In 1989 the Nobel-winning economist Paul Samuelson confidently predicted that in a few years the Soviet economy would lead the world. Two years later the Soviet Union ceased to exist, as if to remind us all that economists’ predictions should be taken with a bag, not merely a grain, of salt.
This time the economists almost got it spot-on. They predicted a 0.1-percent growth in the first quarter of 2012; instead we got a 0.2 slump, and the difference is more significant politically than economically. Not bad, as far as predictions go. One only wishes they had told us that either figure spells disaster.
This is the first double-dip recession since 1975, when Harold Wilson’s socialist government was on its last legs. It’s 2012 now, and David Cameron’s socialist government is also… Sorry, I forgot. There are still three years before the next election, and Dave isn’t a socialist but a Tory. He’s also living proof, as if any more were needed, that one doesn’t preclude the other.
Admitting sportingly that the figures are ‘disappointing’, Dave manfully agreed not to ‘seek to try to explain them away’. He’s right: explaining them away is impossible. However, simply explaining them is part of a PM’s job, the one we pay him to do. And the next part is to reverse them, let’s not forget that. ‘Right hand down a bit’ won’t do any good.
The so’s-your-aunt-Tilly explanation offered by Dave’s Treasury doesn’t really wash. Yes, Britain isn’t the only European country in recession, and it’s nice of the Treasury to remind us that Slovenia and Greece, not to mention a few EU A-listers, are in the same boat. It would be even nicer if they owned up to why the boat is heading for the sand bank.
Dave stated, correctly, that it would be ‘absolute folly’ to reverse the austerity course, as Labour is suggesting. You can’t get rid of the debt by borrowing even more, he said, and truer words have never been spoken. Labour-style borrowing isn’t a solution; it’s the problem. Now the Coalition’s quantitative easing, presumably ‘queasing’ for short, is a wholly different matter. Yes, the government has borrowed the better part of a third of a trillion pounds trying to ‘quease’ the economy back to health. But that wasn’t real borrowing – it was ‘queasing’. And ‘queasing’ doesn’t count.
No, we must stay the course of ‘austerity’, and let those Labour spoilsports scream themselves hoarse. Austerity will produce growth faster than you can say George Osborne. And how do we define austerity? Or rather what definition can we infer from the government’s policies, not its rhetoric? Well, austerity according to Dave is increasing government spending more slowly than before. Not really reducing it, God forbid. That sort of thing could lose Dave the next election, even though it’s still three years away.
It’s time we admitted to ourselves that what we are witnessing isn’t a transient dip, single, double or whatever. We are hearing the crunching, crashing noise of an economy hitting the rocks. We are hearing its desperate pleas: Please, please, don’t let misconceived politics steer me any further. Find a skipper who is a statesman, not a PR flak. Reverse my course, rather than choosing which rock I should hit first.
In more prosaic terms, we can no longer afford – never really have been able to afford – an economy that’s little more than a Ponzi scheme run by self-serving politicians. Balance a pyramid on its point, overload the top, and down it will come with one mighty thud every time. To put it even more prosaically, neither we nor any other European economy can any longer afford the welfare state.
We can afford some welfare, making sure that nobody loses too badly in the game of life. But we can’t afford the economy-busting welfare state making sure that no one will ever lose. For if we try, no one will ever win – except the PR flaks on the state payroll, and their trusted friends.
I know this cracker-barrel economics is less impressive than all those curves, graphs and computer models our macroeconomists can lay on you at the drop of a hat. But it’s true – and theirs has been proved to be false.
Real austerity, as opposed to the bogus kind peddled by Dave and George, would definitely produce growth. May I suggest halving income tax, reducing corporate tax to 10 percent, eliminating inheritance tax altogether, making the welfare Leviathan redundant by encouraging charitable donations (say, by making them tax-free, rather than merely deductible), offering bigger tax incentives to overseas investors, and capping government spending at 20 percent of GDP? For a start? Of course I may. Except that no one will listen.
You see, such radical ideas are impractical. They aren’t politically feasible. Therefore they are insane.
That’s true, they are all those things. The only policies that are practical, politically feasible and sane are those that are beggaring us all. That means they’ll continue, and there’s nothing we can do about it. I just wish we could be spared the nauseating, mendacious hypocrisy.