It Begins to Dawn on Conventional Opinion - George Osborne is not a Miracle-Worker after all

There’s a healthy amount of doubt surfacing now about George Osborne’s ever-ludicrous claims to have sorted out this country’s profound dogma-driven economic crisis. I’m glad to see it. But I have to say that it has been far too long in coming.

 

I seem to remember encountering audience incredulity during a Question Time in June 2010, soon after the election, when I pointed out that there weren’t, in fact, any cuts, but that spending and borrowing were rising.

 

It’s  not really my subject, so I haven’t perhaps written about it as much as I should have had, but here are a few quotations, the first recent, the others from long ago, to show that even a layman such as I could see that trouble was merley being postponed.  

 

26th May

Does anyone, outside the political commentariat, and outside the Republic of London,  actually believe the stuff about Mr Osborne's economic recovery, which is composed entirely of press releases?

 

Mr Osborne borrows more every day. His new army of the 'self-employed' would be better described as 'self-unemployed'. To examine the growth figures is to intrude into private grief,  and every serious economist is horrified by the housing bubble and its attendant dangers. Our main visible exports continue to be scrap metal and air, with which we pay for our Snickers bars, Pinot Grigio and iphones. 

 

6th February

 

I gaze open-mouthed at the praise some of my fellow-scribblers give to the Chancellor of the Exchequer (what is his name? I can never remember it), as the United Kingdom’s unpayably vast national debt climbs rapidly towards the Moon, and increases by about £2,000,000,000 a week. At this rate it won’t be long before it reaches 90% of Gross Domestic Product (it’s now around 75%). It has been higher, mainly as a result of the two enormous wars we fought in the middle of the 20th century, but we had been getting it back under control until the Blair-Brown splurge, in which we still wallow and flounder, because nobody has any idea how to climb out of it.  But what about the lives of the people, employment, income and standards of living.

 

26th January

 

Our hopelessly indebted economy, whose main exports are thin air and rubbish for recycling, is repeatedly proclaimed to be healthy as we tremble  on the edge of a crash worse than 1931.

 

21st March 2013

 

It looks to me as if the government has now decided to inflate its way out of the crisis. The new Governor of the ‘independent’ Bank of England has been given the nod that he may carry on with more ‘quantitative easing’, and the Budget seems to be offering help with mortgages to people who can’t really afford mortgages, which will create a new bubble of unrepayable borrowed money, possibly in return for a short-term boost to the economy. Everyone knows this is a bad idea, after what happened in the USA when they lent mortgages to people who couldn’t repay them. It is not even a kindness.  Why do they do it?

 

It’s all pretty desperate, as one might expect from a  government which never had any ideas in the first place.

 

6th December 2012

 

Also I really cannot see how spending cuts by themselves are a coherent policy in modern Britain. You have to reduce the demand for spending first, and that is a social and cultural matter, which may cost quiet a lot of money.  The entire economy (as economists such as David Blanchflower seem to me to imply) is now so dependent on public spending for survival that large spending cuts, though undoubtedly desirable in principle, will simply kill the patient.  He is too ill for any such treatment. You might as well bleed someone who’s suffering from blood loss.

 

The levels of spending in this country are the consequence of 50 years of leftist social policy. The family, the church, independent charity and self-reliance have been undermined to the point that they barely exist as forces, while the state, and its quasi-independent agencies, have grown enormously.  Manufacturing industry as an employer has shrivelled.  The unproductive public sector wobbles on top of the productive economy. Our ability to export has likewise atrophied.

 

How on earth an immediate radical spending cut will do good under such circumstances, I honestly don’t know. The government’s tax receipts would plunge, as large numbers of public employees stopped paying income tax because they were unemployed. And its liabilities would increase, as they had to be paid various doles and allowances instead. Result: More borrowing, plus less economic activity, as you would have taken so much purchasing power out of the economy. Aldi and Lidl might benefit. I don’t think anyone else would. We did, sort of, go through this before in the Thatcher-Howe era. But the enormous receipts from North Sea Oil (now over) served as great national cushion.

 

18th July 2012 (in a review of ‘Going South’ by Larry Elliott and Dan Atknson)

 

‘An alarming era is beginning, of power shortages, of unaffordable imports, of higher prices and stationary wages, of a vast welfare system which simply cannot function any more because inflation has wiped out the value of the money used to pay for it. I cannot see how the reckoning can be put off much longer.’

 

23rd October 2010

 

What cuts? My favourite two facts about British public spending are these. Housing benefit, probably the single most fraud­ulent and wasteful state handout ever invented, costs more each year than the Army and the Royal Navy combined.

And while Labour spent £600 billion (roughly £10,000 for every human being in this country) in their last year in office, the supposedly vicious cutter George Osborne plans to spend £692.7 billion (£11,500 per head) in 2014-15, after his alleged chainsaw massacre. Britain remains bankrupt in most important ways.

 

We spend more than we earn. We pay huge numbers of people to do silly jobs, or to do nothing at all while pretending to be ill. Our public services, about which we are all supposed to be so sentimental, are often dreadful. And where this is so, it is usually not because of a shortage of money.