It's not Keynesian

[I1L2T3]

Surely the right time to build up your infrastructure is when you have the money to do it. If you are in the 'good times' what else should you do?

 

So you are saying that u should borrow to build infrastructure that you didnt want to build in the good times, stuff that you dont really need, like HS2?

 

This is the thing. There is never the money to do it.

 

Whether or not the infrastructure is needed a government will nearly always have to borrow to finance it.

[unbeliever]

Surely the right time to build up your infrastructure is when you have the money to do it. If you are in the 'good times' what else should you do?

 

So you are saying that u should borrow to build infrastructure that you didnt want to build in the good times, stuff that you dont really need, like HS2?

 

In the good times, you pay down your debt. You can also spend on infrastructure in good times, but Keynes thought that bad times were a good time for such things as it has a stimulating effect on the wider economy. There are also skilled workers available to work on the infrastructure who aren't needed in the private sector because of the recession. It kind of flattens the economic cycle and stabilises things. It's mitigates the hardship of the rough times, but it has to be repaid in the good times.

 

 

---------- Post added 09-11-2015 at 21:02 ----------

 

This is the thing. There is never the money to do it.

 

Whether or not the infrastructure is needed a government will nearly always have to borrow to finance it.

 

That's a good point.

Most government spending that can be classified as infrastructure is big and borrowing is necessary as it can't be wedged into a normal annual budget.

Edited November 9, 2015 by unbeliever

[DrNorm]

So you are saying that u should borrow to build infrastructure that you didnt want to build in the good times, stuff that you dont really need, like HS2?

 

A good point.

 

The idea that investment in infrastructure stimulates the economy is a bit exagerrated. It can, but usually the stimulus is very short acting.

 

People look at successful economies and see a supporting infrastructure and conclude that if you build the infrastructure a successful economy will follow.

 

But roads, railway lines, communication, internet broadband can only support an economy not create it.

 

Building libraries doesn't create writers. Building Sports Stadiums doesn't create athletes. Building roads doesn't automatically create factories.

 

Building a mile high gold pyramid will stimulate the economy, but what then? What are you going to produce?

[I1L2T3]

Labour routinely claim to be following Keynesian economics.

Is this actually in doubt?

I can find some quotes if it is.

 

Osbourne is largely following actual Keynesian economics. I'm not sure I total agree with that, but at least he's generally following an actual school of economics rather than an imaginary one.

 

Yes it is in doubt. Provide some evidence. Let's see the quotes. The only real evidence was Darling in 2008 but the Tories killed that stimulus spending dead in 2010.

 

Osborne is a strange case. He is only Keynesian in a sense because he actually borrowed wy more money than he planned to. He had to borrow more because he removed demand from the economy, which is the opposite to what a Keynesian would do!!

 

As for running a surplus that is actually closer to the classical concept of a balanced budget. Osborne is an accidental Keynesian.

[unbeliever]

A good point.

 

The idea that investment in infrastructure stimulates the economy is a bit exagerrated. It can, but usually the stimulus is very short acting.

 

People look at successful economies and see a supporting infrastructure and conclude that if you build the infrastructure a successful economy will follow.

 

But roads, railway lines, communication, internet broadband can only support an economy not create it.

 

Building libraries doesn't create writers. Building Sports Stadiums doesn't create athletes. Building roads doesn't automatically create factories.

 

Building a mile high gold pyramid will stimulate the economy, but what then? What are you going to produce?

 

Indeed. It has to be useful infrastructure.

It's really no different than a business borrowing to expand. If they build a second factory, it will probably more than pay for itself in the long term as business will grow.

If they spend it foolishly, all they have is a big debt and no extra revenue to service it.

 

---------- Post added 09-11-2015 at 21:16 ----------

 

Yes it is in doubt. Provide some evidence. Let's see the quotes. The only real evidence was Darling in 2008 but the Tories killed that stimulus spending dead in 2010.

 

Osborne is a strange case. He is only Keynesian in a sense because he actually borrowed wy more money than he planned to. He had to borrow more because he removed demand from the economy, which is the opposite to what a Keynesian would do!!

 

As for running a surplus that is actually closer to the classical concept of a balanced budget. Osborne is an accidental Keynesian.

 

Google labour keynesian.

 

If you want a specific. You can start with Diane Abbott on 13th october.

I think she was trying to defend the ridiculous decision of Labour to withdraw from it's previous agreement to the fiscal charter. Which says that outside a recession, the budget should at least balance. Under Corbyn, Labour policy is quite openly that it's okay to borrow all the time. I think that was always their policy, but Corbyn has persuaded them to be honest about it.

Edited November 9, 2015 by unbeliever

[Mister M]

Labour routinely claim to be following Keynesian economics.

Is this actually in doubt?

I can find some quotes if it is.

 

Osbourne is largely following actual Keynesian economics. I'm not sure I total agree with that, but at least he's generally following an actual school of economics rather than an imaginary one.

 

You say that Osborne following a school of economics as if it's a good thing....I'm not so sure. The last time we had a dogmatic adherence to an economic theory was when monetarism was in fashion - back in the early 1980s when it was tested to destruction. Which is ironic as Conservatives were always sceptical about theories and 'isms', and criticised Labour for being ideological.

The late Ian Gilmour, who was a Minister in Mrs Thatcher's cabinet at the time, wrote an excellent and balanced book about that period: 'Dancing with Dogma'. Definitely worth reading.

[I1L2T3]

Indeed. It has to be useful infrastructure.

It's really no different than a business borrowing to expand. If they build a second factory, it will probably more than pay for itself in the long term as business will grow.

If they spend it foolishly, all they have is a big debt and no extra revenue to service it.

 

---------- Post added 09-11-2015 at 21:16 ----------

 

 

Google labour keynesian.

 

If you want a specific. You can start with Diane Abbott on 13th october.

I think she was trying to defend the ridiculous decision of Labour to withdraw from it's previous agreement to the fiscal charter. Which says that outside a recession, the budget should at least balance. Under Corbyn, Labour policy is quite openly that it's okay to borrow all the time. I think that was always their policy, but Corbyn has persuaded them to be honest about it.

 

I did google it. No real evidence Labour had it as a core policy at any time in the last 20 years.

[unbeliever]

I did google it. No real evidence Labour had it as a core policy at any time in the last 20 years.

 

"We have always been a Keynesian Party" Diane Abbott 13th october 2015.

Diane Abbott is shadow secretary of state for international development and a member of Labour's front bench.

 

What would constitute "real evidence"?

 

My whole case here is that Labour operate under the pretence that they're operating on Keynesian economics, but in fact they just pretend so to justify borrowing and then reclassify normal state spending as "investment" to perpetuate the illusion.

It's not actually their core policy. They just pretend.

 

If they're not pretending to be Keynesians, what are they? From what in the school of economics do they draw to justify their policies?

 

---------- Post added 09-11-2015 at 22:03 ----------

 

You say that Osborne following a school of economics as if it's a good thing....I'm not so sure. The last time we had a dogmatic adherence to an economic theory was when monetarism was in fashion - back in the early 1980s when it was tested to destruction. Which is ironic as Conservatives were always sceptical about theories and 'isms', and criticised Labour for being ideological.

The late Ian Gilmour, who was a Minister in Mrs Thatcher's cabinet at the time, wrote an excellent and balanced book about that period: 'Dancing with Dogma'. Definitely worth reading.

 

I'm more saying that Keynes would have far less of a problem with Osbourne's policies than with Labours.

He would most certainly have approved of the Fiscal Charter which Osbourne and the Conservatives support and Labour reject.

 

We'll have to see whether he thinks infrastructure investment is a good idea during the next downturn, but one of the first things he did when becoming chancellor was to restore infrastructure spending which had been drastically cut by the outgoing Labour administration.

It is not my intention to suggest that he's any kind of fundamentalist Keynesian. I expect he, like most with an interest in economics, tries to draw wisdom from various respected economists and base his decisions on that overview.

 

My issue with Labour is they talk like they are Keynesian believers. Although they mention his name a lot less than they used to. When in fact Keynes would be more sympathetic to the current Conservative approach.

Edited November 9, 2015 by unbeliever

[El Cid]

My whole case here is that Labour operate under the pretence that they're operating on Keynesian economics, but in fact they just pretend so to justify borrowing and then reclassify normal state spending as "investment" to perpetuate the illusion.

It's not actually their core policy. They just pretend.

 

 

I guess it would be another thread, but dont the Tories pretend to be free market Conservatives

 

http://www.bbc.co.uk/news/uk-politics-19832916

[Mister M]

I guess it would be another thread, but dont the Tories pretend to be free market Conservatives

 

http://www.bbc.co.uk/news/uk-politics-19832916

 

Didn't Labour under Blair & Brown