Tuesday, 29 May 2012

Omnishambles?

So, the Coalition Government u-turned on the pasty tax and caravan tax, "costing" the Government £65m a year, or put another way, saving £1 per person per year in taxes. That's 1p every 4 days, for each of us. This is Front page news.

They clearly should have consulted on these measures, which while not of great import to many, in Cornwall, which has achieved protected status for the Cornish Pasty, or Hull where static caravans are made, these are big issues.

However, having taken the opprobrium for these measures, the Coalition, with its absolutely inept media management, has managed to bring an absurd story back to the headlines in a display of spectacular incompetence. It is staggering they managed to avoid a single headline about taking 2m low-waged out of tax. Little makes it into the press about the welfare or education reforms, which are going brilliantly. So brilliantly, they're being completely ignored. Meanwhile precisely none of the fear-mongering of the left about people's credit cards being swiped before operations as a result of the "privatisation" of the NHS have come to pass, and these are going well too. (Yes the doctors are screaming and shouting, but they did too well under the last Government, and should shut up, in case anyone learns how much they earn...).

The British government is cutting real spending by around 2% and the Government has cut the deficit by a quarter since it came in. YES, ignorant right-wing bores, we're borrowing more than ever. To point this out is to reveal that you don't understand the implications of the difference between 'debt' and 'deficit'. The Coalition is agreed on a steady de-leveraging of the economy. This deleveraging, public, private, corporate is the fastest in recorded history. And during this deleveraging, growth has been flat. Yes, ignorant left-wing bores, we could, possibly, have avoided the "double-dip" by spending more. Do you REALLY think that's in the best long-term interests of the UK to manipulate headlines using fiscal policy? Oh, and by the way, 7.5% deficit is "stimulus" in anyone's book, not "austerity". The cuts are not "too far too fast" and anyone who says it is clearly thinks a 10% deficit is sustainable, which marks you out as a window-licking moron with shit-for-brains.

Despite a rising workforce unemployment hasn't risen much. 300,000 or so jobs have been lost in the public sector, and nearly 700,000 jobs gained in the private. Indeed, much of the rise in unemployment can be put down to a change in the way it's calculated.

It is clear the UK's fiscal position is improving fast, and this will eventually feed into investment, when confidence returns. Then growth, real growth, not the debt-financed public-sector inflation of the Brown years will happen. (No-one was saying this at the time? I was). The UK, as Keynesians will tell you is operating below its capacity. Some argue that the Government should step in to fill this output gap with more borrowing. I think this is bonkers, as I've laid out before. Big deficits carry their own massive risks. Labour spent all the stimulus money to inflate the boom. Sorry.

On substantially all the big issues however, the Government's broadly right. Contrast with the last Labour government. Whilst they had the detail nailed down, their economic policy - running big deficits every year during a boom simultaneously with the biggest rise in taxation in peace-time history, taking spending from 37% of GDP in 2000 to over 50% in 2010, was insanely irresponsible. Yet for much of this, the one-eyed fuckwit in charge was described as the "Iron Chancellor". However, unless the government gets its act together on the the detail, there won't be a second term, and Labour will get the benefit of the policies listed above, just as Brown was able to spend the savings built up under Major and enjoy the fruits of Thatcher's reforms.

This "omnishambles" is Niff-Naff and Triva. And you're falling for it. Left and right - you believe the cuts are "savage" or they're not happening at all. The simple fact is we have a government intent on leaving the country better off, without thinking about their short-term popularity. For this, I admire them. But I despair, I really do, about their castrophic media management!



4 comments:

Oldsoul_NotQuite said...

You say there is de-leveraging and its the fastest in history. Where is the evidence of it? As I (and you in the case of government) see it, the government is not de-leveraging (and I think this is correct), companies are sitting on piles of cash (so there is some implicit de-leveraging there) and households seem to be static.

Jackart said...

Right. The Government is cutting the deficit as fast as possible. So "not deleveraging" is nonsense. Companies are sitting on piles of cash. That's deleveraging. And household debt isn't static, but falling fast.

So the economy is deleveraging.

Ben said...

"""
However, unless the government gets its act together on the the detail, there won't be a second term, and Labour will get the benefit of the policies listed above, just as Brown was able to spend the savings built up under Major and enjoy the fruits of Thatcher's reforms.
"""


Right. Which is why I am starting to think that we should NOT be paying ANY of it back.

We have learned that when we have a responsible government which reduces debt in the good times, it will be followed by a populist spending government which racks up debt.

The only answer is to keep debt as high as we can possibly service at all times, and cut taxes in the good times. Then there will be no opportunity for statists of all stripes to splurge without attracting the attention of the taxpayer.

Luke said...

Not sure that I agree with you BUT, you make a ooherent argument. Where we're you last night on Newsnight when moulton and A N Other were made to look idiots by Krugman? I probably agree with him more than you , but I would have liked to see a genuine debate with sentient, non raving participants.

There was an error in this gadget