While the British people are coming to terms with their own recent borrowing excesses, the government is doing quite the opposite in an attempt to stimulate the economy out of recession. Will they ever learn?
Based on the largely discredited theories of John Maynard Keynes, the government’s plan is for the government to fill the gap in the economy left by the now reticent private sector. Ignoring the fact that the ideas behind these policies are highly questionable, Keynes’ plan rests on the government acting countercyclically to the health of the economy: saving in the good times in order to spend in the bad times.
Due to Labour’s outrageous profligacy with taxpayer’s money and their loose borrowing since coming to power, the state of the public finances are well worth losing sleep over. Now is not the time to borrow more. They might as well be putting our taxes up, as we will be the ones to pay it back in the end. Brown and Darling are behaving in a fundamentally immoral way, inspired by political survival more than anthing else.
The reason for so much red on government’s balance sheets is simple: too much spending. Thus, government spending needs to be capped, only increasing in line with increases in inflation and population. If this had been in place in the good times, things would look very different now. The increased revenue could have been put away for a rainy day (now), or even better, returned to the taxpayer through tax cuts.
We might as well face up to the truth: they will never learn. It is so much easier to spend other people’s money. Thus, the only way to stop them spending is tie their hands behind their back. Now we just need a referendum on government spending…