The anti-austerity narrative has taken on a life of its own. For large sections of the Left, “anti-austeritarianism” is no longer about a response to a recession. It has become a mindset in its own right. Its central tenet is that there is no such thing as economic constraints – there are only political choices. It is never “necessary” to cut spending on anything. It is always a deliberate choice. In this way, the anti-austerity mindset has really become an anti-economics mindset.
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On Question Time this week, the more a speaker promised to spend the bigger the clap they got. It was like watching a public meeting of a cult which rejected the very concept of scarcity. And they were eagerly looking for fiscal heretics to shame.
It’s not really anti-austerity or anti-economics. The objection is more fundamental, as Churchill pointed out in the Commons, discussing budgetary matters with the Labour opposition in the 1920s :
“You cannot ask us to take sides against arithmetic”
Arithmetic is a cruel mistress, and some folk stand defiantly against her dominion.
“You cannot ask us to take sides against arithmetic”
the global warming grifters do that all the time.
Ever since Margaret Thatcher explained that “Eventually, you run out of other peoples’ money”, the left have known they must deny that – or rather, must ignore it.
The idea of its all ending like Venezuela is merely one of many not admitted to consciousness.
Government spending (overall) has not really been cut – “austerity” is the great lie of our time.
And all the political parties are promising even more government spending – which can not be afforded.
For once I am in agreement with the Economist magazine (on the second point – in relation to the various manifestos of the political parties).
The worst offenders are people like Krugman – the Saruman of economics – who provide a figleaf of respectability to this sort of extravagance when they certainly know better.
The Left has no concept of efficiency, therefore to get more out to them always means more must be put in and if less is put in, then less must come out.
None of them have ever run a business. Most of them are wealth consumers not wealth creators.
In a sense, the anti austerity people are right. What is money? It is just something created by the central bank. Need a bit more? Just create it.
Obviously, that sort of mentality can quickly lead to the Zimbabwe Dollar, but essentially it is true of all modern fiat currencies. They are backed by nothing and can be created at will.
When money was a thing, gold and silver, at least no-one could have argued that government should just “create” some more. That would have made no sense to anyone. It is only by abandoning precious metals, and by us all pretending that a piece of paper printed by the central bank has value, that people can believe that money can be created, and that we can spend ourselves out of recessions.
The anti-gravity narrative has taken on a life of its own. For large sections of the Left, “anti-gravityism” is no longer about a response to falling. It has become a mindset in its own right. Its central tenet is that there is no such thing as physical laws – there are only political choices. It is never “necessary” to not to fall down. It is always a deliberate choice. In this way, the anti-gravity mindset has really become an anti-science mindset.
There are a lot of crazies out there.
“Austerity” means not spending as much as one would like to spend, and so defines everything that happens before the revolution.
You’re not thinking like the little soviet sh*t-heads, once this great country has become a vast communist utopia then all the economic issues will simply disappear, it’s in Das Kaptial dontcha know?
I mean North Korea has solved austerity as well as obesity, hasn’t it?
The issue isn’t really running out of other people’s money. At bottom, it’s … running out of other people’s lives.
(Which leads to the corollary issue of having to hold onto your own … somehow.)
(Para)”…shall be afforded maintenance of the lifestyle to which she has become accustomed …”
Or the same access to the treasury they enjoyed when it was offered in exchange for their “desireable behavior” at the voting booth?
Alimony? Palimony? Politimony?
Problem is, those nice folks you “supported” have done took off with all the gold!
Captain,
Amazing. It’s still awfully hard to believe the whole thing isn’t satire!
.
It does occur to me that the six-year Ph.D. might owe its longevity to the appearance of the results (plural, from her her weblog posting) of the reproductive act.
That this should in any way get in the way of a woman’s career is, of course, not to be allowed.
It is only by abandoning precious metals, and by us all pretending that a piece of paper printed by the central bank has value, that people can believe that money can be created
Up to a point Lord Copper. Money is a slippery sort of thing, and people’s belief in its value is central to its ability to perform its function as money. And as a matter of fact, paper money (or electronic dot money) has been able to command people’s belief and so has been able to work as money. For a loooong time. I know disaster is just round the corner, but it’s been around the corner for at least a hundred years. And yet fiat money staggers on. Particularly interesting is the series of disastrous paper money collapses we’ve had – Russia, Germany, Hungary, Austria, Latin America (lotsa), Zimbabwe and so on. The collapses have been followed by…..new paper currencies, which people managed to suspend disbelief in and use as money. Some places have done it twice over.
Value is subjective say the Austrians and people do seem to see value in those bits of paper.
There’s no “fundamental” value in a gold coin. Sure, the debauchability quotient for gold is much lower than for paper money because the profit margin for the issuer is much higher with paper money. But precious metal money is a matter of faith just as much as paper money is. And experience indicates that once destroyed, faith in paper money ……comes straight back again in remarkably short order.
Lee, you say this as if those various fiat currencies were freely chosen by the public that use them – which was not at all the case. Rather, it was and continues to be forced on them (at gunpoint, if necessary).
I’m not entirely sure I agree with you there Alisa. Well I agree with you up to a point in theory. But I disagree with you rather more in real life. The forcing is usually the government forbidding the private issue of money. But in lots of places the government doesn’t stop you using the currencies of other countries if you want to. And if you want to trade fish for tulips, again you probably won’t go to jail for it. (I mean serious countries not joke ones.) I accept that, via the tax system, the use of the home currency may be given decisive advantages over competitors – eg you can’t use gold coins as cash without, theoretically, a taxable transaction every time the gold coin gets passed around.
But if you go to joke countries where the population really doesn’t want to use the local paper money – what do people use, even if it’s illegal to do so ? US dollars. Not gold coins. This is not dollar usage at the point of a gun. It’s dollar usage because of a belief that other people will give value for your dollars.
And even if I agreed with you that it’s all down to force, in real life we still finish up with government money that actually works as money, even though it’s waste paper.
I repeat – yes, disaster is undoubtedly just round the corner. But round the next corner after that is a shiny new paper currency that people will have confidence in.
Lee, I never mentioned disasters, you did – not that I in any way dismiss the point (quite the contrary*). All I said was that people using fiat money does not mean they choose to do so freely, as you seem to have implied. Whether fiat money is a good thing or a bad thing, or whether forcing people to use something is a good thing or a bad thing, and whether these things lead to disasters or not – all these are part of a separate question.
*I happen to think that disaster is likely around the corner, even if only based on the fact that it struck numerous times in the past, under similar conditions. But even without going as far as blaming past disasters on fiat money (let alone predicting future ones), fact is that the value of Western fiat currencies has been steadily eroded over the decades, whether deliberately or accidentally. And, it is at least arguable that absent compulsion and given other options, the public would not be making as extensive a use of fiat money as it has been doing all these years.
My point about gold currency is that in Victorian times, money was something which a government could clearly not create. It had to be earned first. Anti-austerity types complain that there was QE for the banks, why not have QE for the people? My answer is that there should never have been QE for the banks.
When central banks start creating money out of thin air, they are on a slippery slope. It is important that people do not realise that fiat currency is backed by nothing and can be created at will. After all, if the government can just create money, why do they tax people to pay for the NHS, why not just print the money? I think we all know where that sort of thinking ends.
Everyone here read up on Bitcoin (or other cryptocurrencies) last time I mentioned it, right?
The problem with “QE for the people” is that QE is really only any good for stealing the wealth of many and funneling it into the pockets of the few.
Stealing the wealth of many and feeding it back to the, uh, many is pretty much a null operation. Though I’m sure that the few would manage to enrich themselves from that also.
John K, you assume that an ounce of gold cannot have multiple “ounce of gold” notes written against it. If most people are keeping hold of their gold notes (or trading them directly for goods and services), this can happen. You’re at risk of a run and it’s a little easier to audit with the correct controls in place but essentially it’s little different.
What’s funny about all this is the way the language has been corrupted. Now apparently the word “austerity” means “the government isn’t growing as quickly as we’d like”.
Richard:
In the Victorian era, I doubt most people had even seen a banknote. Money was a physical thing of gold and silver. The idea that government could “create” it would have seemed absurd.
It was not for nothing that Keynes called gold a “barbarous relic”. If money is a real thing, which cannot be created by the will of the government, then all his theories about creating demand where none exists cannot really work. Keynsianism and all modern economic theories about creating and managing demand in the economy depend on central banks being able to set interest rates and create money at will. If they cannot do that, what is the point of them? I know my answer to that question.
John K, Right you are. It’s sometimes deceptive how rapidly inflation has devalued things. This quote seems relevant…
£5 in 1800 would be equivalent to £525 today according to a calculator I found. And I suspect real-life inflation rates were actually higher than published ones. Your statement about the rarity of notes seems fair and your point well made.