Following an article by Will Hutton in the Observer newspaper of 03 January, arguing that the economic news was not as bad as some have predicted, the paper was big hearted enough to publish this letter from me the following Sunday, 10 January:
Is Will Hutton applying for a post as Gordon Brown's spin doctor? His claim that the UK economy is not a basket case after all (03.01.10) will no doubt be highly appreciated by New Labour, but is highly selective in the evidence cited. For example, to say that "growth in Britain from the dark days of the 1991 recession to the end of a disastrous 2009 has still averaged a solid 2.1% - higher than any of the big economies in Europe and Japan" could as much indicate how bad the 1991 recession was in the UK as how we have performed since. Similarly, to say that UK industries which have survived the recession are highly competitive is at least partly due to the lower value of sterling. The fact is that levels of public and private debt have increased dramatically under a government which paraded its claims of fiscal prudence and the cost will take many years to repay, probably under another government.
Thursday, January 14, 2010
Friday, January 1, 2010
House and fuel price fears!
Bad News! According to press reports, petrol prices are set for a major increase. Really bad news - experts also predict that the housing market is set for a further decline in 2010! Bad news? Really?!
Why are higher fuel prices and lower housing prices both considered bad news?
In fact, both these predictions are good news. After all, oil is a finite resource which will run out in the near future, so increasing the price will encourage everyone to use it more sparingly and help justify investment in alternative, sustainable, energy sources. Increasing the price is seen as a good thing where excessive consumption of other commodities, such as alcohol, is seen to need government intervention, so why not also in petrol?
At the same time, housing seems to be the only commodity for which reduced prices are seen as bad news. Yet lower prices are great news for improving accessibility for the young or poor (or young and poor!). Lower prices also discourage speculation and make it more attractive to
invest in alternative forms of tenure which can provide a more stable and diverse housing market. Another benefit is that it reduces the temptation to get on the housing ladder for reasons of financial gain rather than to have a decent place to live. After all, in the last two decades, house prices rose so fast that returns were greater than going out to work, hardly a good incentive for increasing a work ethic.
So, let's start 2010 by welcoming the prospects of higher fuel prices and lower housing prices!
Why are higher fuel prices and lower housing prices both considered bad news?
In fact, both these predictions are good news. After all, oil is a finite resource which will run out in the near future, so increasing the price will encourage everyone to use it more sparingly and help justify investment in alternative, sustainable, energy sources. Increasing the price is seen as a good thing where excessive consumption of other commodities, such as alcohol, is seen to need government intervention, so why not also in petrol?
At the same time, housing seems to be the only commodity for which reduced prices are seen as bad news. Yet lower prices are great news for improving accessibility for the young or poor (or young and poor!). Lower prices also discourage speculation and make it more attractive to
invest in alternative forms of tenure which can provide a more stable and diverse housing market. Another benefit is that it reduces the temptation to get on the housing ladder for reasons of financial gain rather than to have a decent place to live. After all, in the last two decades, house prices rose so fast that returns were greater than going out to work, hardly a good incentive for increasing a work ethic.
So, let's start 2010 by welcoming the prospects of higher fuel prices and lower housing prices!
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