The Labour line for today is that the Budget deficit is just an excuse for CUTS that Osborne & Co. would have made anyway. The Liberal Democrats are left-flank protection. And in repeating the self-serving lie that cutting expenditure now is “taking money out of the economy” at a point where the “recovery is most fragile” they demonstrate a most profound lack of understanding.
Every pound that the Government borrows, it must borrow from either domestic savers or foreign investors. Every pound borrowed by government is unavailable for lending to business. Every pound taxed is unavailable for private spending or investment. I simplify – at the margins, a bit of extra government borrowing can create demand, but the jury’s out on whether this is possible beyond the automatic stabilisers like unemployment benefits.
So on a superficial level, firing a diversity outreach co-ordinator loses some demand in the economy as one family’s take-home pay falls by £22,000 (the £30,000 these creatures are paid, less the extra benefits he’ll receive once he’s on the rock ‘n roll. This will reduce demand for goods and services and a rapid cut in the public sector wage bill by getting non-jobs off the payroll will be noticed in the short term in the GDP figures. It may even “cause” a double dip in the figures.
But if you’re not a filthy parasite in a non-job, does this “recession” affect you? Not very much, because to offset the demand drop from your local 5-a-day support worker, local businesses find it slightly easier than they otherwise would have to secure finance because the Government has to borrow £22,000 less next year, which will be available to the private sector. The money not raised in taxes is money that can be spent in shops. Whilst the victims of cuts are obvious, by all means protect front-line services. There will not be a need to fire a single nurse, police officer or school teacher because of “cuts” when there are still ‘Healthy Workplace Advisors’ or ‘5-a-day coordinators’ being employed. Even the most cursory google search will reveal that these jobs are not mythical. the beneficiaries are dispersed. And given those “victims” of cuts are some of the most generously remunerated, securely employed, idle, bolshie, people in the country some of whom have been taking massive salaries to do very little worthwhile, it is time the public sector party at our expense was brought to an end.
Finally the benefits system which keeps a boot on the face of the very poorest must be reformed. Withdrawal rates must be improved. Bureacracy must be removed. The insecure border between welfare and work must not present a risk of losing benefits as a reason to not take an insecure first job, because the benefits system does not accept that insecure first jobs flipping burgers can and do lead to more secure and rewarding employment. Maximum benefits must be cut so that people cannot make a comfortable life on the state’s teat.
One by one, the recession caused by the deflating of a US property bubble has leaked through the home-loans companies, into the Banking system and finally into the obscenely profligate governments who were running deficits during the boom. However much they may try to blame the financial woes for Government bankruptcy, the fact the UK’s Labour Government was running a serious deficit in 2007, at the height of the boom reveals the lie.
Labour’s crocodile tears about “their people” as well as revealing the profound corruption at the heart of the Labour project, demonstrates that they will do it all again if they ever get power. They will take your money and give it to their client state of welfare junkies and public-sector union slugs. Labour accuse the Tories of wanting to cut come what may – they’re just reversing what they think: Labour never saw a problem to which ‘tax, borrow and spend’ is not their favoured solution.
As a result of the profligacy, it is necessary to cut as much as possible as quickly as possible from the public sector fat. TO fail to do this is a much bigger risk than the tiny risk of a statistical recession which doesn’t affect the private sector. Just like the recipients of ‘sub-prime’ loans, Governments overreached themselves. Today’s budget is the reckoning for those who have not yet endured their recession.
I’m aright though. I’ve had my recession and it was tough. If you’re in the public sector, enjoy yours!