Tuesday, 26 June 2012
Public borrowing rises as economy dips
The strategy is shrink the state and outsource its services. As far as we know, the big spending cuts have NOT been fully implemented, hence the state unemployment is relatively low. The private sector is creating low value, short term jobs. The ineptitude tsunami has not hit these shores yet.
Shrink the state: reduce the spending has the effect of people having a worse standard of life (think homes, streets, schools, health). It also enables the government to reduce income taxes (the undisclosed goal) that enables the people on high incomes to add spending power and outsource some of the services killed by recession and austerity, eg housing, schools or health.
Once the state is small enough, outsource as much as possible of its services, eg prisons, policing. This will move billions from taxpayer into profits for these firms. The inconvenient truth is the private sector jobs have more instability, less benefits and generate more inequality than public ones. When trains were privatised, the same managers made several times more money, fares went up and workers were laid off. These "efficient" companies have not invested in infrastructure. The trains are slow, run with delays, squeak, are expensive and are overcrowded.
This strategy will inevitably lead to a wider gap between rich and privileged, and poor, the median disposable income will continue to fall to historic lows. Social unhappiness will lead to a boom in private security to protect the wealthy in their golden ghettos, but one can always blame the immigrants or the Germans and the French for all the ills on the island.