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Why do Labour still think spending our way out of recession is right when their own.. watch

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    Why do Labour still think spending our way out of recession is right when their own former PM James Callaghan himself said it was wrong when he said at their party conference in 1976?............

    "We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candour that option no longer exists, and in so far as it ever did exist, it only worked on each occasion since the war by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment as the next step."

    Yet they still insist they were right to spend spend spend during the recession despite their own former PM saying it was wrong and would only lead to higher inflation and higher unemployment all those years ago which is exactly what is happening now.
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    Because the words of a Labour leader from over 40 years ago shouldn't dictate Labour policy now?

    It's like saying that why does Cameron believe in the creation of the 'Big Society' when Thatcher clearly said 'There's no such thing as society'?
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    (Original post by Captain Crash)
    Because the words of a Labour leader from over 40 years ago shouldn't dictate Labour policy now?

    It's like saying that why does Cameron believe in the creation of the 'Big Society' when Thatcher clearly said 'There's no such thing as society'?
    This, OP.

    Circumstances and attitudes change. What worked before, or would could have been suggested to work before, is not likely to have the same outcome as it would now. :cool:
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    I might as well dig up some old quote from the Tories who thought the welfare state was a poor idea.
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    I have mixed opinions on this, since we do need to increase demand within the economy, and to do this someone has to do the spending. In the short run it has to be the government, this would increase employment, and have positive effects (multiplier). This will increase Economic Growth in the SR.

    But due to the nature of debt servicing, and the magnitude of debt we have. Something insane like £40bn is spend anually on servicing the debt.

    So in this way, i'm against the government spending their way out of the recession, also because it would increase Demand-pull inflation, and because there is already cost push inflation (rising oil/nominal wage prices) then were doubly ****ed.

    Though the government shouldn't make such extreme cuts so quickly, because as we saw the last quater the economy shrank 0.5%.

    I think the government should reduce the budget, but also spend wisely, it should also increase taxes on the top 1%, and give tax relief to the middle classes. I'm unsure of a bonus on Bankers bonus's because large banks who can afford to pay these bonuses usually have branches and headquaters elsewhere in the world, and could quite easily move their operations out of the country.
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    Surely spending your way out of a recession will just lead to a much bigger deficit and larger cuts later on? Even with more growth the cuts would still have to come.
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    1 - Labour don't think that. They may try to make a nice face to show the public, but their nearly as "pro cuts" as the Tories are. The difference is where the cuts would come.

    2 - Why should the thinking of someone in the past influrence the present? As someone said above, the Tories are trying to push this "big society" despite Thatcher trying to claim society doesn't exist.

    3 - The idea is partly right. You can't just get out of a recession by chucking people on the dole. We need growth. And right now we don't have that. In reality you probably need a mixture of cuts and carefully targetted spending.
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    (Original post by Aj12)
    Surely spending your way out of a recession will just lead to a much bigger deficit and larger cuts later on? Even with more growth the cuts would still have to come.
    It depends what you're spending on. If you're spending just to give people jobs, then perhaps, but if you use spending to stimulate demand and see the economy grow, the increased tax receipts from growth will reduce the deficit.
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    (Original post by Aj12)
    Surely spending your way out of a recession will just lead to a much bigger deficit and larger cuts later on? Even with more growth the cuts would still have to come.
    The general idea being that nurturing growth bolsters the private sector so that when a stable growth pattern is established individuals can be transferred from the public sector to the private sector and then the state's exposure can be reduced.

    More of a gentle curve - which lessens unemployment - than the harsh medicine currently being prescribed.
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    Please read, Economics for dummies, Page 15 chapter 1: Fighting recession with monetary and fiscal policies.

    That'll explain everything
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    (Original post by leetay)
    Why do Labour still think spending our way out of recession is right when their own former PM James Callaghan himself said it was wrong when he said at their party conference in 1976?............

    "We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candour that option no longer exists, and in so far as it ever did exist, it only worked on each occasion since the war by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment as the next step."

    Yet they still insist they were right to spend spend spend during the recession despite their own former PM saying it was wrong and would only lead to higher inflation and higher unemployment all those years ago which is exactly what is happening now.
    Because they were voted out after following that course...?
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    To be fair the world got it wrong not just Labour! look at Ireland in the way Fianna Fail let things shape out! Ireland will go bankrupt and it was all because of spend spend spend! But how would the torys have got britain out of the mess i very much doubt it! The world economy took a massive nose dive by the banks so really the blame should lay at their doors as much as the politicans. The politicians just facilitated it by not regulating the industry more to defend itself in such economic times!
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    We are all Keynesians now.
 
 
 
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