Posts Tagged ‘Recession’
However many euphemisms we may choose to use we are, to all extents and purposes, in a recession. Calling it a “credit crunch” or using similar nomenclature merely serves to reduce trust and confidence- after all, if those “in the know” feel the need to sugar-coat the problems, clearly we should start panicking.
The obvious scapegoats are the bankers and traders who, in the first instance, bought sub-prime mortgages, and have since been massively castigated. They blundered, and the economy suffered. But it is by no means all their fault, and it is important to remember that, however much we may enjoy their pain, however gleefully we accuse them of greed, sin and vice, it was because of their hard work that we had such prosperity in the first place. Every advantage of modern society is ultimately down to banking and trading.
For my money I would blame Gordon Brown for utter financial incompetence. During a decade of fantastic growth and economic strength, he raised the average tax paid (even when reduced so as to be relative to income) at a staggering rate, thereby stifling consumerism. Even now, with (relatively) high unemployment and limited purchasing, he wants to raise taxes, thereby making unemployment a relatively more attractive option (to earning) and purchasing a less viable one. To add to his list of errors, he also failed to set aside any money for a proverbial rainy day (and in fact selling half our gold reserves at a long-term low in the market, costing the country staggering sums), thereby forcing him to borrow excessively, weakening the pound, making importing harder, and therefore damaging the economy still further.
So what is to be done? The first part of the solution is to reduce taxes. That may require a cut in public spending. If it does, then privatize the NHS and give grants (direct to health insurance firms, for children at least- adults can choose to take their chances) for health insurance. This will not only lead to better-run hospitals, it will also put a whole host of new, obviously and directly valuable commodities (as opposed to the still valuable but more intangible and volatile derivatives, for instance) on the market, massively increase trade, and recover the market and therefore confidence.
The second part is to legalize drugs and prostitution. There are all kinds of reasons for doing so- it happens anyway, so it is better to regulate it and, for example, give purity guarantees and STD checks, than to pretend it doesn’t exist; it would free up prison space and police time for genuine criminals (murderers, rapists, etc); without trades to protect (most trades use the police, but these are obviously an exception) there would be no need for guns and knives, so gun and knife crime would plummet and pimps would be out of a job; and of course, it is totally unjustifiable to prescribe what people can and cannot do to themselves in the privacy of their own homes. What right has the government to ban suicide (which is obviously far more dangerous than drugs), or alcohol (which, unlike cannabis, has a known lethal dose)? Adults can take the risks if they choose- otherwise why give them the vote? Either trust adults to make their own decisions or don’t let them choose their leader, anything else is logically incoherent. However, the relevant point here is the economic one. The UN estimates the value of the drug trade as around $400billion, and it is estimated to be around 1/3 to ½ the size of the cigarette and alcohol markets. There is enough money in drugs to tip the balance and turn slowdown into growth. That alone should be enough.
Finally, fraud costs the economy huge sums, directly and indirectly (confidence, labour costs, quality of labour costs- if your best employee is hunting fraud, he/she is not trading and making money, merely preventing its loss, etc.). Fraud is very rarely caught and has short sentences, making the incentives to commit fraud high. To combat this, we should use the US model and impose far harsher penalties for white-collar crime.
There are, of course, other things that would help- for instance, a more attractive Prime Minister would increase confidence. However I see no reason not to implement any of these reforms. Finally, in case of a recurrence, future leaders should learn from this government’s mistakes and save money in prosperous times.