I really don’t understand what it is that Douglass wants the Bank of England to do. It can’t do nothing, it can either do enough so that nominal income is predictable or it can keep it unpredictable. There is no choice to not engage in monetary policy as he suggests. He might want it abolished, in which case he may as well ask for a pony as well.

It is interesting to note that this puts Carswell well to the loony right of Friedman and Hayek, neither of which were opposed to monetary policy’s role in preventing depression (Hayek did in the 1930s, but recanted in later life).

I mean, he’s got a point, we are screwed, its just funny that his solution to this problem is the same as his solution to all problems…

what is that, left outside, a continuation of what has proven to be a failure already, deregulation…

to me, that is a charter for thieves! and they have stolen too much from us already, haven’t they. Our debt/austerity is their exponentially accumulating wealth. So yeah we are well and truly screwed!

“we will deal with the zombie banks”

which banks are these then? Are there insolvent UK banks we don’t know about?

After watching the Godfather last night, a free unregulated market, free from any government interference would lead us in to a state were business gangs would rule. Everyone for themselves will take us into a Mafia style society.

Steven

Yes an apt description. A deregulated market is a gangsters paradise. The fact that even Tory voters would lose out too passes Douglass by…

He is obviously speaking out of his distended rectum, the qurstion is, who distended it? 🙂

“The old orthodoxy claims that an economy grows when demand increases. I believe that demand rises when you have growth”

I believe I can fly… and I believe I can touch the sky… (magic ponies)

Douglas Carswell M.P.
On the plus side, he called for an overhaul of M.P.s’ expenses long before the scandal broke and he was the first M.P. in about 200 odd years to call for the removal of the Speaker (Michael Martin).
For which the Labour M.P Dennis McShane. called for him to be disciplined.
However, this statement seems muddled and somewhat incoherent, he needs to spell out exactly what he means, else us lesser individuals may think he has fallen under the spell of all the other loons on the government benches.

The point is that it doesn’t matter what intervention Government makes at a macro economic level it will be wrong. Its proper relationship with the economy is to leave it alone.

it wasn’t deregulation that caused the current slump it was intervention (bailing out the banks).

it wasn’t deregulation that caused the current slump it was intervention (bailing out the banks).

The UK bank bailouts are going to end up more or less at breakeven for the government.

Their contribution to the deficit is virtually nil (there’s a small amount of extra interest payable on government debt, but the banks are paying interest on their loans, and in any case interest rates on government debt are virtually zero).

So, erm, how did you work that one out?

Interesting that he is quoting Jim Callgahan.

Sunny

Try reading The Plan, Carswell and Hannan’s plan.
It’s all explained there IMHO it’s not rubbish, but what we have is Crony Capitalism. Most free-marketeers would have let the banks fail.

I’m not in politics and I know about it, so why don’t you?

Btw, I would abolish the minimum wage. I’m not paying my daughterand her friends the minimum wage to wash my car. Don’t start me off on that one…

We used to think that you could use cheap credit to get out of a recession. I tell you in all candour that that option no longer exists

that option no longer exists? erm, check bond yields, check BoE QE firepower. Or maybe he’s not referring to the availability of cheap credit, but what you can do with it – erm, check evidence

orthodoxy which holds that government’s can engineer growth

there is a HUGE difference between thinking fiscal or monetary policy can engineer growth in the long-run, in normal times (I think it can be conducive to growth but can’t be used to ‘stimulate’ growth as such) and thinking fiscal and monetary policy can help increase output and employment in the depths of a recession. i.e. The Return of Depression Economics Anybody who doesn’t understand this distinction doesn’t understand a thing.

The old orthodoxy claims that an economy grows when demand increases. I believe that demand rises when you have growth

actually the old orthodoxy thinks the economy will respond to increases in demand when it is experiencing recession caused by a demand shortfall and is below potential output.

Otherwise, the old orthodoxy thinks in normal times something rather close to “demand rises when you have growth” if that is interpreted as in the long-run growth happens because of increases in productive capacity, and demand will rise because if productivity increases real wages increase (so not a “magic pony” but perfect sense). Look at it the other way – if demand somehow increases, how can growth occur unless the productive capacity of the economy increases to meet that demand? In the present circumstance, that’s not an issue – we are below capacity with idle resources waiting to be put to work.

So Carswell is mixing up the economics of an economy at (near) full capacity with the economies of an economy is a slump

p.s. although I have linked to a Krugman book, so some may be tempted to dismiss my argument as left-wing nonsense, actually the distinction between the effects of fiscal and monetary policy in economy below potential output, and at potential output, is at the core of what everybody likes to call “neo-liberal” mainstream economics, it’s what all those DSGE models that everybody derides is based on, what monetary policy rules are based on, and so forth.

@ 13 Shrugged

“Btw, I would abolish the minimum wage. I’m not paying my daughterand her friends the minimum wage to wash my car. Don’t start me off on that one…”

Firstly, I’m fairly certain that the minimum wage doesn’t apply to paying your kids to do chores.

Secondly, even if it did, how much *do* you pay to get your car washed? Assuming the job takes half an hour and that your daughter is younger than 18, you’re looking at a massive £1.84 for the job. And if she’s under 16 there’s no minimum wage at all.

I always got a fiver for washing the car. Maybe I’m horribly overprivileged.

16 – cor, really? In the days when I was actually washing cars I always got either 50p or £1. But then that was the late 80s I guess.

@ 17 Tim

This would have been around the turn of the millenium, although I suspect that still works out at me getting a better deal. Nevertheless, I don’t think £1.84 is a huge amount to wash a car, even if the minimum wage applies here, which I seriously doubt.

There should be no correct rate for a child washing a car. The price that the car owner is willing to pay should reflect the opportunity cost of the time foregone to wash the car himself. However, the price is unlikely to be an equilibrium price since children are usually lacking in alternative income streams and as a consequence it is easy to exploit their poor bargaining position. A car owner who values their time highly, and can find better uses of their time than washing a car should pay more than someone with lower valuable alternatives. When the opportunity cost is zero they should wash it themselves. Enterprising children should wait until the car owner is particularly busy until offering to wash the car as that offers the most likely time to yield high compensation. All the choices in their life will really come down to opportunity cost so it is pretty much the only ethical lesson children need to be taught.

“All the choices in their life will really come down to opportunity cost so it is pretty much the only ethical lesson children need to be taught.”

Wait… what?

“Most free-marketeers would have let the banks fail.”

In the ivory tower/pub perhaps.

At 11pm in the offices of government, after a day of panic reported every hour by 24 hour news, with civil servants running up screaming ‘do something, we’re hours away from cash machines not working and full scale panic’, and wealthy business people on the phone wanting news of what the hell is going on……..a different matter perhaps?

I guess we don’t know, seeing as ultra libertarians have never run an actual economy operating in a democratic country and had to make these decisions.

@ 20 vimothy

“Wait… what?”

I *think* he’s taking the piss. If not, I’m as stumped as you are.

I guess we don’t know, seeing as ultra libertarians have never run an actual economy operating in a democratic country and had to make these decisions

Libertarians would not try to run an economy.

They’d leave it alone and watch it flourish.

this blog post is economically illiterate.

“They’d leave it alone and watch it flourish.”

But leaving things alone is in itself a decision. So are you saying that in the 11pm scenario, an ultra-libertarian govt could withstand the pressure?

Any examples of ultra-libertarians in government making decisions to ‘leave things alone’ during times of great pressure?

Libertarians would not try to run an economy.

They’d leave it alone and watch it flourish.

Your first 15 words are spot on. Your 16th, not so much.

@ 26 john b

Heh, beat me to it.

@ Planeshify

Any examples of ultra-libertarians in government making decisions to ‘leave things alone’ during times of great pressure?

http://www.quebecoislibre.org/06/061029-5.htm

Hong Kong has certainly got a lot to recommend it. However, the HK government is not really a good example of non-intervention specifically in answer to Planeshift’s question. During their own financial crisis they intervened massively in the market and blew the short sellers out of the water. During the Asian financial crisis, currency speculators for good reason were heavily selling the Hong Kong dollar and shorting local stocks and Hang Seng Index futures. The HK government moved into the market and bought US$15 billion worth of blue-chip HK shares over a two-week period. The stated aim was to ‘punish’ currency speculators. So when it came to the crunch an avowedly non-interventionist government did intervene. ” Instead of the government being a regulator, you find that the government is now a player, a very key player.” Could you imagine the outcry if the UK government had intervened to buy BP shares after their Gulf oil spill to stop their shares price falling? That was the equivalent to what the HK government was doing. Anyone who was short Hang Seng Index futures lost a fortune as the government intervention rewarded the longs.
http://www.thestandard.com.hk/news_detail.asp?pp_cat=&art_id=48262&sid=&con_type=1&d_str=19980816&sear_year=1998

One of the main players has since said. “We made a mistake.” He said Wednesday the markets could have collapsed, “if the Hong Kong government hesitated any longer.”

“Government intervention raised public confidence in the market when it was near total collapse. It prevented a bigger crisis and saved the market.”

Tsang declared at the time: “We have frustrated their plan. We are absolutely determined to use all means available to us to protect the stability and integrity of our currency and financial markets.”

http://www.thestandard.com.hk/news_detail.asp?pp_cat=1&art_id=48335&sid=14350285&con_type=1&d_str=20070705&sear_year=2007

On one hand it was wrong for the government to be a player in the stock market. Yet, one of the main players in hindsight thinks it was correct for them to intervene to prevent a complete collapse. Faced with severe financial distress, ideals changed to pragmatism.

Around half the population of Hong Kong live in public housing, which is a form of intervention in the property market. The HK government used to be and probably still are the biggest landlord in the world. Moreover, they intervene in the gambling market by retaining a state gambling monopoly.

Carswell is a Randist. That says all that you need to know about him.
http://www.talkcarswell.com/show.aspx?id=601