"It is structural change which is needed and is not just about demand management."
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Dugsie is right.

What is depressing about Newlabour/Compass neo-liberal Keynesians, is how little they understand about Keynes, and the circumstances for his few "successes" (in fact they have probably been inaccurately credited to Keynes). Stimulus spending makes sense only if it is catalytic. If its not, its a hand-out (usually ending up with the wealthy), or a temporary electioneering trick to create a short period of more shopping to make a ruling government popular.

For stimulus spending to be catalytic, it is essential that certain positive economic conditions exist, especially high latent demand for products manufactured in the country. Typically, if the economic conditions are positive, that would apply to both the export and domestic market.

If you are uncompetitive in the export market because your goods are too expensive, or not wanted, or competition is too great, or the market is glutted, or the market is in recession.... or if the domestic market is flat because of high household debt, unemployment, homelessness and foreclosures, bankruptcies, increasing poverty, outsourcing, foreign purchase and relocation of UK industries and services, inflation...... then the stimulus will act rather similarly to water poured on a duck's back. The wealthy will gather below the duck and catch the stimulus, as they always do.

The UK is suffering all of the above negative conditions. This means that the stimulus will have only temporary results at best, or (as happened under Brown) no effect at all. A car scrappage scheme worked as long as it was there. It left nothing behind. This is typical of neo-liberal economic management through supply-side monetarist interventions. It used to be called voodoo economics, but now it appears on Compass on a regular basis.

Some of the problems the UK is suffering are structural...they are contained within the structure of the economy and they wont be cured by fiscal tricks alone. They need designed solutions along with incentives. Some of the problems are beyond the capacity of the UK to influence... such as the cost of British exports. The changes in the market and wage levels in the UK, according to neo-liberal theory, will sort this out over time. But we all know that neo-liberal theory, as is being expounded in a number of articles on this page, doesnt work the way it appeared to work a decade ago when the imperialist nations ruled the roost.

Something more radical than this will be required in the long run. The UK needs to move away from its imperial past and break from its junior partner status to the USA. We are no longer a great world power and we need to wake up to reality and live within our means, all the more so if Scotland and Wales separate from England. A large 'defence' budget can no longer be afforded. Our resources need to be focused on creating employment in socially useful areas and via green investment and looking after those who are vulnerable through old age and/or disability. It is structural change which is needed and is not just about demand management.

Who is Howard Reed. What authority and influence does this individual have to give the Leader of the Labour Party advice. Unbelievable

You might not have got the e-mail I have just sent so may I refer you to view the <coalitionforeconomicjustice.org» website.

Please e-mail or ring me if you wish, I have an answerphone if not available when you ring.

Mr Irvin: we fundamentally disagree, and you have zero evidence that your approach would work. You cannot show any examples of stimulus spending in a country with massive budget and current account deficits and declining export performance that has produced anything more than a temporary result. To pour money into industrial production when markets are glutted, demand for your product is low, and your production costs are uncompetitive is a perfect example of supply-side economics. Instead of making these abstract, generalised proposals, give us an example of an industrial policy measure that would result in increased UK domestic sales and/or UK exports. Show me the return-on-investment analysis.

Simply to cut the military budget isnt radical; its reformist. To take the UK out of the imperialist camp completely, committing to non-aligned status, and building joint investments with emerging economies that currently regard us as skunks (and quite rightly so)...that is radical, and there is nothing in Howard Reed's paper that comes anywhere near that level of change. I dont see the point in telling me that you are proposing what I am suggesting...you could simply agree.

Of course we need austerity. Our world is running out of resources (e.g. easily accessible oil) and our atmosphere is being changed by the burning of such oil. It makes sense to husband our natural resources.

However, while we should husband our natural resources for the benefit of our future, we should also make effective use of our human resources. There is nothing to be gained and a lot to be lost if we dismiss people from socially useful jobs they have chosen in accordance with their training (which, increasingly, they will have paid for themselves) and keep them on the dole, or, worse, in unsuitable jobs at the expense of those for whom these jobs would be more suitable.

Our government has got it wrong both ways. Despite "austerity", moves are afoot to increase the number of flights through Heathrow Airport. Vast amounts of oil are consumed so that an air ticket to Spain can be maintained at a price cheaper than a train ticket within Britain, while people are prevented from enjoying our own countryside by cuts to rural buses and millions of Londoners have their dwellings invaded by constant noise.

Clearly we need taxes -- not necessarily income tax -- targeted at those people who have been able to maintain a lifestyle of conspicuous consumption. But we also need taxes targeted at well off but "ordinary" people. Together these taxes would raise enough money to eliminate the need to cut frontline services which make effective use of our ample human resources.

If you read Howard Reed's 'White Flag' piece carefully (as well as some of mine on the 'Social Europe' website), I think you'll find plenty about the need to prioritise redistributive policies--as well as cutting military spending! As for 'confronting strutural deficits', Howard is quite right to insist that the notion is both theoretically and empirically of dubious substance. And advocating 'industrial reforms' (ie, industrial policy) is certainly not 'supply side economics', which I think you'll find we have both criticised in the past. Yes, truly radical commitment is what we want, and you'll find plenty of it here!

If there is no money in the kitty then there is no money; BUT there is money to pay people dole for doing sweet FA, so there is money to pay them for doing something useful to help make the economy more productive.
Second if the cuts programme is 7 billion and the top FTSE 100 remuneration is also 7 Billion, what is the problem? Certainly not macroeconomic balances but transferring some to more useful heads of expenditure than rich families third holidays - and (royal?)yachts. Finally if we are taking housing benefit off the landlord profit margin we should use it to buy council housing.

While the criticisms of Newlabour, past and present, are spot on, the remedies are facile. There has been no evidence from either the US or UK over the last few years that stimulus spending has made any long-term difference. It has simply enriched the coffers of the already wealthy. Keynes worked only because the US at the time was poised to become a dominant exporter. That no longer exists for either the UK or the US, so stimulus spending at best will produce just temporary results. It cant be catalytic when both the domestic market and export potential have contracted. As for the list of other reforms, well, until they are spelt out beyond mere headings, its impossible to know how they would work. I want to know from Mr Reed how he thinks the UK can compete in the global market-place which is already glutted. Or is this simply a faith-based initiative. Where is the analysis ??

I think Mr Reed like Irvin are missing the point. If Britain doesnt deal with its debt (both private and public) and its reliance on borrowing to fuel spending, it will simply present a target for market raids. The issue isnt whether or not there should be less borrowing (which is what matters about the deficit) and tighter fiscal control... that is a given in a world dominated by predatory markets. Britain already pays interest on loans equivalent to the education budget.

The real issue is the profile and priorities of public expenditure. Its not that cuts arent necessary. They are. The days are passed when a large country can live with perpetual debt without consequences. Instead of the facile Plan B, the focus should be a radical shift in public expenditure. Its utterly daft for a country in the UK's perilous economic condition, to have the third highest (in absolute terms) military budget in the world. There are many spending priorities established by Newlabour and continued by the Tories that are utterly unnecessary for a functioning economy, which should be radically cut instead of the cuts falling on social welfare. There has also not been serious discussion on the reforms needed in the highly bureaucratised system for delivering services that Blair inflicted on the UK, that results in very low efficiency (results delivered per overhead costs) compared to all major European countries.

Finally, until Irvin and Reed confront the structural defects, most importantly the UK's declining export potential, its ridiculous to advocate industrial reforms. Supply-side economics should have been buried by now and yet it continues to rear its ugly head. The task begins with doing what other more successful exporters do...you analyse the market and the competition, and create niches.

By cutting the military radically to a functional home guard, and departing from the imperialist brotherhood with the US, Britain would open up many trading and joint investment opportunities with the emerging superpowers. But if the UK continues to operate as America's tampon (for which Newlabour is heavily responsible and seems to continue to want), we will be treated as the skunk nation we are, and there will be no economic break-through. War and economics cannot be separated, and the link, in the UK's case, is intimate.

So for god's sake, lets see some courage here, some truly radical commitments, instead of the continued pale and thin reformism exemplified by Plan B.