Over on my own website, I introduce the research showing the true scale of Britain’s liabilities and report:
As Chairman of the APPG on Economics, Money and Banking, I hosted a panel discussion on the documentary featuring film maker Martin Durkin, the Adam Smith Institute’s Dr Eamonn Butler, IEA Director General Mark Littlewood and CityAM’s Editor Allister Heath.
The discussion was dramatic:
- Martin insisted only lower taxes would get us out of our present hole.
- Allister described the growth of the state, the flaws in monetary policy and the regulator regime which caused the crisis, calling for lower public spending.
- Mark said we should be “hysterical” and “apoplectic” about the state’s true liabilities before making some spectacular remarks about our democracy and the election (see from min 13 in the video below).
- Eamonn felt things were even worse and was not sure our grandchildren would wish to pay the benefits we are awarding ourselves.
Here’s a video of the introductory remarks and the responses to the first question. Martin gets the last word on the likely public reaction to doing the right thing:
Panel discussion on Britain’s Trillion Pound Horror Story held in Parliament from Steve Baker on Vimeo.
This event was co-sponsored by the IEA, the Adam Smith Institute and The Cobden Centre.
You want a radical solution to the perennial government debt problem?
No government shall be held liable for the previous government’s debts.
If this no-liability rule were established, creditors would lend for a year or two at most. The bulk of government debt would be in the 90 to 180 day range, primarily for cash flow management.
A state is not like a business which has shareholders who can enter and exit at will. The only “shareholders” of the state are the citizens. They can’t sell their shares and move on if things are badly managed.
A state is much more like a family. What parent would borrow money to spend on consumables or non-appreciating assets and pass the payments on to the kids? It is just as wrong for the state to do it.
Now to all those who would claim that the state could not finance its programs without long term debt, we reply that they are comparing the state to a corporation not a family. Corporations need long term debt to finance capital expenditure to create wealth. The state does not create wealth so it cannot afford long term debt.
We further reply that deficit financing the state’s budget is only necessary because of credit money. If sound money were issued, it has been amply demonstrated that not only would deficit spending be unnecessary, income tax itself could be done away with.
We need to move toward the absolute elimination of any government’s liability for the debts incurred by its predecessors.
I would go one step further and bar government from going in to debt period with the exception during war times, which would only be for the defense of Britain.
The reason I say this is because politicians can never be trusted. The mere fact that they can enter in to just a little debt for cash flow management would soon turn in to something much bigger as happens with all government programs. I believe it was Woodrow Wilson who said the best way to implement policy was to start small and expand once it is policy. So in my opinion we need to take away as much power as possible away from government.
Before any of this though, re-education is needed to undo what the state monopoly on education has taught everyone about economics before anyone can even grasp the grand scale of what awaits future generations and even my own (I’m 25).
I would go one step further and make taxes voluntary as ethically and morally they should be. In order to earn any contributions at all and satisfy potential debtors governments would have to be fiscally responsible and actually deliver on the promises they make.
Just a word on debts in times of war… this is very dangerous. War debts meant Britain came off worse from WWII than Germany!
Well said, Peter. Government debt is immoral. There is a good reason why a son isn’t held legally responsible for his father’s debts. It’s absurd that he’s held responsible for the debts run up by his father’s government.
Borrowing also avoids the important debate about the appropriate size of the state, and the appropriate level of redistribution. It creates the illusion that we can have our cake and eat it too.