Government should be symbiotic

Not parasitic. It should help us or get out of our way.

Firms are dying under the weight of paperwork, taxes, supplementary 'fees' for things like the Money Laundering Regulations, Data Protection Act, specious qualification requirements and others. 

The unemployed and child rearing ought not to get given so much that their income becomes a barrier to gainful employment. The welfare trap is real and people are being pushed onto the scrapheap through unthinking charity.

Tax relief not tax credits. It costs money for the Revenue to take it off us and then give us some back and we fall for the con trick of being grateful.

The State needs to protect it's taxpayer base which is why it encourages people to have children but even that has gone awry. Too much under the existing Government have the feckless and idle scroungers given birth to an army of more feckless and idle, who will do as their parent (the State) instructs - claim every thing they have been told they are entitled to in later life. Alistair Darling's debt is going to be several thousand a head; it will be several tens of thousands per net tax payer. He has no mandate from our future selves to put us in this penury.

There are fewer and fewer net tax payers supporting more and more unproductive public sector workers* and dolescroungers. This is the way of madness. This is the way of anarchy. This is the way of bankruptcy. I do not believe there is a grand plan, that Gordon is a closet Marxist or Communist. It is easy to believe in triangulation. That while times were good money was thrown at anyone who asked for it (in full knowledge that there are a lot of decent people who will be loathe to ask for help) and then for Gordon to ride to the rescue when the wheels fell off. For me the fingerprints of incomptence and infantilisation are all over this nation. Nanny was meant to know best. Nanny knew jack shit.

* There are plenty of public sector workers who genuinely add value to this country. However, there are an army of back room jobsworths whose "work" is an unneccesary burden on the rest of us. It isn't that they would be better off unemployed but that they would be better off self-employed or in private employment earning a productive wage and contributing tax revenue.

That prediction lasted long didn't it.

Wednesday:

"The falls in trade, production and GDP around the world in the final quarter of 2008 were much steeper than expected. Private business survey indicators suggest a similar rate of contraction in the first quarter of 2009" - Alistair Darling's Budget 2009.

GDP fell 1.6% in Q4 of 2008.

Friday: UK economy slumped by 1.9pc in first three months of 2009

What's 0.3% between friends. If past performance is anything to go by the figure will be quietly revised in about a month's time as more concrete data comes in.

I can't help but think that a certain gurning Gordon will see this as good news - believing as he appears to that a faster fall makes for a faster and higher recovery.

I'd rather not step on Plato's toes.

Plato says The economy under Labour - a graph

(From the Telegraph)

The graph of borrowing re-enforces in my mind that the rot set in during the dot com bubble burst.* The response from that episode, during which a lot of perceived value evapourated, was to let rip with credit (both taxpayer debt and personal debt). The Government was loathe to put up taxes in a brazen fashion so borrowed instead. Unfortunately for us they never stopped borrowing.

You can see a double top in the FT 100 in the last decade. Value disappears, things are done to get the whole merry-go-round turning again and it gets out of hand.

(From the Telegraph)

The banks were set loose by Gordon Brown but, by setting up the FSA the banks must have become convinced that they could do whatever they liked until the FSA said stop, and the FSA never got around to saying stop. If the Government is to position itself as referee it must do it's job. It failed. Just as Parliament has failed to supervise the Government. Cheap credit was a convenient get out of jail free card for the Government and the economy. The difficult decisions were never taken. Gordon talks much of redistributing wealth. What he has mostly been doing is redistributing debt.

So much of the last decade has been growth funded by credit not proper wealth creation. Credit cards and mortgage equity withdrawl to realise the 'wealth' from rising house prices have kept retail, service and manufacturing industries afloat. Management buy outs funded by the banks have kept unprofitable firms in business. That in turn kept Revenue coffers mostly full in income tax, corporation tax, national insurance and VAT receipts. Yet even that wasn't enough and Gordon kept borrowing.

It could have all been different if it wasn't for the mortal fear of deflation. Had the full effects of the internet and globalisation been allowed to take hold we would have seen a reduction or standing still of GDP simultaneously with a reduction in the cost of living but, we would have also slipped down the standings compared to other economies. Gordon's fiscal policy was simple - we must have growth. He deployed stealth taxes and fiscal drag to achieve growth through Government largesses. He borrowed even more to add to his profligacy. Yet strip out inflation and what is left? Sod all really. A decade of standing still and shitloads of debt to show for it.

Deflation isn't exactly benign but then, neither is growth at all costs.

The damage has been done. We've been put on the hook for so much borrowings that the Government has okayed plans to print money if the bond markets either go on strike or begin to push up interest rates too quickly.

It isn't entirely Gordon's fault though. There is plenty of blame to share around. The FSA are shit. The public are greedy and idle. The banks have been fantastically reckless. Parliament has been absent from it's role of keeping the State in check for much of the last decade. It has allowed itself to be bypassed. It has withered while the main parties play politics for their own interests not the nation's. The opposition has rarely opposed for the sake of opposing (as Labour were good at in opposition) - that isn't a daft thing or a deceitful thing but merely the accepted mechanism for the opposition to get the best out of Government. To make it up it's game. To look out for our interests. The consensus of the political class has been to serve their needs first.

The house price bubble was forseeable. The mountain of personal debt was easy to spot. The economics of ignoring the cost of home ownership in the measure of inflation was always going to leave it ripe for an asset price bubble to ocurr. The IMF warned we were too much in debt. The Bank of England warned we were too much in debt.

To me Gordon's rote adoption of what he and his international finance jet setter colleagues insisted were best practice was his biggest mistake.** He has doggedly ignored the peripheral warnings because he was led to believe the system was working. If he were even half the economic luminary he believes he is these things would have been taken on board and accounted for. But no. They were swept under the carpet along with public sector pensions, the shrinking productive population, PFI obligations and the rest of it.

All the while the grin on Gordon's face gets more grotesque.

He's enjoying this.

* Of course, in each year's budget speech Chancellor Brown predicted that about 5 years hence the Government would be borrowing bugger all. It never came to pass.

EDIT: Not quite. We started borrowing in 2002. Each subsequent budget Brown predicted he would quickly regain control and simply could not.

** It seems a peculiarly British disease that we have to be seen to be the teacher's pet when it comes to rules. We do the same with EU directives while the others on the continent appear quite happy to ignore or adopt them to fit the national interest.