A question for people who think Austerity doesn't work

Also, I doubt that's something restricted to the Public Sector, althouh it is more likely to happen there.

Incidentially, who probably invented Investment Banking?

The Knights Templar.

edited 2nd Jul '12 6:01:34 AM by Greenmantle

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Government departments losing their budgets if they don't spend them all may be an issue, but if they're getting useful value out of those budgets, it's more of a paper problem than a real one. Certainly, bureaucratic bloat is a valid thing to be concerned about, but that will happen regardless of the absolute size of the bureaucracy.

The simple fact is that austerity in a demand crisis does not fix any problems; it only exacerbates them by further reducing GDP and therefore government revenue. Correspondingly, deficit spending in boom times increases inflation and drives up bubbles, which make the next crash come that much sooner.

The last forty years in the United States is an endless cycle of Republican governments running huge deficits and Democratic governments trying to balance the budget.

Ah, good old Ms. Rand. Objectivism is code for, "I'm seeking validation for my desire to be a selfish prick."

edited 2nd Jul '12 7:42:34 AM by Fighteer

"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"

@Pykrete: except people have all sorts of "facts" that it will cost them more or that "being forced to use my money to help others is violence against my person. Ayn Rand says so"

@ Fighteer: What's your view on the recent events at Barclays Bank, and the worldwide investigation that is connected to it?

edited 2nd Jul '12 7:52:02 AM by Greenmantle

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Given a very cursory understanding of the issues involved, I would say that it's further evidence that the financial sector cannot be trusted to manage the integrity of its own business practices. There was a great deal of market manipulation involved in the housing crash of 2006 and the banking crash of 2008, after all, and the banking sector managed to secure massive bailouts on the strength of their threat to literally destroy the economy.

It's my personal opinion that many, if not most, of the people involved should be in jail or even executed. After all, who's a worse threat to society: the guy who murders a family over a few ounces of cocaine or the guy who engineers a financial scheme that results in the loss of billions or trillions of dollars, throwing thousands or even millions into poverty and starvation which quite possibly results in their deaths?

edited 2nd Jul '12 8:03:59 AM by Fighteer

"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"

If your country has the Death Penalty, which isn't the case in Britain — but then "White Collar" crime does usually get lower sentences than "Blue Collar" crime, as it were...

I know plans are underway to separate Retail and Investment Banking arms, but should Investment Banking be banned outright, despite the effect it might have on people's Pensions?*

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I wouldn't say to ban investment banking entirely; after all, there's value in it. We do need to reestablish the barrier between retail and investment banking, and classify pensions as retail — in short, make it so you can't speculate wildly with their funds.

"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"

The Teutonic Knights, even more specifically.

I can't help but notice that the original poster has not bothered to participate in his own thread. I would actually be very interested in seeing someone attempt a coherent defense of austerity, particularly in light of what's happening in Europe right now.

Furthermore, I think Guantanamo must be destroyed.

The problem isn't government spending when times are tight — the problem is spending when times are good. Good years should be when government is paying down debts and doing things of long-term benefit. Unfortunately, that clashes with the fact that no politician ever sees a spare dollar without wondering how he can spend it to boost his re-election chances.

A brighter future for a darker age.

Or, in the case of George W. Bush, decides to lower taxes while spending lots of money on two wars, thus massively boosting the deficit for virtually no economic gain but earning himself large quantities of Conservative Points for the home crowd.

"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"

@ Morven

The Liberals in Canada created a rainy day fund and a significant cushion (but they also offloaded a lot of costs to the provinces which was unfair). They slashed the debt in half.

Then the Tories came in, saw all this spare money and started spending like crazy. They almost hit deficit spending before the recession even happened, then blamed the deficit on the recession.

What did they spend it on? Mostly tax cuts.

Then now they talk about austerity measures to balance the budget.

That is why austerity makes me angry.

I don't think I've met anyone who actually takes Ayn Rand seriously.

Ever.

I have a friend who is like that, only he wouldn't necessarily use the words "Violence against my person".

He doesn't want to feel compelled to dump tons of money into something against his will. I suppose I can see that as a valid position, he does donate a lot to charity on his own for the sake of tax writeoffs.

Though we argue fiercely on the topic of jobs and the economy. If you look up "Capitalist" or "Opportunist" in the dictionary, his picture is there. He's a millionaire who owns several housing complexes by the beach in my town, and pretty much everybody I know in the area lives in them, with the exception of me. Back when I had money, we used to swap stock tips and he made me a good chunk of change, now that I have no money, we talk about jobs and he's unsympathetic to an obnoxious level.

He is in favor of a flat-tax however. What he thinks would be fair would be a 30-35 percent income tax across the board for all Americans, with all other taxes done away with, and all loopholes closed. I can see the appeal.

Well there is an implicit reasoning with progressive tax rates and avoiding taxation of the poor. Social services, seen from an individual perspective, appears to benefit people the more poor they are and thus the rich are "subsidizing" these services.

In reality however, the tax scheme to pay for social services to help the poor and middle class in various ways mostly benefit businesses, that is, it mostly benefits the richer people. Because if you take those services away, private corporations/businesses has to pay for them out of pocket and it would be more expensive.

So really, attacking social services is attacking job creation policies.

Take for instance healthcare. What's the cost of doing business? Thirty Canadian employees' health benefits cost to a small business is equal to that of a single American employee. So where would I rather hire people?

No, they don't. Most businesses are under no obligation to provide benefits here.

edited 2nd Jul '12 1:39:16 PM by Pykrete

Well businesses can choose not to do so and hurt local human capital growth in the long-run. So either way, they get hurt.

@Pykrete: I know multiple of them. One so big on her that when he asked what my most valued thing in life towards my fellow man was and I said "the willingness to help in a more concrete form than saying "I'll pray for you" he interpreted that, as well as me wanting to reform the financial system via laws instead of guns, as "violent oppression of his freedom"

Businesses generally only give a shit about the short term profit in america.

edited 2nd Jul '12 1:46:07 PM by Midgetsnowman

^^

American Businesses have no idea what human capital is.

The point is that there is a social cost one way or another. While it is true that corporations may not give a shit, it is the job of government to make them give a shit, whether they want to or not.

"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"

Barclays boss Bob Diamond resigns

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Pleasant surprise, though not as much as "Barclays boss faces life sentence" would be.

Share it so that people can get into this conversation, 'cause we're not the only ones who think like this.

Unlikely to happen, but we're likely to see a long Public Enquiry first, like what's happening here with the Leverson Enquiry about the Press.

...and I bet he won't be the last, either.

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Yes, the good old fashioned Public Inquiry, whose job it is to make politicians look like they are Doing Something^TM whilst keeping their monied friends from facing actual legal repercussions for as long as possible.

"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"

Yep, even if the Politicans know it'll do them no good for their image either — since they're at fault too, and they know it.

And do remember, this is an international problem: other banks being investigated include HSBC, RBS*

, Citigroup and UBS*

Swiss

. I've also heard that Deutsche Bank may be involved. I wouldn't be surprised if Asian Banks weren't involved too.

Update: Bank of England 'eased Diamond out'

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