Shape the Future

Arkady

Ali, where would you find the money to end the deficit? I’m assuming that you don’t think that we can continue getting into more and more debt indefinitely – bankruptcy is not progressive after all – so I’m curious as to what you think should happen. Is your assumption a Keynesian one in that you think we are more likely to grow our way out of the deficit without cuts (not an unreasonable position), or are you simply against cuts as a matter of principle?

Ali

Agreed it needs to be reduced over the cycle and the objective is not to end the deficit but to reduce it to more manageable levels. A more balanced view is needed which is not about killing the shoots of growth but readdressing the 75% cuts 25% tax increase balance and encouraging sustainable growth. Large amounts of the borrowing has been to stop the banks collapsing which the main opposition party of the time did oppose until they realised that the cash machines would have been shut down and they saw the effects of Lemans going down etc. It is obvious that the banks will use a lot of the money given to them to rebuild balance sheets and not lend because that is what they have been told to do. Ironically the Government will get back the money they lent to the banks over the period of austerity which is currently being budgeted for. I am pretty sure that is not factored in to forecasts that are currently worked with but I guess that is the piggy bank for the giveaway before the next election. The devaluation which has occurred and the current rate of inflation will also reduce the cost of the debt substantially. So I am for a more balanced view that uses all the tools in the bag not just the ones which are ideologically driven.

Arkady

Ali Do you mean that we shouldn’t be seeking to redress the gap between income and spending completely, or just not in this term? As long as it exists we will get into more and more debt, and have higher and higher interest payments, which is less and less money to spend on the poor. Keynesianism is an ideology too. There is no such thing as non-ideological economics.

Brodiej

Paying tax for public services is not about providing jobs for people. Thats just an outcome, not a reason for. If its running too fat, or can be cut back it should be done....as it would in any private sector scenario. Its rather judgemental to think that the only outcome for those that lose their jobs is to automatically default to a position of claiming benefits. Everyone is capable of doing something, its just whether they are prepared to do it. Those that can't find something are more than welcome to claim benefits. Thats what its there for...people in genuine need. When the dust settles, we will have cut the defecit, and found a sustainable model.......at last

ADGS

"Its rather judgemental to think that the only outcome for those that lose their jobs is to automatically default to a position of claiming benefits."

If the private sector is all cutting back as well, and there's no new businesses starting up because the banks are all too terrified to lend, then this is pretty much what happens. And sadly, that is the case and has been since late 2008. There is no recovery, it's smoke and mirrors like most of the supposed boom was, and benefits only the already rich (Hell, only even some of them) and - for now - homeowners.

sincers

I agree with Brodiej's observation. Like many of my colleagues who had worked with a large company for many years, I was also made redundant. My first thought wasn't that we'd all start claiming. In fact just about every one of us found work with other companies, some in the same, some different industries. I can't agree that public sector workers consider themselves siloed or clueless or have nothing else to offer. Perhaps if they are, then they are in fact being paid for pointless work that's representative of an over-burgeoning public sector.

ShaunG

I once worked in a place that had flexitime. Used to drive me mad - I was hardly a workaholic but I couldn't help clocking up a couple of hours each week just from finishing stuff off at the end of the day, getting in earlier than expected etc. I was only young and I was under considerable pressure from colleagues to take days or half days off to clear my surplus. On a factory production line maybe OK, but this was a simple office job (in fact, now I come to think of it, in Haringey Council).

mikecabic

On the economics of debt reduction, it's all just ideology and political ruses, but of course the politicians have to frame it as 'technically' correct. All of the alternative options would work in some form, but the type of country you come out with in the end is the difference. With the approach we have taken as a country it's my opinion that the damage is far worse. To take just two examples, we are effectively bringing to an end of the idea of publicly funded higher education and giving up our role as an independent international military power, and we are unlikely to get them back for a generation, if ever. And that's just what is arleady known.

Arkady

We haven't been an independent military power of major significance since Suez. I agree that Labour should never have brought in tuition fees though, it should come from general taxation.

mikecabic

It is very easy to get ranty!

I’m currently facing an enforced move to the purely private sector, yet many of my skills are pretty specific to government. It's not just a clear cut case of whether someone can work in the private sector or can't. My equivalent role in the private sector is a strategy consultant, but employers require a very specific type of education, career history, body of knowledge and prior experience (e.g. business internships), even if I have many of the right generic skills. Whatever I end up doing, it is unlikely to be what I’m best at, or what I would have chosen to do if I was making the same choices when I was flexible and didn’t have responsibilities.

But unlike the bankers I'm not going to get any government hand outs to retrain, no one is going to refund me for what is now a fairly useless masters in the technical details of strategic policy making, or compensate me for the lost earnings during my studies and three years of working for next to nothing. I don't believe I have a right to well paid tax funded work, but it would be fair to say that I feel like I was sold a lie by New Labour and the silvertongued spivs in the city that they chummed up with. It isn’t the worst situation to be in the world - I’m not going to be impoverished by any means (fingers crossed), but I’m pretty angry about the wasted investment of the last 6 years and the constant negative remarks of Dave, George and their mates about how lazy, unproductive and generally useless people like me are.

Ironically, I somehow ended up voting for this - Cheers Lynne. I am the proverbial turkey voting for Xmas.

Ali

The argument that someone who goes to University gains more so they should pay on the surface does seem reasonable but I guess that argument doesn’t take into account that society needs graduates to keep you well, count your money, design the products of the future, build you roads etc and should as a whole pay for them. As it seems to be a race to the bottom at the moment on all this maybe by extension maybe kids that stay at school past the leaving age should pay for that extra time at school as well. Even if they don’t go to Uni they will obvious do better make more money etc than the ones who leave so should pay for that privilege. Thought it was great that the Centre for Policy Studies is saying that the cuts are going to be relatively modest and that the total number we are going back to is what it should have been in 2009 if inflation is taken into account etc. It completely forgets the fact that most of the above inflation deficit post 2009 has come from bailing out the banks (and subsequent interest) which is hopefully one off event that should be smoothed out over a longer period and paid off when they sell them on in about 2 years or so. Mikecabic is right “It is just ideology stupid

Arkady

Acquiring a degree raises the statistical likelyhood of higher incomes, buit doesn't guarnatee it. Especially if you stay in academia. Unless I turn out to be the next Simon Scharma I'm unlikely to ever earn that much, and that could be said of a host of other graduates. On the other hand, a highly educated society is a more liberal, open, democratic, healthy (etc) society. Graduates give back in all sorts of ways, including (maybe especially) to non-graduates. Hence it should come from general taxation. The person that I know personally who earns the most is not a graduate, but worked his way up in HSBC and now earns nearly 100k a year. He won't have to pay for tuition fees or a graduate tax. Yet who contributes more to society, a banker or an academic? No doubt that's open to debate, but I know what I think.

Ali

Another good article from Polly Toynbee worth a read if you haven’t seen it. <http://www.guardian.co.uk/commentisfree/2010/oct/15/coalition-crowd-pleasers-not-save-long>; She mentions music at schools. I have heard in the playground at SG School that the music classes may not be running next year due to lack of money !

Papa

I don't work at a council. I did for a while work for one, on and off for a couple of years when I was at university and saw first hand the waste that goes on. I'm a journalist and spent three years on a local paper seeing first hand through committee meetings, agendas and actions, the money wasting going on in the Blair Brown boom years and watching the relentless job self-justification and empire building. My brother also now works for a council and I have friends who work in and around the public sector and civil service. You hear enough from this to know how much waste is going on. I'm now a financial journalist. The way to get yourself out of debt hole is not to run up more debt. The anti-cuts argument diluted to its simplest level, runs along the lines of we need to get out of a recession caused by overspending by continuing to overspend. Yes, there is a trickle down effect, but that doesn't mean wasting more money is the answer to continuing recovery. Essentially, the problem is that pre-Election there was far too much wishful thinking going on about recovery. It was obvious that we were not going to simply bounce back from a global financial crisis and go straight back to normal. Add to this that the 2000 to 2007 period wasn't normal anyway - it was a massive credit boom unlikely to be repeated. To be fair to the Tories, they did make some effort to highlight this but the only real voice repeatedly pointing it out was Mervyn King's. It's very sad that a lot of good things are going to be cut and there needs to be some serious thought put into things like protecting anything that helps the young not to be disenfranchised etc and realising the value of things not just the cost. The problem is that we have shifted the problem from banks to state and the risk of collapse from shareholders to taxpayers: arguably Brown and Darling made some good moves but also a couple of very bad decisions while doing this. Banks are bigger and there is even more risk if they fail now. I know friends who work in the investing world who have made more money in the past year-and-a-half than ever before and they say that the situation is wrong. (Obviously they aren't going to turn the money down). We now have no choice but to show the world we aren't going to be Greece or Ireland - there is no other option and it would be better if rather than pretending this isn't the case the left wing actually helped crack down on all the waste everyone knows is still going on to at least ease the pain as much as possible. Unfortunately while we all feel the pain there'll still be big bonuses going to the banking industry that caused it in the first place and massive salaries to public sector manager fat cats.

ADGS

I agree with a lot of that but you're making the mistake - shared by most mainstream politicians, to be fair - of assuming an exact analogy between household finances and national finances. Which doesn't hold, as economists from Keynes to Krugman - both of them figures I trust rather more than Vince Cable, let alone Osborne or Brown - have always been ready to point out.