David Cameron is coming under increasing pressure to do more to spur the UK economy as budget reductions and the debt turmoil emanating from the eurozone continue to hamper demand. Undeterred by a double-dip recession, the Prime Minister has reshuffled his cabinet without signalling any change in his commitment to austerity.
Cameron wants to focus on shrinking the state. His critics want to focus on stimulating and expanding the economy. It may be true that a vibrant economy can support more debt than a moribund one, but these people, the Shadow Chancellor Ed Balls prominent among them, labour under the delusion that it’s still possible to couple free market economics with a burgeoning socialist welfare system. When the revenue produced does not even remotely approach the amount required for redistribution by the state, spending just has to stop. As Cameron says, you cannot just borrow your way out of debt. The creditors have lent too much and the debtors have borrowed far more than they can repay. Furthermore, it is right to ignore calls for more stimulus if that involves printing money and throwing it on the streets.
Is socialist capitalism an oxymoron? Is it really not possible to steer ourselves towards an enterprising society powered by a free market economy whilst preserving the legacy of democratic socialism? Well, unfortunately, the moral compass required for such a journey has been damaged beyond short-term repair and the destination is slipping beyond the horizon.
Our leaders have condoned tax evasion on an industrial scale and presided over the banks’ privatisation of profits and socialisation of losses. They turned a blind eye while the financial sector borrowed for growth by indulging in the black art of rebadging debts as assets. The damage may have been wrought in the world of investment banking, but the government could have prevented it with appropriate regulation. Sins of omission can be as bad as those of commission.
Ironically, in other areas, the government has lurched to the other extreme, over-regulating countless aspects of our lives to the point where any prospect of wealth creation has been stifled.
While all that has been going on, our expectations of “free” universal health provision and financial subsidies for those unable to work have continued apace. And we are still piling up new debt to combat old debt.
Shrinking the state will involve weaning people off the welfare teat and this will be a painful process, but it really is time for people to take more responsibility for themselves. They can only do that if they are allowed to keep more of what they earn. The government may find that lower tax rates will actually produce higher tax revenues. Either way, we must all lower our expectations of what the state should provide for us.
This is not an idealogical difference of opinion any longer. It is not a debate about whether or not mediocrity for all is preferable to excellence for a few. This is about matching expectations with reality. We have to move away from the rampant confiscate-and-redistribute model and allow individuals to have a greater degree of control over the economy. Dependency is making slaves out of us and we must let the entrepreneurs break free.