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Saturday, 24 September 2011

New insight, old hat

In today's Times newspaper the columnist Matthew Parris reveals his great discovery that politicians in the old advanced economies have for twenty years encouraged their nations to consume more than they produced. He is right;and it is a pity that he has only just come to that conclusion: which has led him to the realisation that it will take at least 25 years of austerity [i.e. massively reduced living standards] to repair the damage; if, indeed, it is repairable. He would have been a great advocate for this truth for much longer if the penny had dropped sooner.

The late Ken Watkins and I pointed out the inevitably ruinous consequences of a political  system in which the parties at each general election vied to offer more to the voters from a socio-economic system that was already consuming more than it produced by the end of the nineteen-sixties.We published Can Britain Survive? in 1971, arguing that democracy itself would be endangered when the consequences of the policy of profligacy came home to roost. The book was a failure in its mission to present the nation with a wake-up call; and poor Ken fell under the spell of Thatcher when she became the Tory leader [as did Mr Parris]. Over almost all of the subsequent forty years I have seen the system stagger on, dependent upon ever more innovative creations by the financial markets; until the inevitable crash that was miraculously delayed until 2007 derailed everything in the discredited politico-economic nexus.

The crisis in 2007-8 was not fundamentally one of financial markets; nor is the second phase that we are now witnessing  simply a failure of governments to be able to service the debts that they have guaranteed. Behind and beneath the purblindness of journalists and of politicians [both of which Mr Parris has been] is a collective failure of all those who have been well paid to manage every aspect of economic life to ask the basic question: is this all real?

Can Britain Survive? was published by Michael Joseph. In the coming days I will show what we said in that book.                                        

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