Correct me if I’m wrong, but to me fiscal austerity means making sure one always spends less than one earns. I bet your definition is similar to mine, but I’ll go double or nothing that George Osborne’s isn’t.
That’s because you and I live in the real world, the place where we earn some income and figure out how to pay our way and make ends meet.
Sometimes we have to borrow, but we know that, should our liabilities exceed our assets, and our income is insufficient to cover the deficit, we won’t be able to keep the bailiffs at bay.
However, George, along with other finance ministers all over the West, lives in a virtual world where nothing is real: words, thoughts, morals – and certainly money.
George lives by virtual adages uttered by virtual economists, such as Samuel Brittan, the Financial Times guru, who once pontificated that “Since my undergraduate days, I have been pointing out that a government budget is not the same as that of an individual…”.
Back in the old days, when the world was real, and so were the economists, Adam Smith uttered some real, as opposed to virtual, truth: “What is prudence in the conduct of every private family, can scarce be folly in that of a great kingdom.”
The two statements represented not just two different approaches to macroeconomics but two different worlds. George, along with his past, present and future Western colleagues, lives in Brittan’s world, while pretending to live in Smith’s.
His much-vaunted budget is being hailed by some, and damned by others, as an exemplar of austerity. So it is, except that in George’s virtual world ‘austerity’ is actually another word for ‘profligacy’.
Hence he took one look at the 2008 crisis and knew exactly what caused it: Labour Chancellor Gordon ‘The Moron’ Brown practised profligacy without ever referring to it as austerity.
That, according to George, was his fatal mistake, one that George vowed never to repeat. He too would practise profligacy, ideally on a larger scale than Brown but, unlike his hapless predecessor, he’d refer to it as austerity.
It has worked like a dream (in fact, it could only have worked like a dream, not actual reality). Under George’s austere tutelage, our national deficit stands at £70 billion, far outstripping Brown’s achievement and confidently moving towards the £100 billion mark.
Austerity George has also more than doubled the national debt, to an utterly suicidal £1.5 trillion, which is quite impressive even if lagging behind America’s $18 trillion-plus. At least Obama’s ministers don’t hold up this catastrophic statistic as proof of their fiscal responsibility.
To be fair, Austerity George doesn’t monopolise his virtual economics. He also lets banks play fast and loose with finances, lending trillions with the same reckless abandon as they did in the run-up to 2008.
As with any pyramid scheme, which is the dominant model of today’s economic activity, things look fabulous for a while. As the pyramid totters in the wind, borrowed and freshly printed banknotes fly out of it, settling on the ground.
This creates virtual prosperity that will persist until reality makes a comeback. The pyramid will then collapse – just as it did in 2008. Next time, however, when banks go to the wall, the government won’t be able to help: servicing the galloping debt will leave no money in the kitty.
Meanwhile George is clipping the coupons of his phoney prosperity, helped in this task by grossly inflated property prices. But for Russian, Arab and Chinese money-launderers parking their ill-gotten cash in British townhouses and mansions, George would find it harder to boast of the impressive performance of his austerity.
Yet there are protests all over the country, with Jeremy Corbyn’s candidature for the Labour leadership injecting some Trotskyist energy into his comrades’ indignation. ‘Down with austerity’ seems to be the battle cry, which is the negative to George’s positive.
However, the protesters also live in the virtual world, which is why they don’t bother to look at the figures. Figures have no place in virtual reality.
Brown was running the country into the ground, but he never mentioned austerity, which was fine with our loony fringe, rapidly gaining the status of the mainstream. George is running the country even deeper into the ground, but he calls it austerity, and those are fighting words.
If George were to state openly that Britain is heading for the knacker’s yard, but that’s fine because nothing in the world will stop him spending money on the [poor, needy, minorities, underdeveloped countries, free health and education, foreign adventures – take your pick], everyone would be happy.
As it is, the God of Party Politics speaks to George out of the burning economy, and his commandment is to talk austerity while doing profligacy.
All we can do is pray that the aforementioned pyramid doesn’t collapse before the next general election. Britain could survive another 2008, one hopes, but she won’t survive Corbyn at 10 Downing Street.
I wonder if George is secretly working on the Elect Jeremy campaign. Who knows, Prime Minister Corbyn might even keep him as Chancellor. Do as you’ve always done, George, he’d say. But for Trotsky’s sake don’t mention austerity.