And so we in the UK finally stand on the brink of another general election, on May 6th.
It's been a while since we had a change of government here, 1997 if I remember correctly, and most people were glad to just get rid of the old government (conservatives), never mind who got in. That seems to be the fashion of things, we let a party have a period in power, then when they get too complacent and over-pompous they get the boot.
It has been an interesting time in politics these past decades .. with 'new labour' there has been a switch from a party following an ideology and set of principles, to the system of 'focus groups'. i.e. Governments now try and find out what voters want, in key marginal seats, and do that, in order to increase their share of the vote, rather having integrity and following a coherent 'plan'.
We now very much get the impression of parties not offering any kind of 'vision', but just offering us what we want to hear (depending on who they are talking to). Of course then they often do something completely different. The aim of the public face is to win votes, the actual agenda may be completely different.
National Debt
In the UK currently, we are in a situation where the country has built up a considerable national debt, created in no small part by Labour's policy which is to spend, spend spend.
Spending money is great for getting votes. Who would deny that it is nice to have lots of money spent on libraries, schools, police, health, support for the unemployed, etc etc etc. As well as us all indirectly benefitting from these things, many of us benefit directly by being employed in the public sector to do these jobs.
This is all well and good, but forgets that someone has to foot the bill for these public services. Common sense would suggest that a government should balance its books each year, using the money it takes from taxes to pay for spending.
However, it can be difficult to get the sums exactly right, plus for example it is expensive to lay people off in the public sector, then suddenly reemploy them again when the financial situation improves. For this reason it is argued that it is better for the government to have a 'credit card', so that if it spends a bit much in any particular year, it is not the end of the world, and it will pay it back on average over a few years.
This system is great, as with personal credit, until it is abused.
Some people, and some governments, simply cannot be trusted with credit. Such people are addicted to spending, and cannot control their own behaviour. At some point, the creditors have to step in, and say 'enough is enough', and forcibly take back their money, bankrupting the individual, company or government.
(As an aside, a better system than credit, is for the individual to build up a buffer of money. That way any particular bad year it can work into the buffer rather than relying on outside institutions for borrowing. Any individual that is able to balance it's books should be able to build up a buffer. If they can't, they don't possess the necessary financial skills to handle being in debt, which is kind of ironic, as the people most likely to fall into debt are those least able to handle it.)
Many of us here are worried that the current labour government has fallen into this spending trap. The most morally frightning thing is that a government knows that if things get really bad, another party will get voted in, so there is never any pressing need to clean up their own financial 'mess'. And the blame will of course (wrongly) be partly taken up by whoever steps in to clean up the mess.
This vicious circle is fed by the way that government spending can be used to 'buy' votes. If for example, a government borrows 1000 pounds from investors, and gives it to voters, many will think, 'Hey this government is great, they are doing something for me! I'll vote for them'.
If there is no 'higher police' to say, no you can't do this, then it is down to the moral integrity of a government (or rather whether they think they can get away with it) whether they indulge in such practices.
The danger currently is that labour seems to have fallen into this spending addiction trap. It has spent a vast amount, to build up it's voting base. And it simply cannot afford to stop spending, as it would lose voters. It would rather drive britain into a sovereign debt situation (bankrupt the country) rather than loosen it's grip on power. It is addicted to power, power is its raison d'etre.
The conservatives in particular can see the problem, the 'elephant in the room', which is the huge difference between what the country is earning (in taxes) and what it is spending. In order to have any hope of addressing the deficit, any government is either going to have to increase tax takings, or reduce spending drastically, or probably a combination of the two.
Brown is currently living in la la land closing his eyes and ears and saying 'I can't hear you' to the financial markets, but the day of reckoning will come, as it is currently to greece, who are facing the prospect of financial rescue or even being thrown out of the eurozone.
In a sense, brown doesn't care, as long as his party does well in the next election. They seem to want to continue having power at any cost, rather than caring about what is best for the country.
Brown's solution for every problem seems to be to spend spend spend more, however this ignores the problem that this wealth has to come from somewhere. If you want to spend more you either have to increase tax rates, or stimulate the wealth creating businesses (private sector) so that they are being more successful, turning higher profits and thus paying more tax (on the same percentage).
The conservative proposal (and philosophy) is to reduce taxes and make it as easy as possible for UK businesses and entrepeneurs to expand, create jobs, and make profit, which in turn increases tax revenues, overcompensating for any loss in the headline tax rate. This approach would be coupled by a dramatic slashing of government spending, and would seem to be the most likely chance we have of balancing the books, and having a hope of paying back the huge debts which gordon brown has built up.
Of course, cutting public spending is not a popular move. It will lead to job losses for public sector workers, and less 'bribes' for the electorate. But sometimes what the country needs is not what it wants (much like a spoilt child). In the same way reducing taxes for businesses can be unpopular, as they are seen as 'the rich', rather than the engines that drive the country (would you want your economic engines choked with friction, or running as efficiently as possible?). Brown capitalizes on this popular misconception by playing up the natural envy from the masses ('us' and 'them'), when counter-intuitively taxing business less is highly likely to be MORE beneficial to the masses than higher taxes.
Gordon brown also fears that each public sector worker laid off will then add to the unemployment line (and why he shakes his head and is in so much disagreement), which is probably true for a time. But the fact is, that public sector workers are NON-PRODUCTIVE WORKERS. They do not create wealth. Their roles, if useful at all, is to FACILITATE the lives of society as a whole, and ultimately the wealth creators. Any tax they pay is just recycled money that came out of public coffers anyway. They are also a convenient way of fiddling the figures so that your government looks more successful than they really are.
It is only the private sector workers that are actually creating UK wealth. While there is a benefit to having a public sector to facilitate wealth creation, its 'bang for the buck' decreases as it becomes more bloated. Unless a public sector worker is significantly helping the country, it is actually BETTER to have them unemployed and collecting benefits that to be employing them, as the cost of benefits will be lower than their salary, not to mention they will then have the opportunity to work in the wealth creation sector.
Anyway, what will happen in the election will be interesting. I feel most of the country will be slapping their heads saying 'oh god' if brown manages to stay in leadership. On the other hand, I feel that a conservative / lib dem coalition might not be such a bad thing, if they can combine some of their better ideas, and lose some of the 'pie in the sky' ideas. I fully support the lib dem idea of rewarding those those come off benefits, something which I have written about in an early blog post on the benefit culture.
Whether we get a government that will be good for the country remains to be seen. I am not sure that our current flavour of voting and democracy is up to the task of electing governments that are optimal for the country, but I will save that for another post.
