Saturday, 19 May 2012

Austerity or growth

A recent post by Martin Durkin nicely captures my thoughts on the phony "austerity vs growth" debate:
What’s all this nonsense about ‘austerity’? I listen to the news and I feel like I’ve stepped into George Orwell’s 1984. Apparently ‘austerity’ means sacking some public sector workers, who are paid for out of taxation. ‘Growth’ means hanging onto them and maintaining high taxes.

Whose austerity are we talking about here? Let’s be clear. All ‘government money’, no matter whether it’s raised from direct taxation, borrowing, or printing money, ultimately comes from us (by ‘us’ I mean tax producers in the productive economy). All public spending means higher taxes. There is no magic pot of gold. No public spending can be paid for, other than by moving funds out of the productive economy. The government cannot conjure up resources from nowhere. The choice is simply, are those resources better left in the productive economy, or are we be better off with more social workers and climate change liaison officers? Which, do we imagine, will lead to more real economic growth?

The absurd, topsy-turvy framing of the ‘austerity or growth’ debate clearly shows that the tax consumers (publically-funded intelligentsia, the BBC & Co) dominate public discourse in this country. Where are the opposition voices?
There aren't many opposition voices, but Daniel Hannan is one:
The new French President is an unapologetic Socialist of the kind we haven’t known in this country since Michael Foot. François Hollande wants wealth taxes, stimulus spending and a massive expansion of the state payroll.
Hollande summarises his programme as ‘growth, not austerity’. Gosh. Who knew it was so easy? Why has no one thought of that before?

The truth, of course, is that France has already pushed tax-and-spend to its limits. The government accounts for an extraordinary 56 per cent of the economy, and the French budget was last in balance in 1974. If state expenditure really had a stimulus effect, France would be the wealthiest country in Europe.

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