Tomorrow's budget

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What horrors are going to come out of this week’s Budget? Wrong question - think first about the horrors we know about. Darling has already announced that he will be borrowing £118 billion this year.

Of course that figure is hopelessly inaccurate. It was based on optimistic growth targets, which we aren’t going to meet; the final figure could be £160 billion. But even that doesn’t include the vast sums used to bail out the banks (which Darling claims he is going to get back one day), or the usual stealth spending (public sector pensions, PFI and so on). So the actual amount is going to be even higher. But never mind that for now; let’s just think about that £118 billion.

£118,000,000,000 extra borrowing, in just 12 months.

But governments do deal in huge numbers. Is that really so large? Yes, it is. About one pound in every five that the government spends this year will be unfunded. Borrowed, to be paid by future generations. If we closed down the entire NHS, that would just about balance the Budget. Alternatively, if we doubled income tax – so that most taxpayers pay 40% instead of 20%, and the better off pay 80% instead of 40%, that would almost raise enough money to plug the hole. Except of course it wouldn’t, because anyone who could would leave the country.

Even in government terms, £118,000,000,000 is a huge amount to borrow. But next year he plans to borrow another £105 billion. In fact over five years he plans to borrow £457 billion. And that’s just what he has admitted to; there will be much more hidden away.

To show the sheer scale of this government’s overspending:

• It took past governments over 200 years, from the 1700s to 2000, to run up a cumulative debt of £300 billion.
• Gordon Brown doubled that in just nine 9 years, borrowing another £300 billion between 2000 and 2009.
• Darling plans to borrow a further £300 billion in just over two years.

The interest and repayments on this debt will be dragging down our economy for a generation.

Frankly I find it terrifying.

Daniel Polak joins the ASI

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My name is Daniel and I began my internship with the ASI yesterday. I am currently taking a gap year. Next year I will reading Economics at Birmingham University. Other than Economics, some of my interests include watching and playing sport, a wide variety of music and film. During my time at the ASI, I hope to gain a more in-depth view in current economic and political issues in preparation for my degree. 
 

This is not a photo opportunity

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An Austrian’s obviously unhealthy obsession with architecture and transport meant that the police had to intervene and delete all of his holiday photos. His pictures of Vauxhall bus station were obviously gold dust to either Al-Qaeda or the People’s Front of Austria. The system is broken and change is needed, we need the power returning to us and this is something only we can bring about, until then we shall continue our descent into authoritarian madness.

MPs: The truth

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More money, less work.

Blog Review 937

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Much is being made of this expedition measuring the polar ice thickness. A climate scientist who knows about it doesn't think much of it.

Just what would it cost to fire a few civil servants? Surely we would profit by doing so?

The best aid policy would be to have the free movement of labour.

Maybe the Pope was right about condoms and AIDS. Ever heard of "offsetting behaviour"?

The Taxpayers' Alliance seems to so provoke certain Town Hall types that they resort to cooking the figures in their response.

Another method of downsizing government.

And finally, how to beat the CCTV.

Official: Carbon dioxide is bad for you

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At least, according to the US Environmental Protection Agency. Of course, there is still some way to go before this "pollutant" is controlled under the Clean Air Act, and it is conceivable that Congress will pass legislation aimed at controlling emissions in the meantime (but I wouldn't put money on it).

Carbon dioxide is essential for life. Without it, plants could not photosynthesise and, without plants, there would be no animal life, or anyone to write or read this blog. Horticulturalists deliberately boost the level in the air in greenhouses to increase their crop yields. Humans and all other animals add more carbon dioxide to the atmosphere every time they exhale. But, because the IPCC has deemed it to be the major driver of recent changes to the climate (despite there being no direct evidence to support this view), the EPA has now ruled that it can harm humans and therefore can be controlled under the CAA.

If this is taken to its logical conclusion, and carbon dioxide is treated in the same way as truly harmful gases such as sulphur dioxide, the impact on the US economy is likely to be severe, and both the American public and the Obama administration will have cause to regret it.

Martin Livermore is the Director of The Scientific Alliance

The Hospital: We are all in A&E

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Channel 4 is currently showing a documentary called The Hospital which takes a frank look at the effect that teenagers have on our nation’s health service. In this three part special they speak to the doctors working on the frontline dealing with the uneducated accidents that barrel through their doors on a regular basis. The first looked at the carnage that alcohol has unleashed, the second teenage pregnancies and the final show will examine obesity. It is an eye-opener and gives a truly shocking insight into the thinking of a sub-section of society.

Politicians have created a monster. It is clear to see that the health service in this country is having an impact on behaviour as there is little or no recognition of the consequences of actions: people have been desensitized. For example, a teenage pregnancy on the NHS typically costs around £10,000 to £15,000 due to the higher than normal risks because of the natural stresses on an under developed body. The teenagers in question have no awareness of these costs. Society as a whole would probably behave differently if only the individuals/families concerned had to bear the costs.

The politicians have created a new breed of teenager who typically come from a family that has little desire to be concerned about their offspring’s education and consequentially show little emotion towards them. This could perhaps be a reason why teens have descended upon alcohol and have such a bad relationship with it. These fault lines are a politicians’ creation, yet they will claim that only they can fix them. Sadly the time has come to shock people into behaving in a ‘normal’ manner by exposing them to the true costs of their behaviour: we should do without politicians. Or at least only hold in high regard those politicians who can say no and explain why a person will be stronger by learning from their mistakes. Until that time we are all in A&E.

Nowhere to turn

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When [unproductive hands are] multiplied to an unnecessary number, they may in a particular year consume so great a share of this produce as not to leave a sufficiency for maintaining the productive laborers, who should reproduce it next year.

Adam Smith, Wealth of Nations 

The UK generates 1.2 trillion pounds worth of wealth each year. Of this, the State confiscates 600 billion pounds. The balance remains in the economy and generates, the next year, the next 1.2 trillion pounds of wealth. 

Where markets and so sales have weakened from recession, the profitability of the economy has been reduced; there can no longer be generated so much from so little. To maintain itself, the economy now needs a larger initial sum; which is another way of saying taxation is too high. 

The upshot of this is that we have -  finally - reached a limit on State spending, for the State cannot extract a greater percentage of wealth from the economy, because to do so will reduce the wealth created by the economy to such an extent that total tax revenue will be lower. 

And it is here now upon this marginal stage that our scene unfolds. 

The UK is heavily centralised. Central Government taxes and then allocates funding, sometimes requiring a local contribution for a fund to be granted. It is so in Nottingham City, today, where a major transport infrastructure allocation requires a 25% local contribution. 

The City obviously has a huge incentive to provide those funds. Will it reduce spending to do so? Will it increase taxes? If taxes increase, there is a fundamental problem, for this money is all coming from the same economy. 

Within that City, there are as you would imagine a wide range and large number of businesses. These businesses own or rent their buildings and the land around them. As you would expect, many drive to and park at their work. 

The Council intends now to provide their local contribution by charging companies a fee, which they must pay, or they will be denied the use of their own, privately owned parking.

Sound money

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A brilliant video of Thorsten Polleit on the subject of Ending the Monetary Fiasco and Returning to Sound Money.

Blog Review 936

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Amazing as it will seem to many, private schools really do work better than state provided ones.

Well, normally they do that is.

A saucer of milk for Mr. Dale please.

When even lefties are calling for a smaller state perhaps we might think that we're actually getting somewhere?

Much of the State we already have won't really be missed now, will it?

What is it with artistes and their inability to understand simple supply and demand?

And finally, a fun new game or the weekend.