29 March 2011

A few hard facts about the economy

The present British Government is citing massive debt run up by the last labour government as a basis for dismantling society. Frighteningly a significant proportion of the UK population seem to subscribe to the view "its tougher but necassary". It's inevitable etc. Well before we close the hospitals, shut the libraries, cut back on the police and start excluding all but the very wealthy from higher education lets look at some actual facts about our defecit.

1. As a function of GDP (thats how much money the country makes) our current debt is lower than it has been in 200 of the last 250 years (see here). Yes that was lower!
2. It was higher when:
a) we pionered the industrial revolution,
b) built a very large empire across half the known world
c) beat the Nazi's
d) built the NHS and social welfare system that is currently being desimated
3. As a function of GDP our national debt is 47%; which is lower than Canada (62%), Germany (63%), Japan (170%), India (70%), Italy (103%) France (67%) and the USA (61%). In debt terms we are doing better than the rest of the G8 except Russia. (see here)

Even if we did have a catastrophic debt, reducing it rapidly is a bad idea. In 1929, following the Great Depression Herbert Hoover cut back just like Cameron/Clegg are trying to do now and the US sank deeper into depression. It wasn't until FDRs New Deal when significant money was spent on public works which created roads, bridges and hospitals etc and stimulated the economy that the US clawed its way out of depression.

Two of our European neighbours (Ireland and Greece) have bankrupted their economies by invoking rapid cuts which have lead to collapse as their economy slowed down and then choked themselves. Why are we blindly following suit? Its got nothing to do with saving the economy and everything to do with an extreme idealogical policy.

So next time somebody says that the cuts are "hard but fair" or that they are "inevtiable" you can now point at that they are nothing to do with prudent managment of the economy and everything to do with an oppertunistic ultra right wing political agenda.

(this post was inspired by and draws heavily from, a much longer piece by Johann Hari which can be found here).

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