The OECD published the financial balance sheets of its member states from 2007 to 2014 this morning. I have not, of course, had time to review all this data as yet but this snapshot for the UK government is telling (page 311):
The bottom line (quite literally) is this: in 2007 the government had negative worth of £495 billion. Now that sum has risen to £1,477 billion, an increase of £982 billion from 2007 and of £618 billion from 2010.
At the same time note this set of balance sheets for UK households and non profit institutions servicing them:
Again the bottom line is key: household net worth (which we know to be very concentrated in the hands of a small part of the population) grew significantly over this period, from £2,860 billion in 2007 to £4,497 billion (£4.5 trillion) in 2014, or by £1,637 billion in al, with £1,329 billion of this being post 2010.
What can be concluded? I suggest three things. First, Conservative led management of the government's finances has been exceptionally poor.
Secondly, there has been a massive transfer of wealth from the state to the private sector during this period: austerity has paid handsome returns to the UK's wealthiest people.
Third, the case for redressing his with wealth taxation is very large indeed.
And all of this is before property is taken into account.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Would you count the late Michael Meacher whom espoused left wing politics all his political life and yet was worth £4 mil (making him easily one of the if not most well of Labour MP?
So?
Haven’t you been advocating (massively) increased borrowing to fund public spending – what would have happened to the net government wealth in lieu of all that borrowing?
Tax revenues would have increased so net government worth would have increased as well
Tax revenues would have increased by more than the debt?
That’s pretty special borrowing…
Have you heard of the multiplier effect?
Just for you Stuart:-
http://bilbo.economicoutlook.net/blog/?p=34200#more-34200
http://bilbo.economicoutlook.net/blog/?p=34204
http://bilbo.economicoutlook.net/blog/?p=34214
The Neo-Liberal monetary and economic ideas you have in your head are mostly made-up fantasies to support a super-rich oligarchy.
Two points:
1) I presume that the second table doesn’t include the net worth of non uk domiciled households and other private sector entities who have benefited directly from the british economy over this period eg. non doms, foreign property investors etc. So potentially, this underestimates things quite a lot.
2) One worry is that this is not a temporary phenomenon that is only going to be experienced while austerity is happening, but rather than once austerity is over (I am defining austerity very narrowly in terms of measures to deal with the defecit) then the impact of the austerity measures will end up perperuating this kind of thing in perpetuity. (I didn’t express myself very well on that last point but hopefully it is graspable).
Adam
Take all the numbers with a pinch of salt: macro data is always wrong (all accounting data is always wrong). It is trends that matter
Non doms won’t change that trend that much
Richard
I don’t understand your point. The government’s net position declined, because it’s been issuing more and more bonds. Obviously. Yet you advocate that they should issue more bonds, which would make the government’s net position worse. Your casual references to the multiplier effect are unhelpful, because the ME is either an illusion or severely limited — there’s a large literature on this piece of Keynesian dogma, by the way.
It’s position declined because it spent without investing
And the IMF now think the multiplier can be well over 2
So shall we talk about facts here?
The IMF is wrong about many things – eg the post-Brexit crash that never happened.
You think we have the data to assess that as yet?
This discussion of austerity reminds of the char between two economists where the ‘progressive’ one is munching a bag of crisps. He says “these taste nice”
His neo-liberal colleague asks “Compared to what?”
The progressive replies “Compared to crisps that I do not like”