A nation of shopkeepers?

I am writing this editorial on the eve of the UK Budget, the first from Britain’s new Conservative/Liberal-Democrat administration.

The run-up to the Budget has seen a distinct softening-up process taking place as government spokesmen and women have been at pains to suggest that cuts and austerity measures are the only route for the UK to balance its books. In reality, most of this rhetoric is hogwash.

For starters, there is an alternative to a regime of endless cuts and that alternative, namely stimulus, was being used as recently as 2008-09. And let us be clear: if the recession had reached the depths of the 1930s depression, it would be stimulus and spending that would still be the order of the day. The fact that governments seemingly have a choice of austerity measures and that markets can get jittery over deficits is testimony to the fact that we have been through a recession and not a 1930s-style depression. If we were in a great depression then budget deficits would not be on the agenda given that it would be the survival of the system as a whole that would be at stake – and that would mean lots and lots of spending as per 2008-09.

Also, the reality of modern state financing is managing deficits. This goes right back to the origins of the state in financing wars. The government of the UK will always be in deficit otherwise it will cease to exist as it will no longer be able to protect its citizens or, if you prefer, the interests of the system as a whole. It is, of course, pretty sensible for you or I not to run up massive deficits in our bank accounts or for a small enterprises to build up gigantic debts. But then, there have to be different rules for states (national and multinational) given the enormous complexity of the enterprises it has to manage and command. Imagine Rupert Murdoch running his media empire like a small corner shop. Daft isn’t it? There are different financial rules because they are different beasts with differing levels of complexity.

As sure as day becomes night the task for all future governments will be the managing of debt. Not that you will find government ministers admitting it. Instead, it seems as if they want us to become a nation of shopkeepers. Good grief.