Are we back to the bad old days of the ‘Rotten Boroughs’
where prospective Parliamentary candidates vie with each other to bribe the
voters? Of course, politics has always been thus, but this time seems to have
gone mad. It seems that Jeremy Corbyn has sold his ‘Magic Money Tree’ to Boris
Johnson, but only because his mining prospectors have discovered a ‘Magic Money Mine’. At least he has established the first principles of economics – mining is
probably more efficient than picking!
But where are we, and where are the lessons of the past? For
me, the past 50 years comprise two different formats:
Spend, spend, spend;
and
Cut, cut, cut
They follow each other as sure as day follows night. Labour
trusts to the good old economic principle that you can spend your way out of a
recession because it grows GDP and therefore there is more scope to borrow at
the same margin of borrowing to GDP. The Conservatives, meanwhile, take over
when the Labour bonanza has ended – in the 1970s we had IMF rules because the
county had gone bankrupt and Jim Callaghan had gone cap in had to the IMF for a
bailout, and the again in 2010 Gordon Brown (the man who had eliminated boom
and bust) left the economy in tatters, not only with a debt that was unmanageable,
but negative growth and a hidden debt of trillions in PPF deals.
So we have had the nice cuddly party that gives the country
other people’s money and the nasty party that spoils all the fun. Now, they both
propose to be the cuddly party, so who will take over in 5 years time when one
or the other has completely buggered up the economy? On the one hand Jezza and his
puppeteers Momentum will have thrown money about like confetti and the unions
will be back running the country as they did in the 1970s; on the other, Borris,
big-ears and Joe Ninety (sorry, the ERG) will have created a country in which
there will be no manufacturing base and the fishing industry will have been
sold down the pan to find some sort of Canada minus trade deal with the EU (don’t
expect Canada plus plus without some HUGE concessions – and the ERG won’t
accept those).
So where is the economic logic? Both sides would have you
believe that this bonanza will be paid for by growth in GDP. Now, that is where
the real problem lies. If I had my way, I would line all macro-economists against
a wall and shoot them. For decades, we have been pushed one way or the other
but essentially using macro-economic theory that is clearly wrong. On the one
hand, it is clear that growth only works if it is accompanied by efficiency
gains i.e. we produce more from less usage of everything from labour to energy.
At the moment we are looking at borrowing based on growth fuelled primarily by
immigration, which carries with it huge costs that wipe out the growth benefit.
On the other, we see a reduction in controls over business in several forms –
employment law, environmental law and borrowing restrictions. Both are proven
failures.
On the one had we have almost uncontrolled immigration that
is the fundamental cause behind today’s polarisation. A sizeable part of Brexit
was indigenous voters not wanting floods on new people invading their territory
as illustrated by that poor 'bigot' – [to use Gordan Brown’s phrase] from
Rotherham who had the temerity to ask what was to be done to stem the tide. On
the other, we have the explosion of white van men who work seven days a week,
12 hours a day, without holidays or sick pay and who both they and their
employers pay the bare minimum, if any, into the social security system. Both
are utterly corrupt and politics is effectively bankrupt.
Nobody (even the Lib Dems who are almost there) has the
honesty to say – ‘we have sold you a vision in which you pay nothing and get
everything’ – it was smoke and mirrors – you ‘don’t get owt for nowt’ and the
only way that you will have more NHS, free university education, free
prescriptions, better roads, more railways etc is by higher taxation. Not just ‘squeezing
the rich ‘till the pips squeak’ (Denis Healey) - eventually the pips do squeak
and the country goes down the pan - both the last Labour administrations proved that.
It is time for a complete change in the economic model – not
one based on growth fuelling borrowing but one based on sustainability. Everybody,
electorate, shareholders, institutions, Government thinks growth is unlimited,
but the reality is that the growth of the last 40 years lies in the waistbands
of the populus, the huge array of rubbish dumps, the volume of plastic in the
sea and the CO2 in the atmosphere. Something will have to give, and at the
moment the most likely result is a headlong rush to oblivion as the planet
passes (has already passed) the climate change tipping point.
