Posts Tagged ‘George Osborne’

David Cameron and George Osborne hold the high ground

December 5, 2012

Politics is an area of activity that lends itself to the gutter. Most short term incentives are for politicians to lie and cheat, in order to attract special interest support, by imposing bad  policies that will hurt freedom and mar prosperity. In too many instances – the United States is a current example – this is the road to Hell.

So it is very refreshing today to read that Britain’s two top politicians – Prime Minister David Cameron and Chancellor of the Exchequer, George Osborne – each in his own way is holding to the high ground and paving the way for a better future for their countrymen.

David Cameron today announced his opposition to the key recommendation of the Report on the Press by Lord Leveson, an enemy of individual liberty if there ever was one. Any one who recommends that press freedom should be regulated by government is a progressive promoter of serfdom. And Leveson does so with a fervor that indicates a seriously deranged, meddlesome mind.

David Cameron’s principled stand on this issue reflects the very best of statesmanship. for he confronts enemies of freedom on both sides of the aisle. Far right Tories and far left Progressives ache to shut down free speech and impose their own bigotries on society.  Their’s is the  road to Stalin’s mis-named  USSR,  Mao’s mis-named People’s Republic of China and Hitler’s correctly named Third Reich. God damn them all.

George Osborne today announced that his austerity battle to end Britain’s debt crisis will continue despite the sea of enemies that confronts his austerity program.  Of course, a government that insists on rolling back the state in the middle of a world recession will impose short-term job losses.  Most of those job losses have a zero if not a negative marginal product, and for that reason alone, are to be applauded. Tough medicine in the short-term will bring huge benefits in the longer-term, and by the longer-term, I do not mean a time frame in which we are all dead.

In the wake of the 2008 financial crisis many British economists and financial reporters clearly have taken a turn to the hydraulic Keynesian, progressive left. I read the Financial Times daily to remind myself what Pravda used to be like before the Evil Empire disintegrated from within. Ironically, Pravda now infringes copyright in order to make my monograph on the 2008 financial crisis available for free across Russia.  With supposed friends like the FT, capitalism needs no enemies.

Well capitalism and freedom – and I surely do not extend the nouns to embrace their crony parasites – have a good friend in George Osborne.

Bravo! David Cameron and George Osborne.

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Posted in budget deficits, do well while doing good, economics and public choice, economics of John Maynard Keynes, liberty and classical liberalism, political philosophy, property rights, relevance of economic knowledge, Uncategorized | 1 Comment »

United Kingdom did not suffer double-dip recession

October 26, 2012

Britain’s economy grew 1 per cent between the second and third quarters of 2012 according to official statistics, following two quarters of allegedly negative growth.  Keynesian economists across the globe – most notably the left-leaning Lawrence Summers – have been gloating and salivating about this so-called double-dip recession – in the Financial Times and the Washington Post claiming that Britain’s austerity program was the cause and that some big-time government spending was the absolutely essential solution.

In reality, it now appears that the British economy has been growing, albeit sluggishly, throughout 2012. Most notably, the extremely long Jubilee Bank Holiday distorted the statistics. Once the distortions are accounted for, the economy will be seen to have grown steadily at about 0.3 per cent throughout the first three quarters of 2012.

No economist, Keynesian or other, would expect an austerity program immediately to elevate the growth rate of an economy. As public sector employment declines it takes time for private enterprise to pick up the slack. However, as the debt crisis diminishes, and as debt downgrades are avoided, interest rates remain lower than would otherwise be the case. And that is the oxygen required for private venture capital to create long-term jobs and wealth.

Green shoots are discernible in the latest statistics. The UK service sector grew at a relatively vigorous 1.3 per cent in the third quarter. Output in production industries – including oil extraction and manufacturing – rose 1.1 per cent. Only construction output declined, and that is predictable given the over-expansion of that sector during the last Labor Government.

Well done, Prime Minister David Cameron and Chancellor of the Exchequer, George Osborne, for maintaining a steady course through the transition squalls. You are now in calmer waters due, not least, to the steadfastness of your commitment to cleaning up the debt crisis that you inherited from your predecessors.

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Posted in do well while doing good, economics and public choice, economics of John Maynard Keynes, political philosophy, property rights, relevance of economic knowledge, Uncategorized | Leave a Comment »

British government refuses to retreat on fiscal retrenchment

October 9, 2012

The Chancellor of the Exchequer, George Osborne, yesterday reaffirmed his commitment to the measures of fiscal austerity set in place by the British coalition government two years ago. Because outside shocks in Europe and Asia have worsened the economic climate for British exports and have dampened private investment outlays, this is a courageous decision.  For the austerity timetable is now likely to extend well beyond the elections scheduled for 2015.  The Chancellor of the Exchequer, presumably with the support of the Cabinet, is now clearly placing good policy ahead of short-term vote-seeking.  The difference between the British Coalition government and the United States Obama administration could not be more clearly defined.

Both in Britain and the United States the shadow of an unsustainable fiscal crisis overhangs economic performance.  The sovereign debt of both nations has reached unsustainable levels.  What it unsustainable will not hold. The British government recognizes this reality and has moved swiftly to head off the looming crisis. The U.S. government, like the skipper of the Titanic,  has increased engine speed as the ship of state hurtles ever faster towards the deadly icebergs. For the huge ship, USS Titanic, there will be no rescue boats hovering on the post-collision horizon.

The British government’s austerity path commits it to finding $16 billion of  government spending cuts by 2015-16.  The Chancellor has stated that he will achieve these cuts while allowing the automatic stabilizers to play a full role and protecting existing investments in health and education.  Otherwise, he will not loosen the fiscal corset.  Inevitably, this implies that the large welfare bill must bear a significant role in the austerity program.

For the Coalition government to survive the 2015 election, the Cabinet will have to justify welfare cuts not merely as means for achieving budgetary sanity, but as the basis for a revitalized economy.  Welfare transfers that simply trap the existing poor into long-term poverty do no service to those so impacted. Policies designed to open up labor markets and to provide the poor with job-related education are crucial to long-term success.

The IMF has torpedoed the Conservative Party Conference with a downgrade in growth predictions, lowering Britain’s expected growth rate in gross domestic product for 2012 from +.0.4 percent to -0.4 percent.  These numbers fall within the error term of the national statistics. The Coalition government rightly has shrugged off this French (Christine Lagarde)  assault.  The darkest hour is always that immediately before the dawn.

Congratulations Chancellor Osborne for your wisdom and courage. Hold on as the government engines cut back. Many private engines are waiting to fire up on the job-creating oxygen that you are currently releasing.

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Posted in budget deficits, do well while doing good, economics and public choice, political philosophy, property rights, relevance of economic knowledge, Uncategorized | Leave a Comment »

Lawrence Summers offers Britain total engine failure, not a new magneto

September 17, 2012

“During the depression, John Maynard Keynes compared Britain’s economic woes to a ‘magneto’ problem, referring to the fact that a car might have many infirmities but if its electrical system did not work the car would not go. If that was fixed, the car would run, even with other problems.  So it is today.  Moreover, to a greatly under-appreciated extent in the policy debate, short-run increases in demand and output would have medium to long-term benefits as the economy reaps the rewards of what economists call hysteresis effects….The most important structural programmes for raising Britain’s potential output in the future is raising its output today.” Lawrence Summers, ‘Britain risks a lost decade unless it changes course’,  Financial Times, September 17, 2012

Lawrence Summers displays his shirt-tails in this column. Chancellor of the Exchequer, George Osborne, will  do well while doing good if he looks closely at the disheveled intellectual attire of this supposed heavy-weight economist.  Heavy in weight surely does not imply heavy in intellectual capacity.

First let us us remind ourselves about the nature and use of a magneto. A magneto is an electrical generator that uses permanent magnets to produce periodic pulses of alternating current.  Hand-cranked magneto generators were used to provide ringing current in early telephone systems.  Magnetos adapted to produce pulses of high voltage are still used in the ignition systems of some gasoline-powered internal combustion engines to provide power to the spark plugs.  For the most part, the magneto is now confined to engines where there is no available electrical supply, for example, lawnmowers and chainsaws.  Magnetos were rarely used for power generation.

Magnetos are inefficient owing to the weak magnetic flux available from their permanent magnets.  This has always restricted their use for high-power applications.  Magnetos are not used in highway motor vehicles which have a cranking battery and which require more control over ignition timing than is possible with a magneto system.

Readers by now will understand the thrust of this analysis. Magnetos are as outdated with respect to motor vehicles as Keynesian economics is for the modern advanced economy. Lawrence Summers has simply confirmed just how out of date he is with respect both to modern technology and to modern economics. One cannot efficiently ignite a modern V6 engine with a magneto, just as one  cannot ignite a modern economy with shovel-ready stimulus packages that effectively suck all the oxygen out of the economy.

Lawrence Summers may not claim expertise with respect to the modern internal combustion engine. From his own now-evident failure as economic adviser to President Barack Obama, he should clearly understand that he has no valid  expertise as a macro-economist.

If  Lawrence Summers has not learned that hard lesson, then surely George Osborne should, and, hopefully, will do so.

 

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Posted in budget deficits, do well while doing good, economics and public choice, economics of John Maynard Keynes, political philosophy, property rights, relevance of economic knowledge, Uncategorized | 1 Comment »

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