Osborne has said he will run a government surplus is re-elected. If he does it will be a fluke.
There has been only seven years when that happened in the last 54 and only 4 were coordinated and planned, by labour, at the turn of the century.
Yes, they ran a surplus when the sun was shining. What baffles me is why they won't say so:
I might be mistaken. However the Labour party said when they won the election, that they were going to keep the tories policy. So until 2000 they were following their guidelines.
They have committed for one year only
The 1997 manifesto committed to stick to Tory spending plans for two years.
The problem is that Labour stopped running a surplus early, and certainly long before any signs of recession. There’s plenty of room for argument that they could have spent more and taxed more – but running a deficit throughout the 2000s was irresponsible. You can’t be a Keynsian only in the bad times
Respectfully, you forget the 2000 crash
Labour stopped it becoming a recession
Memory is short. Success is ignored
I accept from 2005 – 2007 Labour slightly overspent – maybe £10 to £20 billion or so a year. But utterly insignificant
Richard,
Too quick to respond. Olivia is referring to the budget surplus at the turn of the century, not to any future commitment by Ed Balls.
Not only that they should also point out that the tories have borrowed more in the last 3 years than they did in 3 terms in office. Even a tory MP admits this.
Giving credit to the previous [out-of-favour] Labour administration is not the thing to do.
Nobody knows what bodies are buried..
Looking at the trends in the first graph in the Guardian article below I think I can see why Labour is not trying to claim credit for the 1998 – 2001 surplus – Tories would claim the credit (although I don’t like to admit, it they would appear to be, at least in part, justified in doing so???):
http://www.theguardian.com/news/datablog/2010/oct/18/deficit-debt-government-borrowing-data
Fiscal policy a bit too tight in the early years then a bit too loose in the run up to the crash. According to Simon Wren Lewis. He has a point. Much ado about nothing. Also worth remembering that Osborne and Cameron explicitly stated that they would match Labour’s spending plans ‘pound for pound’ as late as 2007, so any claim they are now making about fiscal probity is utter claptrap.
Still they know full well, the electorate hasn’t a clue about any of that, nor are they interested and that they will vote on the economy as they see it in the 6 months leading up to the election. It’s the same on the other side of the Atlantic. If house prices are on the up and unemployment on the way down it will look increasingly like another hung parliament at best for Labour.
Hard to argue Labour’s actions stopped a recession in 2000, given that I don’t believe anyone else in the OECD experienced a recession, and all had widely different fiscal policy at the time.
The point is that Labour were not good Keynsians. Did this materially affect the state of the economy post-2008 crash? Not really. Did it make it that much harder to argue for deficit spending when it was actually needed? Absolutely. And no sign the lesson has been learned.
I despair of the dismissal of facts
The 2000 crash was from dot com excitement, nothing the conservatives could have done anything about as they left 3 years before.
But it was a crash of some scale and yet labour prevented it impacting more broadly
Credit is due
If the Tories want more boom-time budget surpluses then, first of all, they need to prevent the continual busts.
The above graph shows that the deficit that followed the 2000 crash was beginning to move upwards towards 0 from about 2005 onwards but then came the super-crash of 2008. There’s a lag time after every crash that can’t be avoided, no matter how austere your spending.
If the neoliberal economic model was capable of going even a decade without a major crisis then there’d be far more fiscal stability. As it is we have a boom and bust economy that only survives because of state underwriting.
And what do the Tories really want? Less regulation, more laissez faire – therefore more boom and bust; therefore less fiscal stability and more budget deficits.
To my mind the mistake which Labour made, due to its neoliberal instincts, was to believe that second-hand shares in dot-com companies had anything to do with the real economy. They should have recognised that the concurrent house price bubble was very much to do with the real economy and had a profound effect on people’s lives.
I’m probably not qualified to enter a debate like this but it seems to me that the Labour party are serially incapable of framing the narrative in a way that goes beyond the pure balance sheet idea. Here in the West Midlands the social and human cost of the Thatcher/Major legacy was immense and devastating. I am no fan of Blair but the truth is that here, as elsewhere, many of the problems arising from that legacy were addressed and, if not solved entirely, were much improved. It is important to remember that the phenomenon of patients dying on trolleys in hospital corridors started under Thatcher and ended under Blair.(Yes, I know the record of the NHS is far from unimpeachable under Labour, but even that relates to a management culture that was commenced under Thatcher).
What they could not, or did not do, was repair the manufacturing base that had so been devastated during the Thatcher years, leaving us at the mercy of straw-horse economic tools like financial services and dot.com sectors.
As for being ‘good Keynsians’ I thought that commentators on this blog would recognise that, as Richard points out in his book, the Labour party have pursued a neo-Keynsian economic strategy, which is very different.
It amuses me greatly that on this blog as in CIF any attack on Gordon Brown as a cause of current economic woe is dismissed as rubbish, because that was three whole years ago!…….while in the same breath anything and everything disliked in the economy is blamed on Thatcher who left office over 20 years ago!
Whopping hypocrisy when it comes to attributing past blame….
Not at all
Start here http://www.taxresearch.org.uk/Blog/2007/06/14/brown%E2%80%99s-decade-was-it-taxing/ – while he was in office
Government surpluses sound like a good idea, but are actually bad for the economy as Warren Mosler explains…
“In July 1999 the front page of the Wall St. Journal had two headlines. On the left was a headline praising the record government budget surplus, and explaining how well fiscal policy was working. On the right margin was a headline that said Americans weren’t saving enough and we had to work harder to save more. Then a few pages later there was a graph with one line showing the surplus going up, and another line showing savings going down. They were identical, but going in opposite directions, and clearly showing the gains in the government surplus roughly equaled the losses in private savings.”
Of course Osborne will be able to balance the Budget and move into surplus once he starts attacking the “entitlement” culture that exists amongst pensioners. I can just see him now taxing away state pensions for Middle England, while demonising those pensioners as scroungers and layabouts.
Err on second thoughts perhaps not!
Please excuse the sarcasm, I don’t know what came over me. May be it’s the thought of that economically illiterate weasel achieving anything useful over the long term.
I fully expect them to do just that if they win in 2015.
It surely cannot have escaped you that guaranteeing pensioners are ok while removing large amounts of unemployment/sickness and disability payments would foster resentment ?
There have been several letters in my local press complaining about the travel concession pass, stating, essentially, “they should pay something the same as us” (and conveniently ignoring that every bus journey is subsidised (9p urban and about 15p rural)).
I expect, come a con re-election, that the bus pass will eiether go, or be only partially subsidised and that winter payments will be reduced (worth about £330 to me this year).
Never forgetting the housing and council tax benefits..