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Half of new jobs are created by the state watch

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    (Original post by MagicNMedicine)
    Fantastic achievement, we need to make it more attractive for businesses like "The State" to invest in the UK! "The State" is providing as many jobs for British workers as the entire rest of the private sector put together.

    I think we need some more state-friendly policies, imagine if "The State" decided to pull out of the UK and invest somewhere else, half of the economy would collapse.

    This IMO is the trickle down effect working at its best. As the State grows, as the State gains more revenue and becomes more profitable for those at the top, their wealth trickles down in the form of employment. The State is a model of a successful business which all others should follow.
    You jest surely?
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    (Original post by MagicNMedicine)
    Hmm maybe you're right. It would be better if it didn't shrink, it needs to become more profitable. Increase tax.
    And don't buy anythign from outside the UK.
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    (Original post by Quady)
    TBH it was the growth in GDP that allowed the UK to borrow further.
    Borrowing was growing at a higher rate than GDP, hence why net public sector debt as a percentage of GDP began to increase in 2001 - a trend which has continued to this year, and is likely to continue for a while yet. Labour's borrowing was on an unsustainable path even before the recession. Credit to Labour during the 1997-2001 period, though, because back then they were more fiscally responsible. They ran a large net surplus over the period, which quite significantly reduced the national debt. Perhaps they became complacent after this.

    (Original post by Quady)
    How did it crowd out private investment/where are the examples of that?
    The deficits crowded out private investment because funding them decreased the supply of loanable funds in the economy, thus raising the interest rate, all other things equal. Investment is particularly sensitive to interest rates, and the crowding out is evident in the below-trend growth in business investment since 2001. This will mean lower real wages in the future than had the government not run those deficits.

    Not only that, but there is likely to be a high level of structural unemployment when the budget is eventually balanced. Those jobs once funded by the unsustainable borrowing will no longer be funded, so those workers will have to look for other jobs. We can hope that this will occur quickly, but the magnitude of the growth in state-dependent jobs means that it's going to be hard for the economy to readjust.
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    I recommend Colin Hay's book "Why we hate politics" which helps explain how we've ended up with a "quangocracy" amongst other things
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    As for the article in The Times, I spotted that at the weekend and was astounded by the figure on the "quasi-public sector" - i.e. those private sector firms who are dependent on state contracts.

    Have a look at http://www.nuffield.ox.ac.uk/economi...74/74offer.pdf - top of page 8 where in the early 1960s the number of people in the public sector was at just below 30%, despite having lots of nationalised industries.

    One thing it is worth remembering is that with the nationalisation of the banks, many of those banking jobs are now - as far as the stats are concerned, public sector jobs - http://www.scotland.gov.uk/Topics/St...ublicSectorEmp
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    (Original post by Prince Rhyus)
    As for the article in The Times, I spotted that at the weekend and was astounded by the figure on the "quasi-public sector" - i.e. those private sector firms who are dependent on state contracts.
    Really? It makes sense. Anything to do with education, health, the MoD, the DWP is pretty much dependent on the state.
 
 
 
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