Published by , December 9th 2009 at 3:48 pm
Is Daniel Hannan insane?
The gift that keeps on giving, is at it again. On his Telegraph blog, Daniel Hannan preempted the pre-Budget report with a recipe for economic disaster. Repeating his post in full he says:
“If you were overdrawn and in negative equity, with debts on a dozen credit cards and unpaid bills littering the table, what would you do? Would you try to spend less, or would you set out to spend more?
“Ireland is trying to spend less, with cuts across the board. Everyone will share the pain, from cabinet ministers to benefits claimants. The Taoiseach, who is expected to take a 20 per cent salary reduction, reckons that the new budget will reduce Ireland’s deficit by 4 billion euros.
“The United Kingdom, by contrast, wants to spend more. Alistair Darling will continue to expand the budget, and will raise taxes accordingly.
“I have been disobliging about Biffo Cowen in the past, but the fellow is at least trying to do the right thing, acting in the national interest, even if that means dropping in the polls. Labour, by contrast, would rather bankrupt Britain than alienate its remaining supporters in the public sector. Who are the patriots here? Who the rogues?”
The facts:
- Irish unemployment is 12.5 per cent
- the country is experiencing deflation at -6.6 per cent deflation
- GDP has fallen 7.4 per cent over the past year (and GNP by 11.6 per cent).
- And despite the cuts they have still had their credit rating downgraded.
Don’t forget the Chancellor’s line that, “The choices are between going for growth or putting the recovery at risk.” Well said, Darling.
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Is Dan Hannan MEP sane? http://www.leftfootforward.org/2009/12/is-daniel-hannan-insane/
RT @tommilleruk: Is Dan Hannan MEP sane? http://www.leftfootforward.org/2009/12/is-daniel-hannan-insane/
[...] Is Daniel Hannan insane? | Left Foot Forward. [...]
If anyone wants to know why Brian Cowen is often referred to as Biffo – please just ask (if you don’t know already that is). It is astonishing that his salary, at least until recently, was higher than Sarkozy’s – quite staggering when you take into account the disparity of the two country’s populations.
By the way I am sure we could think of an equally ‘affectionate’ name for Daniel Hannan.
Liz – Did you see “Biffo on the bog” in the Irish National Gallery? If he hadn’t made a fuss no one would have even seen it!
My relatives were dying over that one, even my second cousins once removed.
you’re comparing apples with oranges. Ireland is in a bad economic situation which they will try to mitigate by reigning in government spending. as we should. just listing some stats which show Ireland is in a bad position now doesn’t mean their policy ‘from now’ is daft.
George,
I’d argue that their decision not to have a stimulus and to attempt to balance the budget last year and earlier this year is what has caused the awful situation.
It is also a policy praised by many Tories and appears to be what Cameron & Osborne argued for last year.
they couldn’t afford a stimulus. they have been downgraded without one. if they’d have tried it they’d have been off to the imf
George,
I disagree.
I’m with Credit Suisse on Ireland.
http://www.bloomgerg.com/apps/news?pid=20601087&sid=aKSsZDqhrz14&pos=7
“By cutting spending you lower the trend line of growth and store up bigger fiscal problems down the line.”
maybe. thanks for the link.
in the UK case I think the most important thing is not to lose the AAA rating. that means some reigning in of spending now regardless of the stimulus before (which was probably necessary).
i think if we’d controlled spending a bit more in the boom as Australia did, we could have had a stimulus without the PSBR problems. ie balance the books ‘over an economic cycle’ which was a good idea in theory, just wasn’t carried out in practice because we’d “abolished the banking cycle”
George – Clearly WE can’t afford a stimulus – just heard Declan Curry on Five Live and say that Darling “could” (if they pay) raise £0.5 billion from taxing the bankers more…
…at the same time he said the increase in National Insurance on the poor WILL raise £3 billion…
…once again Labour punishes the poor for good behavior and good work and rewards the rich for bad behavior. Nothing changes. As usual Liam Byrne popped up to tell us not to worry it wasn’t until 2011 – Wow thanks Liam.
I’m trying to avoid the TV at the moment in case Yvette Cooper is being interviewed and starts droning on and on whilst opening here eyes wide and nodding furiously attempting to look earnest.
Just the thought is enough to give a sane person nightmares.
what do you think Ed Balls and Yvette Cooper actually talk about at home?
“Ed, can you fix the roof, the sun’s shining?”
“Fuck it. Doesn’t look like rain”
That whole “didn’t fix the roof while the sun was shining” meme is such bollocks. Labour not only *reduced* debt as a proportion of GDP – such that by 2007 it was one of the lowest in the G7, second only to Canada – but they spent billions building real roofs on schools and hospitals and fixing up the public services that had gone to pieces in the preceding 18 years. The only accurate thing about that dumb soundbite is the admission that the Tories left us with a country in a mess, and one that needed fixing.
Have a look? Is Daniel Hannan insane? http://url4.eu/u8bz
Tom – All that’s in the past. It doesn’t matter what you say it’s over. Billions spent? Have you forgotten PFI?
I love the way New Labour rewrite history.
Every Labour government, without exception leaves this country in financial ruin. Every Labour government, without exception blames someone else for that financial ruin.
Pound in your pocket Tom? We deserve the thrashing the electorate will (rightly) deliver at the election next year. It’s over and we blew it.
[...] is less fortunate. So is Ireland. These economies, and the people who depend on them are small and insignficant enough to be [...]
“Labour not only *reduced* debt as a proportion of GDP”
Yes but Tom, comparing debt to GDP is a waste of time as gov’t makes up the GDP figures themselves. They’ve also hidden tonnes of debt of balance sheet using PFI not to mention the pension liabilities and bank debts.
Danniel Hannan is quite correct, you cannot borrow your way out of debt and you can’t spend your way out of a recession. Gov’t needs to cut spending massively to give private enterprise room to grow.
I think pulling everyone together and stopping spending is the best way to ride it out and prevent any after shocks, which is not what the UK is doing, which is to practically kill any savings consumers have and get them into more debt.
[...] measures were praised by Tory bloggers and politicians and gave a taste of what a future Tory budget might look like. George Osborne has long been a [...]
Is Daniel Hannan insane?
Yes.
[...] LeftFootForward has the goods: [...]
Came across this Blog within the last hour and have read through some of your content.
It feels like I’ve just found a convenient pub in a downpour, and the guy behind the bar is annoying me with his knowledgable but a-la-carte political banter.
And as I get up to leave I overhear the counter-argements of the clientele.
And I order another.
Nice place. :0)
Cutting spending in the middle of a recession will not deepen it.
In 1920, America was in a depression. President Warren Harding lowered taxes for all income levels. He cut spending by 50% and reduced the national debt by a 1/3. The Federal Reserve did not pursue an active monetary policy.
The economist Kenneth E. Weiher said of the Federal Reserve, “despite the severity of the contraction, the Fed did not move to use its powers to turn the money supply around and fight the contraction.”
It was the closest an economy has ever approached a laissez faire approach to a recession or depression and the results were astounding. The unemployment rate in 1920 stood at 12.7%. However, two years later, it was 2.4%. One can argue that the tax cuts provided fiscal stimulus, but Keynesians believe in spending increases rather than tax reductions because they believe the multiplier is greater, and tax cuts may lead to an increased savings ratio, which Keynes was apoplectic about. This led to the roaring twenties. Some historians argue that the tax cuts of Harding favoured the rich, thus widening inequality, which led to the depression. If wealth inequality caused economic slumps then we would have recessions in perpetuity.
In short, fiscal stimulus is useless.
[...] hope it’s not a glimpse into the UK’s future particularly since the Irish approach is not actually working. Related posts (automatically generated):A glimpse of a fairer tax systemPublic spending: can this [...]
[...] Hannan on his Telegraph blog (via Left Foot Forward) “If you were overdrawn and in negative equity, with debts on a dozen credit cards and unpaid [...]