4,800,000,000,000
If you stack £50 notes on top of each other, one after the other, the stack would need to be over 6000 miles high to achieve that amount. If you threw £50 notes out of a window at a rate of one every second, it would take you over 3000 years to reduce that stack to zero. Martin Durkin came out with various neat little analogies during Britain’s Trillion Pound Horror Story, like, for example, Chancellor Osborne’s spending cuts being the equivalent of trying to empty a full to over-flowing bath, which is still filling from the taps, with an egg cup. He also came out with some plain statements of fact, like, the debt for every man, woman and child in Britain is £77,000, and growing, like, if you sold off every house in Britain that wouldn't pay it.
...
He also tells us in simple terms how we got into this position what with politicians buying votes, spending on crap, borrowing from the future to saddle future generations with debt. By politicians, who all agree that monopolies are a bad thing, creating state monopolies, like one of the biggest on Earth, the NHS. And he has a neat counter to the claim that any other option would lead to in-it-for-profit medical organisations. Do we refuse to buy our next car from Toyota, our next flat screen from Samsung or our next loaf of bread from Asda because they are all in it for the profit? Would we instead prefer state-manufactured products like the wonderful stuff produced by the soviets?
Of course, the Keynesians, Guardianistas and other daft socialists would claim, ‘But it’s not that simple!’ It is. You don’t spend what you haven’t got, and you don’t keep borrowing when you’re already heavily in debt. Simples.
Another target is welfare, the dole, how we are paying people to sit on their arses and remain in poverty. Last year the welfare bill was larger than the tax collected, which is unsustainable madness. Durkin tells us that the public sector in Britain is now bigger than the private sector and is a bloated parasite sucking up wealth, killing its host. If this continues the money will die and, really, before we get out of that there will be blood on the streets.
But there’s a way out and it is quite simple. Slash the public sector by half, make welfare a limited net and not a lifetime one, privatize the NHS and get rid of all those non-jobs because, when the figures are totted up, all those state jobs we regard as essential are filled by about 2 million employees, whilst on top of them are 5.5 million bureaucrats. Slash taxes to 20%, flat, nothing else, and paid only by those earning above something like £15,000 a year. Don’t, for example, tax someone on £15,000 then feed the tax back to them in benefits after the pointless bureaucracy created for the purpose has taken its cut. All of this would instigate an almost immediate regeneration, as it did in Hong Kong, the tiger economies and China (which incidentally has a public sector about half the size of Britain’s).
It’s not going to happen, however. Because the public sector is now 53% of the economy, and most of those working in it are not going to be turkeys voting for Christmas. It’s also the case that a large proportion of the population doesn’t have a clue about economics, and have thought processes that end at ‘money from the government’ and cannot stretch to ‘but the government has to get its money from somewhere’. Many don’t realise that every time the government does some ‘quantitative easing’ it’s actually taxing them yet again. Many don't understand that whilst money will never run out, it can soon enough end up being valueless.
I rather think that sitting in our nice warm houses, with our shiny cars outside, with our TVs, computers and mobile phones, with our frequent trips to the supermarket and regular purchases off the Internet, we’re living in a false reality. It’s like one of those disaster movies in which you first see the cast of characters living their daily lives before things turn nasty. The asteroid is drawing closer, the terrorists are finishing the bomb wiring and loading their weapons, the tsunami is just starting to rise over the horizon or, being more relevant and prosaic in our case, the bailiffs are starting up their vans.
I wonder if now is the time to load the loft with canned goods, buy a generator and stock up on diesel, and then inquire of the local hoodies where it might be possible to buy an AK47. I wonder if right now is the time to take out any savings we have and turn them into Krugerrands, before Sterling turns into a poor and slippery substitute for Andrex.
If you stack £50 notes on top of each other, one after the other, the stack would need to be over 6000 miles high to achieve that amount. If you threw £50 notes out of a window at a rate of one every second, it would take you over 3000 years to reduce that stack to zero. Martin Durkin came out with various neat little analogies during Britain’s Trillion Pound Horror Story, like, for example, Chancellor Osborne’s spending cuts being the equivalent of trying to empty a full to over-flowing bath, which is still filling from the taps, with an egg cup. He also came out with some plain statements of fact, like, the debt for every man, woman and child in Britain is £77,000, and growing, like, if you sold off every house in Britain that wouldn't pay it.
...
He also tells us in simple terms how we got into this position what with politicians buying votes, spending on crap, borrowing from the future to saddle future generations with debt. By politicians, who all agree that monopolies are a bad thing, creating state monopolies, like one of the biggest on Earth, the NHS. And he has a neat counter to the claim that any other option would lead to in-it-for-profit medical organisations. Do we refuse to buy our next car from Toyota, our next flat screen from Samsung or our next loaf of bread from Asda because they are all in it for the profit? Would we instead prefer state-manufactured products like the wonderful stuff produced by the soviets?
Of course, the Keynesians, Guardianistas and other daft socialists would claim, ‘But it’s not that simple!’ It is. You don’t spend what you haven’t got, and you don’t keep borrowing when you’re already heavily in debt. Simples.
Another target is welfare, the dole, how we are paying people to sit on their arses and remain in poverty. Last year the welfare bill was larger than the tax collected, which is unsustainable madness. Durkin tells us that the public sector in Britain is now bigger than the private sector and is a bloated parasite sucking up wealth, killing its host. If this continues the money will die and, really, before we get out of that there will be blood on the streets.
But there’s a way out and it is quite simple. Slash the public sector by half, make welfare a limited net and not a lifetime one, privatize the NHS and get rid of all those non-jobs because, when the figures are totted up, all those state jobs we regard as essential are filled by about 2 million employees, whilst on top of them are 5.5 million bureaucrats. Slash taxes to 20%, flat, nothing else, and paid only by those earning above something like £15,000 a year. Don’t, for example, tax someone on £15,000 then feed the tax back to them in benefits after the pointless bureaucracy created for the purpose has taken its cut. All of this would instigate an almost immediate regeneration, as it did in Hong Kong, the tiger economies and China (which incidentally has a public sector about half the size of Britain’s).
It’s not going to happen, however. Because the public sector is now 53% of the economy, and most of those working in it are not going to be turkeys voting for Christmas. It’s also the case that a large proportion of the population doesn’t have a clue about economics, and have thought processes that end at ‘money from the government’ and cannot stretch to ‘but the government has to get its money from somewhere’. Many don’t realise that every time the government does some ‘quantitative easing’ it’s actually taxing them yet again. Many don't understand that whilst money will never run out, it can soon enough end up being valueless.
I rather think that sitting in our nice warm houses, with our shiny cars outside, with our TVs, computers and mobile phones, with our frequent trips to the supermarket and regular purchases off the Internet, we’re living in a false reality. It’s like one of those disaster movies in which you first see the cast of characters living their daily lives before things turn nasty. The asteroid is drawing closer, the terrorists are finishing the bomb wiring and loading their weapons, the tsunami is just starting to rise over the horizon or, being more relevant and prosaic in our case, the bailiffs are starting up their vans.
I wonder if now is the time to load the loft with canned goods, buy a generator and stock up on diesel, and then inquire of the local hoodies where it might be possible to buy an AK47. I wonder if right now is the time to take out any savings we have and turn them into Krugerrands, before Sterling turns into a poor and slippery substitute for Andrex.
27 comments:
Well that's cheered me up this morning :)
I'm just glad I shaved before reading it or my razor would have looked rather tempting!
I thought you were going to slant more to the scientific instead of political?
"Of course, the Keynesians, Guardianistas and other daft socialists would claim, ‘But it’s not that simple!’ It is. You don’t spend what you haven’t got, and you don’t keep borrowing when you’re already heavily in debt. Simples."
You wouldn't take out a mortgage to buy a house, then? And if you did have a mortgage, you wouldn't (say) then take out a loan to buy a car?
"It’s also the case that a large proportion of the population doesn’t have a clue about economics"
Indeed.
It is depressing, Bob.
Adam, I wouldn't take out a mortgage or loan that I couldn't pay for in my lifetime and expect my children to pay for it in theirs (if I had any children). And, really, equating the national debt to a mortgage on a house is very misleading, since at least the next generation would have a chance of ending up with a house. A better analogy is me having a lifelong piss-up and expecting the next generation to pick up the tab. Is that simple enough for you?
Neal: your post is predicated on the idea that it is both immoral and disastrous to use future earnings to leverage present benefits. It is neither. The global economy is predicated upon it, and has been, Labour or Tory, left or right, Keynes or Goldspan, for over a century now. Individually speaking, it's something we all do, all the time, and it results in an increased standard of living, economic growth and prosperity.
"Is that simple enough for you?"
Too simple, frankly: simplistic.
Stimulating the economy is not a piss-up; it's a calculated attempt to avoid a 1920s-style depression. Your simplistic approach (destroy the welfare state, slash taxes, throw many millions jobless on the streets to starve) would result in mass misery, and the blood you mention.
You talk in your first paragraph about how big the numbers are; but the numbers are relative not to numerical population but national wealth. If I take out a mortgage, what's relevant is my income, not the number of people in my family ('but this £300,000 mortgage is £100,000 a person! How can little Jimmy ever pay that -- he's only five!'). Britain, though small geographically and in terms of population, is the third (or by some metrics, the fourth) wealthiest in the world. We can afford this stimulus package.
On the NHS, we may have to agree to disagree. Buying health is not like buying a car: making a one off purchase from amongst a variety of choices. Soviet cars were crap, but Soviet healthcare used to be pretty good, as Cuban healthcare (a better example, maybe) still is. State systems aren't the only ones with cripplingly large bureaucracies: the US Health Insurance companies, who are nothing more than middlemen between health service providers and paying patients, syphon vasts sums out of the system into their coffers. US private healthcare, pre-Obama, wholly private, is nearly twice ours, as a proportion of GDP. To put it in simple terms, since simple is what you like, that's pretty inefficient.
Bloody hell! Apologies for multiple posting, there. Not sure how that happened.
Multiple posts deleted, Adam.
Thanks.
Adam using 'future earnings to leverage present benefits' did kick in about a century ago, to pay for the First World War. That, and doing the same thing in the second, really worked didn't it. Oops, there went the British Empire. This kind of approach beyond war time is simply not sustainable. Yes, it may take decades, even a whole century for it to kill the momentum of an economically healthy society, but it will.
The simplistic approach, incidentally, was not mine, but from the documentary. Borrowing can stave off pay-up time, it can even ameliorate it to a certain extent, but not on this scale.
You talk about the debt being relative to national wealth. To stretch your mortgage analogy a little further, what we are doing now is borrowing even more to pay that mortgage. We are not paying it off.
Yeah, we'll agree to disagree on the NHS
And, Adam, I hope you're right and the likes of Durkin are wrong, else we'll be seeing the British economy bursting like the subprime bubble.
Borrowing or printing works until it doesn't. Seems the human race is just bound to do the same stupid mistakes over and over again.
When total debt reaches certain levels the markets become rigid and countries/empires falter. The servicing of the debt just kills everything. Rome did it, UK empire did it, Weimar Germany did it, Argentina did it.. list goes on.
Now with their QE bullox they have and are pushing all commodities up making everyday necessities and energy more expensive and compressing the margins of the manufacturing companies. All in order to boost the markets and getting people to spend money instead of saving it.
Like you say Neal, it's a tax, a back-door tax. Hitting low and middle class hardest. If that is not evil I don't know what is.
There was a brilliant interview yesterday on CNBS (US), which although not so much about debt and more about investing pretty much laid out what broadly has happened the last 15 years.
http://plus.cnbc.com/rss…playershare (29 min)
Link compressed, trying again (sorry).
http://plus.cnbc.com/rssvideosearch/action/player/id/1640401359/code/cnbcplayershare
I haven't got the player for that, Xanares.
And now, for some reason, half the url has disappeared.
While our NHS is bloated and could do with some streamlining, you have to be careful comparing it to other countries, like the US or France.
If you think we have problems, they are nothing compared to the US, which has a private system. US health care is at the moment 16% of GDP (2008) and climbing, versus the UK 8.2% (2008) and yet 15% of the US population has no health insurance and additional 35% is under insured.
http://en.wikipedia.org/wiki/File:International_Comparison_-_Healthcare_spending_as_%25_GDP.png
Health care costs are referred to into in half the bankruptcy. Sorry for use wikipedia, but I can't scan the Economist in.
To talk about just slashing government is, to put it simply destructive without a solution going forward. What do you propose that x million people do, going forward? Do you expect Business just to whistle up x million jobs, so the job less total doesn't just sky rocket and leave families of working people without means to feed themselves? There is always a cause and effect.
Last time I looked you wrote sci fi novels and hadn't changed your profession to an econmist? As you or someone else said, a lot of people don't understand economic's.
Finally please lets not use TV programs as a guide, since they always have an "Angle" and have to be pitched at a interlectual level of a grapefruit.
PS - Please don't have an asteriod fall on my head in the next book :)
It is probably even worse here in Ireland Neal.
We have a government that clung to power for the last 13 years by buying votes. They bought these votes by being utterly irresponsible and creating an unsustainable amount of public sector jobs (not at the service front line levels of course, in the bureaucratic layers instead) while fanning the flames of what everyone clued-in could see was a property bubble to pay for these jobs. Credit was cheap so they continued to pay it forward. Everyone had jobs. The property developers and banks raped and pillaged like there was no tomorrow. The supposed regulators were in on it.
Anyone who tried to point out that we were digging a deep hole was basically drowned out by the ignorant majority with imbecilic shouts of: "But we have the most successful economy in the world".
The media bought into whatever bullshit the supposedly objective but in reality vested-interest-groups-controlled think tanks peddled them. The majority of the public simply do not understand the most basic of economic concepts, and anyway while this was unfolding they were more interested in the results of the game, or Pop Idol, or whether to put their new (bought on credit) gigantic flat screen in their main massively extended (bought on credit) primary mansions, or recently purchased (bought on credit) holiday mansion. Of course, all of this seemingly endlessly available cheap credit was being serviced by jobs either created irresponsibly by the government in the public sector, or directly involved in the bubbling construction industry.
It was not a happy time for the minority of people like me that could see what was happening.
The bubble burst, the construction industry jobs vanished, the credit vanished, and now we have an unmanageable deficit that no democratically elected government could possibly deal with and remain in power. (Vote for me – I will tax the shit out of you, and slash your public services to sub-third world level – Yay!).
Our public and civil servants are corrupt and inefficient providers of services that are frankly appalling, and ironically also beyond our means financially. Our government is not really interested in anything other than getting re-elected, and exploiting the system for their own personal gain in whatever ways they can.
Public sector reform is impossible because the public sector is running the public sector (as you have pointed out Turkeys do not vote for Christmas), and there is no “undo button” that would return power to the government. If any government attempts reform, then the public service make damned sure that the weak, the vulnerable and the marginalised are the first to suffer. This has an effect. People's elderly and infirm relatives die in preventable ways and under scandalous circumstances. There is a huge backlash. Talk radio is deluged with people complaining. Public service representatives actually join in the chorus, explaining that it is all the government's fault for cutting their budgets. The government try to explain that the money is not there but nobody wants to hear that, and everybody loves to hate the government (although to be fair it doesn't help that they invariably are a bunch of pricks). The government ends up being despised, and will not get re-elected. When the replacement government inevitably take over, the public service stare them in the eye and ask them if they are feeling lucky! I find this very frustrating, as once the dust has settled, the replacement government still has to face the same problematic public service. Only now the replacement government has a fresh example of the type of consequences it can expect to face if it tries to take on the public service.
The bond markets have finally figured out that we cannot fix our deficit and now we are truly, irrevocably Fucked (yes with a capital "F").
The regulator failed. The government failed. The banks failed (metaphorically and literally). The media failed. We failed.
But paying non-producers to sit on their arses shuffling paper is not exactly win win either, Skar, as we are finding out. We need industries that produce wealth, not a big fat state that only knows how to piss it up the wall.
I think Durkin's take on it was that once you cut tax and stop saddling people with the red tape, they start creating wealth and jobs, which the state sector employee can take up. And of course you would have to ease into that scenario slowly and carefully. The only problem of course is that those who have been sucking on the state teat for so long are probably underqualified and don't know how to work.
No, I'm not an economist. I just get my take on reality from having been self-employed for a quarter century. And yeah, I know the Durkin thing was polemic, but that doesn't make all its points wrong.
Same story, Duracell, with different degrees of severity in Britain, all across Europe and in America. I guess the problem with democracy is that people will always vote for 'more for me' even when there's no 'more' available.
The state needs to be smaller, in fact the option of providing more needs to be taken away from it. Let me quote that hate figure of the left, James Delingpole:
Wherever you go, even if it’s somewhere run by a notionally “conservative” administration, the malaise you will encounter is much the same: a system of governance predicated on the notion that the state’s function is not merely to uphold property rights, maintain equality before the law and defend borders, but perpetually to meddle with its citizens’ lives in order supposedly to make their existence more fair, more safe, more eco-friendly, more healthy.
And always the result is the same: more taxation, more regulation, less freedom. Less “fairness” too, of course.
Every organisation whether it's government or big business has fat. It's just that business can trim the fat when needed without being asked to justify it, too often.
Regarding the battle on red tape, of course there are improvements that could be made, but if you currently view the UK's rating for "Doing Business", it's 4 out of about 200.
http://www.doingbusiness.org/data/exploreeconomies/united-kingdom
(Notice the getting credit ;) rating, which I thought was tad ironic)
The website rates enconomies.
I don't deny that the points may be valid, but they are always going to be simplistic view. Because people never want the detail, they just want the bullet points, without considering the ramifications.
Damn I can't believe I posted on a topic like this .... need to get back to talking about the lintels in your house.
PS - Nudge any book signings coming up?
This was all very interesting and entertaining and everything but imagine my disappointment when it wasn't THE Adam Roberts.(insert frown smilie)
Does this not all go back to the de-linking of national currencies to gold reserves?
After all all this bullshit money came about when countries started printing money as and when they liked.
Then along came all these financial derivatives that used this monopoly money in weird and complex ways to make more money.
and then the whole sorry heap O'shite fell on its face and governments have to burn their own citizens on the pyre of capitalism to appease the "markets".
I'm with you Neal any good AK's going?
If only we had a PM with the balls to introduce reform like They did in NZ 1984.
here
I think that's very cool. Two very respected British sci-fi authors enjoying a debate about national debt.
I work for the NHS within a prison - I watch the end result of free money from the government - shoot up, steal stuff, reproduce. I have never met a group of individuals so entirely convinced of their entitlement. You don't get your Methadone one day - that's about £900 from the claims culture - the prisoner pursues his claim on legal aid then the settlement is paid for from the public purse. There is a whole parasitic industry thriving on this.
Huan, I've got an old book here about coin collecting. A bit that I read in that has always stuck in my mind. Historically, the currency of a kingdom or empire starts getting devalued just prior to its collapse. In Britain we stopped minting sterling silver coins in 1920. But of course, as many would warrant here, that's too simplistic.
"imagine my disappointment when it wasn't THE Adam Roberts.(insert frown smilie)"
Indeed I am THE Adam Roberts!
Maybe your picture could be updated, Adam. I thought farmer Giles of Ham was visiting.
@Bascule:- You CANNOT be talking about Lange!?! Devalued NZ currency in his first week in office, and increased the cost of the useless frigates (which we are still paying for) from Aus by the same amount! Incredulous!!
A world famous economist (so he is qualified, and not simplistic) recently was quoted as saying "Governments first borrow internally, then externally, then resort to inflation. Then they collapse".
Point of order. If SF authors can't think of a better/idiot proof way of doing things (politically) then why are we paying you the big Euros?
Keith, to be entertained and to escape for a while the madness that surrounds you.
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