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What do you think about France going socialist?

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    (Original post by Craig_D)
    That's why I said in this case, meaning the specific example of the UK at this moment in time. I realise that there is a precedent, but the graph is not a perfect correlation (and I don't know the motive of its compiler; were certain countries not included because they spoiled the results?), so it's not a guarantee that it would work for the UK. Nonetheless I think France is the best acid test to see what would happen.
    When making international comparisons between countries, there will never be a perfect correlation because unlike in a physical experiment, you can't control every other factor, but nonetheless, there is still a strong correlation between austerity and (lack of) growth.

    Nothing is guaranteed in life, but don't you think we are betting against the odds with austerity, given recent economic results (unemployment in the UK has worsened under this government) and the evidence presented above, and despite countries like Ireland and Portugal continuing with their austerity plans, the results aren't getting better. What a lot of people don't comprehend is that when these policies fail, people pay with their livelihoods - the 50% or so of youths unemployed in Spain will never get those years back.

    As for the 'motives',The first graph is from a Berkeley paper, I believe the 2nd graph down was published for an economics paper on fiscal policy, the last one was down by Oxford Economics and Fitch, who are pretty reputable.

    I have now actually found the graph I wanted, and it is based on IMF data, and shows the countries of the eurozone, and is similar to the second graph, but over a longer period - and it is consistent with the findings from the other data:

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    They aren't "going socialist". The Socialist Party of France is a socially democratic party i.e. center left. They won't "go socialist" in the same way Germany didn't "go socialist" after they elected the National Socialist German Workers' Party (obviously, I'm not saying France will start WWIII but you get the picture).

    It's really sad that people **** themselves whenever they hear the word socialist without knowing what the word means or the context it's being used in.
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    (Original post by FDR)
    When making international comparisons between countries, there will never be a perfect correlation because unlike in a physical experiment, you can't control every other factor, but nonetheless, there is still a strong correlation between austerity and (lack of) growth.

    Nothing is guaranteed in life, but don't you think we are betting against the odds with austerity, given recent economic results (unemployment in the UK has worsened under this government) and the evidence presented above, and despite countries like Ireland and Portugal continuing with their austerity plans, the results aren't getting better. What a lot of people don't comprehend is that when these policies fail, people pay with their livelihoods - the 50% or so of youths unemployed in Spain will never get those years back.

    As for the 'motives',The first graph is from a Berkeley paper, I believe the 2nd graph down was published for an economics paper on fiscal policy, the last one was down by Oxford Economics and Fitch, who are pretty reputable.

    I have now actually found the graph I wanted, and it is based on IMF data, and shows the countries of the eurozone, and is similar to the second graph, but over a longer period - and it is consistent with the findings from the other data:

    In that case they are certainly reputable I concede (though cause and effect is an issue). Nonetheless I do fully agree that generally increased public spending leads to a GDP boost, in which case the outlook for France is better than that of the UK, but that's why I'm very interested in what will actually happen in the coming months. I'm not an economist and I certainly don't claim to be, but it certainly seems to be a discipline where predictions are near impossible. Despite all the data that suggests otherwise it's not impossible that the UK would buck the trend - not that I'm suggesting it would - but France is surely the country which comes closest to showing how the UK would react, which is why I think it's an important comparison, despite the existing evidence.
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    (Original post by Ups7)
    Isn't the French Socialist Party more the equivalent of the British Labour Party or the German Social Democrats in the SPD, i.e. just another centre-left party? I don't get the hysteria.
    this is officially my favorite TSR comment of the week. props to you, seriously.
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    so many people on this thread who do not understand what socialism means
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    (Original post by Craig_D)
    The main thing about it for me is that it provides a great chance to compare Britain's growth whilst under a government focusing on austerity with a similar country now focusing on spending its way out of the recession. The next 3 years will demonstrate if the coalition's plan for growth really is the best solution, I look forward to it being properly put to the test. The problem with criticising the coalition at present is that nobody really knows what growth would have been like if Labour had stayed in power (not that I'm suggesting Labour would have a similar policy to Hollande).
    It won't be very easy to use as a comparison as so many other factors come into play. Our economies are not the same. It will still be interesting to see how things go though.
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    (Original post by internetguru)
    Well in the past taxes on the rich have been way higher than their proposals so they do work. In the feudal days it wasn't strange for 90% taxes to be on peasants and they got by. Of course personally I all for low government spending and as a result lower taxes simply because spending money on useless things is pointless.
    The fact that tax rates have been high doesn't show that high tax rates work well. In many case we see that lowering a tax rate can actually help increase tax revenues over time.
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    (Original post by The Patriot)
    And the point is?

    *also, here are some left-wing countries that are definitely 'developed'
    Communist - China - hugely developed. far more left-wing the any European country.
    Socialist - Portugal
    - Russia

    (although I don't accept that development is fully relevant in every case, as some countries are very developed, but just not considered so due to different cultures).
    What are we using to measure as 'left-wing'? All three of those countries have lower spending as a % of GDP than the UK does. Also, how are we deciding on whether a country is 'developed'? Of the three examples you say China is 'hugely developed', and yet it has the lowest GDP (PPP) per capita of all three (the UK has more than 4 times the GDP (PPP) per capita of China).
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    (Original post by FDR)







    ...
    With the absence of any context or explanation for these graphs, as well as no analysis to go with them, can we really draw any valuable conclusion regarding causality of these things?
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    (Original post by Раскольников)
    The fact that tax rates have been high doesn't show that high tax rates work well. In many case we see that lowering a tax rate can actually help increase tax revenues over time.
    Yes and I am a conservative that likes lower taxation but the idea that really rich people paying high taxes on earnings over 300k will destroy the country is false.
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    (Original post by internetguru)
    Yes and I am a conservative that likes lower taxation but the idea that really rich people paying high taxes on earnings over 300k will destroy the country is false.
    Well it won't necessarily destroy the country but it just isn't practical in any way.
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    (Original post by Раскольников)
    Well it won't necessarily destroy the country but it just isn't practical in any way.
    Well rather a 15% increase in taxes for earnings over 300k than an increase in taxes for earnings less than that. Although cutting spending would be the preferable option.
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    (Original post by Раскольников)
    With the absence of any context or explanation for these graphs, as well as no analysis to go with them, can we really draw any valuable conclusion regarding causality of these things?
    I think the first two graphs are pretty self explanatory - as the X-axis reads, it's pretty much a measure of government spending (one is the change in government purchases whereas the other is austerity, both as a percentage of GDP), and on both, the Y-axis is change in real GDP, the countries vary, (although the one from the FT that I posted afterwards is all the countries that use the Euro). As you can see, as austerity increases (or a negative change in government expenditure) real GDP tends to fall - there is no growth as predicted by those who supported austerity, who claimed that such contraction would create confidence and lead to growth.


    The Oxford Economics/Fitch graph is an index starting from 2008 onwards of what actually happened, and what would have happened had their not been the stimulus package, again, the results show that the stimulus, which conservatives claimed would send bond yields soaring (the opposite has happened) and would destroy the economy, has actually helped.

    If you want the detailed analysis, here are some of the links for yourself to see (If I find the others, I'll edit the post and update):

    http://economistsview.typepad.com/ec...-stimulus.html

    http://blogs.ft.com/martin-wolf-exch...#axzz1sy4qGXP8

    http://krugman.blogs.nytimes.com/201...ty-and-growth/
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    (Original post by internetguru)
    Well rather a 15% increase in taxes for earnings over 300k than an increase in taxes for earnings less than that. Although cutting spending would be the preferable option.
    Cutting government spending is 'fine' (Iffy term, because obviously it depends on what is being cut) when the economy is growing at a stable rate, and markets are working pretty efficiently. However, when the market is failing, as it quite obviously is at the moment, and demand is lacking, then governments need to step in and fill the gap.

    What I'm saying isn't a 'liberal' ideological view; it's basic economics.
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    (Original post by FDR)
    I think the first two graphs are pretty self explanatory - as the X-axis reads, it's pretty much a measure of government spending (one is the change in government purchases whereas the other is austerity, both as a percentage of GDP), and on both, the Y-axis is change in real GDP, the countries vary, (although the one from the FT that I posted afterwards is all the countries that use the Euro).
    I got this much, but it wasn't clear what the details were about periods of time involved, what the money was spent on, how much the actual spending was (rather than just the change) etc.

    (Original post by FDR)
    If you want the detailed analysis, here are some of the links for yourself to see (If I find the others, I'll edit the post and update):

    http://economistsview.typepad.com/ec...-stimulus.html

    http://blogs.ft.com/martin-wolf-exch...#axzz1sy4qGXP8

    http://krugman.blogs.nytimes.com/201...ty-and-growth/
    This is the kind of thing I was after. I've opened them in another tab got them ready when I have the time. Thanks
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    Not fussed but i will be if it mkes the eurozone crises worse
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    (Original post by FDR)
    Cutting government spending is 'fine' (Iffy term, because obviously it depends on what is being cut) when the economy is growing at a stable rate, and markets are working pretty efficiently. However, when the market is failing, as it quite obviously is at the moment, and demand is lacking, then governments need to step in and fill the gap.

    What I'm saying isn't a 'liberal' ideological view; it's basic economics.
    The problem is governments either borrow the money and make massive losses through interest, or they just print more money causing inflation. Also governments persist on spending money that doesn't need to spent that offers not benefits to the economy. For example foreign aid should be cut to £0 during times of economic turmoil.
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    (Original post by internetguru)
    The problem is governments either borrow the money and make massive losses through interest, or they just print more money causing inflation. Also governments persist on spending money that doesn't need to spent that offers not benefits to the economy. For example foreign aid should be cut to £0 during times of economic turmoil.
    What you have said is perfectly true under normal circumstances, but at this time, the global economy is depressed, and as such, 'printing money' hasn't been inflationary - look at the US, they've 'printed' billions of dollars in the last four or so years, and yet inflation has been pretty low. And, despite the stimulus package, the yields on 10 year Treasury bonds is below 2% - assuming a long term inflation rate of 2%, the US can effectively, borrow money for free, because US treasuries (and UK gilts) are seen as safe - This is a prime opportunity for the government to carry out capital spending, and create jobs.

    Meanwhile, countries like Ireland and Portugal, who are being good little soldiers and cutting government spending excessively, have seen their cost of borrowing rise, alongside unemployment, with little impact on growth or their deficit.
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    (Original post by Раскольников)
    It won't be very easy to use as a comparison as so many other factors come into play. Our economies are not the same. It will still be interesting to see how things go though.
    As indeed I taken into account, I wasn't meaning to suggest that the results automatically can be assumed for the UK too. Nonetheless it will be a decent guide given how similar - relative to the rest of the world - France and the UK are.
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    The French Socialist Party is socialist in name only. While neither of the two main French parties are as far to the right economically as their British equivalents, Hollande wouldn't be too out of place in New Labour. The real socialist candidate in the French election was Jean-Luc Melenchon.

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