21 Jul 19
2 edits
@no1marauder saidNo, generally due to exogenous shocks (like sudden increases in oil prices) who's [sic] effects soon dissipated.
No, generally due to exogenous shocks (like sudden increases in oil prices) who's effects soon dissipated.
It's popular amongst Keynesian revivalists to argue that the oil crisis which resulted from Yom Kippur was the main (or only) cause of stagflation. In truth, stagflation was experienced in the late 60's, and Keynesian theory was otherwise unable to deal with stagflation after it occured, whether or not it was Keynesian policies that caused it in the first place.
21 Jul 19
@ashiitaka saidWhere exactly? What country in the late 60s had "persistent high inflation combined with high unemployment and stagnant demand in a country's economy"?
No, generally due to exogenous shocks (like sudden increases in oil prices) who's [sic] effects soon dissipated.
It's popular amongst Keynesians revivalist to argue that the oil crisis which resulted from Yom Kippur was the main (or only) cause of stagflation. In truth, stagflation was experienced in the late 60's, and Keynesian theory was otherwise unable to dea ...[text shortened]... lation after it occured, whether or not it was Keynesian policies that caused it in the first place.
21 Jul 19
@no1marauder saidThe term was used in the UK to describe the economic situation as early as the mid-1960s.
Where exactly? What country in the late 60s had "persistent high inflation combined with high unemployment and stagnant demand in a country's economy"?
21 Jul 19
1 edit
@ashiitaka saidInflation in the UK in the mid to late 1960s hovered at about 5%. https://www.economicshelp.org/blog/2647/economics/history-of-inflation-in-uk/
The term was used in the UK to describe the economic situation as early as the mid-1960s.
Unemployment was at levels considered "full employment".https://en.wikipedia.org/wiki/Unemployment_in_the_United_Kingdom#/media/File:Unemployment_in_the_United_Kingdom_since_1881.svg
GDP from the end of 1965 to the end of 1969 increased about 12% in real terms. https://www.theguardian.com/news/datablog/2009/nov/25/gdp-uk-1948-growth-economy
Politicians saying something should not be confused with actual reality.
21 Jul 19
@no1marauder saidHow extremely fatuous! In what world is an inflation rate of 5% considered healthy for a developed economy?
Inflation in the UK in the mid to late 1960s hovered at about 5%. https://www.economicshelp.org/blog/2647/economics/history-of-inflation-in-uk/
Unemployment was at levels considered "full employment".https://en.wikipedia.org/wiki/Unemployment_in_the_United_Kingdom#/media/File:Unemployment_in_the_United_Kingdom_since_1881.svg
Politicians saying something should not be confused with actual reality.
On the topic of the UK economy in the 1960s, I trust the British chancellor of the time much more than I trust you.
21 Jul 19
@ashiitaka saidMost of that occurred after the devaluation of the pound in 1967; from 1960-67 the average was about 3%. https://econ.economicshelp.org/2010/02/economy-in-1960s-and-1970s.html
How extremely fatuous! In what world is an inflation rate of 5% considered healthy for a developed economy?
On the topic of the UK economy in the 1960s, I trust the British chancellor of the time much more than I trust you.
Regardless of whether the inflation rate was optimal, there was certainly no stagflation as there was full employment and continued GDP growth.
Moving the goalposts is a common strategy here, but your claim of stagflation in the UK economy in the mid 1960s is refuted by official statistics.
21 Jul 19
2 edits
@no1marauder saidI love how you cherry-pick a statistic and then declare victory.
Most of that occurred after the devaluation of the pound in 1967; from 1960-67 the average was about 3%. https://econ.economicshelp.org/2010/02/economy-in-1960s-and-1970s.html
Regardless of whether the inflation rate was optimal, there was certainly no stagflation as there was full employment and continued GDP growth.
Moving the goalposts is a common strategy here, but your claim of stagflation in the UK economy in the mid 1960s is refuted by official statistics.
Are you seriously saying that the fall in the value of the pound from $2.80 to $2.40 (a decrease of ~14% ) is responsible for the increase in inflation to from 2.2 % in 1967 to 9.5% by 1971 ( still before the oil crisis)? The pound has drastically fallen since the Brexit referendum, and inflation peaked at 3% around 2017. In reality, inflation from currency devaluation 'flushes out' of the system in a relatively short time - it certainly doesn't take 5 years.
Oh, and inflation was at 4.7% in 1965, before your devaluation, so your point is flawed.
Regardless of whether the inflation rate was optimal, there was certainly no stagflation as there was full employment and continued GDP growth.
You're getting confused about what stagflation is. Full employment is nothing to do with it - that's precisely the point! The word 'stagflation' is a portmanteau of stagnation and inflation - where is employment mentioned?
Moving the goalposts is a common strategy here, but your claim of stagflation in the UK economy in the mid 1960s is refuted by official statistics.
No it hasn't, and your superficial understanding of this (how much did you know before some quick searches this evening?) has been nakedly exposed.
21 Jul 19
@ashiitaka saidI knew that no stagflation occurred in the UK in the 1960s, something you obviously didn't.
I love how you cherry-pick a statistic and then declare victory.
Are you seriously saying that the fall in the value of the pound from $2.80 to $2.40 (a decrease of ~14% ) is responsible for the increase in inflation to from 2.2 % in 1967 to 9.5% by 1971 ( still before the oil crisis)? The pound has drastically fallen since the Brexit referendum, and inflation peaked at ...[text shortened]... g of this (how much did you know before some quick searches this evening?) has been nakedly exposed.
I used standard definitions of stagflation, not those created out of thin air by politicians and now you. Here's a dictionary one:
persistent inflation combined with stagnant consumer demand and relatively high unemployment
https://www.merriam-webster.com/dictionary/stagflation
Again, regardless of inflation increases, there is no stagflation unless there is, at the same time, slow or negative growth and high unemployment. This was simply not the case in the UK until the exogenous shock of oil price increases in the 1970s, so your thesis is refuted and not saved by your pedaling a non-standard definition of "stagflation".
21 Jul 19
@ashiitaka saidAs to inflation, the rate in the UK dropped from 4.8% in 1965 to 2.5% in 1967. http://inflation.iamkate.com/ Then the pound was devalued and the rate steadily rose (as economic theory would predict). It got worse when the UK current account went back into deficit for structural reasons, but still conditions of stagflation didn't exist until after the oil price shocks. As shown above, inflation per year averaged over 15% from 1974 to 1981 and unemployment rose and GDP growth went negative in 1974.
I love how you cherry-pick a statistic and then declare victory.
Are you seriously saying that the fall in the value of the pound from $2.80 to $2.40 (a decrease of ~14% ) is responsible for the increase in inflation to from 2.2 % in 1967 to 9.5% by 1971 ( still before the oil crisis)? The pound has drastically fallen since the Brexit referendum, and inflation peaked at ...[text shortened]... g of this (how much did you know before some quick searches this evening?) has been nakedly exposed.
@no1marauder saidI knew that no stagflation occurred in the UK in the 1960s, something you obviously didn't.
I knew that no stagflation occurred in the UK in the 1960s, something you obviously didn't.
I used standard definitions of stagflation, not those created out of thin air by politicians and now you. Here's a dictionary one:
persistent inflation combined with stagnant consumer demand and relatively high unemployment
https://www.merriam-webster.com/dictionary/stagf ...[text shortened]... so your thesis is refuted and not saved by your pedaling a non-standard definition of "stagflation".
The growth figures from the UK in the 1960s period are misleading - they may seem okay by today's standards (we are in the post-financial crisis world), but the UK economy declined massively in relative terms when compared with its competitors in the 1950s and 1960s. The term "stagnation" does not actually refer to a growth rate of 0%. It is used to describe situations of relatively slow growth. For example:
As negative factors coalesced during the 1960s, the slogan used by Prime Minister Harold Macmillan "(most of) our people have never had it so good" seemed increasingly hollow. The Conservative Government presided over a ‘stop-go’ economy as it tried to prevent inflation spiralling out of control without snuffing out economic growth. Growth continued to struggle, at about only half the rate of that of Germany or France at the same time.
Britain's economy remained strong with low unemployment into the 1960s, but towards the end of the decade this growth began to slow and unemployment was rising again.
Unemployment exceeded 1 million by 1972 and had risen even higher by the time the end of the decade was in sight, passing the 1.5 million mark in 1978.
1972 is before the oil crisis.
In comparing economic prosperity (using gross national product per person), the British record was one of steady downward slippage from seventh place in the world in 1950, to 12th in 1965, to 20th in 1975.
Again, regardless of inflation increases, there is no stagflation unless there is, at the same time, slow or negative growth and high unemployment. This was simply not the case in the UK until the exogenous shock of oil price increases in the 1970s, so your thesis is refuted and not saved by your pedaling [sic] a non-standard definition of "stagflation".
Again, stagnation is a relative term. Given how much the UK economy declined in relative terms in those decades, it was considered stagnant at the time. Now, in a world where we have realized that easily achievable short-run growth caused by excessive government spending and artificial inflation of demand has long-run consequences. This accounts for the generally lower growth rates of countries these days - but don't be fooled by looking at figures from the postwar period.
Your whole point rests on the fact that stagflation occurred because of the oil crisis in 1973. That's obviously not true since inflation was rising, unemployment was rising from '65 onwards and growth rates were slowing.
https://en.wikipedia.org/wiki/Economic_history_of_the_United_Kingdom#Interwar_stagnation
https://en.wikipedia.org/wiki/Unemployment_in_the_United_Kingdom#/media/File:United_Kingdom_unemployment_1881-2017.png
21 Jul 19
Speaking of Norway, their economic success is situational.
They are sitting on a wealth of oil reserves.
But then again, so is Venezuela.
So the debates continue.
Additionally, the distinction between Socialism and Communism should be made.
People should Google it.
Socialism as a term has been misused in the past.
Soviet Union called themselves a Socialist country.
They were in fact Communist.
Heck, East Germany called themselves a Democratic Republic.
21 Jul 19
@ashiitaka saidAgain, the definition of stagflation:
I knew that no stagflation occurred in the UK in the 1960s, something you obviously didn't.
The growth figures from the UK in the 1960s period are misleading - they may seem okay by today's standards (we are in the post-financial crisis world), but the UK economy declined massively in relative terms when compared with its competitors in the 1950s and 1960s. The te ...[text shortened]... ia.org/wiki/Unemployment_in_the_United_Kingdom#/media/File:United_Kingdom_unemployment_1881-2017.png
persistent inflation combined with stagnant consumer demand and relatively high unemployment
This did not exist in the UK (or anywhere else that I can think of) except through exogenous shocks. That capitalism doesn't work very well even in the best of times is not exactly unknown to me but minor increases in unemployment and slightly slower growth (still exceeding 3% in real terms in the late 1960s) doesn't meet the standard definition of stagflation.
21 Jul 19
@no1marauder saidIt's pretty clear to me that this whole debate rests on different interpretations of the term "stagflation". The term was used relative to other countries at the time and the figures then cannot be compared to figures today without considering the figures of other countries or the fact that economic policy-setters targeted different things in those days.
As to inflation, the rate in the UK dropped from 4.8% in 1965 to 2.5% in 1967. http://inflation.iamkate.com/ Then the pound was devalued and the rate steadily rose (as economic theory would predict). It got worse when the UK current account went back into deficit for structural reasons, but still conditions of stagflation didn't exist until after the oil price shocks. As ...[text shortened]... year averaged over 15% from 1974 to 1981 and unemployment rose and GDP growth went negative in 1974.
Then the pound was devalued and the rate steadily rose (as economic theory would predict)
I've already mentioned that an increase in inflation from 2.2% in 1967 to 9.5% in 1971 cannot be explained by a 14% devaluation of sterling in 1967. A devaluation of that size would never cause such an enormous increase in inflation, and it would stop increasing after a year or two as it worked its way out of the system.
21 Jul 19
2 edits
@no1marauder saidYou're ignoring historical context and looking at Britain's growth rates at the time through the lens of a post-2008 world. They were considered bad at the time - this is why Britain's economy declined so much in relative terms over the period. Obviously, a growth rate considered impressive by today's standards cannot be considered impressive in the 1960s if it was half that of Britain's contemporaries. This context is important to remember when wondering why the Chancellor used the term at the time.
Again, the definition of stagflation:
persistent inflation combined with stagnant consumer demand and relatively high unemployment
This did not exist in the UK (or anywhere else that I can think of) except through exogenous shocks. That capitalism doesn't work very well even in the best of times is not exactly unknown to me but minor increases in unemployment and ...[text shortened]... l exceeding 3% in real terms in the late 1960s) doesn't meet the standard definition of stagflation.
The point is that "stagnation" is a relative term.
21 Jul 19
@ashiitaka saidYes, I'm using the standard economic definition of "stagflation" and you are using one you have concocted on your own. Thus, it is reminiscent of Alice's exchange with Humpty Dumpty:
It's pretty clear to me that this whole debate rests on different interpretations of the term "stagflation". The term was used relative to other countries at the time and the figures then cannot be compared to figures today without considering the figures of other countries or the fact that economic policy-setters targeted different things in those days.
[b]Then the pou ...[text shortened]... inflation, and it would stop increasing after a year or two as it worked its way out of the system.
'And only one for birthday presents, you know. There's glory for you!'
'I don't know what you mean by "glory",' Alice said.
Humpty Dumpty smiled contemptuously. 'Of course you don't — till I tell you. I meant "there's a nice knock-down argument for you!"'
'But "glory" doesn't mean "a nice knock-down argument",' Alice objected.
'When I use a word,' Humpty Dumpty said, in rather a scornful tone, 'it means just what I choose it to mean — neither more nor less.'
'The question is,' said Alice, 'whether you can make words mean so many different things.'
'The question is,' said Humpty Dumpty, 'which is to be master — that's all.'
https://sabian.org/looking_glass6.php
Try not to fall off any walls, Ash.