Ajw71 wrote:Fact is Labour ran the economy at a deficit during boom years.
I think you're finished now, might have been better if you hadn't tried to respond at all.
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Joined: Feb 27 2002 Posts: 18060 Location: On the road
Most would expect the deficit to drop in times of plentiful tax revenues, but if you look at the figures that wasn't really the case in the final years of Blair nor under Brown. I agree not a lot he could have done about the global banking greed meltdown
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Another misleading debate here is about 'the boom years'. The period where the right wingers attack Labour for running deficits is 2002-2008 (the budget was in surplus before that) where they say surpluses should have been run because we had an 'economic boom'. Long run trend growth in the UK in the 30 years leading up to the financial crisis was around 2.8%, so really a 'boom' is when you have growth significantly above that and a 'bust' is when you have growth significantly below that (especially when growth is negative).
This is data series ABMI, the measure reported for GDP. The series there just gives the absolute numbers so you can calculate the growth rate from one year to the next by dividing the second year by the first, subtracting 1 and multiplying by 100 to get a percentage.
First if you look at the 30 year period leading up to the crisis, ie 1977 to 2007, the ABMI in 1977 was 646297 and in 2007 was 1474153. So [[(1474153/646297)^(1/30)]-1]*100 gives you the 30 year trend growth rate, which is 2.786%.
Now you can compare the annual GDP growth rates from 1992-97 with the period from 2002-07. I have put the annual GDP growth rate in blue and the budget balance (negative indicates deficit) in red
The growth rates in the 1990s were higher than in the 2000s, and the deficits being run by the Conservative government in the 1990s were much higher than those being run by Labour in the 2000s leading up to the financial crisis. But compared to the long run trend growth rate of 2.8%, what went on in the 2000s was not a boom, it had two years significantly above trend growth (2003 and 2007), whereas in the 1990s, growth was above 3% most of the time and the year of 1994 with very strong growth included a very large deficit!
As I explained in my last post the real reason for this was the much higher rate of unemployment in the 1990s which meant there was a large benefit bill draining the public finances, which wasn't the case in the 2000s. That's why the Tories don't ask the question "why did we run such large deficits in the boom years" in the 1990s, because they know the answer was due to unemployment.
I don't want to make this post too long so won't analyse the rest of the data but what we had in the years leading up to the recession was not a 'boom', we had had many years of around trend growth without a blip, which is a different thing. We had not had a recession since 1990/91. The 'boom and bust' that Gordon Brown referred to of the Tory years was a bust from 1980 to 1982, followed by a very strong boom from 1986 to 1990, followed by a bust from 1990 to 1992, followed by a boom from 1993 to 1996.
Where you had a 'boom' in the Labour years (well really going back to 1995, but most of that was Labour) was a boom in property prices. This meant individuals felt wealthier. Also there was a boom in lending, which was partly underpinned by and partly continued the growth of those property prices. This boom in lending was not underpinned by similar levels of economic growth, so the result was a large accumulation of private debt.
As a final point, just to illustrate the depth of the financial crash, the growth figures and deficits in the last few years were: 2007/08 -0.9%-2.5% 2008/09 -4.0%-4.9% 2009/10 1.8%-10.9% 2010/11 0.8%-9.9%
Had we continued on the path of trend growth of 2.8% from 2007, we would have had GDP 14.4% higher than it was at the end of 2007, so the depth of the recession and lack of pace of the recovery has lost an enormous amount of potential output.
Another misleading debate here is about 'the boom years'. The period where the right wingers attack Labour for running deficits is 2002-2008 (the budget was in surplus before that) where they say surpluses should have been run because we had an 'economic boom'. Long run trend growth in the UK in the 30 years leading up to the financial crisis was around 2.8%, so really a 'boom' is when you have growth significantly above that and a 'bust' is when you have growth significantly below that (especially when growth is negative).
This is data series ABMI, the measure reported for GDP. The series there just gives the absolute numbers so you can calculate the growth rate from one year to the next by dividing the second year by the first, subtracting 1 and multiplying by 100 to get a percentage.
First if you look at the 30 year period leading up to the crisis, ie 1977 to 2007, the ABMI in 1977 was 646297 and in 2007 was 1474153. So [[(1474153/646297)^(1/30)]-1]*100 gives you the 30 year trend growth rate, which is 2.786%.
Now you can compare the annual GDP growth rates from 1992-97 with the period from 2002-07. I have put the annual GDP growth rate in blue and the budget balance (negative indicates deficit) in red
The growth rates in the 1990s were higher than in the 2000s, and the deficits being run by the Conservative government in the 1990s were much higher than those being run by Labour in the 2000s leading up to the financial crisis. But compared to the long run trend growth rate of 2.8%, what went on in the 2000s was not a boom, it had two years significantly above trend growth (2003 and 2007), whereas in the 1990s, growth was above 3% most of the time and the year of 1994 with very strong growth included a very large deficit!
As I explained in my last post the real reason for this was the much higher rate of unemployment in the 1990s which meant there was a large benefit bill draining the public finances, which wasn't the case in the 2000s. That's why the Tories don't ask the question "why did we run such large deficits in the boom years" in the 1990s, because they know the answer was due to unemployment.
I don't want to make this post too long so won't analyse the rest of the data but what we had in the years leading up to the recession was not a 'boom', we had had many years of around trend growth without a blip, which is a different thing. We had not had a recession since 1990/91. The 'boom and bust' that Gordon Brown referred to of the Tory years was a bust from 1980 to 1982, followed by a very strong boom from 1986 to 1990, followed by a bust from 1990 to 1992, followed by a boom from 1993 to 1996.
Where you had a 'boom' in the Labour years (well really going back to 1995, but most of that was Labour) was a boom in property prices. This meant individuals felt wealthier. Also there was a boom in lending, which was partly underpinned by and partly continued the growth of those property prices. This boom in lending was not underpinned by similar levels of economic growth, so the result was a large accumulation of private debt.
As a final point, just to illustrate the depth of the financial crash, the growth figures and deficits in the last few years were: 2007/08 -0.9%-2.5% 2008/09 -4.0%-4.9% 2009/10 1.8%-10.9% 2010/11 0.8%-9.9%
Had we continued on the path of trend growth of 2.8% from 2007, we would have had GDP 14.4% higher than it was at the end of 2007, so the depth of the recession and lack of pace of the recovery has lost an enormous amount of potential output.
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Ajw71 wrote:Fact is Labour ran the economy at a deficit during boom years.
Your answer is above.
I really think that you are done here now, but please do go back and check with your tutor to see if you've missed any more dogma that you'd like debunking.
Someday everything is gonna be different, when I paint my masterpiece ---------------------------------------------------------- Online art gallery, selling original landscape artwork ---------------------------------------------------------- JerryChicken - The Blog ----------------------------------------------------------
I really think that you are done here now, but please do go back and check with your tutor to see if you've missed any more dogma that you'd like debunking.
Haha oh you think I'm done do you? Is that how it works here, you think I'm done so you don't answer any further questions, and ignore any further points being made.
Great way to debate, did you learn that from socilaist worker. Pathetic.
Joined: May 10 2002 Posts: 47951 Location: Die Metropole
Ajw71 wrote:Haha oh you think I'm done do you? Is that how it works here, you think I'm done so you don't answer any further questions, and ignore any further points being made.
Great way to debate, did you learn that from socilaist worker. Pathetic.
He thinks you made a complete plonker of yourself. Several other people think so too.
However, it's entirely your decision if you wish to go on illustrating your lack of intellectual rigour, your inability to deal with facts – and construct anything like a proper argument dealing with those facts – and your own lack of self-awareness on this score.
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Ajw71 wrote:Haha oh you think I'm done do you? Is that how it works here, you think I'm done so you don't answer any further questions, and ignore any further points being made.
Great way to debate, did you learn that from socilaist worker. Pathetic.
There's no need to keep answering your questions, not when the poster known as "Sally Cinnamon" has so eloquently replied to all of them in two posts, one on this page, one on the last - have a look for them because I'm not convinced that you've actually read them.
There's no need to go around and around in circles for another five pages of your repeated dogma but if you feel that any aspect of your questions were left unanswered then let us know.
But you never did answer my question of a few pages back, we know that you're young enough to have not fully appreciated the previous Tory government (you confirmed that some time ago), so where exactly did you learn your dogma from ?
Someday everything is gonna be different, when I paint my masterpiece ---------------------------------------------------------- Online art gallery, selling original landscape artwork ---------------------------------------------------------- JerryChicken - The Blog ----------------------------------------------------------
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