

Marina Hyde was very funny on this yesterday, being as Campbell had no love for the BBC over Dr. David Kelly and vice-versa.

OK so we got rid of Toryboy Laws, Clegg's next. Pretty nauseating hearing a succession of "Coalition" figures queueing up to waffle on about Laws' intergrity, when if a guy on the dole in Hartlepool or somewhere had been lying about cohabiting and screwed 40K out of the DSS he'd be denounced, by the same people, as a scrounging scumbag.

... but, hey, it's the New Politics!

More good news.
http://www.guardian.co.uk/politics/2010/may/30/niall-ferguson-school-curriculum-role

Answering criticisms from the audience that the project sounded uninterested in the fates of the oppressed, Ferguson lashed out against "the militant tendency" in the audience and said: "Can we get away from this rightwing-historian, apologist-for-empire crap?"

Sounds like my history lessons at school back in the day.

This man is a total cock. Surely he's too busy leaving his wife for Ayaan Hirsi Ali to be of any value to the rest of us.

Don't see anything wrong with a narrative approach in one sense - certainly I came out of school with a sense only of isolated events and would have liked at least some sort of sense of beginning to end (even in a Kings and Queens of England sense).

Of course the big problem is which narrative you choose, and I think, like most, that the 'rise of the West' is going to be an increasingly unhelpful structure with which to interpret not just the past but also the events of today, if that Whiggish approach was ever really justified other than as the justification for power. It can lead naturally to the clash of civilisations rubbish. Niall Ferguson isn't quite as unnuanced as that article makes out I think, but still, 'the syllabus was "bound to be Eurocentric" because the world was Eurocentric' = nagl.

Tapas and smorgasbord history! om nom.

ha, i really dislike niall ferguson but am a total stan for whiggish, narrative history. fwiw so is eric hobsbawm: marxist history is basically whiggish really.

think history teaching already *is* eurocentric, as are the questioners when they talk about the "fates of the oppressed". kids shd study the euro-indian relaish.

I agree that narratives are the way to go but I would haaaaaate to be stuck with Ferguson's. I'm quite startled at how compartmentalized the curriculum here has become, maybe because my school's history/social studies department was amazing: we had mandatory US history, European history, government/civics, USSR (with Imperial Russian history too, obviously), world religions in historical context, a further governance course called Political Behaviour... took 'em all, only discovering 20 years later that most US high schools including my own no longer teach civics as a mandatory thing (which leaves a lot of dumbass, entitled Americans not actually knowing how the Constitution etc. works). There were also history modules in science and cinema. I cannot bear thinking what's sprung up in the place of this amazing curriculum (although I checked and students there can now do an IB).

xpost to hm

Completely agree. I mean, there are obviously all sorts of other factors here, that make me wonder how workable this Gove/Ferguson hand waving is - how much time there is (do you really want a syllabus where a lot is studied at the expense of learning in depth about other subjects, + historiography and stuff). + You're naturally going to want to study things that apply to the country in which you live, allows you to interpret your context (although, as with any colonial country, this gives an awful lot of scope for far-flung histories - Boxer rebellion anyone? wd've been great). And how much will this really change things anyway? Far as I know, Romans, Victorians and Second World War - imperial stuff - are still the meat of the syllabus.

I know what you mean about narrative history (I still love HAL Fisher's History of Europe, wch Norman Davies is v sniffy about), although I'm not convinced by the Marxist approach (which I absolutely agree is whiggish - as is Marxism generally), and find all concepts of ideological progression in history to have a whiff of the millennarian about it.

But my main gripe would be this West is the Best thing. Don't think it's helpful or meaningful, or even fruitful as an ideological approach (or even true as far as it goes). It's kinda complacent about democracy imo as well (something that is naturall victorious and comes about when common sense prevails - I tend to see it as something that needs defending). + it's not a useful armoury with which to approach all the thorny ethnological issues, and shifting about in a globalised economic system.

Very Conservative approach. I thought David Cameron didn't want to interfere with teachers?

iirc we basically learn about totalitarianism now

honestly though: gcse was all 20th century history for me. there *must* have been *some* other stuff but i can't remember it.

and we didn't have any equivalent to civics/citizenship classes... or one explaining that we aren't citizens lol

xpost

ha -- boxer rebellion is exact;y what they shd teach kids. opium wars too.

Right, didn't realise that about the heavily 20th bias to the syllabus. xpost to suzy, that does sound great, and as history mayne says, no idea of civic role at all in this country, hardly surprising.

We had this dreadful thing called personal, social and religious education, which was none of the above. Hope that's gone (this is about 20 years ago now).

It's hard to say that totalitariansim isn't a vital part of any modern history education. My solution: children must learn ALL history, across ALL classes, have a sense of narrative and an in-depth understanding of important eras, at home and abroad and have a sense of interpretative and historiographical methods and collating primary source material.

It's hard to say that totalitariansim isn't a vital part of any modern history education. My solution: children must learn ALL history, across ALL classes, have a sense of narrative and an in-depth understanding of important eras, at home and abroad and have a sense of interpretative and historiographical methods and collating primary source material.

EXACKLY

despite my internet display name, feel kind of short-changed by school on this score

n e way

on other matters

Yeah the idea that the Tories would want any Cabinet minister to resign over a scandal two weeks into a new government is ridic.

― The Men Who Stare At Goatse (Matt DC), Sunday, May 30, 2010 10:24 AM (Yesterday) Bookmark

well, ok. but there are tories and tories. it's surely interesting that the telegraph decided to do this. and it's interesting that laws's replacement isn't exactly of the same calibre, and is already getting heat from the selfsame paper:

http://www.telegraph.co.uk/finance/economics/7787010/Opinion-divided-over-Danny-Alexanders-move-to-Treasury.html

Pretty nauseating hearing a succession of "Coalition" figures queueing up to waffle on about Laws' intergrity, when if a guy on the dole in Hartlepool or somewhere had been lying about cohabiting and screwed 40K out of the DSS he'd be denounced, by the same people, as a scrounging scumbag.

I heard a bunch of this on the radio yesterday, as well as pro-coalition ppl kind of inferring that it was because he is gay. It made me furiously angry, the fucker was blatantly on the make! How hard is it to "get" this.