Our long term economic madness

In May the Conservative Party portrayed the election as a choice between Tory competence and Labour chaos. Labour’s spending and borrowing compared to the Conservative “long term economic plan”. The electorate made their choice and the current government received a mandate to cut the budget deficit and fix the economy.

Britain is now purportedly on the path to economic sanity, but you can be forgiven for having some moments of doubt. In this foul year of our Lord 2015, after nearly six years of “austerity, we will still spend £70 billion over budget. Should we redefine what the word “austerity” means?

The economic madness really began when Gordon Brown and Ed Balls implemented their plans for a high tax, high spend, much enlarged state and continental style economy. As we know only too well, it grew completely out of control.

The government has the opportunity to reshape the British state permanently, and when ideas are floated about “thinking the unthinkable” and slashing budgets by 40%; there is a flicker of hope that they might grasp it with both hands. Sadly, there is too much evidence to the contrary to believe anything serious is really being done to end the public spending spree and return to a sensible, sustainable fiscal situation.

“Austerity” Osborne routinely talks flippantly about spending £2 billion here and £2 billion there on infrastructure projects, but not-so-funnily enough that is the exact sum of money that the UK has to borrow each week just to plug the gap between our income and our outgoings. This looks an awful lot like a policy of spending and borrowing.

The £60 billion a year we pay to cover the interest on our borrowings is now the fifth largest item of public spending, exceeded only by the budget for welfare, education and the NHS. Yet our government, elected on a platform of the “long term economic plan”, does not seem to grasp the severity of the situation.

The chancellor intends to cut the deficit to zero and run a budget surplus by the end of the parliament, which is the same aim he had in 2010. Yet we have NHS managers, council officials and BBC executives lining their pockets with taxpayer’s cash with salaries beyond the £142,000 earned by the prime minister.

We intend to build HS2 with £50 billion of borrowed money and build a replacement for Trident for approximately £60 billion of borrowed money, none of which is accounted for in the annual budget. How can we possibly afford these projects?

We borrow money to send abroad in aid, and go to great lengths to splurge the cash just to meet the budget target, resulting in scandalous waste and corruption. We do this every year, and boast about it, pat ourselves on the back because of it, despite the mountains of evidence of waste and corruption, despite the cash lining the pockets of third world governments and dictators.

Both David Cameron and George Osborne have spoken of the importance of being prepared for the “global race”, the great economic competition, yet we transfer billions upon billions (of borrowed money) every year to the European Union, which redistributes it to rival economies. It is not a rational economic or foreign policy to borrow money to give to a foreign body for the dubious benefits of being ruled by it.

I really do wonder sometimes if our leaders have any idea what they’re doing. Is this simply a matter of the blind leading the ignorant? It doesn’t really bear thinking about. Sometimes the only conclusion one can reach is that this is a mad country, ruled by mad people.

  16 comments for “Our long term economic madness

  1. K Simpson
    Jul 28, 2015 at 7:43 am

    Nail and head, hitting is apposite
    Wall and head, hitting is their behaviour, and mine, again and again, when I realise they just don’t get it

  2. Jul 28, 2015 at 8:30 am

    Excellent comment. Nothing to add, except to get everyone to forward to their Conservative MP (should you live in a constituency served by such).

  3. MrVeryAngry
    Jul 28, 2015 at 8:49 am

    Er, yes. And you are surprised?

    • Jul 28, 2015 at 9:32 am

      No, did I say I was?

  4. Jul 28, 2015 at 8:50 am

    There are two schools of thought on both the monetary and fiscal situation.

    Those who believe that that it is fundamentally sound – and those who disagree.

    Like the writer of this article I am one of the people who disagree.

    I believe that there is a massive credit bubble in monetary policy and that the fiscal situation (government spending commitments) is unsound – that the government is spending far too much money.

    Perhaps my disagreement is why I have not prospered in politics – people do not tend to promote those who disagree with them (which is fair enough).

    However, I still believe that the Labour party and Lib Dems are worse (far worse) than the party presently in office.

    • Jul 28, 2015 at 10:54 am

      The problem with the Labour and LibDem parties, is that they really do believe there is a magic money tree which can pay for everything.
      The Tories know there is no such magic money tree, but they hoodwink the electorate to get elected.
      What is needed across the political spectrum is some basic, hard headed realism and honesty. Sadly, both are lacking.
      But given that, having a lying party which understands reality in power, is surely less bad than having clueless fantasists in charge.

  5. Zach Cope
    Jul 28, 2015 at 10:08 am

    This is all a consequence of the government monopoly on money, and the favours bestowed to those who receive this money first.

  6. Ken Ferguson
    Jul 28, 2015 at 11:07 am

    But I’m not sure people really appreciate the terrible consequences of the government’s austerity agenda…..

    http://www.liverpoolecho.co.uk/news/liverpool-news/bumper-payout-former-council-boss-9725439

  7. Jul 28, 2015 at 3:59 pm

    The Conservatives pay lip service to ‘reimagining’ the size of the state but in reality are almost as committed to tax ‘n’ spend as the other parties.

    Cameron and Osborne talk tough, but in reality, are about as radical as instant gravy.

    The long term goal (preferably) should be reducing the size and scope of the state. Not making cutbacks- that are really to appease money lenders and financial institutions. Governments don’t have a finite amount of money, as long as they can repay investors (eventually) the money will keep flowing.

    If we had a money system that actually made sense perhaps that would change….

  8. Aparat
    Jul 28, 2015 at 4:26 pm

    It’ll be a cold day in hell before micro economics and macro economics converge.

  9. Tim Carpenter
    Jul 28, 2015 at 5:29 pm

    The govt says it proposes to slash budgets by 40%, but this is only in non-ring-fenced areas.

    The biggies – health, education and welfare – are protected, so we have massive cuts proposed elsewhere.

    Worse, they remain fundamentally unreformed and monopolistic.

  10. Mr Ed
    Jul 28, 2015 at 9:24 pm

    John Major boasted in 1997 that, compared to the 1992 General Election, (which he won to the surprise of the commentariat), ‘We have spent more than Labour promised to spend’ – referring to the 1992-1997 Parliament and Neil Kinnock’s fantasies for his time in office. Is it any wonder that we are in the mess we are in? I do recall the weird talk of ‘Prudence’ around Gordon Brown during Labour’s first term in office, an obvious lie, but one that the media relished repeating.

    Mr Osborne couldn’t cut himself shaving.

  11. Contrarian Not Apologist
    Jul 28, 2015 at 9:31 pm

    Perhaps the primary purpose of government is to be ‘big enough’ to be allowed to borrow the vast sums of money that are required to pay for services that aren’t provided profitably by the private sector?

    • Tim Carpenter
      Jul 29, 2015 at 8:04 am

      Paying for overheads using debt is the height of folly.

    • Jul 29, 2015 at 9:12 am

      The number of “services that aren’t profitably provided by the private sector” is, at every point of time, infinite.

      • Zach Cope
        Jul 29, 2015 at 9:48 am

        Back on form Rocco!

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