“Condemned to repeat it”
Much of interest in David Cameron’s There Is No Alternative speech today, which included the correct but incredible assertion: “The richest 20 per cent are making the greatest contribution to the deficit reduction and paying the most.”
But I was struck by the idiot-history of his opening section:
Let’s start with what went wrong.
Because if we don’t understand what went wrong in our economy…
…we’ll never understand what is needed to put things right.
How very true. And what a guarantee that what follows will be unadulterated rubbish. And so it proved, as the Prime Minister listed the three problems of the economy – the public deficit, private debt and loss of competitiveness – in turn:
First, the deficit.
This deficit didn’t suddenly appear purely as a result of the global financial crisis.
It was driven by persistent, reckless and completely unaffordable government spending and borrowing over many years.
By 2008, we already had a structural deficit of more than 7 per cent – the biggest in the G7.
In the cold reality of the bust that followed, we saw the true scale of the myth of the boom that had preceded it…
…the broken model of growth that was propelling our economy into an increasingly unsustainable position.
Most of the deficit “suddenly appeared” precisely “as a result of the global financial crisis”. Obviously, it would have been better if Gordon Brown had been running surpluses from about 2001, but there were two people who failed to warn against this “persistent, reckless and completely unaffordable government spending and borrowing” at the time and they were David Cameron and George Osborne.
As for the “broken model of growth” you just want to weep at such drippy Compass-Milibandism.
Second, we had over-indebted households borrowing from over-indebted banks.
Banks lent more than they could afford to – spurred on by an irresponsible banking culture that rewarded short-termism and unmanageable risk-taking.
And households borrowed more than they could afford to – spurred on by an assertion that we had ended boom and bust.
Again, this is just drivel. The credit crunch of 2007-08 was not caused by over-borrowing by households. It was caused by bad debts in America being repacked and sold on over here. Household borrowing in the UK was high but sustainable and, once the crash happened, completely sustainable at unusually low interest rates.
As for the idea that Mr and Mrs Mortgage borrowed at the limit of what they could afford because Gordon Brown had some silly slogan about the “end of boom and bust”, that is just as daft. No one believed that Brown had abolished the business cycle, but equally no one knew when it would turn.
Third, there was a fundamental erosion of our competitiveness.
Let me put this simply.
Britain is in a global race…
At this point, I lost interest.Tagged in: contemporary history, david cameron, economics
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