Economics - the art of fudging!

Every now and then I feel the need to go off on a pseudo political diatribe as if there aren't enough people out there doing the same thing at the moment.

First I will put my cards on the table and say that I am not a Conservative voter, never have and probably never will but who knows.... I am not much of a fan of the Lib Dems either and I think they will be the ones to suffer at the next election. Come the revolution etc. etc.

Right that's that out of the way and now you know where I am coming from you can either find another blog (as mine will be lefty hogwash or some such) or read on as you wish.

What is concerning me is tonight is the budget deficit. The present one in the UK is huge at the moment. The problem is how to deal with it. OK so far so good. Deficit = bad therefore dispose of it. OK we will all agree on that. I have a problem with austerity however. Well it's not much fun for starters. I dislike it though because no matter how you try and dress it up it always hits the the the least well advantaged the most. However you slice the pie if there is less of it the ones who rely on it are the ones who will have less of it. 

I have been reading a few web pages tonight, one of which purported to be from the IMF itself, stated that austerity measures are in fact usually detrimental. No surprise there really. 

Our current government are in the process of finding that out for them selves. The economy is about to head back into recession, the national debt is the highest it has ever been, they are cutting like mad and guess what nothing is happening. There is talk of the creation of a whole new class od people in the 18-24 range who will never find work.

So what is the answer? Promote growth. With growth comes extra government revenue in taxes. More taxes mean the gap between what we borrow and what we earn drops. With a prolonged period of growth our budget deficit may well become a thing of the past. 

So how to promote growth? One way is to spend on infrastructure. This means not just roads and railways but communications too. Invest in infrastructure now and that in itself will produce somne growth but as the economy picks up it will find it has the ability to conduct it's business better and faster.

The first project that come to mind is the high speed rail link to Birmingham. Unfortunately in many ways it represents poor return in my opinion for the money spent. All those billions for just a 20 minute saving. I once read a railway magazine article that maintained that that much time could be knocked off the London Glasgow  rail journey time just by simple line improvements at certain stations and for a fraction of the cost. 

However the rail link should go ahead but they should go the whole hog and reach for Glasgow and Edinburgh at the very least. The money spent would provide quality jobs in the construction industry alone. 

In Europe it has been shown that although these projects are a major expense they drive growth in the areas they reach so much that it is worth every penny. 

The second project the government needs to pull it's finger out on is 4G. Many people see mobile phones as a frippery, the toys of the youthful generation but faster broadband in the community could have untold benefit to business and individuals alike. Business is like the military in a way. They both need access to  high quality information (Intelligence in the military - bit of an oxy moron that really, intelligence and military). with decent information highways all sorts of things are possible from manufacturers trying to make "just in time" not become "just too late" to sales teams gaining and following leads more quickly. Plus I would get to watch high quality videos of funny animals when ever I wanted.

You have to speculate to accumulate.

The current push is all aimed at the money markets so that we maintain our AAA rating and pay less for our debt. If we could grow our debt would also cost less.

Discuss