George Osborne puts the con into Conservative….
by Pseud O'Nym
If George Osborne had any more gall he’d be called Asterix. And it wouldn’t be at all wise to remind readers of his past friendship with a dominatrix. (Although according to the Daily Mail’s perverse moral code calling her a prostitute was somehow less degrading than calling her a dominatrix.) When he claimed he hadn’t really known her, she tweeted a , a ‘photo of him in her flat. For this, she was arrested by the police and charged with ’abusive behaviour.’
A charge that could well be levelled at himself, playing fast and loose with the public finances as he does, and not being honest with people in a way that most everyday people would understand. People well versed in the very technical and nuanced language of economics might understand what national debt is. Everyone knows what debt is – after all, most of us have some. But it’s when one examines what they mean by national debt, then it all becomes confusing. The accepted and widely used figure is the net debt of the UK; simply put what we owe minus what we own. We’ll return to that later.
And the UK national debt has increased massively, doubling in the last five years. So much so that according to the Office for Budget Responsibility, the UK’s stock of debt will keep on rising for years. Anyone saying otherwise is wearing flame retardant pants. Understanding how they arrive at this rather alarming conclusion makes me go a bit ‘Scanners’ because it waxed my woody when I was unable to make head nor tail of it. You might have more luck. Click here.
Anyway there is a surplus. Or a deficit. And we all know what they are. They’re basically Mr. Micawber’s recipe of happiness, as outlined in ‘David Copperfield, “Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”
Sticking with ‘David Copperfield’ for a moment, this is when we get some Uriah Heep type accounting. Anyone familiar with the book will get the reference, but if not then I pity you, because it’s a work of brilliance. Oh, and Uriah Heep is exposed as crook at the end, using peoples ignorance of certain facts to embezzle money. This helps when you consider the notion that is the structural deficit. Now the structural deficit is the deficit, only it’s been adjusted to strip out the cyclical nature of the economy. I think that means it’s the underlying deficit that’s not affected by economic performance. I know, me neither! Okay, it’s like when you go out for a meal with work colleagues. When the bill arrives, so do raised voices. Someone had only water to drink, someone else only had a starter and a salad, and yet another had…you get the gist. Structural deficit is kind of like that inasmuch as everyone only wants to pay for what they themselves have consumed. Unless of course you’re Greece and you threaten to leave without paying in order to obtain a reduced bill. (For a more illuminating economic analysis, I commend you to check out Collaterlie Sisters).
Then there is borrowing and reason deserted me completely at this point. If I’m right – and it’s a big if! – the current budget is how much it costs the government to govern, the day-to-day housekeeping if you will – in order to keep the country running. If we are in a deficit situation then we need to borrow just to keep things going. There’s no money for anything else – infrastructure, like high-speed rail for example. Imagine a household just about keeping the wolf from the door. Every penny is accounted for, but it’s still not enough. So they get a loan to help tide them over. But their neighbours’ have bought a new car and their friends have been on exotic holidays and their relatives have…well you get the idea, so they get another loan to pay for that. And then they have to get another loan to service those ones. The UK is that house, a bit like Boo Radley’s house, in need of repair and forlorn looking, one that people just run by.
And the amount of our national debt is a staggering £1.541 trillion
A trillion is, if you’re British at any rate, a million billion. And a billion is a million million. Helpfully, the Americans have their own system of quantifying these things. To put it in graspable terms, a million seconds is 12 days, a billion seconds is 31 years, and a trillion seconds is 31,688 years. And as anyone with a debt will know only too well, it isn’t so much the original sum borrowed that’s crippling, as the interest that remorselessly keeps on adding. In the UK’s case the interest on our national debt is £5,170 a second. And it keeps growing – see here for the current total and watch it increase before your eyes! (And if you think that’s bad, check out the amount of interest paid on global debt here. And we think Wonga’s bad!)
Remember how earlier on I said how the net debt is what we owe minus what we own? Well George has had the idea of selling what we own to raise cash. The sell off of the remaining government stake in the Post Office is estimated to raise £1.5 billion. Sounds a lot, until one remembers that the interest on our national debt is over £1 billion a week. Imagine a bath of infinite size and a tiny plughole letting only a trickle of water out whilst the taps are full on.
So when George Osborne proclaims that the national debt is under control, that his long-term economic plan is working, one wonders what kind of plan involves it doubling in the last five years? Is George Osborne doing to the economy what his former friend let men do to her?