Is any country in the world trying Labour's way out of the recession?

[bigsexydoug]

i just wondered if any country is trying to borrow /spend its way out of the recession ? which countries ??? how well is it working ???

[Mister M]

In fairness I think Labour are propsing a mix of spending and cutting like the present government is. It's the ratios of spending and cutting as well as timing / duration that differntiates them.

[andyofborg]

none seem to be and as a result there is a global collapse in demand which will drive the world economy into a global depression.

[Conrod]

I can't wait for the SF Labour lovers to work their minds around Ed Balls' latest admissions, if they can.

 

He's saying that Labour must radically re-think its spending policies if it is to become electable again. Translation: he admits Labour screwed up in spades and almost bankrupted the country.

 

He's also saying that he will make no promises to reduce the coalition's saving and tax measures. Translation: He agrees the coalition is doing what any government in their position has to do to dig us out of the mire.

[alchresearch]

I can't believe anyone would want to spend their money on non essentials, whether VAT is reduced is not.

 

When Brown instigated this strange policy a couple of years back I said it was doomed to failure and that when people lost their jobs I hope their big screen TV they bought at 15% VAT would be some comfort to them instead of having food on the table.

[truman]

none seem to be and as a result there is a global collapse in demand which will drive the world economy into a global depression.

 

Can I ask a simple question..where will the money come from to pay for it all?

[andyofborg]

Can I ask a simple question..where will the money come from to pay for it all?

 

slowing the pace of the cuts would keep more people in work and help to stimulate demand

 

we could borrow a bit extra and pump that directly into stimulating demand.

 

as growth returns the increase in revenues will service the extra borrowing and eventually pay it off

[truman]

slowing the pace of the cuts would keep more people in work and help to stimulate demand

 

we could borrow a bit extra and pump that directly into stimulating demand.

 

as growth returns the increase in revenues will service the extra borrowing and eventually pay it off

 

So just borrow it all then..? Isn't that part of the reason we're in this position in the first place? People borrowing too much?

[Sid Umpley]

i can never understand the idea behind Borrowing more to get out of debt.

[ampersand]

i can never understand the idea behind Borrowing more to get out of debt.

 

The plan isn't to borrow more to get out of debt - it is to invest to stimulate the economy as a result of which, in theory, the rises in tax income will repay the debt

 

The theory goes that, in time of recession, if everyone stops spending, the recession gets worse - you can't rely on individuals/private enterprises to invest sufficiently to increase production as they are driven by finances and the profit motive - they may be able to borrow cheap money and make sufficient profit to cover the costs of borrowing and have enough left over to justify the risk/cost of doing so, but "they" are cautious because they may lose money doing so if the demand for their goods & services isn't there.

 

So, if private enterprise won't invest, there are two ways of attempting to improve the situation - give private enterprise enough incentives to do it (cheap labour, cheap money, tax breaks, less red-tape and restrictions on hiring and firing staff etc) or use Government funds to kick start the economy to then create more demand for goods and services which private enterprise can then produce and provide

 

That is the reason why a VAT reduction is attractive, it makes things cheaper and encourages people to buy things (not to spend more necessarily) - but it won't work in isolation, and, to be fair, isn't suggested to be in isolation

 

The ideological split between the two main parties is on which is the better way of doing things - Tories generally believe in less state involvement and more encouragement of private enterprise, old fashioned Labour generally believes that private enterprise is too bothered with profit to provide the services that people need but which aren't profitable and therefore the state should do it, and "New Labour" thinks whatever the Murdoch papers tell them is popular

 

The difference between the current Government and the opposition isn't between to cut or not to cut, it is between how much to cut and where to target the cuts and the spending, and that is as much ideology and politics as economics