There are times when I feel incredibly depressed about the financial future here in the UK. At a guess I read as much as most people who blog about politics and probably understand as much as many do but there are some things that I feel I share with virtually nobody else. Let me try to explain.
Ask most people why we are in the economic mess in which we find ourselves and they have no answer at all. A few will blame the government (any government, not just the one in power today), some will blame the unions or the work-shy or the immigrants or something but there are a few reasons that you rarely hear – and I have never read an article which puts these together as I intend to do. Please remember, I am no economist: what I am saying is based on my own personal experiences as a businessman (including a few bad tumbles) and Dickens – the author who, more than any other, realised the depths to which humanity could sink.
Here are the factors I consider responsible. To start with – say in 1900 – we had an empire which enabled us to grow rich, basically on the back of what was little better than slave labour, and we liked the lifestyle this generated. Then someone thought it would be a good idea if, out of taxes that this wealth could afford, we looked after the really old and made their lives a bit better. So we gave a few shillings a week to men of over 70 (which, based on average life expectancy, would equate to over 110 now). Then we decided it would be nice to offer free education, free health and a host of other goodies that we really couldn’t afford but we didn’t mind – we (here I mean all of us, the people of the UK) just nodded complacently as the governments (all of them) borrowed more and more to give us more and more so that we would give them our votes in return. And we (here I still mean us, the people) also borrowed more and more. The government encouraged us to do that: the more we borrowed the more we bought the more there was for our people to make – then.
But the bubbles burst, one by one. The people who we had used as slave labour to enable us to become rich decided they wanted a slice of the action. Not only did they start to want us to pay them properly they rubbed our noses in it by making the stuff that we used to make (and which we continued to buy because we continued to borrow). Double whammy, no more cheap labour and half our jobs up the spout but we carried on living the life as if nothing had happened.
Then we hit the buffers as the national debt rose and rose. Look at the graph and you should be horrified.
Follow this link to see where this came from and further facts and figures.
No government has been able to stop the growth and even Jim Callaghan knew we had gone too far. Back in the 1970’s he said. “We used to think you could spend your way out of recession and increase employment by boosting government spending” and, “I tell you that option no longer exists. And so far as it ever did exist, it only worked on each occasion by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment as the next step.”
Even then we happily allowed public spending to go on increasing. The above graph is almost the same as a graph showing public spending indicating that all the benefits and free education, free health, welfare this and welfare that have been paid for out of borrowed money.
One of the MP’s for whom I have a good real of respect is Douglas Carswell. “Greece might be the first Western country to discover that you cannot keep running up debts to pay for a lifestyle you did not earn.” he said, “She will not be the last. The laws of mathematics are universal.”
He is, of course, right. This government has done all it can to cut the national debt – but that “all” means that it will be double what it is today before 2020. Put it quite simply, the UK has borrowed so much, there is no way it can be paid back.
Where does that leave us? Well, in the mire – obviously – and there we will stay until we understand that we cannot afford to live this lifestyle and, horrible though the consequences may be, we cannot afford to go on supporting people out of benefits the way we do today.
Back to Dickens and, of course, Mr Micawber.