I've been predicting it for a couple of years now, but the main event of the "recession" is about to get under way. Strikes, chaos and disorder are already taking a grip in Europe - especially France - and here the coalition is about to announce the scale of the cuts to public sector spending as they attempt to get to grips with the debt monster created by the stupidity and profligacy of Blair, Brown and New Labour.
The non-existent recovery is stuttering to a halt while the banks and foreign companies feast on the entrails of our dying industry like vultures devouring a once proud lion that still breathes, but no longer has the strength to fight off the beaks and claws that tear at its flesh.
The unions are on the rise once more - boosted by membership from the bloated non-productive public sector of people in non-jobs - and are belligerent and confident once more. What is more they are now armed with a tactic - the repeated one or two day strike - which causes the most harm and disruption to the employers and the public with the least inconvenience to themselves and their members.
Our armed forces will soon be no longer fit for the purpose of defending the nation - although I'm not convinced that they have been for twenty years - but it doesn't matter. We've sold our nation to the EU anyway and the only thing our soldiers are likely to be doing in the next ten years is putting down internal insurrection and civil chaos. They won't need tanks, planes or aircraft carriers to do that.
And all this as a result of spending cuts that will do nothing to stop the inevitable. This isn't the end of the cuts, the chaos and disruption - this is merely the beginning.
Showing posts with label Economy. Show all posts
Showing posts with label Economy. Show all posts
Wednesday, October 20, 2010
Thursday, June 24, 2010
Breaking the cycle
In case you haven't noticed, I am more than a little sceptical about the coalition governments plans to fix our economy. More than this, I am not convinced that any current political party - or coalition thereof - understands what our economy needs long term for real growth based on wealth rather than pseudo growth based on debt.
I believe that we are set for a decade of, at best, stagnation and inflation - stagflation they used to call it - and, at worst, a full blown, full on depression that will have profound and long term consequences for this nation, its people, their living standards and prosperity. Nothing I have seen from government or read in the media has changed my mind about this - indeed, I've read various articles from various sources which tend to support my view.
However, even if I am wrong and this coalition does manage to stave off the worst case scenario in the short to medium term there remains the problem of what happens in the future when we are back to where we were - say - in 2000?
This coalition - from both the Lib Dems and Conservative flanks - have made much of how they are a "progressive" government. Both the Prime Minister and his Chancellor have claimed that they are progressive politicians and dedicated to the causes of progressivism - and, by implication, the fallacies that ideology is based on.
Consequently, there is no reason to believe that once the economy is "fixed", they will not resort to throwing money into schemes and ideas which progressivism favours - and all that entails. For me there are two major problem areas with this - welfare and manufacturing.
The problem regarding welfare is perhaps the most obvious. Progressivism insists on certain universal "truths" which are either uncertain or patently wrong. For example, the belief that crime is linked to poverty and that if you give people enough money they won't commit crime is clearly daft - but it is considered a "truth" by progressives.
Hence they pour billions of pounds every year into "supporting" criminals and their lifestyles in the vain hope this will solve the problem. It doesn't, of course, because crime is not caused by poverty but by greed, avarice and laziness - and welfare supports all of these traits.
That's just one example of many, but the point I'm trying to make is that to genuinely have a hope of fixing Britain's problems in the long term we need a government committed to breaking the cycle of dependency which so many people in Britain have fallen into. That needs a government that is tough and, above all, socially conservative - because any government that subscribes to the social liberal position is going to fall into the same traps as previous social liberal governments.
There isn't a hope in hell that this coalition will have either the will or the strength needed to break that cycle so the only conclusion that can be reached is that, even in the unlikely event that they do sort out our current problems, they will only make the same mistakes as Brown, Blair and Major.
Remember, before the "credit crunch" struck and the reality of our "economic miracle" was exposed, Cameron and his party backed the Labour government spending plans completely. It was only after the dire situation was revealed that the Tories decided to change tack - and then only marginally.
They do not have the answers. They don't even understand the questions. All they have is the same misguided beliefs that Brown and Blair had and the result will be exactly the same.
Disaster
I believe that we are set for a decade of, at best, stagnation and inflation - stagflation they used to call it - and, at worst, a full blown, full on depression that will have profound and long term consequences for this nation, its people, their living standards and prosperity. Nothing I have seen from government or read in the media has changed my mind about this - indeed, I've read various articles from various sources which tend to support my view.
However, even if I am wrong and this coalition does manage to stave off the worst case scenario in the short to medium term there remains the problem of what happens in the future when we are back to where we were - say - in 2000?
This coalition - from both the Lib Dems and Conservative flanks - have made much of how they are a "progressive" government. Both the Prime Minister and his Chancellor have claimed that they are progressive politicians and dedicated to the causes of progressivism - and, by implication, the fallacies that ideology is based on.
Consequently, there is no reason to believe that once the economy is "fixed", they will not resort to throwing money into schemes and ideas which progressivism favours - and all that entails. For me there are two major problem areas with this - welfare and manufacturing.
The problem regarding welfare is perhaps the most obvious. Progressivism insists on certain universal "truths" which are either uncertain or patently wrong. For example, the belief that crime is linked to poverty and that if you give people enough money they won't commit crime is clearly daft - but it is considered a "truth" by progressives.
Hence they pour billions of pounds every year into "supporting" criminals and their lifestyles in the vain hope this will solve the problem. It doesn't, of course, because crime is not caused by poverty but by greed, avarice and laziness - and welfare supports all of these traits.
That's just one example of many, but the point I'm trying to make is that to genuinely have a hope of fixing Britain's problems in the long term we need a government committed to breaking the cycle of dependency which so many people in Britain have fallen into. That needs a government that is tough and, above all, socially conservative - because any government that subscribes to the social liberal position is going to fall into the same traps as previous social liberal governments.
There isn't a hope in hell that this coalition will have either the will or the strength needed to break that cycle so the only conclusion that can be reached is that, even in the unlikely event that they do sort out our current problems, they will only make the same mistakes as Brown, Blair and Major.
Remember, before the "credit crunch" struck and the reality of our "economic miracle" was exposed, Cameron and his party backed the Labour government spending plans completely. It was only after the dire situation was revealed that the Tories decided to change tack - and then only marginally.
They do not have the answers. They don't even understand the questions. All they have is the same misguided beliefs that Brown and Blair had and the result will be exactly the same.
Disaster
Wednesday, June 23, 2010
Did I miss something?
While All the news channels and newspapers are going on about Osborne's "tough" budget cuts, I'm still trying to work out what they heard that I didn't.
Aside from the completely expected rise in VAT and CGT there was little in this budget that put any flesh on the bones of the cuts we are all told to expect. A public sector pay freeze? Well, no doubt the public sector will complain, but let's be honest - this was two years overdue (at least).
Instead the Chancellor has deferred adding any detail on the cuts until October - which makes me wonder why he had this budget now when half the stuff he mentioned was deferred until next year anyway! It looks to me as if this was designed to grab headlines - which it has - and, perhaps more than this, it looks like it was forced by the Lib Dems to push their election pledges.
When it came to actual cuts, there was no detail whatsoever - hardly surprising as the government haven't held their comprehensive spending review yet - but the media have gone mad over the prospect of a 25% cut in public sector spending.
Which wasn't what was said - if I understood it. I thought the Chancellor said the cuts would "average" 25% - not that public sector spending would be slashed by 25%. There is a difference - if you cut the spending of a minor department by 50% and that of a larger department by 1% you'll get an average cut of around 25% - but that won't necessarily slash the combined spending of those two departments by 25%.
If the budget of the first department is £6 billion and the second is £60 billion then you'll save around £3.5 billion pounds off a total spend of £66 billion - which is about 5%. So, although you've cut departmental budgets by an average 25% the actual savings in money terms is only 5% - hardly the sort of thing to solve this crisis.
So, unless I missed something, I'll defer my opinion on whether this is enough to stave off the coming crisis until Osborne actually adds some specifics. So far, all we've got is a paltry few billion pounds worth of cuts which won't make the slightest difference in the long run - or even in the short term.
Aside from the completely expected rise in VAT and CGT there was little in this budget that put any flesh on the bones of the cuts we are all told to expect. A public sector pay freeze? Well, no doubt the public sector will complain, but let's be honest - this was two years overdue (at least).
Instead the Chancellor has deferred adding any detail on the cuts until October - which makes me wonder why he had this budget now when half the stuff he mentioned was deferred until next year anyway! It looks to me as if this was designed to grab headlines - which it has - and, perhaps more than this, it looks like it was forced by the Lib Dems to push their election pledges.
When it came to actual cuts, there was no detail whatsoever - hardly surprising as the government haven't held their comprehensive spending review yet - but the media have gone mad over the prospect of a 25% cut in public sector spending.
Which wasn't what was said - if I understood it. I thought the Chancellor said the cuts would "average" 25% - not that public sector spending would be slashed by 25%. There is a difference - if you cut the spending of a minor department by 50% and that of a larger department by 1% you'll get an average cut of around 25% - but that won't necessarily slash the combined spending of those two departments by 25%.
If the budget of the first department is £6 billion and the second is £60 billion then you'll save around £3.5 billion pounds off a total spend of £66 billion - which is about 5%. So, although you've cut departmental budgets by an average 25% the actual savings in money terms is only 5% - hardly the sort of thing to solve this crisis.
So, unless I missed something, I'll defer my opinion on whether this is enough to stave off the coming crisis until Osborne actually adds some specifics. So far, all we've got is a paltry few billion pounds worth of cuts which won't make the slightest difference in the long run - or even in the short term.
Tuesday, June 22, 2010
Time to tighten your belts
The long awaited day has arrived and we will finally learn the details of the coalition government's plan to rescue Britain from the depths of recession and stave off the depression that will engulf this nation for a decade or more if they fail.
Yes, it really is that important. It is, quite probably, the most important budget since the end of the Second World War and we've entrusted it to the boy George Osborne. Personally, I can't think of many people whose hands I would be less inclined to place my fate and that of the nation in - but that's who we've got so we'll just have to hope he's up to it. Perhaps he'll surprise me - I certainly hope so.
However, I've not been impressed with what he has done so far and I'm set to be disappointed again. I expect taxes to go up sharply for most of us and I suspect that a lot of what is introduced will do more harm to our already weak jobs market.
Let's be honest about this. Tinkering around the edges of an economy where jobs are rare and getting rarer isn't going to help much - and those jobs have to be real, productive jobs and not the non-jobs which proliferate in the public sector.
It doesn't matter how much this budget helps reduce the deficit if there is no long term plan to get the millions of Britons off benefits and back to working in the productive sector.
That is the key for the future - making stuff.
Yes, it really is that important. It is, quite probably, the most important budget since the end of the Second World War and we've entrusted it to the boy George Osborne. Personally, I can't think of many people whose hands I would be less inclined to place my fate and that of the nation in - but that's who we've got so we'll just have to hope he's up to it. Perhaps he'll surprise me - I certainly hope so.
However, I've not been impressed with what he has done so far and I'm set to be disappointed again. I expect taxes to go up sharply for most of us and I suspect that a lot of what is introduced will do more harm to our already weak jobs market.
Let's be honest about this. Tinkering around the edges of an economy where jobs are rare and getting rarer isn't going to help much - and those jobs have to be real, productive jobs and not the non-jobs which proliferate in the public sector.
It doesn't matter how much this budget helps reduce the deficit if there is no long term plan to get the millions of Britons off benefits and back to working in the productive sector.
That is the key for the future - making stuff.
Monday, June 14, 2010
The man who can't make his mind up
A few months ago, Nick Clegg was a nobody in politics. He had very little support from the electorate, not a great deal of support within his own party and it didn't matter much that he seemed incapable of making a decision or statement and sticking to it.
But since the election Clegg has been elevated to a position well beyond that which he deserved after his party's election performance and even further beyond his capabilities. He is, whether he deserves it or is capable of it, the deputy prime minister - for now, anyway.
People in such a position should know what to say and when to say it - and when they say something they should mean it. People in such a position should realise that they are no longer speaking to just their party supporters - they are speaking to and for the people of the country.
So how is it that a week ago Mr Clegg was telling us that the forthcoming cuts will be nothing like those of the Thatcher era (where, in reality, public sector spending actually rose), but is now telling us that savage cuts are necessary if we are to avoid “decades of debt, higher interest rates and fewer jobs"
A week is a long time in politics, but not so long in economics that what you say one week is completely negated by what you say the following week. If he didn't know just how bad things were last week then he should have kept his mouth shut until he did know.
The truth is that Clegg is so far out of his depth he is already looking like a drowning man. He's trying to balance keeping his party supporters on board while dealing with a crisis that will prove that everything he and his party believe in is false. The man has a choice to make and he has to make it soon - does he put his party first or his country?
Given his opinion of Britain from the statements he made before he found himself in a position of power I'm not putting much faith on the latter. When it comes to loyalty Clegg's starts with the EU, followed by his party, followed by various ethnic victim groups - at the bottom of the list for his loyalty is the country which he now finds himself the deputy prime minister of.
You can bet if Clegg had to make the choice between doing what is right for Britain or doing what is right for the eurozone it will be the eurozone every time. If he has to make a choice about what is right for British farmers or Greek tobacco growers it will be the latter.
I'm not sure it is good for Britain to have a man with such dubious loyalty in such a position of authority, but I'm certain it isn't good to have a man in such a position who can't make his mind up when tough decisions have to be made and made quickly and decisively.
But since the election Clegg has been elevated to a position well beyond that which he deserved after his party's election performance and even further beyond his capabilities. He is, whether he deserves it or is capable of it, the deputy prime minister - for now, anyway.
People in such a position should know what to say and when to say it - and when they say something they should mean it. People in such a position should realise that they are no longer speaking to just their party supporters - they are speaking to and for the people of the country.
So how is it that a week ago Mr Clegg was telling us that the forthcoming cuts will be nothing like those of the Thatcher era (where, in reality, public sector spending actually rose), but is now telling us that savage cuts are necessary if we are to avoid “decades of debt, higher interest rates and fewer jobs"
A week is a long time in politics, but not so long in economics that what you say one week is completely negated by what you say the following week. If he didn't know just how bad things were last week then he should have kept his mouth shut until he did know.
The truth is that Clegg is so far out of his depth he is already looking like a drowning man. He's trying to balance keeping his party supporters on board while dealing with a crisis that will prove that everything he and his party believe in is false. The man has a choice to make and he has to make it soon - does he put his party first or his country?
Given his opinion of Britain from the statements he made before he found himself in a position of power I'm not putting much faith on the latter. When it comes to loyalty Clegg's starts with the EU, followed by his party, followed by various ethnic victim groups - at the bottom of the list for his loyalty is the country which he now finds himself the deputy prime minister of.
You can bet if Clegg had to make the choice between doing what is right for Britain or doing what is right for the eurozone it will be the eurozone every time. If he has to make a choice about what is right for British farmers or Greek tobacco growers it will be the latter.
I'm not sure it is good for Britain to have a man with such dubious loyalty in such a position of authority, but I'm certain it isn't good to have a man in such a position who can't make his mind up when tough decisions have to be made and made quickly and decisively.
Monday, June 07, 2010
The storm is brewing
David Cameron is expected to announce that the scale of Britain's economic crisis is worse than expected and that Britain faces cuts, austerity measures and tax rises which will effect the country for decades.
OK, maybe he won't mention the tax rises, but they're coming. My point is, though, that my claim that this "recession" - far from being nearly over - was merely the precursor to the deep depression that is going to effect our nation for the next ten years or so.
While all this is going on we will be expected to stump up more and more to assist the other EU nations who are going through the same problems - including those eurozone members - and this will probably mean the end of what is left of the rebate.
This deep depression is going to effect most of the developed world, but the nations that will fare best will be those who retained their manufacturing and production capability and who have the sense to protect it - Germany and Japan for example. The nations that will struggle most will be those who rely on imports the most and make the least effort to protect their industries - and that, I'm afraid, means Britain.
Further still, until we wise up to the basic fact that a service industry needs a strong manufacturing base to service then we will continue to struggle - and as we can not compete on level terms with developing nations that means using protectionism.
There is no alternative - we have a choice now between protectionism or a completely failed economy for decades. It's not a hard choice is it?
OK, maybe he won't mention the tax rises, but they're coming. My point is, though, that my claim that this "recession" - far from being nearly over - was merely the precursor to the deep depression that is going to effect our nation for the next ten years or so.
While all this is going on we will be expected to stump up more and more to assist the other EU nations who are going through the same problems - including those eurozone members - and this will probably mean the end of what is left of the rebate.
This deep depression is going to effect most of the developed world, but the nations that will fare best will be those who retained their manufacturing and production capability and who have the sense to protect it - Germany and Japan for example. The nations that will struggle most will be those who rely on imports the most and make the least effort to protect their industries - and that, I'm afraid, means Britain.
Further still, until we wise up to the basic fact that a service industry needs a strong manufacturing base to service then we will continue to struggle - and as we can not compete on level terms with developing nations that means using protectionism.
There is no alternative - we have a choice now between protectionism or a completely failed economy for decades. It's not a hard choice is it?
Friday, May 28, 2010
Even really clever people can be stupid
I'm a big admirer of James Dyson - a man who carries on a long and proud British tradition for invention and innovation - but his comment piece in today's Telegraph demonstrates that even really clever people are incapable of thinking things through sometimes.
Dyson makes the now traditional call for Britain to lead the world in science and technology. I say "traditional" because it's been going on ever since Harold Wilson bragged about the "white heat of technology" and promptly started the systematic destruction of our arms industry which was in the fore front of that "white heat". As Dyson asks ....
"Why is it that only in war will governments recognise the contribution of science and technology?"
Dyson is talking about the failure of the Air Ministry to recognise the potential of Frank Whittle's jet engine during peace time, but Dyson ignores the fact that the Air Ministry is not "government". Their failure to back development of such a revolutionary idea was primarily due to two things - the first being the fact that the Air Ministry was run by men rooted in First World War ideas and the second being government cuts to defence budgets and the policy of "appeasement".
But that's not my main complaint about Dyson's comments. What really annoys me is that Dyson seems to think that coming up with ideas is enough in its own right. It isn't.
My point is this. Although Whittle's idea was ignored for a decade, when Britain finally did decide to back the jet engine it had the engineering know how to develop it and the industrial base to manufacture it. Even though we started serious work on producing a jet fighter long after the Germans had the RAF still managed to have their first operational jet fighter in service around the same time as the Luftwaffe.
Dyson goes on to say that the new government must encourage new ideas in science and technology. My response is to ask why? I'm sure he would think I were mad for asking this - and I suspect he is not alone, but think about it. Where are Dyson vacuum cleaners made? Not in Britain.
Coming up with ideas is not enough if it is other countries that take advantage of those ideas. Dyson demands that we learn the lesson of Frank Whittle's jet engine - but he hasn't learned it himself. For us to take advantage of those ideas we need to have people who can turn an idea into a practical concept and then we need factories and workers to manufacture those goods.
The fact that Dyson chooses to make his products in some country other than Britain demonstrates that we are not in a position to do that. He does this because it is cheaper to employ people wherever it is he makes his vacuum cleaners these days and because they are able to provide him with the labour he needs to do repetitive manufacturing work in his factories.
The truth is that we can not all be great inventors, precision engineers and research scientists. A nation needs to get the balance right. Of course it needs to provide the environment and facilities in which technical innovation can flourish, but it also needs to provide an education system that finds the brightest and the best and enables them to rise to the top.
This is done through a process called selection and a system known as "elitism" - but both of these things are abhorred in modern social liberal Britain where equality of outcome is considered more important than equality of opportunity. The point to selection is that you discover at an early age who has the most potential and the point of elitism is that you make sure those people fulfil their potential.
But even then that isn't enough. What is the point of coming up with brilliant inventions when Britain just can not compete with those foreign countries where the labour pool is massive, the wages are cheap and the working conditions are less ..... regulated. That means that we can not have the factories and plants filled with workers producing the goods we develop and that is why Dyson has his factories somewhere else.
That gives us a choice. Either we change our welfare system and industrial regulation so that we can compete with those foreign workers in developing nations - employing children, slave labour wages, dangerous working conditions, 15 hour days with no breaks and so on - or we do something to protect our industry at the borders.
I know which I prefer.
Dyson makes the now traditional call for Britain to lead the world in science and technology. I say "traditional" because it's been going on ever since Harold Wilson bragged about the "white heat of technology" and promptly started the systematic destruction of our arms industry which was in the fore front of that "white heat". As Dyson asks ....
"Why is it that only in war will governments recognise the contribution of science and technology?"
Dyson is talking about the failure of the Air Ministry to recognise the potential of Frank Whittle's jet engine during peace time, but Dyson ignores the fact that the Air Ministry is not "government". Their failure to back development of such a revolutionary idea was primarily due to two things - the first being the fact that the Air Ministry was run by men rooted in First World War ideas and the second being government cuts to defence budgets and the policy of "appeasement".
But that's not my main complaint about Dyson's comments. What really annoys me is that Dyson seems to think that coming up with ideas is enough in its own right. It isn't.
My point is this. Although Whittle's idea was ignored for a decade, when Britain finally did decide to back the jet engine it had the engineering know how to develop it and the industrial base to manufacture it. Even though we started serious work on producing a jet fighter long after the Germans had the RAF still managed to have their first operational jet fighter in service around the same time as the Luftwaffe.
Dyson goes on to say that the new government must encourage new ideas in science and technology. My response is to ask why? I'm sure he would think I were mad for asking this - and I suspect he is not alone, but think about it. Where are Dyson vacuum cleaners made? Not in Britain.
Coming up with ideas is not enough if it is other countries that take advantage of those ideas. Dyson demands that we learn the lesson of Frank Whittle's jet engine - but he hasn't learned it himself. For us to take advantage of those ideas we need to have people who can turn an idea into a practical concept and then we need factories and workers to manufacture those goods.
The fact that Dyson chooses to make his products in some country other than Britain demonstrates that we are not in a position to do that. He does this because it is cheaper to employ people wherever it is he makes his vacuum cleaners these days and because they are able to provide him with the labour he needs to do repetitive manufacturing work in his factories.
The truth is that we can not all be great inventors, precision engineers and research scientists. A nation needs to get the balance right. Of course it needs to provide the environment and facilities in which technical innovation can flourish, but it also needs to provide an education system that finds the brightest and the best and enables them to rise to the top.
This is done through a process called selection and a system known as "elitism" - but both of these things are abhorred in modern social liberal Britain where equality of outcome is considered more important than equality of opportunity. The point to selection is that you discover at an early age who has the most potential and the point of elitism is that you make sure those people fulfil their potential.
But even then that isn't enough. What is the point of coming up with brilliant inventions when Britain just can not compete with those foreign countries where the labour pool is massive, the wages are cheap and the working conditions are less ..... regulated. That means that we can not have the factories and plants filled with workers producing the goods we develop and that is why Dyson has his factories somewhere else.
That gives us a choice. Either we change our welfare system and industrial regulation so that we can compete with those foreign workers in developing nations - employing children, slave labour wages, dangerous working conditions, 15 hour days with no breaks and so on - or we do something to protect our industry at the borders.
I know which I prefer.
Monday, May 17, 2010
Feeble and pointless
The big argument between Labour and the Tories during the election was whether to cut spending immediately or wait a bit. The Labour party argument was that cutting spending now may harm the "recovery" while the Tories claimed it was vital to make cuts at the earliest opportunity to boost confidence.
To be honest, my own personal views crossed into both camps. Cuts in public spending are absolutely essential if we are ever going to get out of this economic mire the Labour Party have landed us in, but you either cut hard or don't bother - and a measly £6 billion off of a deficit of £165 billion is not going to make a blind bit of difference.
Remember, this is not making any difference to our growing debt problem - we're talking about the budget deficit here, not the national debt. In other words, we're talking about knocking a tiny off of the amount we're overspending. The 6 billion quid that Osborne hopes to save will be swallowed up by interest payments on the amount he is still having to borrow.
Think of it this way - your credit cards are almost maxed out, but each month you are still putting another £165 on them and all you resolve to do is cut that to £159 a month - and you still get clobbered for another £80 in interest.
It's as pointless spending £6 billion less in the government terms as it is spending £6 less in that scenario I just mentioned - it is nothing, It is a feeble and pointless amount and Osborne may as well not bother. And thanks to the coalition with the Lib Dems, the Tories have abandoned their plans to cut the taxes that might have given some stimulation to the economy (the £10,000 tax threshold will not make a difference if employers are still getting hammered on National Insurance).
My view is that you either cut now and cut substantially - I mean 50% or more not 3,5% - and plough many of those savings into tax cuts or you leave alone and take the opportunity to borrow money while you can to start investing in the things that will ensure your future - industry, infrastructure and energy - because, sooner or later, Britain will default on that debt or face hyper inflation (or both) and then nothing will make a difference.
To be honest, my own personal views crossed into both camps. Cuts in public spending are absolutely essential if we are ever going to get out of this economic mire the Labour Party have landed us in, but you either cut hard or don't bother - and a measly £6 billion off of a deficit of £165 billion is not going to make a blind bit of difference.
Remember, this is not making any difference to our growing debt problem - we're talking about the budget deficit here, not the national debt. In other words, we're talking about knocking a tiny off of the amount we're overspending. The 6 billion quid that Osborne hopes to save will be swallowed up by interest payments on the amount he is still having to borrow.
Think of it this way - your credit cards are almost maxed out, but each month you are still putting another £165 on them and all you resolve to do is cut that to £159 a month - and you still get clobbered for another £80 in interest.
It's as pointless spending £6 billion less in the government terms as it is spending £6 less in that scenario I just mentioned - it is nothing, It is a feeble and pointless amount and Osborne may as well not bother. And thanks to the coalition with the Lib Dems, the Tories have abandoned their plans to cut the taxes that might have given some stimulation to the economy (the £10,000 tax threshold will not make a difference if employers are still getting hammered on National Insurance).
My view is that you either cut now and cut substantially - I mean 50% or more not 3,5% - and plough many of those savings into tax cuts or you leave alone and take the opportunity to borrow money while you can to start investing in the things that will ensure your future - industry, infrastructure and energy - because, sooner or later, Britain will default on that debt or face hyper inflation (or both) and then nothing will make a difference.
Wednesday, May 05, 2010
Opportunity knocks
In a comment to the previous post, Steve suggests that it may take two generations or more to rebuild our nation once the progressives have finally disappeared up their own backsides - as they very shortly will. To be honest, up until a few years ago I shared this view, but my viewpoint has changed somewhat due to events.
First of all, let me say that Britain - or an independent England - will never be the nation it once was in terms of economic and political clout, but it doesn't need to be. The main reason for this is that the economic power base has shifted from the Atlantic to the Pacific and this is unlikely to change back again quickly. So whatever happens, we can never be anything other than on the periphery. That doesn't really matter - and in many ways it is no bad thing.
What matters is that we restore our nation to where it was before the progressives took over and that can be done in a very short space of time. It always has been possible to reverse the damage done by the progressives, but the longer they held power the harder it would be - as long as things remained stable.
But thanks to the economic mess that the progressives - both here, in Europe and in the USA - have wrought, things will not remain stable - and this is the crucial point. While there was the semblance of normal economic stability (I say that because it is now apparent that the economic "miracle" of the progressive era was founded on substantially dodgy ground) it would have taken decades to reverse the damage.
We have become so dependent on the state in so many ways that it would have been impossible to roll back these barriers. That was always part of the plan of progressives - make the people dependent and then they will never give up those things on which they depend.
However, so great is Britain's public debt liability that total economic collapse is now not just a possibility, it is an inevitability. To understand why that is, I suggest you read this piece on the American Thinker. They are obviously talking about the USA, but the same things apply here in Britain.
When this happens all of the structures that the progressives put in place to protect their dominance will come tumbling down. It will not be pretty and it will not be easy, but it will happen and when it does it will be end of the progressive era for good.
From that point on, the rebuilding can begin under social conservative leadership. It will be hard work and it will require strong governance, but the rise will be rapid and in ten years we will have restored our nation to a self-reliant, independent, fully functioning country once more.
The problem for social conservatism has always been the existence of the dependency culture. The economic crisis that is about to hit us - much much harder than the depression of the thirties - provides an opportunity which must be taken.
I'd rather it hadn't happened and I'd have preferred it if it wasn't necessary - but it has and it is and when opportunities like this present themselves we must grab it with both hands. Even if we don't and the opportunity passes us by I still believe that we will roll back the damage of the progressive era. As I said in the last post, the coming generation show every sign that they are not keen on the progressive ideology - but that way will be slow and just as arduous.
If we miss this opportunity then we will be struggling for the next 50 years to overcome our problems, but if we take it when it comes then we will have restored our nation to the peaceful, independent, self-reliant and contented nation it once was inside of two decades. Who knows, I might actually live to see Britain great again!
First of all, let me say that Britain - or an independent England - will never be the nation it once was in terms of economic and political clout, but it doesn't need to be. The main reason for this is that the economic power base has shifted from the Atlantic to the Pacific and this is unlikely to change back again quickly. So whatever happens, we can never be anything other than on the periphery. That doesn't really matter - and in many ways it is no bad thing.
What matters is that we restore our nation to where it was before the progressives took over and that can be done in a very short space of time. It always has been possible to reverse the damage done by the progressives, but the longer they held power the harder it would be - as long as things remained stable.
But thanks to the economic mess that the progressives - both here, in Europe and in the USA - have wrought, things will not remain stable - and this is the crucial point. While there was the semblance of normal economic stability (I say that because it is now apparent that the economic "miracle" of the progressive era was founded on substantially dodgy ground) it would have taken decades to reverse the damage.
We have become so dependent on the state in so many ways that it would have been impossible to roll back these barriers. That was always part of the plan of progressives - make the people dependent and then they will never give up those things on which they depend.
However, so great is Britain's public debt liability that total economic collapse is now not just a possibility, it is an inevitability. To understand why that is, I suggest you read this piece on the American Thinker. They are obviously talking about the USA, but the same things apply here in Britain.
When this happens all of the structures that the progressives put in place to protect their dominance will come tumbling down. It will not be pretty and it will not be easy, but it will happen and when it does it will be end of the progressive era for good.
From that point on, the rebuilding can begin under social conservative leadership. It will be hard work and it will require strong governance, but the rise will be rapid and in ten years we will have restored our nation to a self-reliant, independent, fully functioning country once more.
The problem for social conservatism has always been the existence of the dependency culture. The economic crisis that is about to hit us - much much harder than the depression of the thirties - provides an opportunity which must be taken.
I'd rather it hadn't happened and I'd have preferred it if it wasn't necessary - but it has and it is and when opportunities like this present themselves we must grab it with both hands. Even if we don't and the opportunity passes us by I still believe that we will roll back the damage of the progressive era. As I said in the last post, the coming generation show every sign that they are not keen on the progressive ideology - but that way will be slow and just as arduous.
If we miss this opportunity then we will be struggling for the next 50 years to overcome our problems, but if we take it when it comes then we will have restored our nation to the peaceful, independent, self-reliant and contented nation it once was inside of two decades. Who knows, I might actually live to see Britain great again!
Wednesday, April 28, 2010
And this helps how, exactly?
To be honest, I don't know the details of the dispute between Birmingham council and the unions over equal pay for women. It's something to do with bonuses being paid to "men" which were denied to "women".
It doesn't sound quite right to me, because, as far as I can make out the bonuses were paid to people doing different jobs - for example, refuse collectors got a big bonus while care workers didn't.
I don't actually see what that has to do with equal pay for genders myself. After all, there are plenty of men working in social care and they didn't get the big bonuses either - and there is nothing to stop women working on bin collections which means they could have got big bonuses if they'd decided to do that job - but hey, I've given up trying to make sense of the equal pay rubbish (I can't make sense of it, because there is no sense to it).
What I do wonder is who has actually benefited from this court case. As I understand it, Birmingham City Council have stopped paying bonuses to people doing "man's" work - so they lose out. The women who are supposed to have lost out will get a couple of grand each maybe - but they've probably all lost their jobs by now or seen them transferred to a private care company who will give them even worse pay and conditions and Birmingham City Council don't actually have any money other than that they take off the taxpayer.
So the men working for Birmingham City Council lose out, the women working for Birmingham City Council lose out and the people of Birmingham City lose out. As far as I can see, the only people to benefit from this are the lawyers who now see an opportunity to milk councils up and down Britain for more cash.
And all this at a time when we are facing the biggest cuts since the nineteen seventies according to some think tank.
It's a bit like handing a glass of water to a drowning man.
It doesn't sound quite right to me, because, as far as I can make out the bonuses were paid to people doing different jobs - for example, refuse collectors got a big bonus while care workers didn't.
I don't actually see what that has to do with equal pay for genders myself. After all, there are plenty of men working in social care and they didn't get the big bonuses either - and there is nothing to stop women working on bin collections which means they could have got big bonuses if they'd decided to do that job - but hey, I've given up trying to make sense of the equal pay rubbish (I can't make sense of it, because there is no sense to it).
What I do wonder is who has actually benefited from this court case. As I understand it, Birmingham City Council have stopped paying bonuses to people doing "man's" work - so they lose out. The women who are supposed to have lost out will get a couple of grand each maybe - but they've probably all lost their jobs by now or seen them transferred to a private care company who will give them even worse pay and conditions and Birmingham City Council don't actually have any money other than that they take off the taxpayer.
So the men working for Birmingham City Council lose out, the women working for Birmingham City Council lose out and the people of Birmingham City lose out. As far as I can see, the only people to benefit from this are the lawyers who now see an opportunity to milk councils up and down Britain for more cash.
And all this at a time when we are facing the biggest cuts since the nineteen seventies according to some think tank.
It's a bit like handing a glass of water to a drowning man.
Beware of Greeks bearing gilts
Yes, I know Greece doesn't issue "gilts" - but I like the pun! OK?
I am, of course, referring to the decision to downgrade Greece's credit rating to "junk" status meaning that they are now paying the sort of interest on their borrowing that you or I might face on our credit cards - bad enough when you owe £1000, but a total disaster when you owe £1000 billion.
This will, of course, make borrowing prohibitively expensive for Greece and they will have to rely on handouts from the rest of the EU and the IMF to meet their financial commitments - and they'll have to slash public spending massively at the same time.
Greece is not going to be a nice place to be for the next few years - they are, effectively, in a deep depression which is going to last for a decade or more and it is only a matter of time before other European nations join them (including us). It wouldn't be so bad if they could rely on tourism - but what with the euro, Greece is just so damn expensive when compared to Tunisia or Turkey.
Anyway, my post isn't really about bashing Greece, but bashing their decision to join the euro - after all, it is that choice which has shackled Greece's ability to do anything about their debt and finance problem - and has hamstrung, Portugal, Spain and Ireland too - and made the country a much more expensive place to visit.
It also demonstrates just how wise a decision it was for Britain to keep out of the euro - a fact which most of the euro supporters have not mentioned over the last couple of years for some reason - particularly the Liberal Democrats who were once pushing for Britain to join as soon as possible, something which that nice man and financial genius, Vince Cable, seems remarkably reticent to talk about these days.
And let's be honest, here - the only reason the Tories and Labour parties didn't take us into the euro was because they didn't think they could get it past the British people. The truth is that they both favoured the idea privately - and some of them publicly - but knew that it was pushing the people too far too soon to make them ditch the pound.
Of course, all three main parties remain committed to our membership of the European Union and remain determined to take us into the euro as soon as they practicably can.
Just bear that in mind when you listen to them discussing how they would deal with this economic crisis (which hasn't even really started yet) in the run up to the election. They don't have any answers - so they'll just lie - but don't be fooled. If the politicians of all three of our main parties had had their way we would be as deep in the mire today as Greece.
I am, of course, referring to the decision to downgrade Greece's credit rating to "junk" status meaning that they are now paying the sort of interest on their borrowing that you or I might face on our credit cards - bad enough when you owe £1000, but a total disaster when you owe £1000 billion.
This will, of course, make borrowing prohibitively expensive for Greece and they will have to rely on handouts from the rest of the EU and the IMF to meet their financial commitments - and they'll have to slash public spending massively at the same time.
Greece is not going to be a nice place to be for the next few years - they are, effectively, in a deep depression which is going to last for a decade or more and it is only a matter of time before other European nations join them (including us). It wouldn't be so bad if they could rely on tourism - but what with the euro, Greece is just so damn expensive when compared to Tunisia or Turkey.
Anyway, my post isn't really about bashing Greece, but bashing their decision to join the euro - after all, it is that choice which has shackled Greece's ability to do anything about their debt and finance problem - and has hamstrung, Portugal, Spain and Ireland too - and made the country a much more expensive place to visit.
It also demonstrates just how wise a decision it was for Britain to keep out of the euro - a fact which most of the euro supporters have not mentioned over the last couple of years for some reason - particularly the Liberal Democrats who were once pushing for Britain to join as soon as possible, something which that nice man and financial genius, Vince Cable, seems remarkably reticent to talk about these days.
And let's be honest, here - the only reason the Tories and Labour parties didn't take us into the euro was because they didn't think they could get it past the British people. The truth is that they both favoured the idea privately - and some of them publicly - but knew that it was pushing the people too far too soon to make them ditch the pound.
Of course, all three main parties remain committed to our membership of the European Union and remain determined to take us into the euro as soon as they practicably can.
Just bear that in mind when you listen to them discussing how they would deal with this economic crisis (which hasn't even really started yet) in the run up to the election. They don't have any answers - so they'll just lie - but don't be fooled. If the politicians of all three of our main parties had had their way we would be as deep in the mire today as Greece.
Wednesday, April 07, 2010
Money and the economy
Inspired by the excellent Fat Bigot and the squabbling on Question Time, I'd just like to add my two penneth worth to the argument on National Insurance.
In particular, I'd like to concentrate on the issue of "taking money out of the economy".
The Tories argue that increasing National Insurance will "take money out of the economy"
Labour argue that reducing the tax take for the government will "take money out of the economy"
They are both wrong. Before I go on, I'd just like to point out that of course I favour lower taxation and of course it promotes jobs and growth - but that isn't the point here. We're talking about what "takes money out of the economy" and the truth is that neither a NI increase or an NI reduction takes money out of the economy.
If you leave NI the same then the money stays in the economy in the form of money in the private sector (from where all money comes from) in the pockets of employers and their employees.
If you increase NI then the money still stays in the economy - it just goes to a different set of pockets. Either way, the money will remain in the British economy. You can argue that one use of the money is better than the other - but not that one way takes money out of the economy.
The only way money leaves the economy is if it leaves this nation and every year we "take money out of the economy"- billions of pounds - and hand it to the EU who graciously allow us to have a little bit of it back - but not much.
The biggest way to "take money out of the economy" is to run a trade deficit - and we've been doing this for decades. Every year 5% of our GDP is taken out of our economy in the form of the trade deficit. Even in years when our economy is growing at a decent rate this is usually over and above the level of growth by 2-3%.
In other words, even if you grow your GDP by 3% per year, you are still losing 2% of the money out of your economy. It's not like the money is lying dormant somewhere or just not being put to the best use - it has gone. For good.
When money is leaving your economy faster than wealth is being created then you have two choices. First of all, you can resort to debt - which is what we have been doing for the last 20 years to support the fallacy that was our "economic miracle". Well - we all know where that ended up.
The second choice is to print more money - which is what we've been doing for the last year or so - but that is just storing up inflation which is yet to hit us, but inevitably will.
There is a third option. You can reduce your trade deficit or, even better, run a trade surplus. However, that requires some sort of commitment to protect and preserve your national industries - particularly manufacturing.
But no one wants to do that.
Yet.
They will - eventually.
In particular, I'd like to concentrate on the issue of "taking money out of the economy".
The Tories argue that increasing National Insurance will "take money out of the economy"
Labour argue that reducing the tax take for the government will "take money out of the economy"
They are both wrong. Before I go on, I'd just like to point out that of course I favour lower taxation and of course it promotes jobs and growth - but that isn't the point here. We're talking about what "takes money out of the economy" and the truth is that neither a NI increase or an NI reduction takes money out of the economy.
If you leave NI the same then the money stays in the economy in the form of money in the private sector (from where all money comes from) in the pockets of employers and their employees.
If you increase NI then the money still stays in the economy - it just goes to a different set of pockets. Either way, the money will remain in the British economy. You can argue that one use of the money is better than the other - but not that one way takes money out of the economy.
The only way money leaves the economy is if it leaves this nation and every year we "take money out of the economy"- billions of pounds - and hand it to the EU who graciously allow us to have a little bit of it back - but not much.
The biggest way to "take money out of the economy" is to run a trade deficit - and we've been doing this for decades. Every year 5% of our GDP is taken out of our economy in the form of the trade deficit. Even in years when our economy is growing at a decent rate this is usually over and above the level of growth by 2-3%.
In other words, even if you grow your GDP by 3% per year, you are still losing 2% of the money out of your economy. It's not like the money is lying dormant somewhere or just not being put to the best use - it has gone. For good.
When money is leaving your economy faster than wealth is being created then you have two choices. First of all, you can resort to debt - which is what we have been doing for the last 20 years to support the fallacy that was our "economic miracle". Well - we all know where that ended up.
The second choice is to print more money - which is what we've been doing for the last year or so - but that is just storing up inflation which is yet to hit us, but inevitably will.
There is a third option. You can reduce your trade deficit or, even better, run a trade surplus. However, that requires some sort of commitment to protect and preserve your national industries - particularly manufacturing.
But no one wants to do that.
Yet.
They will - eventually.
Monday, April 05, 2010
Incomes, outgoings and outcomes
Following on from my post regarding "free trade", I now want to explain why this matters to the economy.
I suspect most of the people who read this blog have a job - or have had one in the past - and know what it is like to manage their finances. A job brings income and this is your "wealth" - but living also has costs attached to it and these costs represents your outflow of wealth. Eventually you reach a balance between the two which becomes your "living standard".
With any luck you can reach a point where your increase in income growth is faster than the increase in expenses growth - and when you reach that you have improving living standards.
But if you reach a point where the rise in your income is less than the rate at which money is leaving your household then you will be forced to cut back and this will represent a drop in living your living standard.
We all know this. It's why we want and negotiate pay rises every year - not just to give us more money, but to cover the increased costs we are having to face through inflation. If the rate at which our pay increases is less than the rate of inflation we all know that we are worse off in real terms.
It's the same for a national economy. We have an income and expenses. However, for a national economy the income comes from GDP rather than wages and the expenses - the outflow of wealth from the national economy - is the trade deficit.
The trade deficit represents the flow of money out of the "household" and is equivalent to internal inflation. It is currently running at around 5% of GDP per year - but, more than this, our trade deficit has been consistently higher than our GDP growth for decades.
We all know that if we receive a 2% pay increase while inflation is running at 5% then that represents a 3% drop in our wealth in real terms. We are faced with a choice - increase our income or decrease our costs. Few of us can increase our income arbitrarily, so most of us choose to cut costs - and this invariably means lower living standards.
Over the last decade or so we have all experienced this in some way. For many of us we have been able to cushion this by increasing our debt - but we also know that this is ultimately unsustainable. The debt has to be repaid at some point and the only way to do this is to either increase your income substantially or face significant cuts in your living standards.
How we do this is up to us. It might mean cutting back on nights out or cancelling the Sky subscription or cutting back on the groceries - but whatever it is it will mean a reduction in living standards.
It's exactly the same for a national economy - except on a bigger scale. I know people will argue that it isn't as simple as I have suggested here, but in essence it is. Increasing our national income by growing GDP is only beneficial if it is more than the rate at which the money is flowing out of our country through the trade deficit.
Over the last 30 years we've not been doing this - instead we've been storing up debt. There are only two ways out of this. Either we reduce the outflow of money from our economy by getting the trade deficit below the level of GDP growth or we face up to the fact that we are going to have to suffer substantial cuts to the services and benefits that our national economy can afford.
We know this is true because we all deal with it day after day - but for some reason we ignore the obvious when it comes to the national economy. Trade is income - and when the money coming is rising slower than the money going out you know you're going to struggle.
Debt can not be the solution forever. You all know that if nothing is done about it then the outcome is going to bankruptcy.
I suspect most of the people who read this blog have a job - or have had one in the past - and know what it is like to manage their finances. A job brings income and this is your "wealth" - but living also has costs attached to it and these costs represents your outflow of wealth. Eventually you reach a balance between the two which becomes your "living standard".
With any luck you can reach a point where your increase in income growth is faster than the increase in expenses growth - and when you reach that you have improving living standards.
But if you reach a point where the rise in your income is less than the rate at which money is leaving your household then you will be forced to cut back and this will represent a drop in living your living standard.
We all know this. It's why we want and negotiate pay rises every year - not just to give us more money, but to cover the increased costs we are having to face through inflation. If the rate at which our pay increases is less than the rate of inflation we all know that we are worse off in real terms.
It's the same for a national economy. We have an income and expenses. However, for a national economy the income comes from GDP rather than wages and the expenses - the outflow of wealth from the national economy - is the trade deficit.
The trade deficit represents the flow of money out of the "household" and is equivalent to internal inflation. It is currently running at around 5% of GDP per year - but, more than this, our trade deficit has been consistently higher than our GDP growth for decades.
We all know that if we receive a 2% pay increase while inflation is running at 5% then that represents a 3% drop in our wealth in real terms. We are faced with a choice - increase our income or decrease our costs. Few of us can increase our income arbitrarily, so most of us choose to cut costs - and this invariably means lower living standards.
Over the last decade or so we have all experienced this in some way. For many of us we have been able to cushion this by increasing our debt - but we also know that this is ultimately unsustainable. The debt has to be repaid at some point and the only way to do this is to either increase your income substantially or face significant cuts in your living standards.
How we do this is up to us. It might mean cutting back on nights out or cancelling the Sky subscription or cutting back on the groceries - but whatever it is it will mean a reduction in living standards.
It's exactly the same for a national economy - except on a bigger scale. I know people will argue that it isn't as simple as I have suggested here, but in essence it is. Increasing our national income by growing GDP is only beneficial if it is more than the rate at which the money is flowing out of our country through the trade deficit.
Over the last 30 years we've not been doing this - instead we've been storing up debt. There are only two ways out of this. Either we reduce the outflow of money from our economy by getting the trade deficit below the level of GDP growth or we face up to the fact that we are going to have to suffer substantial cuts to the services and benefits that our national economy can afford.
We know this is true because we all deal with it day after day - but for some reason we ignore the obvious when it comes to the national economy. Trade is income - and when the money coming is rising slower than the money going out you know you're going to struggle.
Debt can not be the solution forever. You all know that if nothing is done about it then the outcome is going to bankruptcy.
There is no such thing as "free trade"
Yep - we're back on this old chestnut again.
If it wasn't for the fact that the consequences of this fixation with "free trade" was so damaging for Britain as a nation there would be some sort of delicious irony in the fact that "free trade" conservatives will be the authors of their own destruction. However, their destruction will also mean the destruction of this nation and its people.
Free trade does not exist. It is questionable whether it is even possible (or desirable) to attain free trade within a national economy, but it most certainly is not possible beyond national borders.
For free trade to exist you have to have identical conditions for trade between the two trading parties - not mostly similar or relatively close conditions - they have to be identical. If they are not then one or other party will have a "penalty" and the trade can not be free.
As I said, this is pretty hard to achieve even within the national context. There are still regional discrepancies and so trade is never really free within national borders - but at least you can have a single government that can make those conditions as similar as it is possible to be.
But when you are talking about two different nations with two different governments with widely differing approaches to trade then "free trade" is nothing of the sort - and if those conditions of trade offer one of those nations such a massive advantage that you can not compete with it then it is in your national interest to impose conditions on trade with that nation.
If you don't then you are effectively giving up on your national economy. Other nations will take advantage of that and plunder your nation for what they can get. They'll sell you whatever they can and buy up whatever they want - until you've got nothing left to offer them at which point they'll leave you and go elsewhere.
If it wasn't for the fact that the consequences of this fixation with "free trade" was so damaging for Britain as a nation there would be some sort of delicious irony in the fact that "free trade" conservatives will be the authors of their own destruction. However, their destruction will also mean the destruction of this nation and its people.
Free trade does not exist. It is questionable whether it is even possible (or desirable) to attain free trade within a national economy, but it most certainly is not possible beyond national borders.
For free trade to exist you have to have identical conditions for trade between the two trading parties - not mostly similar or relatively close conditions - they have to be identical. If they are not then one or other party will have a "penalty" and the trade can not be free.
As I said, this is pretty hard to achieve even within the national context. There are still regional discrepancies and so trade is never really free within national borders - but at least you can have a single government that can make those conditions as similar as it is possible to be.
But when you are talking about two different nations with two different governments with widely differing approaches to trade then "free trade" is nothing of the sort - and if those conditions of trade offer one of those nations such a massive advantage that you can not compete with it then it is in your national interest to impose conditions on trade with that nation.
If you don't then you are effectively giving up on your national economy. Other nations will take advantage of that and plunder your nation for what they can get. They'll sell you whatever they can and buy up whatever they want - until you've got nothing left to offer them at which point they'll leave you and go elsewhere.
Friday, April 02, 2010
Desperate to find a difference
The argument over the Labour and Tory plans for NI demonstrates just how pathetic our politics has become.
First of all, of course lots of "business leaders" support the Tory plans. On the whole, businesses support anything that means lower costs to them - but their opinions are no more worthy or valid than anybody else's so it really isn't relevant.
Secondly, in terms of the deficit and debt faced by this country, the sums we're talking about are trivial. It might sound like a lot - anything with the word "billion" after it always does - but it isn't really. That's the trouble when currencies reach the situation we have now - people lose all sense of value.*
Finally, the Tories are not proposing to reduce NI - only not to raise it by quite so much as Labour. Fundamentally, they are not arguing over the general idea - just over the scale of the idea - which demonstrates, once again, just how similar the two parties are.
It also demonstrates how desperate our political media is to find something to distinguish Labour and Tory policy - that they cling on to this minor quibble as if it is something of great importance while, in the grand scheme of things, it's very, very minor. In terms of our economy, it's like fighting over a farthing in the gutter while pouring hundreds of pounds down the drain.
* Which is why I believe we need to revalue our currency so that £10 becomes £1 - to bring back a sense of value to money. Consider this, if you've got £100 and spend £10 - you still have £90 left. That's a lot of money, right?
But if you only have £10 and spend £1 - you only have nine quid left. It's the same proportion, but suddenly it doesn't sound so much and you're much more likely to watch what you spend. Of course, this isn't a popular idea in a consumption based economy.
First of all, of course lots of "business leaders" support the Tory plans. On the whole, businesses support anything that means lower costs to them - but their opinions are no more worthy or valid than anybody else's so it really isn't relevant.
Secondly, in terms of the deficit and debt faced by this country, the sums we're talking about are trivial. It might sound like a lot - anything with the word "billion" after it always does - but it isn't really. That's the trouble when currencies reach the situation we have now - people lose all sense of value.*
Finally, the Tories are not proposing to reduce NI - only not to raise it by quite so much as Labour. Fundamentally, they are not arguing over the general idea - just over the scale of the idea - which demonstrates, once again, just how similar the two parties are.
It also demonstrates how desperate our political media is to find something to distinguish Labour and Tory policy - that they cling on to this minor quibble as if it is something of great importance while, in the grand scheme of things, it's very, very minor. In terms of our economy, it's like fighting over a farthing in the gutter while pouring hundreds of pounds down the drain.
* Which is why I believe we need to revalue our currency so that £10 becomes £1 - to bring back a sense of value to money. Consider this, if you've got £100 and spend £10 - you still have £90 left. That's a lot of money, right?
But if you only have £10 and spend £1 - you only have nine quid left. It's the same proportion, but suddenly it doesn't sound so much and you're much more likely to watch what you spend. Of course, this isn't a popular idea in a consumption based economy.
Wednesday, March 31, 2010
Under pressure
I hear today that there are suggestions that school children are suffering from more stress than ever before with the pressure of examinations. Although I make no secret of my belief that school exams have become easier and grades inflated (simply as a political tool to demonstrate how "successful" an education programme has been) I can quite easily believe that children are under more pressure with examinations than they have ever been.
When I was coming to the end of my time in junior school (as we used to call it back then) we were vaguely aware of the impending 11+ test - but there was no attempt to teach towards it and there was no major importance placed on the examination. We didn't go through practice tests or mock examinations - one day we were ushered into a classroom, took the test and that was it. A few months later we got a letter asking us to choose the school we wanted to go to and, for those of us who passed, this included grammar schools.
It was different at grammar school with O levels - we were obviously taught specifically for those tests from quite a few years back - however there was not the emphasis on the importance of getting results other than from the point of view of getting into sixth form and on to university. For those of us uninterested in sixth form or university it was no big deal.
One of the reasons why this wasn't so important and why there was less stress placed on children was that there were plenty of job options available. Of course, it helped that I lived next door to the biggest trading estate in Europe, but that wasn't the sole reason. Back then, Britain was still predominantly a manufacturing nation.
There was a big demand for workers at all levels - from manual labourers, through semi-skilled and skilled right up to graduate class. Whatever your level of education there was always a decent well paid job available (by the standards of the time) for anyone prepared to put a bit of effort into finding one.
There were thousands of apprenticeships for school leavers providing young people with an oppotunity to learn a valuable life long trade. However, most apprenticeships were "indentured" requiring a long term commitment from the employee of four to five years.
On top of those formal apprenticeships there were also lots of firms - large, medium and small - offering a kind of informal apprenticeship and sponsoring "day release" enabling school leavers to work four days a week and attend a college course, paid for by your employer, on the other day. Virtually everyone I knew, regardless of which school they went to, went through this system - either finding an apprenticeship or a job with day release if they left school at sixteen.
I'll be honest, I've never been so well off as I was in those first few years as a wage earner - even though I only started off on £16 a week. I should also point out that the dole paid £9 a week at the time I started work and there was no tax or NI on top of that!
By the time I'd had my deductions and handed mum a fiver for "upkeep" I was worse off than most people claiming unemployment benefit - but I still seemed to have enough cash to go out six nights a week and spend most lunchtimes in the boozer nursing a pint of Trophy bitter and a cheese roll.
I even had enough money to run a motorcycle - well, a second hand FS1E*, but it was unrestricted and good for 60 when flat on the tank with a following wind. After a couple of pay rises and a year or so saving I'd managed to upgrade the Fizzy to a Kawasaki KH250** and started paying for driving lessons!
However, by then - unfortunately - our membership of the EEC and the Labour government had done their damage and Britain was in the middle of the winter of discontent and dire economic circumstances (see - nothing really changes). Our manufacturing base was already in decline and with it were the jobs and training which us youngsters had taken for granted when leaving school.
And this is why there is so much pressure on kids today. Even university graduates are finding it hard to find jobs and often end up working at KFC or Poundland. All those technical colleges converted to universities and firms no longer bother to offer day release schemes.
The over emphasis on university and "degrees" means that too many kids are vying for too few spots in those universities and competing for ever declining slices of the government cash that pays for those universities (not including the massive debt they incur through student loans).
This is the reality that faces school leavers today and this is why there is so much pressure and, consequently, so much stress for school children. It's not that the exams are so tough - they aren't compared to O levels and A levels of the sixties and seventies (and everyone really knows they aren't).
This is also why it is so daft to talk about a "high tech" economy. Even assuming we could do "high tech" better than the emerging nations (which is doubtful) it is ridiculous to assume that everybody is capable of working in "high tech". A target of 50% in university would be fine if 50% of jobs were high really skilled graduate jobs - but they aren't - and 50% of school leavers are not really university potential either.
Indeed, I suspect that 90% of "graduate" positions today would have been filled more than adequately by 16 year old school leavers on day release back in 1973 - and I suspect that considerably more than 50% of jobs available today do not require particularly high levels of education.
What we need is a properly balanced mixed economy with an emphasis on manufacturing - not service - providing a range of job options for school leavers. On top of that we need a proper education system that does select the best to go on university, but that also provides the majority with a decent level of education as well.
And we need proper apprenticeships and business sponsored day release at technical colleges for school leavers who don't want to go into sixth form or university, but just want to work and earn enough money to buy a few beers a week and a motorcycle.
* The Yamaha FS1E was a 50cc sports moped and learner legal for sixteen year olds. Affectionately known as the Fizzy (or Fizzie) it was every 16 year old school boys ambition to get his leg over one - far more than it was to get his leg over in the other way, if you know what I mean! How times change.
**The Kawasaki KH250 was a learner legal (17 years +), three cylinder, two stroke, rev happy, 250cc motorcycle with fiendish acceleration and a propensity to buck around like an angry bull under braking. It handled like a brick and the factory fitted tyres were lethal in the wet - but I loved it to bits and went everywhere on that bike.
When I was coming to the end of my time in junior school (as we used to call it back then) we were vaguely aware of the impending 11+ test - but there was no attempt to teach towards it and there was no major importance placed on the examination. We didn't go through practice tests or mock examinations - one day we were ushered into a classroom, took the test and that was it. A few months later we got a letter asking us to choose the school we wanted to go to and, for those of us who passed, this included grammar schools.
It was different at grammar school with O levels - we were obviously taught specifically for those tests from quite a few years back - however there was not the emphasis on the importance of getting results other than from the point of view of getting into sixth form and on to university. For those of us uninterested in sixth form or university it was no big deal.
One of the reasons why this wasn't so important and why there was less stress placed on children was that there were plenty of job options available. Of course, it helped that I lived next door to the biggest trading estate in Europe, but that wasn't the sole reason. Back then, Britain was still predominantly a manufacturing nation.
There was a big demand for workers at all levels - from manual labourers, through semi-skilled and skilled right up to graduate class. Whatever your level of education there was always a decent well paid job available (by the standards of the time) for anyone prepared to put a bit of effort into finding one.
There were thousands of apprenticeships for school leavers providing young people with an oppotunity to learn a valuable life long trade. However, most apprenticeships were "indentured" requiring a long term commitment from the employee of four to five years.
On top of those formal apprenticeships there were also lots of firms - large, medium and small - offering a kind of informal apprenticeship and sponsoring "day release" enabling school leavers to work four days a week and attend a college course, paid for by your employer, on the other day. Virtually everyone I knew, regardless of which school they went to, went through this system - either finding an apprenticeship or a job with day release if they left school at sixteen.
I'll be honest, I've never been so well off as I was in those first few years as a wage earner - even though I only started off on £16 a week. I should also point out that the dole paid £9 a week at the time I started work and there was no tax or NI on top of that!
By the time I'd had my deductions and handed mum a fiver for "upkeep" I was worse off than most people claiming unemployment benefit - but I still seemed to have enough cash to go out six nights a week and spend most lunchtimes in the boozer nursing a pint of Trophy bitter and a cheese roll.
I even had enough money to run a motorcycle - well, a second hand FS1E*, but it was unrestricted and good for 60 when flat on the tank with a following wind. After a couple of pay rises and a year or so saving I'd managed to upgrade the Fizzy to a Kawasaki KH250** and started paying for driving lessons!
However, by then - unfortunately - our membership of the EEC and the Labour government had done their damage and Britain was in the middle of the winter of discontent and dire economic circumstances (see - nothing really changes). Our manufacturing base was already in decline and with it were the jobs and training which us youngsters had taken for granted when leaving school.
And this is why there is so much pressure on kids today. Even university graduates are finding it hard to find jobs and often end up working at KFC or Poundland. All those technical colleges converted to universities and firms no longer bother to offer day release schemes.
The over emphasis on university and "degrees" means that too many kids are vying for too few spots in those universities and competing for ever declining slices of the government cash that pays for those universities (not including the massive debt they incur through student loans).
This is the reality that faces school leavers today and this is why there is so much pressure and, consequently, so much stress for school children. It's not that the exams are so tough - they aren't compared to O levels and A levels of the sixties and seventies (and everyone really knows they aren't).
This is also why it is so daft to talk about a "high tech" economy. Even assuming we could do "high tech" better than the emerging nations (which is doubtful) it is ridiculous to assume that everybody is capable of working in "high tech". A target of 50% in university would be fine if 50% of jobs were high really skilled graduate jobs - but they aren't - and 50% of school leavers are not really university potential either.
Indeed, I suspect that 90% of "graduate" positions today would have been filled more than adequately by 16 year old school leavers on day release back in 1973 - and I suspect that considerably more than 50% of jobs available today do not require particularly high levels of education.
What we need is a properly balanced mixed economy with an emphasis on manufacturing - not service - providing a range of job options for school leavers. On top of that we need a proper education system that does select the best to go on university, but that also provides the majority with a decent level of education as well.
And we need proper apprenticeships and business sponsored day release at technical colleges for school leavers who don't want to go into sixth form or university, but just want to work and earn enough money to buy a few beers a week and a motorcycle.
* The Yamaha FS1E was a 50cc sports moped and learner legal for sixteen year olds. Affectionately known as the Fizzy (or Fizzie) it was every 16 year old school boys ambition to get his leg over one - far more than it was to get his leg over in the other way, if you know what I mean! How times change.
**The Kawasaki KH250 was a learner legal (17 years +), three cylinder, two stroke, rev happy, 250cc motorcycle with fiendish acceleration and a propensity to buck around like an angry bull under braking. It handled like a brick and the factory fitted tyres were lethal in the wet - but I loved it to bits and went everywhere on that bike.
Monday, March 29, 2010
A bore draw
OK, I didn't watch it all - just the last twenty minutes - but what a banal, boring event the much vaunted clash of the chancellors turned out to be.
Apart from the fact that they spent most of the time agreeing with each other (so much for clear blue water - there isn't even a murky grey smear of difference) the only other striking thing about the event was how utterly undynamic all three were. You'd feel more energised after washing down a bottle of Valium with neat vodka than you would watching Darling, Cable and Osborne in full flow.
The format didn't much help either. In case you didn't see it, it went sort of like this.
Someone in the audience asks a pre-prepared question.
The moderator asks one of the prospective chancellors to answer the question.
The chosen chancellor says the questioner is right and they must do something about it.
The other two agree.
The moderator then asks what they would do about it.
Each prospective chancellor then answers with vague generalisations using the words "global", "fair" and "regulation" a lot without ever saying anything particularly specific.
The moderator asks for another pre-prepared question from the audience.
None of us is any the wiser.
Oh - except that I'm all the more convinced that the Boy George is completely out of his depth even in the company of such mediocrity as Darling and Cable.
Apart from the fact that they spent most of the time agreeing with each other (so much for clear blue water - there isn't even a murky grey smear of difference) the only other striking thing about the event was how utterly undynamic all three were. You'd feel more energised after washing down a bottle of Valium with neat vodka than you would watching Darling, Cable and Osborne in full flow.
The format didn't much help either. In case you didn't see it, it went sort of like this.
Someone in the audience asks a pre-prepared question.
The moderator asks one of the prospective chancellors to answer the question.
The chosen chancellor says the questioner is right and they must do something about it.
The other two agree.
The moderator then asks what they would do about it.
Each prospective chancellor then answers with vague generalisations using the words "global", "fair" and "regulation" a lot without ever saying anything particularly specific.
The moderator asks for another pre-prepared question from the audience.
None of us is any the wiser.
Oh - except that I'm all the more convinced that the Boy George is completely out of his depth even in the company of such mediocrity as Darling and Cable.
Wednesday, March 24, 2010
Not a budget for Britain
The last Labour budget before the General Election has been about as much of a damp squib as it is possible for a pre-election budget to be - but I have a feeling that it has done enough to placate Labour voters to ensure that the next budget will not be delivered by George Osborne.
Given that the Labour Party is taking direction from the Unite union which in turn is taking direction from the Communist Party it was the kind of "bash the rich" budget we've come to expect from Labour while in office, but without the large bribes they would normally offer at the same time.
However, perhaps the biggest indication of just how much Labour are under the influence of the unions is the total lack of commitment to cut spending. Instead, the public sector share of the economy is expected to rise from 54% this year to 75% in 2014/2015.
We've seen it already with the unexpected announcement that unemployment has fallen. It didn't really fall - the number of people employed in the productive private sector continues to drop substantially. All that is happening is that the state is employing more and more people in non-productive public sector jobs and this rampant rise in the client state is taking up the shortfall in private enterprise employment.
The budget, to be quite frank, is a total fudge. Darling has failed to take the necessary steps to curb the public sector and has simply done the obvious thing of putting up tax. He's demonstrated no interest in repairing the economy - only in shoring up Labour's shaky credentials with its biggest financiers and disillusioned supporters.
It may be enough to keep Labour in power, but it's not going to save this nation from financial collapse. Once again we see where this government's priorities lie - and Britain and the British people come last.
Given that the Labour Party is taking direction from the Unite union which in turn is taking direction from the Communist Party it was the kind of "bash the rich" budget we've come to expect from Labour while in office, but without the large bribes they would normally offer at the same time.
However, perhaps the biggest indication of just how much Labour are under the influence of the unions is the total lack of commitment to cut spending. Instead, the public sector share of the economy is expected to rise from 54% this year to 75% in 2014/2015.
We've seen it already with the unexpected announcement that unemployment has fallen. It didn't really fall - the number of people employed in the productive private sector continues to drop substantially. All that is happening is that the state is employing more and more people in non-productive public sector jobs and this rampant rise in the client state is taking up the shortfall in private enterprise employment.
The budget, to be quite frank, is a total fudge. Darling has failed to take the necessary steps to curb the public sector and has simply done the obvious thing of putting up tax. He's demonstrated no interest in repairing the economy - only in shoring up Labour's shaky credentials with its biggest financiers and disillusioned supporters.
It may be enough to keep Labour in power, but it's not going to save this nation from financial collapse. Once again we see where this government's priorities lie - and Britain and the British people come last.
Monday, March 22, 2010
The road to ruin
According to the OECD, more than half of Britain's GDP now comes from government spending.
The figures from the Organisation for Economic Co-operation and Development (OECD) disclose that central and local government spending made up 52.1 per cent of Britain’s GDP last year.
Now I'm no economics expert, but the way I read that it says that we are not just spending 52% of our GDP on the public sector, but that 52% of our GDP comes from public spending - and that does not include the cost of bailing out the banks! Maybe I'm wrong - if so, perhaps someone can clear that up for me - but that's how it reads to me.
In other words, if our GDP is £1000 billion (I know it isn't) then £520 billion of that is government spending. In other words, our GDP without including what government spends is just £480 billion.
What is also obvious to me is that a government spending more than is raised in total from private enterprise - not just the total tax, but every penny that private business makes plus another 2% on top - is taking this country on the road to ruin. Even if the tax rate was 100% this government would still not raise enough to cover its spending!
It also blows wide open the myth of GDP growth. In the thirteen years since Labour came to power some 12% of our GDP growth didn't actually exist - it was just Labour spending. Personally, I think it is wrong to consider government spending as part of GDP - but these things are not designed to give us, the people, the full picture. They are designed to enable government to tell us whatever they want to - and before anyone blames Labour for this, it all started under the Thatcher government who were the first to start fiddling the figures.
Thus we've spent the last 20 years being told that everything in the garden was rosy. The truth is that inflation is much higher than claimed, unemployment is considerably more than we're told (1 in 3 people of working age are unemployed in London), our economy is on the rocks and being battered by massive waves of debt and this country is now in serious danger of ending up in the poor house.
The figures from the Organisation for Economic Co-operation and Development (OECD) disclose that central and local government spending made up 52.1 per cent of Britain’s GDP last year.
Now I'm no economics expert, but the way I read that it says that we are not just spending 52% of our GDP on the public sector, but that 52% of our GDP comes from public spending - and that does not include the cost of bailing out the banks! Maybe I'm wrong - if so, perhaps someone can clear that up for me - but that's how it reads to me.
In other words, if our GDP is £1000 billion (I know it isn't) then £520 billion of that is government spending. In other words, our GDP without including what government spends is just £480 billion.
What is also obvious to me is that a government spending more than is raised in total from private enterprise - not just the total tax, but every penny that private business makes plus another 2% on top - is taking this country on the road to ruin. Even if the tax rate was 100% this government would still not raise enough to cover its spending!
It also blows wide open the myth of GDP growth. In the thirteen years since Labour came to power some 12% of our GDP growth didn't actually exist - it was just Labour spending. Personally, I think it is wrong to consider government spending as part of GDP - but these things are not designed to give us, the people, the full picture. They are designed to enable government to tell us whatever they want to - and before anyone blames Labour for this, it all started under the Thatcher government who were the first to start fiddling the figures.
Thus we've spent the last 20 years being told that everything in the garden was rosy. The truth is that inflation is much higher than claimed, unemployment is considerably more than we're told (1 in 3 people of working age are unemployed in London), our economy is on the rocks and being battered by massive waves of debt and this country is now in serious danger of ending up in the poor house.
Sunday, March 21, 2010
Dear prudence
If I hear one more politician from the Labour, Tory or Liberal Democrat parties tell us of the need for financial "prudence" I will go spare.
They wouldn't know financial prudence if it bit them on the backside. The Labour Party, while our dear leader was Chancellor, frittered away untold billions of pounds of public money on various pet projects and for no discernible improvement.
But worse than that, both the opposition parties supported them in doing so. Indeed, David Cameron took great pride in telling us all how he would stick to Labour spending plans if he were Prime Minister.
Look, I've no intrinsic objections to the idea of the state taking tax from the people to pay for essential services which the public want and demand - I just have a very different idea of what those services are. As a homeowner, I know what financial prudence really means - it means living within your means and not spending what you haven't got.
Our politicians don't understand this and most likely never will - hardly surprising given their history on claiming expenses and hugely excessive personal spending.
The next time a politician from any of these parties mentions "prudence" on national TV or radio the right response from the interviewer would be to give that politician a swift, hard kick up the backside while telling him to get out and never darken our doors again.
Their idea of "prudence" has cost us dear.
They wouldn't know financial prudence if it bit them on the backside. The Labour Party, while our dear leader was Chancellor, frittered away untold billions of pounds of public money on various pet projects and for no discernible improvement.
But worse than that, both the opposition parties supported them in doing so. Indeed, David Cameron took great pride in telling us all how he would stick to Labour spending plans if he were Prime Minister.
Look, I've no intrinsic objections to the idea of the state taking tax from the people to pay for essential services which the public want and demand - I just have a very different idea of what those services are. As a homeowner, I know what financial prudence really means - it means living within your means and not spending what you haven't got.
Our politicians don't understand this and most likely never will - hardly surprising given their history on claiming expenses and hugely excessive personal spending.
The next time a politician from any of these parties mentions "prudence" on national TV or radio the right response from the interviewer would be to give that politician a swift, hard kick up the backside while telling him to get out and never darken our doors again.
Their idea of "prudence" has cost us dear.
Subscribe to:
Posts (Atom)