Potiphar12's Blog
An Octogenarian in the modern world

ECONOMICS AGAIN

The argument is renewed. Cameron wants deficit reduction. Cable wants borrowing to invest. Borrowing is fine if you are confident that the activity on which you spend that money is going to earn you more than you pay out. This was very clear to me fifty years ago when contemplating a machine purchase for a ludicrous £15. Would the purchase get me £15+ of ‘new’ money – money that I would not get without the purchase. Purchase for any other reason was daft. Worse still if it meant borrowing from Dad.

The question must be considered in the context of a nation that is unable to live within its current income. Like the UK. Borrowing is still going up. That suggests a pressure to spend more, and that at least some portion of any new sum borrowed would be devoted to what are already perceived as needs. Not all of it would be invested in the true meaning of the word.

At the moment our government does not know whether it is capable of living within it’s income. IT DOES NOT KNOW. Surely things would be easier if it did know?  Questions about whether to borrow, and how much, and what for would then be easier to answer.

It’s hard to have confidence in a personal view when economists with impressive degrees and a big audience are propounding theories and disagreeing with each other. But all intellectual disciplines are also prisons, and sometimes one wonders if these experts are over-influenced by whatever cows are sacred in their field. Does cleverness sometimes obscure common sense?

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