It’s been another weekend of mad economic news from our government. We now low that some government departments are going to be asked to cut 40% from their budgets.
The logic of this manic cutting is almost impossible to fathom: there is none in any sane economic theory. In that case we have to assume that the coalition believes its own justifications.
The Coalition’s belief that that this process of cutting public sector jobs — with massive private sector knock on consequences — during a time of high and already rising unemployment will reduce the deficit makes no sense: I have shown that. But again, despite the absurdity of doing so, let’s assume that will happen.
And let’s also assume that, as the coalition predicts the size of government will shrink steadily but the size of the overall economy will increase despite that over coming years (even though, again, there is no reason to think that true). So from having the state represent in various ways around 45% of the current economy now let’s assume as the Coalition does that the state sector will shrink to below 40% of GDP and that when this happens GDP growth will pick up and a new equilibrium will be created.
I want to ask a really important question having made these assumptions, and it is this. What is it that the private sector is going to provide us with in the future which will make us so much better off than the public sector services we enjoy now do?
Try a few of these statements for size:
I want 20,000 fewer police because I want xxxxxxx
I want to get rid of all class room assistants because I want xxxxxxx
I want to get rid of home helps for the elderly because I want xxxxxxx
I want the poorest in our community to be unable to feed their children because I want xxxxxxx
Now what is xxxxxxx?
No one has ever told me. I’ve never even seen the question asked. And I genuinely don’t know what it is because I foresee no technology out there bar green energy that we really need. I see no massive technical advance likely to transform well-being that is crowded out by government activity now. But I quite candidly, know we can live with fewer mobile phones, fewer large cars, fewer plasma televisions and much else besides and be absolutely no worse off.
Put simply: I can see some in society need more of what society has to enjoy but I see no pressing need in society as a whole for more of the “stuff” that the private sector creates, having spent a fortune on advertising to tell us we want it. As a result I just cannot see the private sector now leaping forward to fill this gap in the economy that the government is planning to create. That’s why I am so sure that for every job it cuts there will be two people joining the unemployment register, the second being from the private sector.
Of course if someone could tell me what xxxxxx was I’d be happier with the Coalition’s claims. But I really don’t think anyone can, or will.
In which case the hole in the middle of the Coalition’s plan is revealed. And that hole is simply this: that they have no industrial strategy at all. And that’s a massive problem when you’re setting out to destroy employment with all the energy you can muster because the absence of that bit of the equation says that this is the road to ruin. And that, I fear, is the way we’re headed right now.