Thursday, 5 August 2010

Wedgy Benn

It appears that even at the grand old age of eighty five, Anthony Wedgewood Benn cannot bear to go five minutes without hearing the sound of his own voice.  He is organising a 'coalition against the cuts.'  It appears coalitions are very popular these days.  Disraeli once said 'Britain dosen't do coalitions.'  As with so many things, Dizzy was completely wrong.  Mr Benn is renowned as a great democrat and a great parliamentarian who reveres that hallowed and sacred institution.  That didn't stop him from trying to infilitrate Parliamentary Labour Party's during the 1980's, when he proved to be a thorn in the side of the much more honourable Michael Foot, and the much more devious Neil Kinnock.  I do not understand where his reputation comes from, but it appears age makes a person much more respectable.  It was always thus.  So, this 'democrat' should respect the rules of democracy.  All of the parties in the General Election promised cuts.  Not one party was honest about the level of cuts I concede, but all accepted the necessity of cuts.  The combined total of the three main parties was 88%.  Therefore, 88% of voters chose parties that accepted spending cuts.  Those who didn't want cuts could have chosen the Green Party (whose vote actually fell), the Socialist Workers Party or any other collection of deluded lefties who believe in punishing success. 

The combined vote share of the Conservatives and the Liberal Democrats at the moment is 55%.  The Labour Party is on 36%, translating into a 19% lead for the Coalition.  The Liberal Democrats have lost support which appears to have moved to Labour, but even so, over half the country support the Coalition, which is committed to immediate spending cuts.  Is Benn really wanting to defy the will of the people.  Is Benn implicitly admitting to being a fascist, unwilling to accept the public will?  Socialism and its smiling friend social democracy implicitly assume the public is far too stupid to spend its own money how it wants, and therefore must do it for them.  They just dress it up in the language of social justice, a term as nebulous as the Big Society. 

Now, there is no case for delaying cuts.  All the statistical evidence suggests that fiscal contractions are successful when spending cuts take most of the hit.  It is a sad reflection on society when people like Benn claim that cutting spending would endanger standards of living.  Is this what the Welfare State was created to do?  No.  It was created as a safety net if people fell off the ladder.  It wasn't meant to be a spider's web, trapping people into a life of perpetual serfdom.  Benn and his comrades should be ashamed of themselves.  Scotland is a case in point of what happens to a country when socialism strangles it.  Scotland was one of the homes of the Enlightment, particuarly in political philosophy and economics.  Adam Smith and David Hume revolutionised the subject, encouraging free trade and free markets.  Scotland was known for its self reliance and social conservatism.  It is now a cesspit, reliant on the English taxpayer to survive. 

I present some statistical evidence that debunks the Keynesian case.  In 1933, the fiscal deficit in America stood at 4.5%.  During the first 4 years of the New Deal, it averaged 5.1%.  Is a 0.6% difference between the deficits of Hoover and Roosevelt the difference between depression and recovery?  I doubt it.  For those who believe it so, consider this.  In 1945, the deficit was 21.5%.  In 1947, there was a surplus of 1.9%, a swing in basis points of 2,320.  If a swing of 60 basis points was a catalyts for economic change, surely 2,320 would be even more so?  No.  Post war America had an 8 month recession compared to the decade long depression.  Unemployment in the Depression never fell below 14%, whereas it peaked at 3.9% post war.  If reducing a deficit was really that bad, surely America would have experienced a second Great Depression?  In 1920, President Harding cut government spending by 1/3, cut taxes, and cut the federal government by 50%.  This was in response to a depression.  According to the Keynesians, this should have deepened it.  The American economist Benjamin Anderson describes it as thus

''we took our losses, we re-adjusted our financial structure, we endured a depression, and in August 1921 we started up again.  The rally in business production and employment that started in August 1921 was soundly based on a drastic cleaning up of credit weakness, a drastic reduction in the costs of production, and on the free play of private enterprise.  It was not based on government policy designed to make business good.''

It is not sustainable to have a public sector that eats up 52% of 'national income'.  That crowds out private sector investment which is needed to give our economy a much needed boost.  Tax cuts are also desirable to stimulate demand.  Tony Benn took a degree in Philosophy, Politics and Economics at Oxford.  He should return to the textbooks and leave the Marxist economics books in the dustbin where they belong.

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