The SNP is the latest party to think it is within the power of the politician to offer a balanced budget. They say in their manifesto that they will:
When will politicians learn about sectoral balances? It's a simple fact that when consumers, business and overseas (via trade and investment) decide they all want to save there is nothing the government can do as a result but run a deficit. That makes this promise by the SNP, and others, economically impossible and any attempt to deliver it something of a suicide note for the economy.
For once, don't take it from me. I'll link to Frances Coppola's version of the story instead.
In the meantime one has to just sigh with a heavy heart about the fact that UK political debate continues to ignore economic reality.
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Well, as I’ve said before, hopefully this time the SNP (and Labour) are doing exactly what the Tories did about the NHS etc., – that is that they are lying and just trying to win over gullible voters so that when they get in, the deficit is quickly forgotten.
Prudent levels of debt & elimination of the deficit are surely incompatible? The manifesto says both.
Looking at the Coppola article……this is interesting!
“Business investment is now back to its 2000 level. This is no doubt what has generated the UK’s recovery.”
A marked difference from your “business is on strike” and “refusing to invest” comments on this blog…..
Is he right on this or are you just cherry picking the bits you like from this article?
Coppola is a woman
And the 2000 point us to emphasise how low it is – it is falling steadily at present
Business is sitting on cash piles around the world
How much more can you get wrong?
So you are saying that if the private sector want to save it is physically impossible for the government to not sell them bonds? What happens if the government simply says ‘we will not sell more bonds?’ Are you saying that the laws of physics make this impossible? That some cosmic force compels them to issue more bonds?
The government could refuse, of course
But it would have to refuae to pay pensions
And sack NHS staff
And close schools
And shut the RAF
Do you really think thT will happen?
And if they did what do you think might happen to GDP?
People do not want reality. They want crystal palaces and fairy princesses.
People do not understand macroeconomics, politicians do not want them to (assuming that politicians, any, understand macro (I am cautiously proceeding along the path…).
There is an election coming…..fairy princesses are in favour
¨ A major cause of the decline in investment in recent years that has fed through more recently to falling productivity has been the change in the way senior executives are paid. The massive jump in their remuneration is largely due to the rise in incentive payments that are linked to short-term changes in profits and share prices. As such, management now has a much greater incentive than before to run companies in ways that will enhance these measures in the short term, even though the price is lower long-term investment.
Crucially, underinvestment enables companies to gain market share in the short term, as their consequent lower costs allow them to reduce their prices while maintaining the same margins and thus undercut their competitors¨
https://flipchartfairytales.wordpress.com/2015/04/16/buccaneering-britain/
Short-term[ism]
What the UK specialises in.
See blog this morning building on this
Thanks
the majority of us want honesty and fairness, but this appears to be fantasy too.