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Tuesday, 28 October 2014

Tribute to Beijing

Gideon Osborne thinks that he is very clever; and even he is impressed by his cleverness in orchestrating the announcement that many tens of billions of pounds are to be invested in infrastructure projects in the UK.

It was a principle of Political Economy that the primary function of an economy is to maintain its people to the highest possible level of comfort; and that this could only be assured in the future if enough of the national product was invested today. The principal reason why Political Economy was known as the 'dismal science' was because of its insistence on setting aside at least what was necessary for investment. That was an overriding constraint on consumption.

Gideon thinks he has pulled off the ultimate defiance of Political Economy, by continuing with growing payments for civil servants and beneficiaries of the welfare state. Normally this would mean that the infrastructure continued to decline and become more out-of-date. But the great genius is getting foreigners - and the Chinese in particular - to put just a little of their accumulated trade surplus into British railways and other essential systems.

The British users will have to pay the alien owners for the use of those services in perpetuity: the cash will syphon out of the country after direct costs have been met within the UK. The profit - which should be available for re-investment, had the projects been British-owned - will be allocable by the Chinese to whatever investments they deem appropriate, wherever in the world these occur. Given the balance of the British economy, this is likely to be a permanent situation.

Isn't Gideon a clever boy!

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