The British economy is in dire straits, which look set to result in a permanent downward shift in our comparative position in the world. The five year growth forecasts from the Office for Budget Responsibility forecast that in the best year of the coming half decade, growth will peak at just under the average growth rate for the last two hundred years.
It is therefore worrying that we have a Chancellor who thinks that the appropriate response is a series of petty, peevish party political points. His attack on Gordon Brown for sellng off our gold reserve at a quarter of its current value, was perfectly true but absolutely irrelevant to the budget. And as for
“The principles of good taxation have been set out from Adam Smith to Nigel Lawson”
I can only observe:
“The prinicples of good batting have been set out from W G Grace to Craig Murray”.
The last fortnight has seen a series of disastrous economic statistics, as inflation, unemployment and the budget deficit all returned monthly figures substantially worse than forecast, The forecast budget defict this year is now £149 billion.
The extraordinary thing is, that nobody denies that this appalling financial situation was caused by the collapse of the banking sector. Nor does anyone appear to deny that the collapse of the banking sector was caused by a system which hugely rewarded individuals for short term gains on multiple high risk speculative transactions, in a way which made a “Bubble” inevitable.
While the perpetrators – a whole class of them – took massive rewards for the short term gains of the complex bubble scheme, they did not get punished by its collapse. Rather everybody paid up for them, resulting in there being a gross shortage of money to pay for anything else – hence the recession.
It has been argued that. in running this massive government deficit, we are in fact in the middle of the biggest Keynsian stimulus in history. The problem with that analysis is that, rather than be put into public spending which stimulates the demand, the money from this deficit has been put entirely into the banks, which use it to stimulate the appetite of their senior staff for cocaine.
But other than a token levy amounting to well less than 1% of the money that has been given, nothing whatsoever has been done to address the cause of the malaise, and the over-rewarded class who crashed the whole economy have been left free to crank up the next bubble and immediately to start over-rewarding themselves again. Politicians of all major parties then simply deal with the resulting damage to the economy by palliative measures as if the collapse were an earthquake and tsunami, which we had no choice but to accept will come, and no choice but to realise will come again. Indeed we have just had an entire budget speech which did not even mention the banking collapse as the cause of our troubles. The only mention of the banks was to repeat their own propaganda about freeing them up to enable them to compete on a global basis.
I am in fact entirely in favour of a small state, and am not against budget cuts per se. There are hundreds of thousands of people working for local authorities who are in office jobs which in fact do no good to anybody. Those who deny that local government in the UK is corrupt, overstaffed, overpaid and full of local political placemen, obviously have had very little contact with it. Sadly, the numerous “officers” and “managers” in local government are precisely those who will not get sacked in the spending cut round. The useful people who actually work will be cut instead.
The National Health Service is a prime example of how this government gets the public sector totally wrong. Public services should be delivered by the state simply, efficiently, directly and with the minimum administration. By seeking to introduce market forces into the equation, the simplicity and directness are both removed and the administration increased until it exceeds half of the total cost, as hordes of useless bureaucrats and accountants administer completely artificial market mechanisms and pass miliions of useless invoices and receipts for payment from one bit of government to another bit of government.
Cuts are a good thing. The cuts of this coalition are worse than useless. They have to be part of a fundamental restructuring of our economy, which ties financial transactions to actual payments for real goods and services, rather than speculation on the future value of goods and services. Most importanly, redistribution of capital to the workers in companies needs to be initiated. I favour economic competition, but capitalism as currently consitituted brings an escalating concentration of capital and consequent concentration of political power, and a quite unacceptable leap in the wealth gap between rich and poor.
Instead we have from Osborne a little adjustment here and there and the odd snide partisan quip. I have noticed an interesting phenomenon about Osborne. Every time he takes a measure to benefit the wealthy, his hair parting grows wider, and it is threatening now to take over the whole top of his head. His one big idea was that it is time to take the “historic step” of merging Income Tax and National Insurance. Actually that is precisely a hundred years overdue, ever since Lloyd George, with that twinkle in his dark eye. quipped “The secret is, there is no fund”. But then it turned out that Osborne’s “Historic step” was to launch a consultation over several years into the possibility of doing this.
An irrelevant budget from an irrelevant man in what increasingly seems an irrelevant government.