Big price rises and restricted credit are here and are going to get worse for a while yet. As spending inevitably slows, pay demands grow and sales fall, we can expect unemployment to rise and exacerbate the situation. The whole mess will feel worse as public sector unions organise strikes to get what they feel they deserve, despite the problems we all face. Further, the corrupt politicians will award themselves yet another massive pay rise, while scamming even more from us on bogus expenses claims.
Government has borrowed heavily on our behalf in expectation of continued growth, which evidently was financial bad judgement. They borrowed in the recent good times, running up debt rather than saving for this rainy day. To balance the books now they have three tools: increase our countries already huge debt, which eventually has to be paid for with taxation, raise taxes less but immediately, cut services. Raising taxes immediately is perceived as political suicide, indeed government has just committed us to even more debt to pay for the interim 10p tax concession, so obviously the pay later option will be selected in combination with cuts to services.
These problems show how poor our system of government is: clear financial incompetence, political power placed before good judgement, corruption at the very top. Sadly the incompetence is not limited to the financial aspects of government. It seems impossible for the public sector to keep our information safe or prevent top secret information from being scattered across the country. To top the list of complaints, how did we end up in an expensive and damaging war in two countries that were no threat to us? Was it breathtaking incompetence or an ego trip for our previous PM Tony Blair? Whichever it was Gordon Brown was not seen to be against it.
We need a new form of government. One not based on an adversarial political party system run by the dysfunctional people that are politicians. Politicians tend to be self serving, power hungry, deluded and egomaniacal. Adversarial political party based government is an anachronism, we are all in this country together and we need to work together, not fight each other. We need a new government system that is not party based but formed from people of all views. It must be adaptable and able to respond rapidly to changing world conditions, not based on dogma or ideologies or evolved out of rule by despots. The system needs power to be widely distributed to deny corruption and ego. Positions need to be filled with experts, not friends and family of those with existing positions. Changes are needed to the legal system, so that it does not persecute the innocent, unlucky and misinformed, but targets the criminals. Control of the economy needs to be placed squarely in the hands of the expert with a remit of long term stability for the whole, rather than be used a tool for political party advancement. Accountability needs to be more immediate. One vote every few years for one of a small number of parties composed of dysfunctional individuals is not good enough.
To get involved in the creation better government visit this site and join the forum.
Home ownership increases unemployment
The BoE MPC member Professor Danny Blanchflower points out that owning homes makes for a less mobile workforce and therefore tends to increase unemployment. Sounds plausible. So the implication is we make people more mobile by promoting home rental. Unfortunately people like to own their homes, so we could make business more mobile. It seems to me there was some promise to encourage businesses to move to the provinces quite some time ago by Tony Blair. It appears there was insufficient action on that one. I think some guaranteed periods of low and gradually increasing corporation tax combined with relocation advice might be a nice carrot. Perhaps a gradually increasing corporate tax rate for the highest density areas of business would provide a good stick.