Associated Press
David Cameron's economy still isn't pointing in the right direction.
Mitt Romney arrived in London early this morning, as part of a multi-day international excursion. Perhaps, while he's across the pond, the Republican presidential hopeful can take a look at the problems plaguing the British economy.
The U.K. economy unexpectedly shrank the most since 2009 in the second quarter as record rainfall and an extra public holiday hurt output, increasing pressure on Prime Minister David Cameron to abandon the government's biggest budget squeeze since World War II.
Gross domestic product fell 0.7 percent from the first quarter, when it dropped 0.3 percent, the Office for National Statistics said in London today. Economists forecast a 0.2 percent decline, according to the median of 36 estimates in a Bloomberg News survey. Construction plunged 5.2 percent, production fell 1.3 percent and services declined 0.1 percent.
Americans should care about this, if for no other reason because of interconnectivity of the modern global economy. But there's also a purely political perspective to keep in mind: namely, the problem of Republican predictions.
As we discussed in April, Republican policymakers in the U.S. spent quite a bit of time arguing that the United States should follow Europe's lead and impose austerity measures here at home. This is especially true of David Cameron's British austerity policies, which have drawn enthusiastic praise from Republicans.
In fact, it was just last year when Sen. Jeff Sessions (R-Ala.) wrote an op-ed urging U.S. policymakers to follow the lead set by our friends across the pond: "We need a budget with a bold vision -- like [the one] unveiled in Britain."
We're now witnessing the effects of the Tories' conservative vision: the first British double-dip recession since 1975.
Will this deter Republicans who continue to argue that spending cuts and a focus on debt reduction -- remember "cut and grow"? -- will work wonders? Probably not, but the American mainstream should take note.
In 2011, austerity's champions -- in Europe and the U.S. -- said taking money out of the economy and scaling back investments will lead to stronger growth and lower debts. We've now seen the results of this experiment: lower growth and higher debts.
A year ago, Richard Portes, an economist at the London Business School, argued, "My view is that we are in serious danger of a double-dip recession. This is going to be a cautionary tale."
A year later, we know Portes was exactly right, but American conservatives refuse to learn the lesson.
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"The U.K. economy unexpectedly shrank the most since 2009 in the second quarter"
unexpectedly? hardly. there were numerous predictions of exactly this happening long before they started down the road to austerity.
On the contrary, they have learned the lesson: Cameron is still in power, and the British welfare state is being progressively cut back.
The general theme of European austerity is clear: make draconian cuts to the welfare state, which causes economic hardship, which justifies more cuts to the welfare state. Never let a crisis go to waste.
What austerity? The UK spent more in 2011 than 2010. 691.67 pounds over 669.44.
http://www.guardian.co.uk/news/datablog/2011/oct/26/government-spending-department-2010-11
This austerity:
- Austerity Defenses
- Ben Cohen: Double Dip Recession in UK Proves Austerity Doesn't Work
- Austerity In The United Kingdom Leaves Disabled In Fear For Their Lives
- Chancellor's austerity measures causing UK 'lasting damage', NIESR warns
- Britain Defends Austerity Despite Moody’s Debt Warning
- Paul Krugman attacks Britain's austerity drive as 'deeply destructive'
- The Leprechaun Factor
This one has a nice pretty picture of UK's austerity:
Cameron's Remarkable Achievement
And this one shows the overall effects of austerity in Europe:
The New Voodoo
Looking at Shooter's link you find that half of the "increase" was due to increased debt payments, and that the total increase was 0.3% from 2010 to 2011. The vast majority of government departments actually took a hit and those with minor increases also took a hit because of inflation. As Cameron makes clear in his defense of budget austerity, he has doubled down since then. Their double dip recession, the worst since 1950, is the reason that governments need to spend during decreases in the business cycle in order to make up for those people who don't have the money to spend and to get money flowing through the economy again.
"The cuts across departments appear to equal at least £24.9bn in slashed spending to individual government programmes and agencies. Worse is yet to come for Whitehall - with cuts of up to 30% per department coming down the pipeline.
Only 15 out of 54 government departments and major agencies surveyed received no cut." (From Shooter's article)
Looks like Shooter shot himself in the foot (again). Sure hope his medical insurance covers all those self-inflicted wounds.
DKM - I'm sure you know what a liquidity trap is, why do you think throwing more money at it will save the day?
Stephen? Stephen Colbert? Is that you?
Good grief. How hard is this for Mr. Mitty: the reason for government stimulus in a slump when the private sector is not doing what it normally does is to increase demand.
Unbelievable.
In the meantime, the rich are getting richer.
We have up to five years between elections over here. The coalition's popularity is waning but it is still nearly three years from an election. Cameron is still in power because of the system, not because the electorate has expressed renewed approval of policies
A no confidence vote is possible , probable , impending , in the wings of progress .
As if the Republicans care about the economy . . . They care about staying in power, and seeing their corporate puppet-masters prosper. This is precisely what has happened in Britain -- Cameron remains in charge; British financiers are fat.
However, yes, it's true that the R's may now have to find another convenient slogan to justify austerity, since it's now clear that austerity hurts everybody but the ruling class, and fails to boost GDP.
Republican's would have us believe that more tax cut's for the top2%and austerity for the rest will put us in economic heaven.
Although we need not enact severe austerity measures, there is a need for some level of responsible spending. The debate these days seems to focus on the ideal level of spending, or 'investment', in the economy..while I agree infrastructure and the like provide a compelling argument for some level of increased government spending, that's far from the solution. Infrastructure spending, at its core, only creates temporary jobs (it only takes but so long to build a road), artificially boosts our GDP and doesn't provide of means of sustained growth. If we're going to say "don't cut spending", the real conversation needs to be focused on the question "what are we going to spend on?" and the answers need to shy away from the short term solutions and fixes we often hear from politicians.
You missed the point of investing (invest, v. - to put money to use by purchase or expenditure in something offering potential profitable returns) in infrastructure, which is to create something like roads, power lines, wide band internet accessibility, water and sewage treatment plants, etc. that will give you a payback later on.
We don't spend money just to create short term jobs. Otherwise there would be no problem with giving more money to the war profiteers, but instead we spend the money on something that will enable a continued benefit for the foreseeable future that makes other activity more profitable. Obama's American Jobs Act is no short term solution or fix. It is an investment that will pay back what was spent in terms of increased productivity.
Thanks for the clarification @dkm, although, I disagree that I missed the point of 'investing'. There needs to be a serious cost benefit analysis in the proposed infrastructure spending--that idea that the American Jobs act will "pay back" is a relatively blank statement that doesn't have too much factual evidence behind it that I can find. Yes, the construction of certain roads and systems will prove to be a pay-off, but just as any investor would analyze the potential pay-off before investing in a stock, I'd like to see what the expected pay-off is on the roads and bridges being built because if they don't improve quality of life in the status-quo, say improve commute time, it's a worthless investment and false growth.
If the Republican objective is to cause Obama to fail, then it is a no brainer for Republicans to endorse more austerity measures. They see that Britain is cutting their domestic programs while failing to deal with revenues. This is the problem is most of Europe. They are enacting austerity measures while failing to increase revenues. It is exactly what Republicans want to do to the US, kill domestic spending on what they consider welfare while handing welfare to defense contractors.
If?
"We're dealing with our debts at home and the debt crisis abroad. We've made progress over the last two years in cutting the deficit by 25% and businesses have created over 800,000 new jobs,"
This was the official response by the Tories from Sky News. Notice that they are still focussed on creating austerity and cutting budgets, not in improving Britain's infrastructure or economy. You'll notice that those 800,000 jobs he mentions are offset by people losing jobs that he doesn't mention.
Hi Rachel,
I'm writing a book framing some of the recent irrational political schemas in the United States using psychological and historical perspectives to elucidate recurrent patterns of human stupidity. I plan to make a huge acknowledgment to your work as part of my inspiration to write the book.
Rachel, I appreciate your coverage of the voter-suppression laws in various states and I would like to ask you to consider challenging the African American
church community to mobilize as they did during the civil rights protests and provide organization, human resources, transportation and yes, finances to assist those who do not have photo identification to get it once and for all and quell this subversive attempt to deny African Americans access to the vote. This is a critical year and it's crunch time. Black churches need to put their money and resources to good use to re-elect President Barack Obama. Far too many so-called evangelicals who preach their interpretation of the will and word of God with venom and vitriol dripping from their fangs have made their political goals of ousting the president very clear and they have mobilized against him. It is time counter their influence.
I would also like to ask if you would strongly encourage a similar grassroots approach from the Latino community through it churches. Such a concerted effort could make a huge difference in democratic voter turn out in November regardless of how the courts rule.
Thanks!