Some things are worth repeating because they are that important and some things should be repeated because they were not heard, or listened to, the first time. Some fall under both categories.
Some things are worth repeating because they are that important and some things should be repeated because they were not heard, or listened to, the first time.
Some things fall under both categories.
It is testament to a failure in communication on the left that in the years immediately after the financial crisis the consensus was allowed to form that under Labour spending got out of control. The hangover from this communication failure persists in the public’s continued reluctance to trust Labour on the economy.
It is seemingly forgotten now, but the Tories promised to match Labour’s spending plans right up until 2008; in the aftermath of the 2010 election, however, a drawn-out Labour leadership contest allowed David Cameron to define the post-crisis landscape as the hangover of a spendthrift Labour Party.
The country was in a mess and the only ones who could clear that mess up were the Conservatives, who would reign in the excesses of the Blair and Brown years and bring some temperance to proceedings.
It is worth repeating, then, something pointed out by Martin Wolf in today’s Financial Times (£): in the years leading up to the 2007/08 financial crisis – the supposedly out of control, spendthrift years – UK net public debt was close to its lowest ratio to GDP in the past 300 years.
As the graph below shows, government debt as a percentage of GDP was well below average under Labour and rose, predictably, as a response to the collapse in GDP – as it would. And why does this matter? Because the relevance of the amount of money spent by government is related to how big a proportion of GDP it is, not how much is spent in total.
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While debt is now higher than it has been for a considerable period of time, the blatant dishonesty in the claim that spending was out of control under Labour has more to do with finding a rationale for stripping back the state than it does with dealing with any perceived ‘debt crisis’.
60 Responses to “Once again on Labour’s ‘out of control’ spending”
LB
Yes they do.
I suspect you are confusing the sum insured with the expected liabilities.
For example, lets say 1 house in 1000 burn down each year, and they cost 200,000 each, Lets say 1000 houses are insured.
That’s 200 million sum insured.
Expected losses, 200,000.
In practice, insurers have to put more money aside than 200,000 and its all put down as a liability.
Now for the state. What are their expected payouts? There is an element of insurance too. They do not know how long individuals will live. Just like the insurer doesn’t know which houses will burn down.
However, they do know the numbers pretty accurately for large numbers of people. It’s quite simple mathematics, and the topic you need to look up is the Central Limit Theorem.
So back to the basic question you don’t seem to want to answer.
How do you pay a debt of 7000 bn, on income of 550 bn, and spending of 700 bn. Interest rate on the debt of at least 2.5%
LB
Yes they do.
I suspect you are confusing the sum insured with the expected liabilities.
For example, lets say 1 house in 1000 burn down each year, and they cost 200,000 each, Lets say 1000 houses are insured.
That’s 200 million sum insured.
Expected losses, 200,000.
In practice, insurers have to put more money aside than 200,000 and its all put down as a liability.
Now for the state. What are their expected payouts? There is an element of insurance too. They do not know how long individuals will live. Just like the insurer doesn’t know which houses will burn down.
However, they do know the numbers pretty accurately for large numbers of people. It’s quite simple mathematics, and the topic you need to look up is the Central Limit Theorem.
So back to the basic question you don’t seem to want to answer.
How do you pay a debt of 7000 bn, on income of 550 bn, and spending of 700 bn. Interest rate on the debt of at least 2.5%
LB
Yes they do.
I suspect you are confusing the sum insured with the expected liabilities.
For example, lets say 1 house in 1000 burn down each year, and they cost 200,000 each, Lets say 1000 houses are insured.
That’s 200 million sum insured.
Expected losses, 200,000.
In practice, insurers have to put more money aside than 200,000 and its all put down as a liability.
Now for the state. What are their expected payouts? There is an element of insurance too. They do not know how long individuals will live. Just like the insurer doesn’t know which houses will burn down.
However, they do know the numbers pretty accurately for large numbers of people. It’s quite simple mathematics, and the topic you need to look up is the Central Limit Theorem.
So back to the basic question you don’t seem to want to answer.
How do you pay a debt of 7000 bn, on income of 550 bn, and spending of 700 bn. Interest rate on the debt of at least 2.5%
LB
So what about the part of PFI that is borrowing?
Redshift1
Of course it’s absurd you pillock! A household is only responsible for their own expenditure, not macro-economics. A single household’s expenditure has a negligible impact on the economy, the government’s not only has a massive impact on demand but actually forms the little democratic accountability we have over the economy.
If you think you can run a country like a piggy bank you’d never be able to take on debt for investment in capital projects for example or simply partially absorb the shock of an economic crisis. If you had your way, we’d have unemployment shooting up into Greek-style figures, treasury income would collapse – your deficit would just keep rising until you defaulted.