The General Election is turning into Alice in Wonderland

No one has yet told the truth to the electorate about the depth of hopelessness in our national debt problem. The election is turning into the Mad Hatter's Tea Party, a bidding war for your votes with your money, writes former UKIP MEP Godfrey Bloom

Living in fantasy land: our leading politicians
Godfrey Bloom
On 20 April 2015 09:27

The pending May election is beginning to take on an Alice in Wonderland quality. It is generally undisputed that in the western democracies the electorate go to the polls to judge current or future administrations on the handling of the state's finances.

Naturally there are many other issues which hold the attention of the nation, but first and foremost is the nation's budget because ultimately that effects businesses and families.

For better or worse, worse usually, the nation raises money through taxation or borrowing and more recently printing, explained as quantitive easing by politicians and central bankers, or explained as counterfeiting by the police if the citizen indulges in it.

Most of these western democracies are now indebted to the extent that the numbers are beyond the human imagination.

According to a report this year from McKinsey, global debt since the Great Recession began in 2007/8 has risen by an astonishing $57 trillion.

Even after a career in the city managing money in some format or other for over 40 years, these numbers are outside my comprehension never mind that man on the proverbial Clapham omnibus, or his opposite number across the pond, Joe Sixpack.

Yet apart from minor conflagrations we have enjoyed peace in these countries for 70 years. How is it possible to have run up these amazing debts? Where has all the money gone?

Here in the UK -- where Q1 government debt stood at £1.6 trillion, or 82 percent of GDP -- do we enjoy a perfect NHS, education system, public transport infrastructure, road network, police service or armed forces?

Of course not. In fact they are pretty dire, aren't they? To the point people are prepared to pay twice for the same services. Private health, schooling and security flourishes. Beds or desks in the state sector go unclaimed as people buy out of the state system. What has gone so badly wrong?

Although the government spends not far short of 50 percent of GDP, the reason everything the state runs is inefficient is two fold: it is run by amateurs and its customers are locked in; and only the moderately wealthy can avoid the gravity of the state black hole.

In order for the government to perpetuate this extraordinary system of running the nation's finances people and businesses need to create wealth.

Society appears to want the state to provide this myth of cradle to grave protection but deliberately won't face the reality of how it is supposed to be funded.

This is manifesting itself in the continued absurdity of the meaningless election ritual. The first past the post system gives the UK, and indeed the USA a red or blue choice. Yet with an electorate heavily dependent on government largesse people quite naturally are hostage to being bribed with their own money.

The electorate therefore will vote for an administration which will either give them the most in freebies, or steal the least of their wealth: a constant battle between the haves and the have nots, mixed with the ever growing number of those who thrive on fat cat salaries in the public sector.

Interestingly none of these issues have been discussed so far. It has just been the usual bribe campaign with competing promises from parties who will somehow magic money out of the system for another 5 years. This is all compounded by a media which is economically illiterate, led by the BBC, itself a publicly funded anachronism.

No one has yet told the truth to the electorate about the depth of hopelessness in our national debt problem.

The IMF hinted at it last week: it is impossible for us ever to repay the national debt. To do so would mean cutting deficit spending to zero, not pathetically cutting it from £100billion to £80 billion. Somebody for God's sake buy the chancellor a pocket calculator.

Incidentally, include private funding initiatives and public pension liabilities in the national figures in accordance with International accounting standards and the debt is 160 percent of GDP, about the same as Greece.

So when the leading politicians come on your screen in the next couple of weeks, if they don't address these problems they are either deceitful or just plain thick. I suspect a bit of both.

Godfrey Bloom sat as a member of the EU Economic Monetary Affairs Committee 2009/2014. He had a varied City career over 35 years which included winning prizes for managing fixed interest  investment funds. He is a member of the Mises Institute, Resident Author for Libertarian Alliance, and popular speaker on the international economic circuit. His recent book is A Dinosaur's Guide to Libertarianism, available on Amazon

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