It is Obvious

Chris Rick has got altogether too much to say

Spend it now

Posted by chrisrick13 on May 19, 2010

It is obvious: you can fool yourself for a long time.

I have been reading a lot about the economy – more than is good for me.  It seems that every move that might be made to fix our economic problems is counterbalanced by another effect.  For example cut government spending…but government revenue then reduces.  Not as much, but it does remove a lot of the effect.  Increase taxes…people spend less and government revenue reduces.  Not as much, but it does remove a lot of the effect.  Let inflation go up (or maybe stand helplessly by as it does).  Such export competitiveness as we might have does not go up, but drops as raw materials and energy cost more.  Increase interest rates to combat inflation…and our indebted nation has less to spend thereby reducing government revenue.

There is only one thing that really makes a difference.  We all reduce our standard of living below that of our competitors in global markets.  All the government’s efforts to maintain the standard of living just make the problem worse.  However any reduction in our standard of living resulting in more competitiveness in world markets takes a long time to come through.  Pain now results in gain…but in 10 years, not tomorrow and then only if society can hold together for that time.  Our reduced living standards means the government spends less but now on the good side of the equation.

Alas that is not enough on its own.  There still needs some appropriate management of the economy to take place and I think there is little chance of that.

I am amused that Liam Byrne wrote to his successor saying he had spent all the money.  It is amusing in itself, but it was so obvious that Labour had spent all the current money and all the future money I am surprised that he thought it necessary to write a letter.

It is also quite sinister that the senior people in the Labour party are running around with smiles on their faces.  There is no renting of clothes, no wailing in despair, no introspection of the disaster that they have presided over.  No, they see that a necessary 5 years of relaxation in opposition will take place while the current government tries to fix the problems they have left behind. They will fail and then Labour will have power for a generation.  For the moment they just have to sit out the honeymoon period and then they can set about making sure that the coalition gets the blame for the problems they left behind.

I am very pleased that my sons have chosen to live abroad.

My advice is to spend any money you have now.  In a short while you will be able to buy much less with it (inflation at over 5% and rising)  and the expenditure might help the economy a little.

It is obvious: you can fool yourself for a long time, but you can’t fool yourself all the time.

One Response to “Spend it now”

  1. Amnesiac said

    A lot of the labour party got out early, some into the Lords, lots into Quangos. The rest are currently fighting over the spoils (new party leader). Yes, they will probably be in next time and make a lot of mistakes with the country’s finances and leave it far poorer but surprisingly come away personally a lot richer.

    As regards electoral reform, the way I feel now I’d like to have an anti-vote where I can vote for the person (or list if you like) of people I would least like to see running the country!

    It is Obvious : That I have become a Cynic!

    _______________________________
    The Cynics (Greek: Κυνικοί, Latin: Cynici) were an influential group of philosophers from the ancient school of Cynicism. Their philosophy was that the purpose of life was to live a life of Virtue in agreement with Nature. This meant rejecting all conventional desires for wealth, power, health, and fame, and by living a simple life free from all possessions. As reasoning creatures, people could gain happiness by rigorous training and by living in a way which was natural for humans. They believed that the world belonged equally to everyone, and that suffering was caused by false judgments of what was valuable and by the worthless customs and conventions which surrounded society. Many of these thoughts were later absorbed into Stoicism.
    _______________________________

    Or perhaps not… I don’t want to be absorbed by a Stoic

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