How did GDP (gross domestic product) start

 The term and economic measure GDP (gross domestic product) was first used by the United States Commerce Department in the 1930s during the depression.

It was first put to full working use during WW2 by British and American economists, including Keynes. 

Keynes played a major role in both WW1 and WW2. In WW1 he put forward the argument that the war should be held at the stalemate it had become. Germany blockaded from all sides and starved into surrender. This actually happened Germany faced starvation and famine as a result of the blockade. Keynes' economic warfare plan was put into action, minus the stalemate and millions of young men died.

In WW2 GDP was used as a measure of production capacity.

The economists were given the job of analysing if an all out war like WW2 was viable. They used GDP as a primary measure of economic activity in the analysis of the viability of war.

They all agreed that war, for America at least, whose economy boomed during the war is economically viable.

basic keynes

Basic Keynes and MMT

Keynes disagreed with 19th century 'classical' economics that had failed

He said firms would not invest in a recession because demand was too weak. Businesses cut investments rather than take advantage of lower wages and costs. He said once a recession sets in the gloom will make things worse.

He proposed the government should stimulate consumer spending. Consumer spending would create demand known as aggregate demand.

He argued the government borrow to stimulate demand. When governments spend more than they receive in tax it's called deficit spending and most governments do this.

The aim is to spend, (or invest) stimulate demand, stabilize the economy and bring it out of recession.

Modern Monetary Theory (MMT)

MMT argues governments with a fiat currency and central bank can always repay deficit spending.

(Tories have been levelling down Britain since 1689)

why there's never been a free market and never will be

     cash in hand is the nearest to a free market and even this is regulated

Markets have been regulated from the beginning.

Markets other than barter that use some form of exchange require a formal financial system to regulate the flow of savings, investment, the amount of exchange (money) in circulation, its value and its manufacture.

According to classical economics, interest is supposed to balance the demand for investment and savings. Therefore interest should fluctuate with the supply and demand of investment. This can't happen in practise under a system of financial control.

Savers reduce their current spending ability in anticipation of the need for money in the future. This means savers need liquidity. (Will Hutton, The Revolution That Never Was)

Investors need long term stability or illiquidity of money provided by savers.

This and other factors will lead to crises. When the financial system hits a big enough crisis the state steps in. The first measure the state will take will be to adjust interest rates. Next, it will increase or decrease the money supply.

The fact that markets need a formal and regulated financial system and that the financial system needs state aid from time to time means there can only be a limited free market. The market is limited in scope and time.

Markets are inherently cyclical becoming freer on the upswing and more regulated on the downslide.

Keynes recognised this.

Keynes wasn't the first to record this, a few years earlier Marxist economist Michel Kalecki wrote an analysis almost identical to that of Keynes' General Theory (An Attempt at the Theory of the Business Cycle 1933).

The British economist Alexander Cairncross was a student of Keynes and he advised the Chinese government how to build the successful demand based economy they have now. The Chinese government may call themselves communists but they operate a solid Keynesian system. The demand came from Britain and America. 

The growth and success of China is a direct result of Thatcherism

In Britain ex-bankers like Sunak and Javid, who should know better, are harking back to the failed and failed again 19th century ideology that we can still call Thatcherism.

Why no 'common good' hinders Keynesian measures in UK and US

 

A problem with introducing Keynesian or socialist measures in the UK is there's little to no experience of the 'common good'.

Any notion of 'common good' in the UK is the sum of private gain, commercial interest and individual actions.

The underlying 18th/19th century based ideology of the British is individualism, individual action and individual responsibility. This was exported with even more veracity to North America.

The writers whose work explored the concept of individual action and rational individual decision making have become the cultural norm. This is the case even though their ideas are generally relegated to their historical time and context.

There's a group of alt-right think tanks in the UK and the US who firmly believe in this defunct ideology and the notion of free markets that go with it. Most of the current government ministers are products of and have been spawned into leadership positions from these alt-right groups. The 

The UK is in a dangerous situation because we need to pull together but the government is encouraging us to pull apart.

Should Labour help the LibDems win more seats?

During the early years of the Labour Party, Labour and the Liberals cooperated to win parliamentary seats. The small group of Labour MPs cooperated with the liberals in Parliament against the Tories. Did they co-operate too much?

Ben Tillett thought so. he said the party has no teeth no claws and has lost its growl.

He argued that labour should stop supporting the liberals (so much) and start fighting unemployment.

Ramsay MacDonald at this time was a kind of secretary chairman and I think an unofficial leader. his strategy was to help the liberals so that the liberals would help labour get more MPs in the future. In this way, the Labour Party would have a much bigger representation in Parliament.

Perhaps McDonald's strategy worked?

I wonder...

Did Ramsay MacDonald have a bigger input to the development of the Labour Party that he's given credit for?

Would Ben Tillett's observations be quite pertinent now?

Should labour help the liberals again, in reverse this time? That is should Labour help the liberals get more MPs where they have a better chance of ousting a Conservative?

Why we feel anxious after making an important decision

 Buyers always think before doing anything.

Sometimes they only think for a split second and sometimes they think about a purchase for months, even years.

 

When buyers think about a purchase they access memory and emotions.

 

Thinking is an emotional as well as a cognitive process. Every thought we have brings with it a congruent emotion. Unless we are anxious when the emotions can disrupt our thinking.

 

Decisions about whether to buy something or not involve thoughts, memories and emotions. The emotional aspect of decision making is the most influential.

 

Thinking about a purchase provokes feelings of anxiety to a greater or lesser degree.

 

Every time we make a decision we experience anxiety to a greater or lesser degree. The more meaningful the decision is to us the greater will be the anxiety.

 

When anxiety reaches a certain level we begin to think irrationally.

 

When we experience anxiety our brains act in a set way that is difficult to override.

 

When we experience anxiety about making a decision three things happen in a progressive sequence.

 

1.    We avoid thinking about the subject

2.    Our brains block access to thoughts about the subject

3.    We will 'escape' if the anxiety gets too high.

 

As we approach the point of making a decision the anxiety will increase.

The bigger or more emotionally important the higher the anxiety.

All this brings a sense of mixed feelings, psychologists call it cognitive dissonance.

The bigger the purchase or the higher the emotional charge the bigger the feelings of pleasure and anxiety and the more we research the purchase.

Eventually we make a decision and buy the big item or make an important decision.

We experience a moment of pleasure but very soon after the purchase we begin to question if we've done the right thing. Another wave of cognitive dissonance hits us and this is called 'buyers regret'.

It passes in due course.

Why Keir Starmer was wrong to oppose Scottish independence now

 personal opinion:

I think Keir Starmer was wrong to voice opposition to Scottish Independence. There's no reason for Labour to mention it at this stage. I think it's coming from Claire Ainsley and I don't think she's the right person for the job.

The result will be to move what little support Labour has in Scotland to the SNP. Scots voted strongly to remain so there's bound to be a backlash of support for the SNP after Brexit. If I were a Scot living in Scotland I'd be an active member of the SNP at this time. And what will Scots think when they learn about the deal Gibraltar, who voted strongly to remain is getting compared to Scotland, who voted strongly to remain, being glued to Johnson's England. The EU might buy into the idea of a genuine freeport in Aberdeen or Clydeport, the British Ports Association (BPA) are calling for something similar*. A freeport has special tax, import and export arrangements with other countries as do Hong Kong or Singapore. Aberdeen could have freeport status within the EU and strong links to Scandinavia and Clydeport to Northern Ireland?

I think Keir Starmer could have said that Labour will open negotiations with the EU about a close long term relationship, perhaps similar to that of Ukraine when elected to government in 2024. He might also have said Scotland, that has historically had closer links to Europe than England should be given special status along with Northern Ireland. This might put the brakes on, or take the edge off the rush to deregulate that's coming our way.

The time for Labour to take a position on Scottish independence is when it becomes a live issue. I voted Starmer/Rayner and hate to say that I am disappointed in both of them.

Sorry...

*sunak pinched the freeport idea from BPA although sunak's version is plain daft.