7 3 mins 10 yrs

A most excellent and ATW approved article here by Janet Daly in the Telegraph. Her contention is that in these times of severe economic challenge we need Government to show real leadership…..by doing LESS.

Gosh, what a parcel of goodies George Osborne is about to present to us in his Autumn Statement. Already promised last week were a government programme to underwrite the mortgages of first-time buyers, as well as a nifty £200  million “green deal” to encourage families to insulate their homes. Then there was a billion-pound subsidy to employers who give young people work experience that will lead to jobs. And who knows what more bounty is to follow in the speech itself?

Now where have I seen the like of this beneficence before? Oh yes – it was under Gordon Brown. As Chancellor (and then later when he was Prime Minister, through his half-hearted proxy Alistair Darling), Mr Brown would stand at the Dispatch Box and shower us with government spending projects. There were injections of cash into house-building, and grants for scientific research, and God knows how many initiatives to create “training” and engineering apprenticeships. All that micro-management: new “start-up” schemes and “one-stop shop” outreach services funded by this department and that department, and then re-packaged and re-announced so that they sounded less tired and predictable.

Maybe you thought we had got past this. Not just because additional public spending is now supposed to be anathema, but because the myth of government activism – the idea that intervention by the state is the answer to every economic and social problem – had been definitively routed. Apparently not: Mr Osborne and, we must assume, his boss still seem to believe that any unacceptable national situation must require direct action from them.

The problem was nicely summed up by the late great Ronald Reagan when he wittily observed “The nine most terrifying words in the English language “I’m from the government and I’m here to help”. Correct. Government works best when it stops interfering, twisting, distorting. Government works best when it accepts it cannot micro-manage our lives. Government works best when it stops spending our cash to bribe us. But this Coalition Government wants to keep on doing MORE, being seen to do MORE, and as a consequences, dear reader, we will get LESS. The Government is never your friend and sometimes, just sometimes, it is your enemy.

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7 thoughts on “WHY LESS REALLY IS MORE…

  1. That the government sets up all these ‘initiatives’, issues budgets of unnecessary complexity in an annual tome exceeding 1,000 pages, and bases its assessments on models based on completely false ‘economics’ is no accident. Corporations have the staff who can make use of the complexity to run rings round HMRC’s inspectors who also have to deal with this garbage but small companies don’t. If small companies are restricted in their potential, then the corporations, which donate so much to MPs under the guise of lobbying, will not face any future competition from independents.

    George Osborne’s best friend would be able to explain it from the other side of the fence. After all, he set up and owns the fence.

  2. Watching Osbourne on the Andrew Marr show this a.m.- and his emphasis on encouraging the private sector to borrow and expand – as this is the way forward to future growth, blah! blah! blah!

    So the scenario might well be thus – an entrepreneur – isn’t that what they call ‘small business’ men and women these days? – has a brilliant idea, but little cash, – so off to the bank for one of those new ‘incentive loans’, at a rate as little as 5%, – wow! They duly get their loan, received no doubt, through a transfer to their sparkly new bank account, – which just coincidentally, now has quite a hefty monthly management charge, in addition to that 5% interest charge.

    What a brilliant idea – as an incentive, – the government gets what it wants, – an excuse for another tax on banks, – passed on to the consumer, – it is afterall only underwriting the loan, so they have little risk, the banks get the same as usual, and the ‘entrepreneur’ gets shafted – as usual…

    The question is – ‘will it work?’ – will it convince people to expand or invest in a ‘start-up’, – it may well have done a decade ago, but our national debt has grown so large that any profitable ‘small cap’ business will have nothing to look forward to but much hard work and punitive tax bills for at least a generation.

    The goose that laid those golden eggs is dead, and to try and replace it by teaching sparrows the same trick, just isn’t gonna work! As usual – too little, too late!

  3. Just seen Allan’s comment.

    Two different but complimentary views on the matter, from different viewpoints, both validated by experience. I look forward to reading an opposing viewpoint, and as ever, I am always willing to learn…if the lesson makes sense!

  4. Janet Daley is spot on. George Osborne is panicking, the economy is deteriorating, poll numbers are falling so they make up spending schemes in desperation.

    On top of the housing guarantee scheme and wage subsidies for young people we now have a £40 billion government guarantee for business loans. This is just a washed over NuLabour scheme. They announced the same thing in 2009.

    We knew Cameron and Osborne have no sense. Remember, they agreed with every Labour spending plan right up to when the economy went south. There is not significant point of departure between them and Gordon brown until then.

    The reason why they are continuing with these stupid schemes is that they don’t understand how an economy works. They think spending and consumption is the economic driver, so when they want to ‘boost’ the economy they boost the spending. They think it all comes down to these ‘animal spirits’, as Keynes described it but what is now known as ‘consumer confidence’.

    This is the economic voodoo which has wrecked economies since the 30s. They don’t understand that savings are the bedrock of economic growth, not spending. Savings with low consumption equals excess capital to be invested. This is the only sustainable and real model of growth.

    Neither do they understand the nature of the problem in the first place, that the only solution to an inflated economy is a recssion to wring our the malinvestments. They don’t understand Austrian Business Cycle Theory so they don’t understand why we are are where we are nor that the only helpful thing the government can do is stand aside and let it happen (which it would do, rather quickly).

    We are being governed by literal economic idiots who haven’t a clue what’s going on. All they can think of is re-inflating the bubble which will not be re-inflated. This is the road to permanent depression. Japan has been trying these solutions for twenty years and it’s still in the doldrums. Last year its economy shrank by five percent – twenty years after the recession they’re still trying to avoid.

    This is our fate because these people are stuck in the mindset that someone must be ‘in charge’ of our economic activity and that something must always be done.

  5. I have never understood why George Osborne was made Chancellor when John Redwood was available and so eminently suitable for the position.

  6. Is Janet Daley a Belgian by any chance? 😉

    The more powers a government takes on, the greater the bureaucracy, the longer the red tape, the bigger the tax bill; and the less anyone cares what the people think..

  7. Well said Pete Moore.

    This latest loan guarantee for small firms will not make the silghtest difference to the banks, who will continue to reduce lending, because they cannot borrow to finance that lending.

    Maybe the state should simply nationalise at least one of the banks so that it could then direct that bank to lend, and to stop paying obscene bonuses. Say RBS for example. Oh wait…

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