22 November 2008
On Monday Alastair Darling will announce his plans for borrowing. He will be quite explicit in his hypocrisy. All the ideological ranting we have listened to for the past 40 years about how spending would destroy the economy has suddenly been abandoned. Was it wrong for all those years? Or is our economy so close to collapse that all the rules we have lived by can be gleefully abandoned?
The scale of borrowing is set to exceed $100bn., which is three times more than the government predicted. What are we to make of this? How can we possibly take any more of those projections - neat lines of exactly 45 degrees on x-y axes - seriously ever again? It is quite clear that the government economists are not in control and don't know what they are doing.
So what are the economic rules for? One begins to suspect they may be made up to find excuses for not doing what the people in the democracy demand. Want a new hospital funded from government spending? Sorry, we can't possibly borrow more than 40% of GDP. Could we have more investment in the railways so that people have a serious alternative to driving? Can't do that because we can only borrow to invest.
It all turned out to be nonsense. Because when it looks like a situation might arise where really radical economic change is called for, any amount of money can be borrowed to ensure this doesn't happen.
When this level of borrowing was first mooted I remember waxing biblical and wailing about the debt hanging around our descendants necks unto the tenth generation. I thought I was being rhetorical, but the size of debt we're talking about raises questions of intergenerational equity in financial, not just planetary, terms.
What is our chuckling ex-chancellor thinking about all of this? I have a sneaking suspicion that he may have been expecting it just like I was. Is it just possible that he is deliberately provoking this massive indebtedness to force us towards the grand jubilee, the wiping out of all national debts, and the road to the New Jerusalem? Tweet