Apparently, each month YouGov asks people who is to blame for the cuts, and in the latest offering it seems Labour is still very much blamed.
This blog gives away that I am not a right winger, but I'm also not about to defend left wingers either on here.
What interests me most however about this is that people really don't seem to get the economics going on.
I am fairly confident that if you talked to most of those involved in this survey, they would suggest that paying benefits to people out of work and making income tax proportional to how much you earn (so more for those earning over 40k etc), are reasonable things.
Yet if you believe in those two things, then in a recession you have to also accept that deficits will be run: More people lose jobs hence are unable to pay income tax, and may well also claim benefits. We're talking at least a million people that make this transition. People also spend less, meaning that indirect tax receipts (VAT mainly) must fall too. Firms make less in profits, hence corporation tax receipts fall also.
The bottom line is that in a recession, government receipts will fall, and expenditure will rise, if a system is in place that pays benefits to the unemployed, and taxes people and firms based on their income.
When that recession is the biggest in 70 years, is six consecutive quarters of negative growth, then all the more so will a deficit be run - and a big one!
So much so that in fact, looking at data just over the last 30 years (I'm working on getting a dataset for over 100 years - watch this space!), based only on previous government action relative to the state of the economy, the recession was so steep that in fact a deficit larger than that run by the past government should have been run!
That is data, not party politics, or even economic theory talking. It says that in recessions, the budget deficit worsens, and if the last government followed how all previous governments since 1981 behaved, it would have run a larger deficit than it did.
But these kinds of fact-based reasonings are generally lost, let alone the economics behind it, when politics come into play, alas...
The problem arises though in that conversely, the government should be running a surplus in the good times in order to pay for the deficit in the bad times.
ReplyDeleteI do blame the previous government for failing to provide, but that is a fault with all parties as if you have money, you'll spend it! A way to try and end the cyclic pressures is required, but how to accomplish that, I have no idea!!
I think the previous-govt bashing is another example of contradictions inherent in many people. These same people voted in a government committed to reversing much of what the Conservatives did in education and healthcare since 1979 - hence investing in it, in hospitals and schools. Then, once the investment happens (which clearly costs and will lead to deficits), they get blamed for having done what they were elected to do!
ReplyDeleteAll very strange...