This chart clearly shows that austerity, tax hikes and bailing out the banks ruins your country. The UK has embarked on a fool’s errand of schizophrenic policy choices that includes importing hundreds of thousands of low skill immigrants. Lee Kuan Yew joked about this, he called it “immigration of the fruit pickers” and knew that Singapore could never succeed if it had more low skill immigrants than high skill immigrants. That’s why Singapore actively discriminates against low skill immigrants – shorter visas and lower minimum wages for these people as an incentive against welfare immigration by European Union membership.
As Winston Churchill lost the Empire, so David Cameron will go down in history as the Prime Minister who lost Britain to technocrats, low skill EU immigrants and bankers. His critics moan about austerity here and austerity there, but public spending has skyrocketed whilst tax revenue has stagnated. HM Revenue & Customs makes the Inland Revenue look charitable – they are on a mission to tax anything that moves in Britain and as a result many productive people and enterprises have called time.
I am a happy customer of ASOS.com – a very popular online shopping website for clothes and shoes. But the UK cannot reverse its terminal decline by exporting GBP16 worth of plimsolls to New Zealand with free shipping! The decline of the pound through the Bank of England’s quantitative easing (fancypants way of saying we’re printing money with 1’s and 0’s) might have made UK exports more attractive but the death spiral has already begun. Next step, massive immigration from Romania! That will increase aggregate demand and solve all of their problems, won’t it? Won’t it? Isn’t all immigration wonderful even if we get cheap chalupas?
To head off the wonks, let’s put UK fiscal and monetary policy in clear terms: they are printing money and spending money to support an underclass that has never worked, whilst simultaneously importing other people to do low skill work that qualifies them for state assistance, thus enlargening the welfare state further still. This can only be done by borrowing billions of pounds every month while the global financial market is happy to earn a low rate of return on UK government debt.
This is why quantitative easing can never end – as soon as interest rates increase, additional debt issued will incur higher and higher coupon payments. The old debt will have fixed interest payments so that’s OK for now – but when time comes to refinance that debt there is no guarantee that the global bond market will have enough liquidity or stability to refinance almost 100% of GDP in gross debt!
The reason that the UK is so sluggish, as FT economics correspondent Martin Wolf writes, is that government spending is the economy. They have crowded out the private sector to such an extent that their multiplier for government spending is far higher than what macroeconomists predicted. Felix Salmon points out de Long and Summers might be correct.
In a recent speech David Cameron basically acknowledge the necessity of low interest rates. He can’t understand that using personal finance memes like “spending within your means” do not apply when you have skewered the private sector on the altar of a welfare state.
Although there are obviously cuts happening in the public sector in the UK, they are being cancelled out by the constant expansion of the welfare state and driving out of private investment. The private sector in the UK is only nominally private when you think about it – they have embraced outsourcing to a massive extent so many large private sector firms depend on government largesse for their revenues!
The UK can be written off. This is what happens when you try and integrate with completely different cultures and ideologies in “One Continent Under Brussels”. This is what happens when you forget what made a nation great. It is disturbing that John Key seems to worship at the altar of David Cameron and his advisors. At least we’re only getting a few hundred boat people.