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Lecture 1 Politics and Policy

Lecture 1 Politics and Policy . Dr Maurice Mullard Lecture One October 2010. The Economic Context. What comes first – does policy need decide resources or is the economy that sets the context? Making Decisions on Health and Education Spending The UK Economic Context 2010 UK Deficit PSBR

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Lecture 1 Politics and Policy

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  1. Lecture 1 Politics and Policy Dr Maurice Mullard Lecture One October 2010

  2. The Economic Context • What comes first – does policy need decide resources or is the economy that sets the context? • Making Decisions on Health and Education Spending • The UK Economic Context 2010 • UK Deficit PSBR • UK National Debt

  3. The Policy Process • AUTONOMY THE IDEA OF POLITICAL CHOICE AS OPPOSED TO INEVITABILITY • The Coalition Government says there is no alternative to austerity • The Opposition says this will lead to new recession • How do we judge what is the correct analysis

  4. EXPLAINING POLITICAL CHOICES • What is political choice in the policy process • CHOICES ON RESOURCES AND THAT CHOICE IS POLITICAL AUTONOMY • THAT AUTONOMY IS CONSTRAINED BY EVENTS BEYOND THE CONTROL OF GOVERNMENT • THE ECONOMY AS A FORM OF CONSTRAINT EVENT

  5. ECONOMIC EVENT RECESSION 2007 -2010 • The meaning of Credit Crunch 2007 Bank stopped lending in intrabank markets • Banks making loses on assets • Loss of Capital and Liquidity • UK Northern Rock Lloyds Bank RBS • US Bear Stearns Lehman Brothers AIG

  6. The Spillover Financial Crisis to crisis in real economy • Declining GDP UK but also global GDP – • Loses in tax revenues • UK Stimulus package Germany and USA • Unemployment • Household Net Worth

  7. NATURE OF THE UK ECONOMY • FIRST INDUSTRIAL NATION ROLE OF MANUFACTURING AND INDUSTRIAL COMMUNITIES • Coal Steel Making Cotton Engineering Staple Industries • Great Depression 1929 mass unemployment • Growht industries aircraft chemcials • Post World War 2 • Growth of Service Sector

  8. NATURE OF UK ECONOMY • BRITAIN IN DECLINE – REASONS AND EXPLANATIONS • COMPETITION AND CATCH UP • DECLINE OF MANUFACTURING • DEPRESSION 1929- 1932 • POLITICS OF UNEMPOLOYMENT

  9. THINKING ABOUT HOW THE ECONOMY WORKS • KUHN AND PARADIGM SHIFTS • FREE MARKETS TO KEYNES TO FREE MARKETS AND BACK TO KEYNES • IMPACT ON POLITICS AND POLITICAL PARTY THINKING

  10. UK ECONOMIC POLICY MAKING • THE ROLE OF THE UK TREASURY • SPENDING MINISTERS • FISCAL POLICY Taxation and public expenditure • Stimulus to the economy • Monetary Policy Interest rates • The Concept of Liquidity • The Savings Paradox

  11. SUMMARY • UNDERSTAND THE TWIN CONCEPTS OF AUTONOMY AND CONSTRAINT • HOW TO EXPLAIN POLICY MAKING IN BRITAIN • POLITICAL PARTIES IDEOLOGY AND BELIEFS

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