Labour and their economic record

John82

Well as amazing as Mrs T was, she didn't manage to implement every single one of her policies in 1984. Politically it takes a while to implement economic policy.

I hear being elected in 1979 helps though.

The end justifies the means. A great thing about Thatcher is she did what was right, and not just what was popular.

Are you sure? I don't know what 'big **** ups' are good for. The good things are good, but to deny that the Tories ****ed up every so often is blinkered.

Hmmmmm. Privatisation could be considered a success. Unless you're a socialist of course.

Signs so far suggest, sometimes. In industries where competition was possible, sure (electricity/water/gas/phone). In others, doesn't look like it (railways).

Labour have done ok but they inherited a decent economy. I believe Britain would have been better off without the tax increases (etc) but I would concede there have been some improvements as a result (although I would say the extra money has not been spent efficiently).

Well, what do you want us to do in the future? Only have new governments elected when economies are in the dumps? :confused:

And yes, government money has been spent on some rather 'unusual items'. The big glaring ones in my mind that are really hard to justify are the defense related ones. Most of the others, there is some kind of case for it.

Essentially it would depend on the government but yes, I doubt it would have been different. As an economist you should know that our interest rate is dependent on many factors. The largest being Mr Greenspan, or the new guy now.

No, really, governments are 'bad news' for monetary policy.

I'm not sure what the figures are but I'd guess investment has suffered more under Brown's economy.

Nope. Suffering, but not as badly. It is however, largely out of the hands of the government to look at the numbers since both have done next to nil to deal with it.

Reply 22

President_Ben

I'm sure he does :p:

Independent central bank monetary policy is much less volatile than government controlled ones. Fact. Empirically, they give you quite noticably lower inflation with marginally less growth. Nice change of gradient in your Expectations Augmented Phillips Curve (steeper: when pi vs employment is the original PC - ie. for the benefit of others, more change in pi needed for a given change in E).

Which is exactly what I explained :confused:

My point was it's not the choice of interest rate that matters, but the fact they're credible when they say they want to keep inflation low, which a government isn't. Governments have a time inconsistency problem that the BoE doesn't.

Reply 23

Also, if the interest rate wasn't set responsibly before independence and was used "politically", someone in the Thatcher government ****ed up when interest rates went to 15%! In fact they were relatively high through the 1980's!

I stand by my point; an independent Bank of England didn't change interest rates significantly.

Reply 24

President_Ben

No, not really. It's a narrative.
Hmmm... I'd say there's enough theoretical and empirical back-up to consider that more than a narrative. A narrative would be to say that Clinton had a boom. Economics would be to say it was down to his policies in large part.

Reply 25

John82

No, but they did change *expectations* significantly. People stopped believing they'd lower interest rates to stimulate the economy as soon as people weren't looking. How else would you explain low inflation when unemployment was falling rapidly? It can't happen unless people's expectations of inflation are also falling.

Reply 26

Drogue

Or you could believe it was done badly, with key assets sold off at a far too low rate, without a plan to keep regulation efficient. Natural monopolies cannot have competition efficiently, as Railtrack has shown. Moreover, I'd liken it to Iraq - it could have been a good idea if they'd been a plan of what to do after.

True. It was unchartered territory though.

Drogue

Yes, but not how you'd think. The key is the differential between our and the world interest rate. That's how we can encourage investment and control inflation. So it's not the US rate that matters, but how different ours is to the US rate.

Same difference, isn't it? :p:

Reply 27

Andronicus Comnenus

The immigration ship still looks reasonably steady to me. But then, I'd be prepared to state it always kind of has and will since there's no need for strict control to measure against. Another thread, another time.

Economies don't fall apart 'quickly' for endogenous reasons. Exogenuous, well, yes - but you can't do jack about them anyway.

Reply 28

Drogue

(U)IP doesn't hold in the real world :wink:

Or it randomly walks, a lot.

Reply 29

Drogue

Which is exactly what I explained :confused:

Oh, hang on - was reading John82 with too much faith.

You said

The Bank of England being independant doesn't mean interests rate would be much different

It's the 'much' part that makes it all good :cool:

I stand by my point; an independent Bank of England didn't change interest rates significantly.

Then you're an idiot. Because it did - and the evidence of independent central banks being better is crystal.

A narrative would be to say that Clinton had a boom. Economics would be to say it was down to his policies in large part.

Still narrative :p:

Economics would be 'Clinton had choices to make - list - and he did x which caused y instead of m to cause n. Where x/y/n/m are bundles of mixed strategies. Decomposed into 'bits and bobs'.

John82

True. It was unchartered territory though.

No, it wasn't. It was charted in most textbooks since the early 20th century. Privatisation/Nationalistion is more often than not, political willy waving of the highest order.

Reply 30

President_Ben

I hear being elected in 1979 helps though.

I did say the policies weren't really implemented until 1984. Unless you thought 1979-1992 was 8 years! :smile:

President_Ben

Are you sure? I don't know what 'big **** ups' are good for. The good things are good, but to deny that the Tories ****ed up every so often is blinkered.

I wouldn't deny the Conservatives made mistakes. However, on balance I think Thatcherism was a success.

President_Ben

Signs so far suggest, sometimes. In industries where competition was possible, sure (electricity/water/gas/phone). In others, doesn't look like it (railways).

Natural monopolies are never going to be ideal for privatisation. I think British Rail was losing significant taxpayers money and the railways are financially better off now. I wouldn't have a clue if they are more punctual, but there is more pressure on them to improve. Also, I'm fairly sure train prices are still limited in some way. Tickets must be significantly below market price.

President_Ben

Well, what do you want us to do in the future? Only have new governments elected when economies are in the dumps? :confused:

No but I'd rather new governments didn't create untruths about the last governments achievements. In this case ignoring the 5 years prior to 1997.

President_Ben

That's politics, probably best we don't drift too far. Down with the NHS! :smile:

President_Ben

No, really, governments are 'bad news' for monetary policy.

I agree. I believe all government interference should be at a minimum.

Presidetn_Ben

It is however, largely out of the hands of the government to look at the numbers since both have done next to nil to deal with it.

Higher taxes on business and more regulation hardly help though.

Reply 31

President_Ben

It's the 'much' part that makes it all good :cool:

I must prefer my use of 'significantly'. :rolleyes:

President_Ben

Then you're an idiot. Because it did - and the evidence of independent central banks being better is crystal.

Please can I book a trip on your time machine. You can take me back in time again and reverse independence then we'll travel forward in time (back to now) and see this difference you "know" of. Oh wait, that just nonsense!

President_Ben

No, it wasn't. It was charted in most textbooks since the early 20th century. Privatisation/Nationalistion is more often than not, political willy waving of the highest order.

Really? Name one British company that was privatised before the 1980's. [I actually don't know if there was one but I'm guessing no]

Wait a minute "it was chartered in textbooks" :rofl:

Please. Because everything in theory works out in practise.

Reply 32

John82

I did say the policies weren't really implemented until 1984. Unless you thought 1979-1992 was 8 years! :smile:

Saying she was mostly dossing about for five years without implementing many policies isn't much better.

I wouldn't deny the Conservatives made mistakes. However, on balance I think Thatcherism was a success.

If that's fair, so is saying Labour have done pretty well with the economy.

They still cost taxpayers a lot. As do, in fact, all of the things that got privatised. None of them are profitable to run (hence why they were ever national to begin with) and so the government gives them money in return for operating them. Financially, things are still awful while trains are still slow and planes are cheaper/faster for many journeys. Privatisation of the railways has at best meant 'things are just as bad' and at worst meant 'we sold it off too cheap and lost years when it could have been made better'.

No but I'd rather new governments didn't create untruths about the last governments achievements. In this case ignoring the 5 years prior to 1997.

If you're expecting honest politicians, you're in for a long long wait.

Down with the NHS! :smile:

Another thread, another time - but no.

I agree. I believe all government interference should be at a minimum.

Government 'deciding what should be', is generally a bad idea. Government giving nudges to 'what should be' when markets 'get it wrong' is alright with me.

Higher taxes on business and more regulation hardly help though.

Governments buy capital goods too. And boosting investment will have a lot more to do with convincing people to save (rather than consume... which through the 80s is marked by 'UK consume more champagne than probably the rest of the world combined while spending money on now useless cars, VCRs, Betamax and stupid hair-dos' and in the 90s onwards by 'bling bling, burberry, talking on mobile phones to the person on the bus 10 metres away from you and Sky TV')

Reply 33

You have yet to meet the arcane arts of econometrics.

Really? Name one British company that was privatised before the 1980's. [I actually don't know if there was one but I'm guessing no]

Wait a minute "it was chartered in textbooks"

Please. Because everything in theory works out in practise.

Privatising a natural monopoly does **** all or 'bad things only as people suck profit out' has been shown, time and again, to be 'on the ball'.

The basics of economic theory tend to hold really really well.

Reply 34

President_Ben

Saying she was mostly dossing about for five years without implementing many policies isn't much better.

Well I still love her! :smile:

President_Ben

If that's fair, so is saying Labour have done pretty well with the economy.

They've managed to avoid recession (possibly because of the growth in the public sector but I'm not too sure) and have keep a steady ship. I don't see how higher taxes and more regulation can have helped the country and I remain convinced that within a few years the (potential) damage may become apparent. Unemployment has risen for 9 or 10 months now and although not significant rises it is a possible warning sign.

If you're expecting honest politicians, you're in for a long long wait.

Too true.

Government 'deciding what should be', is generally a bad idea. Government giving nudges to 'what should be' when markets 'get it wrong' is alright with me.

It's the governments idea of 'what should be' and it's definition of markets 'getting it wrong' that worries me.

Reply 35

President_Ben

Privatising a natural monopoly does **** all or 'bad things only as people suck profit out' has been shown, time and again, to be 'on the ball'.

Does that mean you don't know of any British company privatised before the 1980's?

The basics of economic theory tend to hold really really well.

It just remains to decide which economic theory to implement. :wink:

Cue the politicians. :smile:

Reply 36

John82

Really? Name one British company that was privatised before the 1980's. [I actually don't know if there was one but I'm guessing no]
British Leyland and the merger and privatisation of the Tilling Group and British Electric Traction merger and privatisation.

They're the only two British ones I can think of. But as Wiki says:

In general, privatization was common during the immediate post-World War 2 period

Worldwide, privatisation is a lot older than Thatcher. And it's been shown in natural monopolies it doesn't work, while it does where competition is efficient. Which isn't really a surprise, when you think about it :smile:

Reply 37

arkbar

You realise the rail system costs more money than it did when it was nationalised, and ticket prices have risen above inflation by a huge margin?

Don't forget the bailout packages that have been handed over...

Reply 38

arkbar

Don't forget the bailout packages that have been handed over...

That's what I mean by costing more to the government than it used to. However you have to remember that one of those (the Virgin package) was due to the government's breach of contract, rather than Virgin mismanagement. But the majority were the result of privatisation.

Reply 39