Monday, 8 August 2011

Why Tory economic policy is doomed to fail

It's a conundrum for everyone who cries out that a smaller government inevitably leads to economic growth.

Hence, libertarians and "small-c conservatives" are all calling for cuts, yet despite all the evidence of cuts being trumpeted left, right and centre, economic growth is flaccid, limp and in desperate need of economic Viagra.

The cuts are smoke and mirrors. Inflation is kicking in, services are being cut, especially at the frontline, and yet growth isn't happening. "Progressives" and tribal Labour supporters are jeering that this is proof that government spending is vital.

But the truth is that we're not seeing the whole truth.

The previous government spent money it didn't have like a drunken sailor in port for the first time in 18 months. Banks were bailed out, vanity projects were finances, PFI skullduggery was rampant.

And when governments do cut spending, they always cut at the frontline first, because that way it hurts people the most so they start screaming for services to be reinstated.

In a business, you cut the frontline as late as possible, because those are the people bringing the money in. It's always possible to make managers manage more people or combine functions so that you can get shot of people in the back office.

But the motivations are different in the two cases. Businesses want to make a profit and retain customers. Governments want to build empires and fuck people around.

So while there may be small cuts happening in government service provision, there aren't cuts in taxes from the savings made. And because there are no cuts in taxes, it's impossible for individual spending to make up for the cuts in government spending.

Taxes are still sky-high, and that's because of the massive debt. The debt isn't even being attacked, all that the government is trying to do is clear the deficit, which is the gap between current income and expenditure. When they've done this, they will still be left with the legacy of debt that needs to be paid off. But at least then they'll be able to start paying off historical debt.

And the other side of the government spending issue is that government spending isn't actually going down. By the time the Tories get kicked out of power again, government will have spent more every year than even that insane Scottish spendthrift maniac could spunk out in his desperate attempts to buy votes. It's just being spent on paying for debt.

So if the currently fuckwit Lib Dem and "Red Tory" hold on taxing the people who actually work to death, while spunking money out on their pointless vanity projects continues, the best that we can hope for is that some miniscule growth will happen and that somehow Gideon will pay off some of the debt so that the next lot of delusional cuntwanks can start the whole "pissing other people's money away" lark again.

Personally, I can't wait. I'm fucking off to Lichtenstein.


Anonymous said...

good post

Michael Fowke said...

Well, they're not cutting enough, are they? And it's the councils that are cutting the frontline services - to embarrass the government.

Mark Wadsworth said...

Obo, you've gone all sensible on us, sensible articles about immigration, opposing death penalty, why Lib-Con economic policies won't work. I have to say that I find myself agreeing with you on all of this.

In the instant case, what you miss out, besides the rampant overspend on their chums in corporatist sector, a key plank of Lib Con policy is keeping house prices as high as possible, which is another sure fire way of choking off any sort of recovery. God bless Sir John Major, who called this one right all those years ago.

Jill said...

I was about to mention house prices, but Mark got here first.

sixtypoundsaweekcleaner said...

Lichtenstein? I think Prince Charles may be joining you. Or is that Transylvania? Well, wherever...he's been buying properties over there to eek out his retirement.

thefrollickingmole said...

Im unsure if you have a similar calculator to this available through your tresuary.

If you want to be depressed find it and use it.

This is the Australian one using historical data.

A basket of goods and services valued at $100 in year 1966, would in year 2011 cost $ 1111.76.

Total change in cost is 1011 per cent, over 44 years, at an average annual inflation rate of 5.6 per cent.

Thats not made up figures, that the government of Australia ststing you moey is worth less than 10% of what it used to be. (I used 66 because thats when we went decimal)

Jill said...


1966-2009 (latest year)

£1,390.00 using the retail price index

£2,820.00 using average earnings

Anonymous said...

All valid points in a very good post Obo,but its even worse than you say ,so many u turns and the failure to implement what were sensible money saving execises eg the non burning of the quangos (they are actually employing more civil servants than they have got rid of in some departments,the reintroduction of the totally discredited PFI after Osbornes initial distain for it,the endless frittering away of OUR money on pointless schemes for their egos to feed of.
As for the "cuts" there's very little yet ,most of the money beingsaved ,if you can call it saving,is being used on redundancy payments for those losing their jobs !