Friday, February 20, 2009

How to destroy the middle classes

Chris Dillow on Stumbling and Mumbling has an excellent post today ( not that they aren't always, especially those with pictures of well endowed young ladies with a minimum of clothes).
I did my economics a long time ago, and I had forgotten that borrowing and saving are two halves of the same coin - someone can't borrow unless somebody else has saved.
So the explosion in Government borrowing should not be a shock. We are all saving or paying down debt in one way or the other ( either through thrift or because the banks won't give us any money) so the Government is the only body that can borrow to balance the equation.
PoliticalBetting has a copy of the Mail's headline today, mentioning £2 trillion as what the UK Government now actually owes. This is quite scary as the Yanks, including all their present bailouts, only owe about £7.5trillion - and their economy is considerably more than 4 times bigger than ours. In effect we are over 100% of GDP and the US still only about 75%.
I was speaking with a person who is a real spook recently, and he was saying that he had been astonished at the vitriol that was being poured over this government and Brown in particular. In a narrow sense I suppose the thought was that people tend not to blame in quite the way they have recently.
But on further reflection, and ignoring all the spin ( or lies depending on your point of view), what Brown has done is reduce lots of people to near-penury. Even at the worst point of the last recession, there was quite a large middle-class band that was doing OK. Brown's profligacy, and subsequent taxation policies, has reduced that band considerably, with many falling out of it altogether. As lots of other posts today have pointed out, everything was going along just fine whilst Blair and Brown stuck with the inherited Tory budgets and policies - it was only subsequently that it began to fall apart. I doubt those middle classes will ever vote Labour in the same numbers again. I believe that after the next election the political landscape in the UK may change forever- and I don't mean we will have a permanent Conservative government, but the growth of radical parties across the spectrum.
In my view the critical bit of language/spin was Brown's forever mentioning his "investment" in various areas.
In fact, of course, this was just one more lie. The investment made was largely dead expenditure - whilst real investment was conducted under PFI. It's rather like taking £250 cash out of the hole in the wall, blowing it all on a party, then borrowing £10 to pay the interest on the money spent.
It's Brown wot did it. And because he did it, millions more thought it was OK for them to do it too.


Winchester whisperer said...

Keep shorting sterling

kinglear said...

ww - I've run out....