Tuesday, 31 March 2015

The real recession story and how Labour's plans to fix the deficit are better than the Tories'

Admittedly, New Labour made a mistake in spending so much in the previous government and they mistakenly liberalized the banks which was what really caused the global recession which started in the US. The Tories would've done no better - it was the Tories who really liberalized everything under Thatcher and, coincidentally(?) there were more recessions thanks to their liberalization - they were hardly opposing New Labour's liberalization of the banks.

The Tories then supported austerity once the recession hit - scapegoating Labour for causing the recession saying that they spent too much and created too large a deficit (they claimed that government spending caused recession - any economist knows that's completely wrong - who's the economically illiterate party now?). Interest payments were not outstripping borrowing so the deficit was a long-term problem - not a short-term one that caused the recession (as the Tories say).

Indeed, if the Tories got in in 2008 (if there were an election then) and successfully implemented harsh austerity there and then, the recession would've massively worsened due to the sharp reduction in government spending which reduces Aggregate Demand (and so, GDP would've fallen even more). What instead happened was that banks were bailed out (which effectively counts as spending), spending was increased to lessen the effects of the recession (partially in the form of automatic stabilizers such as unemployment benefit as unemployment increased) and the effect of the recession was lessened. In fact, Brown was hailed as a saviour of the world for advocating Keynesian spending as a way of avoiding a total meltdown!

In the 2010 election, Labour supported eliminating the deficit by 2020 while the Tories promised it would be balanced by 2015 - which they failed at and are now aiming for 2018 which would require (even more) colossal cuts. Labour are aiming for 2020 minus investment (which pays for itself). We'll see if the Tories do any better at realistic targets this time...

There's good reason why growth has been so horrendously slow and wage rises have been slow to occur and it's because the Tories cut during a recession when, really, you've got to spend to encourage spending. Now that we have a stable recovery we can cut, both Labour and the Tories agree on this.

Monday, 2 March 2015

Why Labour's policy on university fees makes sense

The uni fees and loan system works to an extent - people have massive loans forced on them but they only have to pay them a bit at a time when they're earning a good wage - it's already a graduate tax in all but name! It also means one less thing to fund from elsewhere; you can only raise a certain amount from tax evaders and banks as suggested elsewhere. It's popular to say "scrap the fees" but it would be costly to do so and Labour, with this policy, should help fix the major problems with the current system (still not perfect, but it'll be better).

There's two major issues with the current system that Labour are effectively fixing. Firstly, the levels at which the fees are at means that billions will almost certainly be written off after 30 years losing the taxpayer money so, in fact, reducing the fees by £3,000 could actually be good for the taxpayer (unlike what the Tories say!) Secondly the maintenance grant/loan isn't really high enough for those on poorer incomes to go to university with - Labour will raise it by £400 which sounds like little but it will make an important difference.

Additionally, Labour have correctly identified and admitted that university just isn't for everyone - some people do badly academically and don't want to continue school as it were! University should cost the students something because it isn't compulsory and it shouldn't be necessary to get a good job. Indeed, most of the time the degrees offered at uni don't teach you anything that will be useful for the job; they just differentiate some people from other people, effectively showing one person has spent more time learning an unrelated subject!

To fix the issue above, Labour will introduced vocational (read: actually useful) qualifications and, critically, guarantee apprenticeships by forcing companies holding a government contract to offer apprenticeships. Unlike other forms of education - you don't have to pay for an apprenticeship and it's directly relevant for whatever job you want to go into.

In fact, I am about to go to uni myself, and I am happy to pay a price in my future life for it. If I wanted, under Labour's policies I'm sure I could get an apprenticeship as an accountant and work into a profession that way - as I want to be a politician or lawyer and have more academic backing I will get a degree, but I don't mind there being a cost since I didn't HAVE to get the degree.

Also, Ed remembers what happened to the Lib Dems when they pledged to remove fees - they ended up trebling them and now tell off Labour for pledging to reduce the fees by the same amount the Libs pledged last time (by £3000). He's not going to make the mistake of making an expensive promise he can't keep - however reducing them a bit and increasing the maintenance loan and increasing the relevance of degrees and increasing apprenticeship provision are all things that WILL make a difference for my generation.