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Attack Of The Austerians

Jams O’Donnell, late of Her Majesty’s Civil Service, has a piece about what is happening in Britain under the current Conservative / Liberal Democratic program:

Despite the fact that councils are to face huge spending cuts over the next few years, the Government is advising local authorities not to be too hasty in making compulsory redundancies over fears that local authorities are moving prematurely to sack staff.

According to the Guardian the Local Government Association said this week that around 100,000 local government jobs would be lost as a result of the comprehensive spending review.

[Notes: Jams is not a relative of Christine of Delaware. A “redundancy” is a “lay-off” in Britain. You would also be helped if you understand the character of Wilkins Micawber in Charles Dickens’s novel David Copperfield.]

The new government is slashing away at the budget to control deficits. Of course, based on the actual experience of the economic effects of moves like this following the Great Depression, the deficits will grow as a result of increasing unemployment which will push down tax revenue and economic growth. The cuts, if necessary, should be timed for after the economy has recovered, and the numbers already suggest a slow down in growth has already begun.

Gordon Brown had a lot of faults as a Prime Minister, but he was an excellent Chancellor of the Exchequer and limited the effects of the global financial meltdown on Britain by making the right moves quickly. The new government is about to introduce the British public to the joys of a double-dip recession for reasons of ideology, not economics. Creating an extra half-million-plus unemployed is not going to help the struggling economy.

You only have to look at Ireland to see what a mess austerity causes. This may be satire from Newsbiscuit, but it sums up the situation.

20 comments

1 jams o donnell { 10.27.10 at 1:50 pm }

The depth and the speed of the cuts have more to do with ideology than the necessity to reduce the defiicit. I shudder to think what things will be like once the cuts bite. The Government seem to think that many services can still be maintained despite savage cuts. Delusional idiots

2 Bryan { 10.27.10 at 5:14 pm }

Consider the logic – the former government workers will be eligible for unemployment benefits, so the cut in the personnel budget generates an increase in the benefits budget. The unemployed are not going to be paying income taxes, or at a reduced rate, so a cut in revenues. The unemployed are not going to spending at their previous level, so a cut in demand.

All of the small shops that catered to these workers are going to see reduced sales and will probably start laying off people or shutting down, so it won’t simply be government workers out of jobs.

The services that these workers performed will not be done, so things will slow to a crawl when you have to interact with the government. Infrastructure repairs will not happen, because there is no one to do them.

The latest GDP quarter saw growth in Britain halved from the previous quarter, so things were already slowing. Businesses will put off hiring because of the slower growth and the anticipated impact of this massive redundancy. It will be a disaster, just like anyone who studied the Great Depression would predict. Just the announcement of this program is going to generate a reduction in growth estimates.

These programs never work. There has never been a decent example of this ever working, but ideologues keep insisting on doing it.

3 Badtux { 10.27.10 at 11:14 pm }

Stupidity is doing the same thing over and over again and expecting a different result. History shows that Mr. Duff’s proposed plan of action — drastic cuts in government spending — has resulted in enormous declines in economic activity every time it has been tried. Yet Mr. Duff apparently insists that this time it will be different because… well, just because, I guess.

So it goes. Those who fail to study history … are idiots. Sorry. I cannot use a more polite word here, because there is not one.

– Badtux the History Penguin

4 Bryan { 10.27.10 at 11:48 pm }

There are times, Badtux, when I wonder why governments bothered to abandon the gold standard and adopt fiat currency when they continue to act like the rules of the gold standard still exist.

5 Kryten42 { 10.28.10 at 12:46 am }

I can think of more appropriate words than *idiot*! 😉 But, I’m not as tolerant of morons as you guys! 😉 😛

Like this one (very typical of the entire moronic bunch):

GOP House Candidate Mike Kelly: ‘There’s Stuff To Be Cut. What Is It? I Can’t Tell You.’

And of course, these warmongering morons don’t even understand that when you fail to take care of the warriors, you won’t have any to fight the wars these assh*les love starting:

Support For Veterans Shows Sharp Partisan Divide

They loved them troops! They just wish they would all have the decency to die wherever they are sent and not come back and cost money! What a nerve these soldiers have! Everyone knows it’s an honor to fight and get wounded or die for these $#%$&&*%@!#, right? After all, if a solder is too stupid to avaid getting hurt, it’s their own fault apparently!

There are days when I wish I still had my trusty old Tikka M55 (or M82 (Parker-Hale) which I found very accurate reliable, or maybe the Stoner (SR-25) or SR-98, or Steyr IWS2000 AMR with a 1.2km point blank range, though whilst it’s extremely accurate, there isn’t much left of whatever the munition hits), or even my Grandfathers very trusty Weatherby (he was an armorer and had completely rebuilt it) that he taught me to shoot with many years ago and gave me for my 18th Birthday. Then I would teach these morons about pain and suffering! Death is too good for them. 👿

6 Kryten42 { 10.28.10 at 2:22 am }

Hey Bryan… This is OT, but thought you might find it interesting, or maybe not. 😉 😀

After my post above, it got me to thinking about my days as a Scout-Sniper-Recon (SSR). One of the biggest problems my (and other SSR unit’s) had was poor field tasking. Usually because some Field Commander’s thought a specialist SSR was the same as a *Marksman*! Not even close! Love to see a mere marksman take out a target at +2.5KM for a start! 😉 Also, marksmen are usually a single shooter that are used as part of an infantry unit. We were 6 man (or more if extra security was needed) teams and we had long range surveillance capabilities. One of our primary roles was actually to locate and take out enemy snipers. Aus developed a special system to detect a sniper from some distance after a single shot (in fact, we have apparently sold this system, which has been developed and refined since my time, to the US Secret Service). 🙂 During training, we had to learn all about weather, geology, geography, intel & COINT, building various types of *Hide’s* and many forms of concealment. Chatting with a friend who’s Son was chosen for SSR (my friend was in my unit), they have become really advanced now. The new scopes are accurate and can show a very small target at 3KM+, are attached to a special CCD camera system (Sony developed apparently to our spec) and can supply a real-time live feed via the RAVEN/WAGTAIL field portable digital comm’s system (hence the surveillance aspect). We had an IR system that could reveal a heat signature through some building walls (standard wooden and some brick structures) that would be used by 1 or 2 forward scouts (the system only worked to a few hundred meters back then. Now it’s part of the weapon system!)

If a mission required a single hit, it was relatively easy. If it was a cover mission where we may have had to engage multiple targets at range, it was more complex. I hate in movies when there is a *sniper* team, they stay in one spot and take shot after shot… Never happens in the real World! First rule for survival of a sniper is: Shoot and move! You NEVER stay in the same spot unless you have a death wish. 😉 All that has to be planned in advance and tac recon’s performed. Knowledge is life, ignorance is death (and they were the words drilled into us from day one in training). Sometimes some ignorant commander thought we could just be dropped somewhere and start shooting! (That got two of my m8’s killed!) :'( We were trained to survive long periods in the field, possibly behind enemy lines, but we couldn’t survive a stupid commander. And this is almost always the case where special forces personnel are killed. Bad tasking. I see it happening a lot in Afghanistan. We didn’t loose a single Aussie in Iraq in 5 years. We’ve lost more than 10 in Afghanistan! I blame the stupid commander’s, and the stupid Gov we have.

We could gather intel’ in places the US would never get a Raven or other surveillance drone anywhere near! And we were much better at real-time analysis than those CIA idiot’s remoteing the drones! There is a lot they miss using them. 😉 🙂 All this reliance on tech rather than people will be to the determent of the US. (and I see Obama has changed the rules about combatants who don’t wear a uniform being war criminals, because the CIA operatives that operate the drones don’t wear a uniform.)

So, yeah… I’m an expert on the ignorance of one’s leaders! It will always get one in trouble! After Cambodia, most of us resigned from the military in disgust (for several reasons). They went from eight active unit’s to one.

*shrug* 🙂

7 Badtux { 10.28.10 at 10:18 am }

Ah yes, it’s *magical*, the unemployed former government worker will just magically get a job doing, err, probably the same thing that he was doing as a government worker (since the reason he was a government worker was because society needed something done) but at a lower wage since the private entity now performing that work needs to make a profit (while government doesn’t have such a need, y’know). Unless you think that suddenly the roads will not need paving and the median grasses mowed and shrubberies trimmed even though the workers to do so have been laid off by the local government?

So anyhow, he will have less money, and he will buy less, and thus there will be less overall economic activity. But the magical Free Market Fairy will at some point in the future (when, Mr. Duff? When I’m dead and buried?) wave her magic wand and POOOF! More wealth out of nowhere!

So, Mr. Duff, can you point to any Depression in history where that has happened? Where government cut-backs brought the economy out of depression? And don’t bring up the post-WW1 demobilization recession, because that was *caused* by massive government cut-backs in spending (when all the government contracts for war goods were cancelled and those workers thrown out onto the streets) and for most people that recession did not end until the massive government spending of WW2 re-employed those people thrown out of work in 1919 and 1929… the Great Depression actually began in 1919 for most people, such as my grandmother who lived on a farm and grew up under conditions of great deprivation due to low commodity prices during the 1920’s, it just took ten years for the economic distress to reach the middle and upper classes.

Yet you insist that *this* time it will be different. Inexplicable. A hint to you, Mr. Duff: Free Market Fairies wielding invisible hands are IMAGINARY. Markets are simply one of many mechanisms for matching supply and demand, the long-dead economist who created an imaginary “invisible hand” to govern their operation did so only because the mathematics of chaos theory did not exist in the early 1800’s and that was the closest he could come to understanding the operation of chaotic processes — that they were “magic”. But magic isn’t REAL. And your faith in magic is disturbingly medieval, yo.

– Badtux the Modern Penguin

8 Badtux { 10.28.10 at 1:07 pm }

So let me get this straight. Joe the Bush Trimmer got fired by the local council because their budget got chopped. Joe now goes to work for Fred’s Bush Trimming Company for less money because of the competition from all the other laid-off bush trimmers. Fred gets a contract with an association of homeowners to trim the bushes in front of their homes — a contract where he charges them *more* money than the city would have charged them in taxes to trim the bush, because, well, he has overhead, he has to bill the homeowners, he has to collect from them, and so forth. So Joe makes less, thus spends less, thus less VAT tax collected. Fred, on the other hand, makes more, thus has more income, thus more income tax collected, but remember, he also has more expenses because he paid Joe (however meagre that be) and had the expenses of billing and collecting, and those are written off against that more income.

In other words, in REAL LIFE, it’s a wash as far as tax revenue is concerned — Joe pays less (because he has less), Fred pays more (because he has more). But in your fairy tale land somehow +1-1 != 0?! WTF? It’s called MATH, dude! Learn it!

So anyhow, at *BEST* this is a zero-sum game insofar as taxes are concerned — and that’s assuming that Joe *DOES* get a job with Fred’s Bush Trimming Service. Which is a pretty huge ASSumption, yo, ’cause the homeowners are suffering from declining wages too because of the wage competition from laid-off government workers, and likely *don’t* have the money to buy Fred’s services. Meaning you end up with less economic activity overall in real life, as vs. whatever fairy tale magic world you apparently live in…

– Badtux the Math Penguin

9 Steve Bates { 10.28.10 at 1:15 pm }

Duff still hasn’t answered Tux’s question. That’s because the real answer… that a depression has never been ended by reduction in public spending… doesn’t suit Duff’s ideology. And ideology is everything. Truth is a mere leaf in the wind compared to the rock of ideology… a rock that appears to reside in Duff’s head.

10 Badtux { 10.28.10 at 3:57 pm }

So let me get this straight. Mythical “bond vigilantes”, who don’t exist (thus 0% interest rates), are what we should be afraid of, not scared unemployed hungry people who will do whatever it takes to survive, up to and including cutting your over-intellectualized throat and gutting you alive and roasting you over an open fire to get meat for their table?

As Steve points out, you *still* haven’t answered the question. What depression, anywhere, has ever been ended by cutting government spending? Indeed, the solution to the Great Depression was a massive *INCREASE* in government spending — as in, in 1944, government spending consumed over 80% of the U.S. GDP! And total U.S. debt then was *TWICE* what it is today as a percentage of US GDP! Clearly that destroyed the U.S. economy in 1944, which is why, err, the post-war U.S. economy was the strongest that any economy anywhere had ever been, because it had been utterly destroyed by out of control U.S. spending and U.S. debt.

– Badtux the Snarky Penguin

11 paintedjaguar { 10.28.10 at 8:41 pm }

And as for the shiny new lie that FDR’s policies prolonged the Depression… that has been widely debunked and I can’t be bothered to look it up for someone who’s determined to remain ignorant. Suffice it to say that there is a grain of truth embedded in the lie. FDR’s initial policies did indeed relieve unemployment to a significant degree. Unfortunately some of his advisers convinced him around 1937 that the partial recovery meant that it was safe to return to conservative budget-cutting. That was what caused another rise in unemployment and “prolonged the Depression”. The right-wingers attempting to rewrite history are always trying to have their cake and eat it too, framing the failures of their own ideology as proof that liberal policies don’t work.

Also, if you think the usual Chicago-school Econ101 boilerplate is a description of the real world, then you are an idiot.

12 Badtux { 10.28.10 at 10:31 pm }

The Austerians apparently believe that the solution for unemployment is for the unemployed to all die, since they advocate cutting unemployment benefits, health care benefits, food benefits, etc. for the unemployed. I suppose that’s a solution to unemployment, but it seems rather… final… does it not? I suppose the Austerian slogan is “Nein Arbeit Macht Frei durch den Schornstein”…

– Badtux the Snarky Penguin

13 Badtux { 10.29.10 at 9:58 am }

Err, except Germany did *not* adopt austerity measures, they just talked about it a lot. Their generous social safety network maintained overall government spending at roughly the same levels as prior to the recession and they made no significant cuts on the order of what Britain is doing. In fact, German government expenditures last year were 44.2% of GDP, and according to the ECB in Q1 and Q2 of this year German government expenditures grew at roughly the same rate as German GDP. Only in the fertile imagination of Austerians is 44.2% of GDP in government spending and continued growth of government spending “austerity”. Congratulations, my dear Mr. Duff, on your active imagination and accurate recitation of talking points that are applicable in SOME universe, but not in THIS universe! Bravo, dear chap, bravo!

– Badtux the Snarky Penguin

14 Badtux { 10.29.10 at 10:29 am }

BTW, if you want to check actual numbers rather than talking point:

http://sdw.ecb.europa.eu/search.do?type=free&q=germany

That’s the ECB. Check out the table on total government debt. In 2008 Germany went on a spending spree in response to the recession, and the debt line takes an abrupt jog upwards. Some “austerity”. Also check out the deficit table. Germany’s deficit was basically 0 in 2007, and in 2009 was close to 4% of GDP. Again, hardly “austerity”. Finally, check out private vs. government consumption for the first two quarters of this year. Private consumption fell at an annualized rate of about 0.5%. Public consumption rose at an annualized rate of about 3.5%. Again, some “austerity”.

Oh wait, I forget, these are facts in THIS universe, and thus don’t exist in Mr. Duff”s universe, where unicorns are real and Germany apparently is located somewhere to the west of the UK and is called “Ireland”.

– Badtux the Snarky Penguin

15 Kryten42 { 10.29.10 at 11:00 am }

What Badtux said!

Australia is the only major Western economy to have avoided recession, defined as two successive quarters of negative growth. GDP accelerated in the second quarter, notching up a rise of 0.6%, three times higher than expected. This follows a 0.4% increase between January and March, taking growth out of negative territory after just one quarter.

What the commentators said:

A key reason for Australia’s resilience is the government stimulus package focusing on cash hand-outs for consumers and infrastructure spending. As a result, Australia is heading for a record budget deficit, said Lex in the FT; but “Canberra deserves credit for running a surplus in the first place”.

Australia has also been shielded by a “non-dysfunctional banking system” that steered clear of risk.

Most important of all are its trading links with China. “As China’s preferred supplier of rocks and crops” it has “piggybacked off a stimulus nine times larger than its own”. With inflation unlikely to stay below target for long as the economy strengthens, said Capital Economics, Australia could hike rates by the end of the year.

How did Australia escape recession?

The Aus Gov allocated a huge (for us) stimulus package (like the USA). unlike the USA, we put the tax payers money where it would do some good. The ROI on the money used to increase public spending, infrastructure project (increasing employment) and international trade was up to 9 times! The only people in the USA that got a return on the taxpayer funded stimulus were the same people who created the problem and want austerity in Gov! Why? because they are totally selfish greedy a*holes who want all the money for themselves! And that goes for every moron who thinks Austerity is a good thing! It is, for them… bad for everyone else! Oh, and if a person is pushing for austerity measures, and isn’t even within a mile of the gravy train (where the money will go), they are even bigger morons!

One other thing we did (not mentioned in the above) was our Reserve Bank saw what was coming in 2007 and raised interest rates several times before 2009. This gave them plenty of room when the global economy started meltdown to then quickly drop interest rates significantly and eased the burden on homeowners, and encouraged buyers. And it worked. 🙂

Things are currently pretty rosy here! Everyone else who didn’t spend, or spent in the wrong places, is feeling pretty sad and poor right now. 🙂

Hell, during 2009, thousands of Brit’s came to Aus to get job’s! Was one of the few places in the World they could get a job!

From a Press release:

Moving to Australia to escape the doom of a UK recession.

As the British economy hits rock bottom, thousands of skilled workers are looking abroad to start up a brighter, more stable life in a different economy. Australia has been a favourite destination for British skilled migrants but is it the answer?

FOR IMMEDIATE RELEASE
PRLog (Press Release) – Mar 05, 2009 – There has been much debate as to whether Senator Chris Evans (Minister for Immigration and Citizenship) would lower the record rates of immigration to Australia in the 2009-10 Budget in response to his country’s prospective financial troubles.

Evans has decided to keep this year’s record 133,000 skilled visas as a ceiling until the Government assesses the country’s economic situation in time for the mid-year Budget.

This means that Australia still has plenty of places for skilled workers to move to Australia, and you could be joining the thirty-odd thousand other Britons moving to Australia permanently every year through the Australian migration program.

Now we all know Australia has a better climate, nicer beaches, and the promise of a more comfortable, outdoor lifestyle than the UK, but, in this economic climate would skilled workers actually be better off by moving from the UK to Australia?

Getting Down Under Webmaster and Owner, Mark Butterworth said “The UK weather is often one of the countries biggest draw backs with many UK citizens dreaming of a new life in the sun. One thing that many people fail to understand is that it’s not all about the sunshine.

Once people arrive in Australia there will still be a need to work to support this new lifestyle.

Our research goes a little way towards helping people in the UK understand the real differences between life in Australia versus life in the UK.

A fool and his money are soon parted.
— Thomas Tusser (1557)

16 paintedjaguar { 10.29.10 at 3:00 pm }

Duff – “And, PJ, how is that Britain came out of the recession earlier than the USA?”

Can’t really argue this because I don’t know enough European economic/political history. However…

First, I don’t know if what you claim is true or not — you’ ve given no time frame, no data, and haven’t said whether you are defining recovery using unemployment (my metric) or something less cogent like stock prices.

Second, off the top of my head, I’m guessing that military spending in Britain ramped up well ahead of the U.S., given the political situation. In the U.S., certainly, it was the massive government spending, higher progrssive taxation and direct control of pricing, allocation, etc. necessitated by the war effort that finally ended the Depression. Again, trying to have their cake, right-wingers argue that it was the war rather than the New Deal that did the trick, as if that fact didn’t also completely invalidate conservative ideology. But hey, war is always OK by the wingers. Lot’s of money to be made in a war, you know.

17 Bryan { 10.29.10 at 4:16 pm }

PJ, the answer is in the original post. As a former Chancellor of the Exchequer [British Treasury Secretary] Gordon Brown sorted things out, punishing the banksters and stimulating the economy. In addition, though reduced in recent years, Britain still has a much stronger social safety net than the US, so the net effect of lay-offs is nowhere near as bad on the demand side as in the US.

Brown’s stimulus wasn’t as large as it should have been for a rapid recovery, which is why the current austerity moves are going to drive Britain back into recession.

18 paintedjaguar { 10.29.10 at 7:39 pm }

????

Sorry, since my original post was referring to 1930’s history, I assumed that David’s question was too.

Never mind, though. The faces change, but the script stays the same.

19 Badtux { 10.29.10 at 8:45 pm }

Mr. Duff, are you accusing the European Central Bank of lying? Ms. Merckel is a politician. How do you know a politician is lying? (Hint: Mouth. Moving.). Ms. Merckel “cuts” the German budget in much the same way that President Ronald Reagan “cut” the American budget — i.e., a budget is proposed with gigantic spending increases, and she cuts it down until it has modest spending increases. That’s the German version of austerity.

It is utterly baffling to me that you continue to insist upon living in a universe where up is down, unicorns are real, and an increase in government spending is “austerity”, rather than in *this* universe. So it goes.

– Badtux the Snarky Penguin

20 Badtux { 10.30.10 at 1:26 pm }

So you still believe the European Central Bank is lying about the size of the German budget? I gave you the link to the site showing that German central government spending grew by THREE PERCENT PER ANNUM over the first two quarters of this year, you still insist that the ECB is incorrect?

Note that “cut” in politics doesn’t mean what you seem to think it means. Here in the United States, we “cut” the Medicare budget by over $200B over the next five years. Definition of “cut”? Uhm, we allocated less money to it than had originally been predicted as being needed for Medicare over that period of time (thanks to changes in the privatized portion of Medicare that cuts out the extra subsidy for that program)… but still more money than was spent last year on Medicare. And that, you poor gullible fool, is what a politician means by a “cut”.

– Badtux the “You probably believe in the tooth fairy too, huh?” Penguin