The U.K. is living beyond it’s means. We are spending more than we earn. The government is blowing money on welfare and other things.
National debt is huge and becoming more expensive to serice. Taxation as a source of funding is at it’s limit.
Rather than reduce expenditure, the ‘left’ have developed the spurious ‘borrow to invest’ argument. Heaven forbid they would agree on sensible or tough decisions. They just want to go down the ‘never never’ route……
It sounds attractive, does it not? We can access more dosh by borrowing it on legitimate grounds. Unfortunately the rationalisation is nonsense.
You could possibly borrow extra money for a toll bridge. But even then the (in that form generally) extra borrowing, will overall, increase the interest rate we pay on all our borrowing. Thereby making the economics ever more difficult.
But let’s assume the bridge is built, and lots of people use it. If it helps expand the economy that would be good. The toll revenue can pay back the borrowing, like a house mortgage, over a number of years. But if there is no more economic activity, and people just use the bridge as it is more convenient, they face higher living costs – the tolls – so are worse off.
If you are lucky, a new road or power grid can help expand the economy. There can even be a multiplier effect – the new road generates more journeys, which can then increase demand for fuel or vehicles and so on…… If the economy propspers, higher productivy, the return can exceed the borrowing cost, and we make money (growth!).
However, ask yourself what kinds of projects a socialist government is likely to prioritise?
Is it going to be ‘hard headed’ business investments – for example that might increase productity but reduce jobs (for example investment in robots, AI, and so on)?
It’s east to speculate the likely favoured projects.
Nationalisation – money borrowed to ‘buy back’ utililies and transport services. Under the dead hand of government bureaucracy they may perform worse than as regulated private sector monoplies. And certainly not generate extra revenue to repay the borrowing.
State subsidisation – nationalisation by another name, for ‘dead duck’ industries. Think of steel, ship building, the car industry. The money would please the trade unions, short term. But in fact of course it is being ‘pissed away’, with poor managers failing to turn round the businesses. Probably they are simply a dead loss, the end of a road……. And of course will not make the commercial return (profit) to repay the borrowing.
The left will try to argue that public sector investment, for example hospitals and schools, are good for the economy. However, productivity in the NHS appears not to be managed, so capital investment is just another ‘pot to piss in’, promising something that will never be delivered. So where would the revenue come from to repay the borrowing?
Mad Ed Millibrand would argue for ‘green’ investment. We have solar water and solar electricty at home – in sunny south spain – and if the installation costs are managed (ie DIY) it works well. By contrast, Ed proposes more wind generation, for example, when we already have to pay people not to generate too much electicity on windy days.
Clearly ‘green’ is akin to ‘kindergarten’. You need as a priority an enhanced ‘national grid to get electiricity where it is needed for AI centres and to meet the electric car strategy (which of course in itself is nuts). And of course what about nights and cloudy, windless, days? You need battery (or hydro-electric) power as backup.
So an incoherent ‘green’ strategy will not work, and not payback the borrowing. Such peole should not be trusted to borrow money on our behalf.
Let me finish with two examples. I assume Gordon Brown borrowed money to build two aircraft carriers. They may have been good for politics in Scotland. Were they good ‘investments’? Given the ongoing technical problems they were not a good technical project. We do not have enough support ships to escort them at sea.
So the ‘left’ that supports defence as a concept might spend money this way. But will they ‘make money’ to pay back the borrowing. Obviously not, it just makes us more indebted, and dependant on foreign lenders in the bond market.
The crowning glory is of course HS2. The totally gormless people involved in HS2 should not even be allowed to manage their own money, let alone borrow on our behalf. Their rhetoric about ‘cost benefit analysis’ is a complete joke – you might get to a city five minutes earlier, but does this have a collective value of ‘a billion.a year’? If we can’t manage projects we shouldn’t borrow to fund them. By all means blow our savings – wasted money – but don’t borrow more……..
Clearly HS2 is a disaster, over cost, over time, reduced specification. Covid showed you don’t need to travel, so the whole concept is to some extend out of date. Self driving coaches will probably be a real competitor. A relative just paid £334 for a day return rail ticket from Chester to London. HS2 will probably be more expensive, with just a fast ride from London to Birmingham?
What chance is there that it will make a good return on the investment, so we could repay the borrowing?
And you can imagine a left wing government ‘investing’ this borrowed money in ‘woke’ projects – extra ‘alternative’ toilets in government buildings for ‘non binary’ people. Buying pink coloured police cars. Building new prisons for those that elect, post conviction, to ‘change gender’. None of which of course will xzgenerate money to pay back the borrowing.
All of this course just gives an excuse to borrow more, to spend more,and the hell with the long term….. Maybe please the electorate at the next election, unless the problems come home to roost more quickly
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