Jan Boucek

What with the ongoing eurozone crisis, G8 summits and NATO confabs, politicians from around the world continue to dominate the headlines – but things don’t seem to be getting any better. Amid all that hot air, though, were a couple of nice pearls of wisdom in the past week. Both suggested salvation from beyond the world of politics.

Long queues are a clear indication of supply failing to meet demand. In the Soviet Union, you queued for bread and butter. In the UK not too long ago, you queued for the GPO to install a telephone. The mismatch was usually due to some government agency mucking things up.

Lost in the noise of Wednesday’s news that the UK has slipped into a double-dip recession was the report Tuesday on the government’s financial performance for its fiscal year ending March 31. A picture is said to be worth a thousand words so here’s 3,000 words of pictures and 51 of comment.

Cumulative public sector net borrowing

As a percentage of GDP, the UK government’s net borrowing comes to 8.3%, about the same as Spain’s 8.5%.

This week’s obsession of our chattering classes has been an alleged failure of Prime Minister David Cameron’s government to implement a coherent strategy for an apparently flagging agenda. Clearly, bringing the nation’s appalling financial condition under some semblance of control is now so yesterday. Never mind that it was always going to be a long slog and that the journey has only just begun.

"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."

This is one of Adam Smith’s most celebrated insights. In these days, the conspiracy usually includes some government body or agency to facilitate the businesses’ objectives. Purveyors of green energy products have merrily colluded with governments for subsidies and tax breaks. Mortgage lenders were more than happy to divert their risks to Fannie Mae and Freddie Mac.

You can always count on Argentina for abject lessons on how not to run a country. That’s always been painful for its citizens but useful for the rest of us to see how hair-brained, populist schemes just don’t work.

This week, President Cristina Fernandez de Kirchner announced the seizure of Spanish oil company Repsol’s stake in Argentine oil company YPF to give the government 51% control. Spain is outraged and has recalled its ambassador. The Argentine navy has been diverted from the Falklands and is now steaming towards the Canary Islands.

Large pots of money invariably draw politicians like bees to honey, especially when those bees are already sucking dry every other pot in sight.

A few weeks ago we praised the idea of doing away with Britain’s current pension arrangements in favour of a simple large annual ISA allowance from which money could be taken tax free at an appropriate retirement age. Our big concern was the obvious temptation for politicians to swarm around these ISA pots and fiddle away their simplicity over time.

Germany’s Bundesbank, that symbol of sobriety and caution, reports that banks appointing a higher proportion of female executives results in “a more risky conduct of business.” Yes, that’s right, women aren’t the traditionally viewed paragons of safety and touchy-feely empathy.

David Cameron’s challenge upon taking office was monumental. After 13 years of Gordon Brown’s fiscal incontinence and Tony Blair’s failure to reform public services, national debt levels are incomprehensible and the government sector bloated and inefficient. All this against the wider issue facing all mature democracies of a burgeoning ageing population supported by a relatively dwindling workforce. This certainly wasn’t what Cameron expected when he first thought of becoming leader of the Conservatives.

I became a fully conscious taxpayer a couple of years before Montreal hosted the 1976 Olympic games. Those games are probably best remembered as the ones that started the modern era of over-blown, over-budget and financially disastrous Olympic games. With notable exceptions of the games in Los Angeles and Atlanta, all of them have been vanity sinkholes for taxpayer cash. For Montreal taxpayers, the last bond was finally paid off in 2006.