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Excellent criticisms of UK austerity plan in layman's language; lessons for Ireland


patslatt

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Apr 11, 2007
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13,693
See Keynesians are wrong, because George Osborne's cuts are actually very modest - Telegraph

Key points:

-"Idiotic decision to hike the tax burden on an already hardpressed nation,and simply trimming the state without unleashing the private sector was always going to be foolish."
-"...current [government] spending,such as wages and benefits,tends to be bad for long run economic growth..."
-"But surging welfare (including pensions) and debt interest payments mean that the overall [spending] bill will barely decline [by 2018]"
-"...cuts...excessively focused on easy-to-axe capital projects [private sector contracts mostly]"
-Major negatives are the impact of the UK's high inflation on wages and savings,front end loaded tax increases,increased bank reserve requirements that limit credit,crippling red tape in construction,weak eurozone exports and an abject failure to introduce business friendly reforms and tax policies.
-Despite the government's mistakes,it should "stay well clear the Keynesian Kool Aid" given that "excessive government debt is bad for growth" as shown in various economic research reports.

Most of the above criticisms could be made of the Irish government's austerity programme. Irish public sector pay is 48% higher than the private sector average in the latest CSO figures,compared to about 13% higher in the UK and lower wages in the public sectors in France and Germany. The banks have been ordered to massively increase reserves,reducing the ability to trade their way back to health,and the government added to their solvency problems by inviting moral hazard on mortgage defaults in delaying legislation to facilitate repossessions of properties. Rising debt interest payments are becoming a problem and could wreck the government finances if interest rates rise. In construction permit processes,Ireland is ranked by the World Bank with primitive third world countries for inefficiencies.

As for business friendly activities,some useful headline government initiatives are small change compared to the negative effect of massive tax increases and stealth charges on business. For example,the capital gains tax of 33% is confiscatory given that inflation creates phoney capital gains.This is bound to discourage investment and it locks capital into inefficient ownership. Business people who should liquidate their ownership and invest efficiently elsewhere or sell shares to new partners will be deterred from doing so.
 


Alan Alda

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Jun 23, 2011
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5,496
Is there a question or a point to this post ?
Seems like a lot of waffle to me.
 

shiel

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Feb 14, 2011
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The problem is that some of the people who were round the various tables when decisions were made that bankrupt the country and the people who cheer led their actions back in the Celtic tiger madness are now complaining about the consequences of their own actions.

The mantra of being agin austerity is hypocritical.

The effin country is broke and the foreigners are keeping the holes in the wall open.
 

Howya

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Feb 29, 2012
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1,690
So a right wing paper supports cuts in government spending and cuts in taxation etc - nothing new in that, yawn.
 

IbrahaimMohamad

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Feb 5, 2013
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4,221
Slash Welfare and State intervention & cut Taxes.

Investment will be directed to the areas of maximum return!
 
Joined
Oct 18, 2011
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37
The problem is that some of the people who were round the various tables when decisions were made that bankrupt the country and the people who cheer led their actions back in the Celtic tiger madness are now complaining about the consequences of their own actions.

The mantra of being agin austerity is hypocritical.

The effin country is broke and the foreigners are keeping the holes in the wall open.
Didn't you say the exact same thing in another thread? Btw the narrative for austerity is crumbling before our very eyes. Always was a silly idea.
 

ShoutingIsLeadership

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Jan 17, 2011
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50,434
The country is filled with constant misery and all the good looking young people have emigrated.
 

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