The Truth About The Economy

Tuesday 14th April

We are in the middle of an election and all the parties are concentrating on the Economy.  They are all parading their policies, infinitesimal differences in wording but they are all promising the impossible, that they will balance the books without hurting any of us at all; no extra taxes, no swingeing cuts – it will all be done by magic.  And if we still had a decent dollop of inflation magic would have happened, or if we had a huge rise in GDP and productivity.  But that aint that likely either.  The truth about the economy is that actually Government doesn’t affect it very much at all.

The recession was a worldwide calamity, and Labour are blamed for crashing the car – unfortunately it was out of control traders mostly in America who were in the driving seat.  And Osborne has engineered a recovery, which would have happened anyway and possibly far sooner had there not been so much talk of austerity.  Governments can make us feel better by tax cuts or worse by spending cuts, but whether these actually affect the economy is debatable.  The economy is far more driven by international events which are far out of control of politicians than they would like to admit.  The whole world economy is driven by Debt.  The rise in living standards since the War has happened because Governments have borrowed wildly, as have companies, as have individuals.  Most of us older people have benefited by the rise in house prices and not by any financial acumen, or even hard work or saving.  And it has been at the cost of the younger generation who have become even more indebted to fuel our pensioner spending frenzy, which of course may help the economy in a strange obscene way.  The truth about the economy is that nobody has any control, not Governments certainly or Central Bankers or large corporations.  It is like the weather, influenced by hundreds of small actions all over the world and very unpredictable over any significant length of time.  Nobody saw the financial crash coming and nobody will see the next one, even our supposedly wise politicians….