Monday, February 27, 2012

Mind the (money) Gap

Margaret Thatcher once warned: "The problem with socialism is that you eventually run out of other people's money. "

Well looks like Britain is finally there. I saw this headline from The Telegraph: George Osborne: UK has run out of money

And why has the UK run out of money? One guess:

Mr Browne writes that reform of pensions, welfare and defence is essential to stop the departments "collapsing under the weight of their own debt". "Just because the spending was sometimes on worthy causes does not in itself mean it was affordable," he says.

That from Liberal Democrat Jeremy Browne, the foreign minister. And this is not a surprise either, the first attempt to balance the books was a surtax on the top earners (sound familiar?) but it kind of backfired:

Amid warnings that Britain urgently needed to adopt a more pro-business outlook, senior Conservatives have urged the Government to get rid of the 50 pence top rate of tax.

Figures from the Treasury last week suggested the policy was not raising the expected amount of revenue and was threatening to drive leading business people and entrepreneurs away from Britain.

Golly, you raise taxes and people change behavior, who would have thunk it? But never fear my liberal friends, there is at least one champion carrying the socialist torch into the abyss:

Simon Hughes, Liberal Democrat deputy leader, said yesterday that keeping the current 50p rate was "the right thing to do" [even though it has actually lowered tax receipts?]. He told the BBC: "I represent people in a pretty solid working-class community. What they're concerned about is what happens to ordinary people out of work and where they get jobs."

Talk about a non-Sequitur. This genius is saying - keep a tax policy that does not work (presumably to punish the evil wealthy) so that what? The unemployed can stay unemployed? Brilliant.

And not to be left out of the, ahem, argument, the Keynesians (i.e. Labour party) made their views clear:

Last night, Labour argued Mr. Osborne needed to take a more proactive stance on boosting growth by increasing public spending.

Wait, I thought they were broke. How can they increase spending (over here across the pond we call it 'investing')? Oh yeah, borrow from the Chinese. Again, Brilliant.

Anyway, the Treasury minister, like all good bureaucrats points out that business alone cannot create growth:

Chris Leslie MP, the shadow Treasury minister, said it was wrong of the Chancellor to argue that Britain was broke (even though they are) and to rely on business alone to create economic growth (As opposed to who,the government?).

Honestly, I don't think the Brits will ever get it together again. The problem they have is too many factions. Between Labour, Liberal Dems , a weak Conservative party and the generations of rioters voters on the dole I just can't see where there is common ground to build on. 

So whoever is in power will be forced to come up with half measures that will only prolong the country's slide into irrelevance.

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