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Deficit Target Met, Is Austerity Vindicated?
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Is it worth it? Public services are presently not fit for the name, and many councils are being forced to run below operating costs. This has serious implications for standard of living and general long-term wellbeing in the UK.
Unintuitive as it may seem, it is not unusual or even undesirable to have a certain level of structural deficit in a modern economy. Granted, of course, this can get too high - as it did in the UK as a result of the 2008 bailout (not "overspending" as is often claimed) - but it's simply not realistic to expect a modern economy with a health system, pensions system and disability support system to run a surplus for a prolonged period of time without those things becoming dysfunctional, as they are now.
So yes, the target has finally been reached. I am not sure the cost has been worth it, though. I would prefer to live in an economy with a reasonable amount of structural deficit and keep public services functional. Because if they aren't functional, then all money spent on them per se is effectively wasted.
Unintuitive as it may seem, it is not unusual or even undesirable to have a certain level of structural deficit in a modern economy. Granted, of course, this can get too high - as it did in the UK as a result of the 2008 bailout (not "overspending" as is often claimed) - but it's simply not realistic to expect a modern economy with a health system, pensions system and disability support system to run a surplus for a prolonged period of time without those things becoming dysfunctional, as they are now.
So yes, the target has finally been reached. I am not sure the cost has been worth it, though. I would prefer to live in an economy with a reasonable amount of structural deficit and keep public services functional. Because if they aren't functional, then all money spent on them per se is effectively wasted.
"....but it's simply not realistic to expect a modern economy with a health system, pensions system and disability support system to run a surplus for a prolonged period of time without those things becoming dysfunctional, as they are now."
So basically then we must suffer ever increasing levels of public debt in order to finance things that tax revenues cannot meet. Servicing these debts will cost taxpayers £41bn next year. This is over £1,000 for every adult in the country. It is more than is spent on Public Order and Safety, more than is spent on Housing, more than is spent on Transport and only a little less than is spent on defence.
The "certain level of structural deficit" you describe as acceptable, Kromo, is nothing of the sort. It is an enormous burden on the public purse and is only manageable at present because interest rates are unrealistically low. When they return to proper levels the debt will be unsustainable.
Having said that, the "austerity" which the Shadow Chancellor criticises is nothing of the sort. I have seen no "families struggling to feed their children". I have seen lots of families heading off on foreign holidays (during term time) and lots more making for McDonalds, Nandos and KFC whilst out shopping. But I haven't seen any struggling to feed their children, especially when, if they have two children,they get £33 per week to help them do so.
So basically then we must suffer ever increasing levels of public debt in order to finance things that tax revenues cannot meet. Servicing these debts will cost taxpayers £41bn next year. This is over £1,000 for every adult in the country. It is more than is spent on Public Order and Safety, more than is spent on Housing, more than is spent on Transport and only a little less than is spent on defence.
The "certain level of structural deficit" you describe as acceptable, Kromo, is nothing of the sort. It is an enormous burden on the public purse and is only manageable at present because interest rates are unrealistically low. When they return to proper levels the debt will be unsustainable.
Having said that, the "austerity" which the Shadow Chancellor criticises is nothing of the sort. I have seen no "families struggling to feed their children". I have seen lots of families heading off on foreign holidays (during term time) and lots more making for McDonalds, Nandos and KFC whilst out shopping. But I haven't seen any struggling to feed their children, especially when, if they have two children,they get £33 per week to help them do so.
//The "certain level of structural deficit" you describe as acceptable, Kromo, is nothing of the sort. //
It's a perfectly normal part of modern policymaking. You cannot realistically expect to run a pensions service, a health service, and disability support functionally without incurring some level of deficit. It makes more sense to plan for and control deficit spending than it does to pretend that pigs can fly.
It's a perfectly normal part of modern policymaking. You cannot realistically expect to run a pensions service, a health service, and disability support functionally without incurring some level of deficit. It makes more sense to plan for and control deficit spending than it does to pretend that pigs can fly.
>You cannot realistically expect to run a pensions service, a health service, and disability support functionally without incurring some level of deficit.
I'm not sure why. If the cost of servicing debt is £41 billion pa that seems a very high price to pay- if it could be halved for example it would go a long way to tackling some of the issues you raise
I'm not sure why. If the cost of servicing debt is £41 billion pa that seems a very high price to pay- if it could be halved for example it would go a long way to tackling some of the issues you raise
Some of the problems we have with old age care (I'm not going to say the NHS as I think it is over funded but poorly run) that could be addressed with an injection of cash could be paid for out of the money not spent on debt repayment. That of course means paying off the debt and not acquiring vast sums more.
So getting the national debt and resultant repayments down is of paramount importance. More debt will never be paid of so more debt is needed to service the ever growing need for more money.
On a much smaller scale, I had a friend who always got a provy loan in December to pay for a wizzbang Christmas. Each year she had to get a larger loan to finish paying off the previous one even before the increase in prices from the previous year. It was only when the debt was so large she couldn't afforded cHristmas that she finally tried to pay it off without another loan.
So getting the national debt and resultant repayments down is of paramount importance. More debt will never be paid of so more debt is needed to service the ever growing need for more money.
On a much smaller scale, I had a friend who always got a provy loan in December to pay for a wizzbang Christmas. Each year she had to get a larger loan to finish paying off the previous one even before the increase in prices from the previous year. It was only when the debt was so large she couldn't afforded cHristmas that she finally tried to pay it off without another loan.
“The country is not governed based on what you, personally, have seen.”
Of course it isn’t. Because I haven’t seen something provides no proof that it does not exist. Indeed proving any negative is very difficult. So perhaps Mr McDonnell (or somebody else) could point us towards some examples of people “struggling to feed their children” (excluding, of course, those who have the funds to do so but prefer to spend them on something else). Also to be excluded are those who prefer to feed their children with expensive takeaway or convenience food. They may struggle but through ineptitude or idleness rather than their impecunious state).
Of course an ever increasing level of public debt is unsustainable. Schoolboy economics demonstrates why and explains the probable consequences. It is the duty of every government to ensure those consequences are not realised.
Of course it isn’t. Because I haven’t seen something provides no proof that it does not exist. Indeed proving any negative is very difficult. So perhaps Mr McDonnell (or somebody else) could point us towards some examples of people “struggling to feed their children” (excluding, of course, those who have the funds to do so but prefer to spend them on something else). Also to be excluded are those who prefer to feed their children with expensive takeaway or convenience food. They may struggle but through ineptitude or idleness rather than their impecunious state).
Of course an ever increasing level of public debt is unsustainable. Schoolboy economics demonstrates why and explains the probable consequences. It is the duty of every government to ensure those consequences are not realised.
The running of a modern national economy is, I would put to you, rather a complicated affair than "schoolboy economics." If you want to have a state that has a pensions fund, a public health service, and care for the disabled, then you have to choose between having those things or running long-term surplus. There is also a world of difference between a small deficit and a vast, uncontrollable one. The latter is a problem - one inflicted on Britain's public finances by the colossal bailout a decade ago. The former is not. Or, isn't as much of a problem as eschewing public services altogether or rendering them dysfunctional as the government has.
"If you want to have a state that has a pensions fund, a public health service, and care for the disabled, then you have to choose between having those things or running long-term surplus."
No you don't. You have to choose between funding them properly without excessive borrowing or not having them. One method of funding them without borrowing is to prioritise the use of the funds you have. This is not done properly in the UK. MPs need to decide, for instance, whether they want to donate £13bn pa in foreign or use the same sum to fund the items you mention. Another method is to increase taxes so that people pay for what they consume now rather than borrow the money and leave future generations to foot the bill. There are 101 ways to avoid excessive borrowing and they should all be explored before squillions of pounds are borrowed to fund things we cannot afford under the current model.
No you don't. You have to choose between funding them properly without excessive borrowing or not having them. One method of funding them without borrowing is to prioritise the use of the funds you have. This is not done properly in the UK. MPs need to decide, for instance, whether they want to donate £13bn pa in foreign or use the same sum to fund the items you mention. Another method is to increase taxes so that people pay for what they consume now rather than borrow the money and leave future generations to foot the bill. There are 101 ways to avoid excessive borrowing and they should all be explored before squillions of pounds are borrowed to fund things we cannot afford under the current model.
Costs of social programs are inherently difficult to plan for. People live far longer now and have fewer children than the architects of Britain's health and pensions system could ever have expected. You cannot predict how many people will become disabled or sick, yet the duty to cater for them remains. You can make all the "savings" on foreign aid that you want - or scrap it entirely. It will not make even the slightest dent in the pensions budget. Modern states are inherently expensive, and there aren't any shortcuts. "Efficiency" is not magic, and all the pushing in the world will not move mountains. You cannot run a modern state well and expect to have a long-term surplus of payments. It is a fantasy. (Unless, for example, you have a tiny population and vast amounts of oil wealth to spend on your citizens as Saudi/Norway do).
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