[darksideday]

As the title says 2 quarters of negatives growth but 2 quarters of a fall in unemployment, this is very strange to happen as when there was economic growth last year albeit very little unemployment was going up. But, somehow we have clawed are way back, is this the Private sector coming and making all the jobs like the PM promised at the start of the coalition. Furthermore the reason I think this has happened is that many of the Supply-Side policies have finally been implemented by this government to help business's, apparently were so competitive we're comparible to China in the textiles industry , ( http://www.bbc.co.uk/iplayer/episode...ina_Episode_1/ ) so obviously something must be going right.

[Extricated]

Unemployment is a lagging indicator ; it takes time to create and calculate the figures.

[prog2djent]

, my dad has worked in textiles for 30 years, we certainly aren't as competitive as china on profit margains, but when push comes to shove, we have the diversification and innovation to compete in terms of quality-price and vice versa.

I think the Eurozone plays a MASSIVE part in the negative growth, the public sector cuts should not affect growth, (sorry for the rique point here) but in the areas where the public sector is being cut, those places don't create any growth, and as a rule of thumb, the public sector is nowhere near as productive as the private sector.

Growth, right now, is a populist term used by the centre, centre left and centre right (labour) in this country, whats more important, potentially artificial growth, or tackling the deficit and debt, which, if we had taken the Hollande method in 08, would have come back to turn us into 2008-09 iceland ... but permenantly.

[Spaz Man]

One job can have far more productivity than another and so contribute more to GDP. Not all jobs are the same my friend.

[ForKicks]

Well society is not weighted equally in contribution to economy. 20,000 industrial workers would not make up for the fact that financial markets are in turmoil.

[Classical Liberal]

(Original post by prog2djent)
I think the Eurozone plays a MASSIVE part in the negative growth, the public sector cuts should not affect growth, (sorry for the rique point here) but in the areas where the public sector is being cut, those places don't create any growt

I think this is is wrong. The parts of government expenditure that have been cut are mainly discretionary expenditure on infrastructure. This is because it is easy to cut this part of the budget without causing riots. However this is probably one of the few parts of government expenditure that does stimulate growth.

The parts of government expenditure that do not really create growth are the redistribution parts and the provision of services. This is things like benefits (which I guess can stimulate some growth in some cases), NHS, education etc. These parts of expenditure have not been cut.

Overall the government has not cut. It has just cut capital investment (the spending that would help the economy) and increased so called social justice bull**** (the stuff that in the long term damages the economy).

[biggie]

More people have entered part time work as they can't find full time jobs, and some may have become economically inactive and given up searching for work entirely (therefore they don't count on unemployment statistics, as they aren't claiming JSA). The total number of unemployed is therefore likely to be higher than the statistics suggest.

Pretty much the only jobs the private sector are making are lower paid part time ones, which are hardly going to support a person who has a family, for example.

[Herr]

(Original post by darksideday)
Furthermore the reason I think this has happened is that many of the Supply-Side policies have finally been implemented by this government to help business's, apparently were so competitive we're comparible to China in the textiles industry , ( http://www.bbc.co.uk/iplayer/episode...ina_Episode_1/ ) so obviously something must be going right.

China's manufacturing competitiveness is indeed taking a hit now as they are having big problems controlling their inflation and in particular wage inflation is almost out of control. The other thing to consider is much of China's manufacturing up until very recently has been very much labour intensive and productivity levels aren't all that fantastic other than some of their best of factories. The other issue that faces China is their real estate in the eastern part of the country is now very high and logistics cost is hugely expensive.

As for that cushion manufacturer, it's quite obvious his China factory was rather poorly run and it seemed like he moved there just to save cost, most people place a factory in China to enter their domestic market in addition to exporting back to their own country, I'm almost 100% certain the reason that company was there in the first place was in the early part of 2000 many of the provinces in China gave out huge subsidies to have factories there and also to export it, these days those subsidies are very few and far between. If you want to manufacture in China, in order to be competitive you must also sell your goods in China or else you would never be able to compete with their big dogs.

I highly doubt we would see the industrial heyday in UK as China though is now losing it's competitiveness it is merely a small correction and essentially much of their manufacturers are now concentrating on their domestic economy, their own central government is looking more towards a consumption rather than an export driven economy. Either way manufacturing in cheaply in China is "yesterday" these days if you want to manufacture something using cheap labour you go to Bangladesh, Indonesia and Vietnam where labour cost are 1/3 of what it is in the eastern seaboard of China. Many of the new factories are being set up by China companies.

[faber niger]

The number of full-time jobs has fallen, only the number of part-time jobs has risen sufficiently to raise the overall indicator, so if you consider the number of manhours worked (if you'll excuse my antediluvian, sexist term), the figure is still in decline.

(Original post by Classical Liberal)
The parts of government expenditure that do not really create growth are the redistribution parts and the provision of services. This is things like benefits (which I guess can stimulate some growth in some cases), NHS, education etc. These parts of expenditure have not been cut.

Overall the government has not cut. It has just cut capital investment (the spending that would help the economy) and increased so called social justice bull**** (the stuff that in the long term damages the economy).

They quite obviously do support the economy over the long term: try creating a successful innovation-led (or even service-led) economy without an educated, healthy workforce, it's simply not possible.

And, of course, we know full well that the private sector wouldn't be sufficiently able to provide education and healthcare to create such a workforce, as never has it done so in any other time or place.

[semiotically]

(Original post by darksideday)
As...

I've a cunning suspicion, so I won't even check:

Unemployment doesn't include those not actively seeking. I would guess that after 1 year when JSA is cut a lot of people simply slide off official figures, as I think is the case you described...

Say there are 100 people. 98 working, 2 collecting dole & actively looking for work... unemployment rate is 2%. At the end of the year both still cannot find work, however they are now not counted because they are no longer claiming. At the same time 2 new people claim jobseekers. The unemployment rate remains at 2%. After another year these 2 drop off benefits and 1 person starts newly claiming. Unemployment rate DECREASES to 1%. Yet during the third year year you have 5% of the original population (5/100) not in unemployment...

I'd bet on this being the reason why growth & unemployment have started (and will continue) to correlate in this way...

[Classical Liberal]

(Original post by jismith1989)
They quite obviously do support the economy over the long term: try creating a successful innovation-led (or even service-led) economy without an educated, healthy workforce, it's simply not possible.

ohhh yes because the market would never supply such things would it......

Ohh hang on, yes it would.

Anyway I am just saying these things need to be cut, not eliminated entirely.

[faber niger]

(Original post by Classical Liberal)
ohhh yes because the market would never supply such things would it......

Ohh hang on, yes it would.

Anyway I am just saying these things need to be cut, not eliminated entirely.

Well, no, it wouldn't (unless state-subsidized or something), since, as I say, we have no precedent for it ever having sufficiently catered for the needs of a modern industrial/post-industrial economy at any other time or in any other place. Of course, it would supply it where profitable, as it does today, but most of the time that kind of investment is only profitable to the economy at large over the long term -- there are many cases in which it simply can't offer short-term gains (since relatively poor people just wouldn't be able to afford the market rate without the redistribution that tax enables and there'd be little incentive for companies to compete in a race to the bottom for their paltry custom), which is what businesses by their nature need.

Just as a strong state relies on a strong economy, a strong economy relies on a strong state. There are no examples, to my knowledge, to the contrary.

[Classical Liberal]

(Original post by jismith1989)
Well, no, it wouldn't (unless state-subsidized or something), since, as I say, we have no precedent for it ever having sufficiently catered for the needs of a modern industrial/post-industrial economy at any other time or in any other place. Of course, it would supply it where profitable, but most of the time that kind of investment is only profitable to the economy at large over the long term -- it can't in anything like all cases offer short-term gains (since relatively poor people simply wouldn't be able to afford the market rate without the redistribution that tax enables and there'd be little incentive for companies to compete for their custom), which is what businesses by their nature need.

You can talk a big game about "helping the poor" but the fact of the matter is that it is all rhetoric. There is no place where the poor are so hideously disadvantaged as in education. They are not as disadvantaged in the homes they live in, the cars they drive, the leisure they partake in. And yet education is one of the worlds great socialist enterprises that is always defended on the basis of helping the poor. And yet it is the part of society where the poor are most disadvantaged.

You can talk about big game about intentions but the results are plane to see. Government education sucks. The government is a monolithic monopoly supplier for education to the poor. That is why I call it social justice bull****, because it does not even work.

[faber niger]

(Original post by Classical Liberal)
You can talk a big game about "helping the poor" but the fact of the matter is that it is all rhetoric. There is no place where the poor are so hideously disadvantaged as in education. They are not as disadvantaged in the homes they live in, the cars they drive, the leisure they partake in. And yet education is one of the worlds great socialist enterprises that is always defended on the basis of helping the poor. And yet it is the part of society where the poor are most disadvantaged. You can talk about big game about intentions but the results are plane to see. Government education sucks.

I disagree. The relatively poor are certainly disadvantaged in terms of education when compared with the relatively rich, there's no argument there. However, the relatively poor are just as disadvantaged -- if not, in some cases, more so -- in terms of property, cars (although disadvantage there doesn't matter as much, because the only real advantage that better cars tend to offer is in terms of status, unlike with education), leisure time and the activities with which they fill that time; the really poor (i.e. real down-and-outs and people from poor countries) are more disadvantaged still. But there are very few nations where kids don't at least learn how to read and write (except where parents in poor countries, for example, can't afford school fees or can't afford the opportunity cost of not having their kids out earning money).

You're absolutely right, however, that we all buy the same kind of consumer/electronic/Veblen goods and buy the same kind of products from the same kind of supermarkets etc., but the easy availability of all of those products is based on cheap labour overseas, and I don't see how that model could be in any way utilized in education or health care (except in terms of nicking bright professionals from overseas, thereby creating brain drains abroad, but the NHS already does that). Unless you want our kids to be taught via webcam by Indian and Indonesian callcentre workers? That sounds like an interesting model.

EDIT: Even the Khan Academy, whose logo you're using for your avatar and as excellent a project as that is, is a not-for-profit. For Salman's reasoning behind that, see here.

[FDR]

(Original post by darksideday)
As the title says 2 quarters of negatives growth but 2 months of a fall in unemployment, this is very strange to happen as when there was economic growth last year albeit very little unemployment was going up. But, somehow we have clawed are way back, is this the Private sector coming and making all the jobs like the PM promised at the start of the coalition. Furthermore the reason I think this has happened is that many of the Supply-Side policies have finally been implemented by this government to help business's, apparently were so competitive we're comparible to China in the textiles industry , ( http://www.bbc.co.uk/iplayer/episode...ina_Episode_1/ ) so obviously something must be going right.

Growth has pretty much been flat, and the unemployment figure will only have fallen because of a combination of people getting part time jobs, and people giving up on looking for work, and dropping out of the labour force. The only reason the economy isn't doing much worse is that the Bank of England has acted heroically in the past few years, stimulating the economy by maintaining low interest rates, and injecting money into the economy by way of QE.

I'm almost certain that we are no where near as competitive as China in terms of textiles, or any other labour intensive production process, although wages in China are gradually rising, and the Yuan has been appreciating rapidly in real terms over the last few years, which has weakened the competitiveness of their exports slightly.

The government quite obviously haven't done anything right - unemployment is much, worse since they have taken over, the economy is in it's longest depression ever, confidence hasn't recovered despite the government's (false) proclamation that austerity would create confidence and growth, and the longer the number of people unemployed remains high, the worse the long term impact on the UK economy will be.

[Sdiff]

(Original post by darksideday)
As the title says 2 quarters of negatives growth but 2 quarters of a fall in unemployment, this is very strange to happen as when there was economic growth last year albeit very little unemployment was going up. But, somehow we have clawed are way back, is this the Private sector coming and making all the jobs like the PM promised at the start of the coalition. Furthermore the reason I think this has happened is that many of the Supply-Side policies have finally been implemented by this government to help business's, apparently were so competitive we're comparible to China in the textiles industry , ( http://www.bbc.co.uk/iplayer/episode...ina_Episode_1/ ) so obviously something must be going right.

Well if you consider the classical keynesian GDP formula...

Y = C + I + G + X - M
(GDP = Consumption, Investment, Government, Exports, Minus Imports)

The government is sensibly reducing the deficit. This represents a fall in "G". It is entirely possible that C, I and/or X are growing while G is falling. In other words, the real economy is growing while the unproductive part that is dependent on government spending is shrinking.

[dreadnaut]

I wouldn't get too excited.

We are still literally years from closing the output and unemployment gaps on the current policy trajectory. We may get some upticks in GDP or employment here and there, but that should not obscure the fact we are far, far away from where we should be both in jobs and output, and we aren't making ANY catch-up growth.

A lot of unemployment will be hidden - those saying they aren't looking for work anymore after giving up looking, so by ILO definitions are no longer unemployed.

2 quarters? At this rate we'll need improvements in labour markets for years to come.

[MagicNMedicine]

(Original post by darksideday)
As the title says 2 quarters of negatives growth but 2 quarters of a fall in unemployment, this is very strange to happen as when there was economic growth last year albeit very little unemployment was going up. But, somehow we have clawed are way back, is this the Private sector coming and making all the jobs like the PM promised at the start of the coalition. Furthermore the reason I think this has happened is that many of the Supply-Side policies have finally been implemented by this government to help business's, apparently were so competitive we're comparible to China in the textiles industry , ( http://www.bbc.co.uk/iplayer/episode...ina_Episode_1/ ) so obviously something must be going right.

Full time employment has more or less followed economic growth, pretty much flatlining, temporary employment has spiked up and down so you may get times when unemployment falls slightly at the same time as GDP falling slightly, what will govern the demand for temporary and part time employment is business confidence in the future, and most of the survey indicators have suggested that business confidence is slightly better at the moment than it was, despite the falling GDP figures. Bear in mind though that there is not a large fall in unemployment, it has just come down slightly.

Overall though there is one big point worth noting about the labour market, it is more flexible and works better than it used to -



Note how in the recessions of the early 1980s and early 1990s (which were far less bad recessions in terms of lost GDP), there was a huge spike in unemployment, but the worst recession since the 1930s from 2008-09 and a completely flat recovery, has not resulted in as high a level of unemployment.

Wages adjust more fluidly than they used to, part time and temporary contract work is used rather than older more rigid structures of pay and conditions.

[FDR]

(Original post by Sdiff)
Well if you consider the classical keynesian GDP formula...

Y = C + I + G + X - M
(GDP = Consumption, Investment, Government, Exports, Minus Imports)

The government is sensibly reducing the deficit. This represents a fall in "G". It is entirely possible that C, I and/or X are growing while G is falling. In other words, the real economy is growing while the unproductive part that is dependent on government spending is shrinking.

'Sensibly reducing the deficit'?

Well, we know that Consumption and Investment are lacking, because of the fact house prices have fallen, unemployment remains high, and wages aren't growing, not to mention the overhang of personal debt, and uncertainty. As a result, investment is low, because demand is low. Net exports are obviously not growing seeing as our main trading partners are implementing self defeating austerity, and as such, they aren't exactly going to be clamouring for our stuff.

As such, there is a huge spending gap which needs to be plugged by the government, and now is a prime opportunity to do so, because the UK can borrow money for free. Yet our government has decided to embark on an austerity plan that is guaranteed to fail.

Oh, and your comment 'the unproductive part dependent on government spending is falling' is plain stupid, and ignorant of the facts. What has been falling drastically is public sector net investment, which is actually hugely productive, and by neglecting it now, the Tories are reducing long run potential growth and thus future revenues, and thus the opportunity to reduce the deficit. Sensible, right?

[Classical Liberal]

(Original post by jismith1989)
EDIT: Even the Khan Academy, whose logo you're using for your avatar and as excellent a project as that is, is a not-for-profit. For Salman's reasoning behind that, see here.

One of the reasons the Khan Academy is so great is that government is not involved.