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March 18, 2010

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Guano

It is notable that the only bit of the Chilcot Inquiry that interests the Tories is this stuff about military spending. They have remained completely silent about the doubtful way in which Peter Goldsmith arrived at his conclusion that the invasion was legal. The inability of any of the Government ministers to say what was the "further material breach" by Iraq doesn't interest them in the slightest.

A couple of reasons for that.

1 They are just as culpable for the Iraq invasion

2 They are only interested in some ya-boo politics at the expense of Brown, and aren't interested in the things done by Blair, Straw, Hoon, Goldsmith.

The invasion wouldn't have been such a SNAFU if land rovers had a bit more armour? I doubt it.

Laban

"this doesn’t mean computer prices have been flat, because today’s computer is vastly better than one 10 years ago. Adjusting for this, prices have fallen"

But if you only wanted a computer to do the same thing a ten year old one would do (e.g. word processing) you'd still need to pay current prices. Adjusting for that, prices haven't fallen.

It just goes to show what a tricky issue 'inflation' is. And you can see why "UK" goods price inflation remained low - because the goods were all "Chinese", and why "UK" food price inflation was low - because the veg-pickers were all "Afghan/Iraqi/Polish" or were round my way.

Allan Jones

This government habitually deflates spending changes for all government departments using the GDP deflator and describes the resulting changes as the real change in their spending. You just need to check out every single Budget, PBR and Spending Review since 1997 to confirm this. So it was quite proper for the Tories to call Brown out on the misinformation he gave to Chilcot and - for once - Brown had to admit he was wrong.

I agree with your argument - ideally the debate around spending would be about where we allocate changes in real spending power - but good luck trying to get political consensus on the right deflators. (You can't even get political agreement about whether crime has gone up or down.) But Brown has been hoist on his own petard in this case.

chris

@Allan - you're right, of course. For public spending as a whole, the GDP deflator isn't likely to be too wrong. However, because military spending is atypical of the entire economy, it might be.
My argument wasn't intended to say the Tories are wrong. Quite the opposite. It could be that they are even more right than they think, if the military expenditure deflator has risen faster than the GDP deflator.

Allan Jones

Chris - but the government has also consistently deflated specific government departments' spending using the GDP deflator. In principle that's just as illegitimate for, say, health or education spending as it is for defence. We don't know whether the Tories are right substantively (i.e. whether defence budgets have actually fallen in real terms), but they are totally justified in pointing out Brown's inconsistency.

One other thought - it's possible the true deflator for defence spending is not independent of nominal defence spending given the structure of the defence market. That's one other way in which getting political agreement to what the true defence spending deflator is would be impossible!

Econoclast

I'm always intrigued by those who raise the 'quality' issue, as you do in point 2. In discussing this adjustment, it always relates to goods. What about quality-adjusting services prices (eg air fares have fallen sharply, but so has the quality of service).

Surely, the simpler point here is that, after a decade as chancellor when Mr Brown judiciously used statistics to support his case, he's now been found out. How many more 'facts' are similarly flawed?

Dave Vize

Figures on MoD spending do seem to be strangely flexible and the Government strangely willing to downplay costs. One interesting (well, to me) example is replacement of Trident. Government figures suggest something like £20-25bn, but this doesn't including actually building or maintaining them - if the actual costs are added up, the total comes out at a little under £100bn. Given our current and much-discussed financial woes, Britain simply can't afford it (I think it adds up to around half our existing national deficit), and the Government seem not to mention what would get cut to pay for it - schools, health, other?

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