The emergence of Depression Denial & questions over tax transparency

In response to the woeful GDP figures for the last quarter of 2012, which showed the UK's economy had contracted by 0.3%, it caught my attention that a few political commentators had started voicing an interesting new angle on economic matters. 

Historically, we've become accustomed to many various excuses for the coalition's inability to get the economy moving. We've had Royal weddings, jubilees, snow and more snow... in fact, pretty much if anything 'stuff like' happens, then you can be pretty damned sure it was to blame for a precipitous fall in output and derailing all those credible plans for growth the coalition had so carefully crafted. One wonders if the coalition maintains a record of slightly unexpected/unusual events with which to refer come the bleak date of the next GDP figure release; 'Feb 2nd - Newcastle United beat Chelsea 3-2... plausible link to North East manufacturing and construction drop', 'Feb 1st - a wetter than usual Friday, causing decrease in night-time economy'. 

But when I read Jeremy Warner of the Telegraph ask "does anyone believe in the GDP figures anymore?", it struck me that there might be a new chord being struck here. 

Jeremy's question begs the response - if we can't trust GDP figures anymore, why not, and at what point did they become discredited (strange coincidence this seems to coincide with ? Perhaps it's all a public sector conspiracy and the staff at the ONS are trying to manipulate the figures downwards? Or, stranger and more conspiratorial still, perhaps the figures are right.... and everyone involved in creating growth is being persuaded by their public sector friends to work less hard for a bit. 

Jeremy poses the question as to how GDP can still be so poor, given that private sector jobs are being created at a rate of knots. He then answers his own question, in a way which suggests he's not too sure of the GDP being so wrong after all.... 

Either the GDP numbers are quite significantly wrong, or labour productivity has gone into precipitous decline, with growing numbers of people prepared to accept poorly paid, "grunt" jobs.

My own view is that it is a combination of the two. The situation is probably not as bad as the headline number suggests, but by the same token, these are by and large not great jobs that are being created – scraping by on part time work and self employment. A whole new army of white van man is being created. Some work is better than no work, but this is not a healthy development.

We know that whilst jobs are being created, they are not being created nearly fast enough, nor are they at decent levels of pay, nor for permanent or full-time positions. Positions are low paid, short hours/part-time, temporary. We know also that the figures are being massaged on job creation. If, on top of this, a large number of positions are apprenticeships....  then how much growth do we expect in productivity? An apprenticeship is no bad thing, but it is not a position which will add greatly to productivity on a macro scale. 

Fascinatingly, Warner's analysis and headline point to the likelihood that the right will begin to castigate the longstanding international measure of a nation's wealth and growth - GDP- purely because it doesn't suit their purposes. Standard sophistry some might say, but this kind of propaganda should not go unnoticed. (same sophistry is brewing now on child poverty - being redefined by IDS)

The right has made a lot of 'deficit denial' since 2010, let us not allow their 'depression denial' be unseen. 

A further thing which comes to mind when we speak of the deficit and the depression - both of which do exist, but are deliberately obfuscated - to what extent was the UK's parlous financial position in 2010 down to corporate tax avoidance measures? 

The right commonly points the figure of blame at Brown and Blair for spending at the wrong point in the economic cycle (which they use as an excuse, to permit themselves to not spend at the right point in the cycle....'couldn't make it up' springs to mind). However, given that we now know that most large multinational corporations operative in the UK have been avoiding paying minimal taxes for years, what effect is that likely to have had on the UK's balance? Although the transparency of these tax affairs is now in the public eye, is it not likely that SMEs which were UK based and paid full taxes, have consistently been driven out of business for a period of decades by those which pay minimal taxes? 

Not knowing the scale of the tax avoidance means it is hard to say what the impact has been, but certainly we know that the UK account would be looking somewhat less unhealthy if these companies had been paying corporation tax at the full rate. 

So, whilst the right busy themselves denying the depression, we can but hope that corporations will be forced into paying UK taxes to start to reverse that depression and keep more funds in the UK... Apple, Google, Amazon, Play, these tech-giants must be brought to heel, and we can't rely on the Government to do that job - they will lay the blame at the door of international laws and globalized trade. Which means that ethical consumerism is the only realistic route. 

ps. I fully expect GDP figures to change - perhaps be revised up, but that always happens, and just means that over time more analysis can be carried out to make the analysis more accurate. To imply that GDP is simply 'wrong' is different, as it points to something fundamentally inaccurate in the way that it is measured, and is being devised as a plot to water down the potency of the GDP figures and their impact on the polls - which is the biggest threat to the Conservatives, simple as that.