According to many newspapers George Osborne will be announcing tonight that it is his intention to run long term budget surpluses in the UK so that he can reduce government debt and put state finances back on what he calls a sound footing, because he believes that only by running surpluses and reducing debt can he deliver long term prosperity for this country. He is actually going to say the government should only borrow in exceptional circumstances, but is declining to say what they are.
Maybe he’s right and maybe he’s wrong to do this but look at what this will mean:
First, he is seeking to end for good the post Second World War consensus that delivered the welfare state, growth, reducing inequality and increasing prosperity.
Second, he is seeking to significantly reduce the size of the state in the process.
Third, in so doing he is taking us back to the thinking of the pre-war era, when there was no social safety net, there was no NHS, pensions were limited, education ended at 14, economic well-being depended upon the vagaries of the market which was presumed to always deliver optimal outcomes, even if many suffered as a result, and wealth was always deferred to.
This is not just an economic policy that George Osborne is proposing, it is the re-establishment of an old world order where the rights of those with wealth are to be entrenched by the refusal of the state to intervene in ways that might challenge them ever again. To put it another way, George Osborne has announced open class warfare.
That a government which collects £600 billion in taxes is only going to spend £599 billion of it will cause all that, eh? Really who would have thought it?
As an economist I think he is wrong,
Osborne’s not an economist so Ritchie must be referring to himself there.
But then an economist would possibly know the difference between the level of State spending and the balance between tax funded spending and borrowing funded spending.