Economy: Can our fiscal austerity be economically justified? | Speaker's Chair.
I recently signed up to the new politics site, "the Speaker's Chair" but I can't see myself sticking with it for long. Do I even need to fisk the following unutterable tosh by young "independent voter," advocate of "social mobility" and promoter of "social equity" (yeah right, he's not a Labourite) Ben Szreter?
Our budget deficit is extremely large, but directly removing money from the economy through fiscal austerity is not a way to stimulate and secure economic recovery. While the Government is spending less on employment through large scale public sector redundancy (around 710,000 public sector workers will have been made redundant by 2017), this doesn’t mean they are saving money. Removing these people from the workforce, albeit potentially temporarily, means that their consumption will fall, they will receive government benefits and they will not pay tax whilst unemployed.
The idea that money not spent by the state is "removed from the economy" is startlingly stupid. The only money the state has is that taken by force from the productive (or their descendants, in the case of state spending funded by debt). There are no productive state enterprises any more (not that the ones we used to have were ever very productive anyway). The state creates no wealth of any kind. The public sector is pure cost - some of it necessary cost - but cost nonetheless.
Removing non-essential workers from the public payroll liberates them for productive work. Of course, there's no guarantee they will get it, in an economy devastated by such idiotic thinking as Szreter's, but at least there's a chance. Some of them might even become desperate enough to start businesses; thus saving their souls and boosting the economy by creating wealth. The Blair/Brown regime created almost one million new 'jobs' in the public sector. Even if Szreter's numbers are right (and given the prevalence of the frankly corrupt practice of paying off public servants and then re-hiring them elsewhere in the state apparatus, I doubt it) the Coalition are not even coming close to scaling that back.
Unless the unemployment benefits of sacked public sector workers are greater than their salaries, there is a clear saving. As for the nonsense about the taxes they will not be paying, give me a break. They only ever "paid taxes" from money given to them by the only real taxpayers; i.e. those in the productive sector. Or, to put it another way, money they were given to pay taxes is also part of the saving achieved by sacking them, at least to the extent of the churn involved; i.e money lost on administration costs in paying out and taking back the part of their wages designated "tax"
PUBLIC SECTOR TAXES ARE A FICTION. If we can get nothing else into the statists' thick heads during these difficult times, please let it be that. And as for their lost purchasing power - it was taken by force from their fellow-citizens anyway. To the extent that it was not funded by debt, it will re-emerge elsewhere. To the extent it WAS funded by debt that's just us doing to our children and grandchildren what our welfarist grandparents and parents did to us.
Somewhere a line has to be drawn, because the more delicate issue is this. What if the economy is beyond stimulating into recovery? What if we are seeing the chickens of the Welfare State finally coming to roost? How are we going to cut our coat according to our cloth if so many of our voters are as blind as young Ben Szreter? And how, as he is young enough to be saved, are we going to rescue him from this craziness and make an honest, productive fellow of him before it's too late?