Comments on: Time to stop living beyond our means – and that means the government too

By: Derek

Derek — Mon, 19 May 2008 23:42:09 +0000

I have just returned from a buying trip to China. They are most definitely not immune to the credit crunch and US slowdown. Factories there are closing down left, right and centre. It’s possible that China’s commodity demand may subside, but it’s unlikely the Chinese government will publicise any setbacks their economy experiences.

Even having witnessed this I’m still pessimistic about inflation in the short to medium term, too many cost increases are already in the pipeline, literally and metaphorically. It’s not entirely clear that demand from high-growth economies is a complete explanation for soaring prices.

By: mikestallard

mikestallard — Mon, 19 May 2008 15:32:53 +0000

You make several important points:
1. Production of food: Here, in the Fens, mile upon mile of verdant greenery signals the demand (EU?) for biofuel. Hardly any other food can be seen. There is absolutely no chance of a reduction of the CAP (“Open Europe” this morning).
2. Production of manufactured goods/energy: why are 1/4 people out of productive work? What is being done about them?
3. Central Government is losing power fast to Brussels. We all know this. So why are the MPs getting more and more questioned about their expenses? Could the two things be connected?
4. And the bureaucracy, even down at Parish level, is stultifying. I am even told what textbooks to use to teach out of!
5. Taxation is at about the same as at the end of the Roman Empire or just before the French Revolution: dangerously high.
Meanwhile, we hear today of a mere couple of million pounds being squandered on teaching adults how to drink alcohol. (Sentence removed)

By: Neil Craig

Neil Craig — Mon, 19 May 2008 14:07:34 +0000

You are right about government living beyond its means. I don’t think individuals are as much. After all real, after tax, income has been static or falling for the last couple of years. The world economy is growing at 5% & despite all the claims about an international recession causing our troubles, it looks likely to continue doing so.

What we are seeing is, as you point out, commodity prices, rising, at least in terms of our own currency. However the world is continuing to produce more goods & human wealth will increase. What this suggests is that we are falling from being a country which produced things using cheap commodities to one rather lower down the technological food chain.

Paddy Ashdown on Question Time recently put the current fashionable political view that we are facing the end of cheap power, food & travel & must get used to it & regulate accordingly. This illiberal view was entirely wrong on all 3.

Food production is increasing & this will only accelerate with GM foods. Unlimited cheap power is available if we just let the market build as much of it as we want. Technologically airflight is getting cheaper (also safer & quieter) & it is only politics which could let Britain lose the position of having the world’s #1 airport & all the economic benefits that go with it.

In all 3 cases & several others the brake on prosperity is Britain & the EU’s government enforced Luditism often on the basis of government funded propaganda (the EU is the overwhelming funder of Friends of the Earth Europe who use their money to lobby for more restrictions as Mr Porrit of the Sustainable Development Commision, the BBC, the Carbon Trust etc etc use UK tax money to sell the same line).

If we were seriously to make growth rather than Ludditism our objective we could certainly match the BRIC countries (Brazil, Russia, India, China)

By: Tony Makara

Tony Makara — Mon, 19 May 2008 14:00:07 +0000

“The UK (and the US) has to shift some output into exports and import substitution. This will start to happen because of the weakness of both the dollar and the pound.”

This is very true. However it is going to be very difficult with such a reduced manufacturing and agricultural base. The more we can produce for ourselves, the less we need to be dependent on imports and with it the worry over currency depreciation leading to imported inflation whenever we cut interest rates. If we can produce goods in abundant supply we can keep prices low and fight off the lure of cheap foreign imports. This is particularly important as far as food production goes. What we need to import through necessity we should import, but where possible we should try to supply our own domestic market, especially with foodstuffs. We need to give manufacturing and agriculture special tax status and allow those that produce to operate at a lower level of taxation. After the years of neglect by the Labour government in favour of imports, British producers now need a business friendly Conservative government.