Tuesday, May 15, 2012

The "moral" argument for Coalition's chainsaw attack on British nation

Last week, Nick Clegg rolled out the "moral" argument for the Coalition's chainsaw attack on the British nation:

"..we have a moral duty to the next generation, to our children and our grandchildren, to wipe the slate clean for them. We set out a plan, it lasts for about six or seven years, to wipe the slate clean. To rid people of that sort of dead weight of debt that has been built up over time... We owe it to the youngsters of today to lift that dead weight of debt off their shoulders".

Well, apart from the fact that even the Spectator can tell that he is lying, the debt issue is a little more complex than either Nick Clegg or my esteemed debating opponent, Mark Littlewood, would have it.

The thing is that Osborne, Clegg and free marketeers operate by frightening people with large numbers in isolation. This is not to deny that the UK national debt is a very large number, but any mathematician will tell you that no number exists in isolation; all numbers exist in relationship with other numbers, and economic numbers even more so.

So: the UK national debt. what is its full scope in historical perspective? Here is the graph:

 Hm. Not too bad. We are in a fairly average position really, at present.

The figure shows how totally fatuous it is for Nick Clegg to claim that he is going to "wipe the slate clean" in seven years, that is to undo 300 years of overspending in seven.

Here is another, more recent view of national debt, as an absolute figure this time. It looks worse, because the banks foolishness is included:

Here's another useful view. Look how the debt builds up every time there is a war. Someone should tell George Osborne, so that he silences any idiot that starts talking about having a war.

Next, let us put the debt into context as a percentage of GDP. Here we go:

As you see, it shot up to 2x GDP for WWI, and 2.5x GDP in WWII.

In 2009, it was very modest in comparison to war and post war levels. Sure, it is bad for peace-time, but we have to remember that idiot bankers had to be bailed out to the tune of £163 billion or so.

Our debt stands at 66% of GDP.

If the banks bailout is included, it rockets up to 143% of GDP.

In comparison with other countries, the 66% figure puts us 23rd out of 132 countries (that is, 23rd from bottom) on this list. On that list though, the 143% figure would put us 6th from bottom.

Other ways of looking at debt include private debt, and here we come out badly, but this is because of our preference for having mortgages, whereas on the continent, it is more conventional to rent.

Getting depressed? Try this one to cheer you up:

I have lost track of what the x-axis represents, but clearly, we are not doing as badly as some.

What we learn from this is that one figure serves only to frighten, not enlighten. To understand our economic position, we need to put all figures in context.

Debt is bad, and needs to be brought down. But Clegg is simply lying when he says he is going to wipe the slate clean in 7 years. He is not. Only 9 counties are not in debt. They deserve study. Cuba, libya and North Korea are among them.

The reason we are in debt? Because debt is how money is made. Banks make money by lending money to people who have to borrow money. Sure, debt has got out of hand, with vast amounts of national wealth flowing into bank vaults. The rational response to this unacceptable situation is to stop the haemorrhage of money into tax havens, and readjust the money creation system so that it is divided 50:50 between commercial banks and central banks, instead of 97:3 as things now stand.

I'm not an economist, thank all the gods. But I can see when politicians and ideologues are pulling the wool over the eyes of gullible journalists, and through them, over the eyes of the people, so that small state ideologues can use the financial crisis as a cover to dismember the common wealth of the British people.

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