The following is the start of George Osborne’s Autumn Statement speech in November 2011.
“Let me start by placing squarely before the House of Commons and the British public the economic situation facing our country.
Much of Europe now appears to be heading into a recession caused by a chronic lack of confidence in the ability of countries to deal with their debts.”
Saying the recession has been caused by a chronic lack of confidence in the ability of countries (which means governments) to deal with their debts is either: a deliberate attempt to mislead, or evidence of his inability to reason clearly. It’s probably the latter.
The question that must be asked is: WHY do people lack confidence in the ability of governments to pay their debts? Because governments are on the brink of bankruptcy. Why are governments on the brink of bankruptcy? Because for decades they’ve spent far more than they were receiving in tax revenues. Therefore, what has caused the recession is government overspending. This is a fact that can now be independently verified easily thanks to the hopelessly naive expectation of some in government that ‘transparency’ would lead to more responsible behavior. It hasn’t. The government’s accounts are there for all to see, but they continue to borrow billions.
Osborne believes our unsatisfactory economic state is the fault of those lacking confidence in the solvency of governments. As if this lack of confidence in government solvency is something akin to the universe itself; we don’t know why it’s here. It just is! And that’s the point from which he starts to construct his ‘solution’. False premises lead to false conclusions. Start in the wrong place and you’ll end up in the wrong place.
And that’s exactly where governments are taking us – the Wrong Place. George Osborne and his kind believe in a fantasy land where anyone can consistently spend more than they have coming in and never go bankrupt. A place where there is always people who are happy to lend you money even if you never pay it back. A place where you can print money indefinitely.
A wise man once said:
“The governments alone are responsible for the spread of the superstitious awe with which the common man looks upon every bit of paper upon which the treasury or agencies which it controls have printed the magical words legal tender. Government interference with the present state of banking affairs could be justified if its aim were to liquidate the unsatisfactory conditions by preventing or at least seriously restricting any further credit expansion. In fact, the chief objective of present-day government interference is to intensify further credit expansion. This policy is doomed to failure. Sooner or later it must result in a catastrophe.”
This was written in 1949 by economist Ludwig von Mises. By catastrophe he meant a state of irremediable economic ruin. And the ‘later’ is looking like it’s going to be within our life time.
Last year George Osborne presented his Autumn Statement as “my plan to see Britain through the storm”. This is nonsense. There’s no way ‘through’, no chance of survival for the monetary system in its current form. Whatever comes out the other end (whenever that might be) will be different. How different will probably depend on George Osborne and those like him, which is not comforting to say the least given that he appears incapable of identifying that the institution he has chosen to join has consistently failed in the past to act in accordance with the most basic principles of sound money – and continues to do so.
It’s like a suspension bridge where the load-bearing capability of the deck has been miscalculated. Eventually the deck and everyone on it will plunge into the water below. The new bridge must be different, which is to say it must be fit for purpose, in order to stop the same thing happening again at some indeterminate time in the future. But this analogy is only partially valid because economies are not like bridges, they cannot be ‘tinkered’ with to make them work ‘better’ or ‘normally’, they are more like ecosystems. Economies and ecosystems are defined by the complex network of interactions among the life forms that constitute them. Humans do attempt to manage ecosystems, but just like these attempts are ultimately humanistic in that they pertain to the philosophy of humanism, so governments’ attempts to ‘steer’ economies are government-istic because they necessarily pertain to the ideology of statism. The paradigm of ecosystem management takes as a given our right to control nature and justifies this with the claim that effective stewardship mandates control. The paradigm of statist assumes the right to control people’s economic affairs and justifies this with the claim that it is serving the ‘greater good’. Just as managing ecosystems serves the needs of humans, so to does controlling people’s economic affairs serve the needs of all those who work for government – and their cronies. It’s not a big conspiracy, it’s just what was bound to happen.