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Blair & Brown's dirty little secret

by Jerome a Paris Wed Apr 12th, 2006 at 04:54:09 AM EST

The thick line is private sector jobs
The thin line is public sector jobs
(both measured from their 1996 level)

This one is the total indebtedness of households, as a percentage of gross household income, in various countries (note that the scales are different on the two graphs).

That last one is an attempt by CDC Ixis, the investment bank that prepared the study from which all the graphs here come from, to assess what growth would have been without the increase in household debt: each year, they deduct 50% (or 60% for the USA, presumably because it's easier to borrow to consume) of the increase in household debt from GDP growth.

It's not pretty - even for the USA, where a lot of the increase in consumption has been fuelled by public (government) debt in addition to private debt.

And note that none of the graphs are zero-based.
by Colman (colman at eurotrib.com) on Tue Apr 11th, 2006 at 09:34:42 AM EST
So does this mean we have socialism via the back door?

For the US, half of the budget goes to the military. That is, it is government supported employment. The fact that firms like Lockheed are nominally private doesn't change the fact that they exist only because of government payments.

I imagine that health care in most of Europe could be considered a government supported industry, regardless of who provides the services.

Policies not Politics
---- Daily Landscape

by rdf (robert.feinman@gmail.com) on Tue Apr 11th, 2006 at 09:50:22 AM EST
Whatever about Socialism, it's certainly not free-market magic. Drew would say something about Keynes at this point I imagine.
by Colman (colman at eurotrib.com) on Tue Apr 11th, 2006 at 10:02:05 AM EST
[ Parent ]
Actually, it is free market «magic». But it has to be paid back, with interest. Only the temporary aberration of low i terest rates has made it sustainable for so long.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Tue Apr 11th, 2006 at 11:48:44 AM EST
[ Parent ]
Free-market necromancy maybe: Dr Frankenstein zapping the corpse.
by Colman (colman at eurotrib.com) on Tue Apr 11th, 2006 at 11:51:28 AM EST
[ Parent ]

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Tue Apr 11th, 2006 at 01:19:30 PM EST
[ Parent ]
Does this confirm, like I believe it does, that France, the only true communist country in the world, is actually doing very well compared to all its capitalist competitors?

Evviva il communismo e la liberta!!

by Alex in Toulouse on Tue Apr 11th, 2006 at 10:39:14 AM EST
France is not a communist country. Too few gulags imho.

The US is better in that department (Guantanamo anyone?).

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Tue Apr 11th, 2006 at 10:54:36 AM EST
[ Parent ]
And pray tell, why must a nation have gulags to be communist?  

Those who can make you believe absurdities can make you commit atrocities. -Voltaire
by p------- on Tue Apr 11th, 2006 at 11:28:03 AM EST
[ Parent ]
And you can reframe this further -

The poor and middle classes are going into debt to sustain the personal wealth of the rich.

The spending is semi-voluntary, but the effect on personal wealth is very similar to taxation, in that there's less real money available. This will become a very bad thing over the next few years, because debt that was once used to fund luxuries is now increasingly being used to pay for essentials like housing, fuel and transport. At the same time 'economic reforms' will be putting pressure on real wages.

Also, it's not actually true that the repayments will be at low rates. I suspect a lot of that debt will be credit card debt, whose rates are notoriously usurious.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue Apr 11th, 2006 at 12:54:51 PM EST
A considerable amount of the increase in public sector jobs are down to the Blair governments actions but it is often forgotten that these will include teachers and health workers.

Let's look at some factors that will be contributing to the increase.

For a start, there has been considerable recruitment of nurses and doctors to the NHS due simply to the changes in working patterns. Newly qualified doctors working in hospitals have had their hours reduced from the rediculous and dangerous level of 80-90 a week on call. This meant more were needed to provide 24/7 cover. Not in itself a significant number but there are also increases due to the pressure on health authorities to make extra provision.

The numbers involved in that will however be quite small compared to the education side, particularly the under 11s. Blair's famous "education, education education" commitment meant that more non-teaching staff were employed to support class teachers. Again fairly small in overall terms but more recently they have mandated that every teacher has a half day session a week for preparation, marking and personal professional development. This was already common practive in secondary schools where the teaching tends ot be undertaken by subject specialists. For most primary school teachers this was an innovation but it meant schools had to get their classes covered. The need is for an extra 10% teacher time. This does not necessarily equate to only another 10% of people employed as many of these cover posts will appeal to part timers or temporary teachers.

by Londonbear on Tue Apr 11th, 2006 at 05:05:33 PM EST
I am certainly not saying that that spending is bad - just pointing out that this is not how "Blairism" is sold. They flaunt their "reformist" credentials, and do the exact opposite, while blaming Old Europe for doing pretty much what they are doing.

Look at the Ségolène Royal episode. She said that she thought Blair was unfairly criticised despite spending a lot on education and healthcare - and that has been turned in the papers into a supposed admiration of the "third way" and "reform", etc... which Blair is supposed to embody.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Tue Apr 11th, 2006 at 05:59:15 PM EST
[ Parent ]
And I won't be the one to call foul here: improving teaching and health has my blessings. Although the other side of the story is the oft remarked injection of more and new manager tiers into the NHS (and what about schools?) Although I believe this is more Metatone's beef than it is mine.

The hypocricy, though, comes when the UK is touted as a "booming" economy, while its plummeting unemployment number is covered by increased public jobs. Again, I find nothing wrong with public jobs - as long as it is spend wisely. But freemarketistas (to generalise) shouldn't use the number as fodder that the Anglo-Saxon model trumps any other economic configuration while Blair and Brown practically betray the ideology they seem to pursue... And according to TGeraghty, the same is true for the US - but there the defense sector takes much of the public spending pie. Now there public spending doesn't seem the wisest solution...

by Nomad on Tue Apr 11th, 2006 at 06:11:06 PM EST
[ Parent ]
It was quite right for New Labour to create public-sector jobs after the diet Thatcher put public services on. What is insincere is to hush that up, claim the improvement in the job market is due to mobility, make out Britain has a hot free-market economy when in fact Blair & Brown have been running a Keynesian spending policy.

It's particularly infuriating when B&B and their surrogates (see this Ashley Seager article for example) keep on feeding the meme of a stark divide between UK and French economies, one successful, the other "failing". This narrative constantly paints a picture of a stodgy public-sector France compared to a flexible private-sector Britain. The implication is always that the UK has defeated unemployment through private-sector job creation. In fact, it's the other way round : over a decade, France has created more private-sector jobs than Britain, while Britain has been strong in public-sector job creation.

BTW, when you read in the press (hard to avoid this one since the Economist fed it into the mainstream a couple of weeks ago) that three-quarters (or two-thirds, accounts differ) of young French people want to become civil servants, you should remember that  teachers and health workers are included in the French fonction publique. In Britain they are public-sector employees, but not civil servants. Just another small example of the (more or less wilful) inaccuracy of British journalists in presenting France and its economy.

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Apr 12th, 2006 at 02:20:56 AM EST
[ Parent ]
The main problem I see with Blair/Brown is not the fact that they have increased public spending, but the fact that they are cowards. Instead of challenging the proponents of deregulated untamed free trade, many of whom come from Britain, they continue to provide cover for them by pushing for more liberalization and not advocating a bigger role of the government in creating a more stable and sustainable economy.

Mikhail from SF
by Tsarrio (dj_tsar@yahoo.com) on Wed Apr 12th, 2006 at 01:14:29 PM EST

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