Thursday, 24 November 2016

Autumn Statement

Why do we put ourselves through the annual – recently bi-annual - ordeal of suspending our natural inclination to pragmatism for a day in which everybody has to pretend to believe in A) what the Chancellor of the Exchequer says, or B) the opposite of what the Chancellor of the Exchequer says? The big guns of the Office for Budget Responsibility is wheeled in to present grandiose projections of what might happen in the future, always supposing the world doesn’t end tomorrow, after which everybody gets up and A) agrees with the OBR’s projections, or B) flatly refutes the OBRs outrageous assumptions.

The economy, one might paraphrase, is an ass. It is an ass, donkey-wise, in that it is driven by simple desires and it is an ass, sphincter-wise, in that it has the propensity to shit on anybody at any time, unless you have taken the wise precaution to stock up on economic Imodium®. Of course the notion of saving for a rainy day has taken many knocks of late given the ultra-low interest rates and the dangerously uncertain nature of investment in shares, whose value is determined not by reality but by perception.

For a start, there is the sheer generalisation of all the forecasts, assuming that everybody will behave in the same way and not seek to act independently of groupthink. Actually, that’s not so bad an assumption - proportion of people who do actually manage to go off-grid is vanishingly small. But you don’t need to decouple from the economy altogether in order to exert some control over it. There is talk of falling consumer demand; surely a large part of that is down to simple caution. The numbers don’t need to be very large for the cumulative effect to be noticeable.

If every family – say 30 million households – spends £2 a week less, (less than a stupidly-named coffee in Starbucks) that’s £100 per year and thus, at a stroke, £3billion fewer pounds-Sterling per year circulating in the economy. And if an outcome is that Starbucks branches close down, consumers have lost nothing but the spurious notion of choice. Oh, but wait, they have exercised choice in quitting the daft habit of queuing with hipsters to collect an overpriced cup of brown liquid to then wander the streets with. (I never did understand the attraction of portable coffee as a status-signalling fashion accessory.)

But, you object, what of the employees of those now empty cafes? Well, tough, but it may just have the knock-on effect of making those now ex-employees seek more fruitful and useful employment. It might cause more parents to encourage more kids to work harder at more useful subjects than ‘Being Everybody’s Soulmate Studies’ and in a few years Chancellor Hammond’s longed-for increased productivity might actually come about. As gently as you might want to be with others it is my experience that a kick up the arse is often a far better way of focusing the productive mind than groups hugs and clearing-the-air meetings; everyone’s input is not of equal value.

How the budget works...

Of course, everything bad is blamed on Brexit and everything good is just – phew – lucky happenstance. In reality the budget is never either good or bad, it is a simple fucking about with numbers, a political prestidigitation to make believe that somebody, somewhere has their hairy mitts on the levers of economic power. If the media gloom over ‘the cost of Brexit’ manages to achieve one thing – the big kick up the arse that persuades more people to take responsibility for their own budgets, rather than imagining government can do it for them – it will have been worth every penny. 


  1. I learnt an interest fact today(h/t to Mises Daily). In the 17th century the first American colonies were organised on what we call today socialist principles. It nearly destroyed them in fact may of the colonists died. It was only changing to a market economy that saved them and ultimately allowed them to survive. A lesson taught centuries ago still not learnt today. I feel obliged to share this knowledge with anyone who lands in ear shot or are in the position to be a captive audience.

    1. I've screenshotted that and tweeted it!