In response to an article by Martin Wolf on 4th March 2016, entitled 'George Osborne's idea to cut UK spending makes little sense'
Thanks Mr. Wolf. This is an important subject, with much wider implications than whether or not George Osborne knows what he's doing - though clearly he does not. Some thoughts:
“It is a myth that the UK’s crisis was due to a failure of the government to live within its means”
The UK's crisis was not due to any one factor alone, and the fact that politicians have used it as a political football has done a total disservice to their electorates, here and overseas.
It is a myth, and poor economics, to separate out the results of government actions in the market into fiscal, monetary and regulatory etc. The cumulative effects and overall design of government policy sets the context in which the economy flourishes, or not. Gordon Brown's hubris was encapsulated in 'No more boom, no more bust'. His intellectual understanding of markets, and of business at all levels was as bankrupt as the banks he brought back from the dead. He thought he could spend his way to prosperity. George Osborne thinks he can cut his way to prosperity. They're both wrong. We have a crony capitalist/socialism for the rich system that is in need of reform - monetary, fiscal, and regulatory, otherwise the road we are on will continue to trace the course it is on - a circular one, with each 'boom' leading to a bigger 'bust'
"Again, it is not true that running a fiscal surplus year after year is either necessary or sufficient to achieve “economic security”.
Year after year? Have you been at the port Mr Wolf?! There is no fear of that. The UK has run a surplus 8 times in the last 60 years. The last time was in 2001/2, fourteen years ago, just before Labour took the lid off public spending. I think once in every 7.5 years, and heading north, is less than Lord Keynes had in mind. If he was around today I suspect he'd think economists like Professor Krugman might have been on something stronger than port.
"Moreover, Mr. Osborne constantly and presumably deliberately elides the country with the government...Yet, by ignoring what is happening in the private sector, Mr. Osborne might even be increasing the risks to the economy"
I totally agree Mr. Wolf. The government is not the economy. Repeated governments have portrayed themselves as 'engines of growth' blah blah blah. The economy of real people, relationships and things was here before, and will be here long after, any form of government has come and gone. The best government can do is to get out of the way. People, businesses and natural resources combine to make the garden grow, not governments. Alas, we have politicians of all stripes who view themselves as master gardeners...most are more akin to Japanese Knot Weed.
I believe that we need a conversation about what we want from government; and personally I think we need to reform the banking and monetary system…globally. If we do not do this now, it will reform itself...sooner rather than later. In the face of the challenges we face, Mr. Osborne’s plans will solve nothing, and will probably not make it to 2017.