by Sean Corrigan
by Sean Corrigan
UK Chancellor Culpability Brown got the ‘best Christmas present he could have hoped for,' enthused the Standard, ‘as new figures showed Britain's economic recovery gathering pace as the year draws to a close.'
‘Official estimates of gross domestic product were raised for a second month in a row,' the cheerleading continued, ‘with National Statistics revealing the economy grew 0.8% in the third quarter against a previous 0.7% forecast.'
OK — true enough as far as it goes, but does it go far enough?
Firstly, let's set aside the usual methodological quibbles about GDP not telling anything like the whole story about the health of an economy, or whether the non-market and compulsory transactions carried out by government have any place in the reckoning at all, and let's take the numbers as they are presented.
The first thing we find is that while the number of actual pounds sterling measured in the GDP data increased by 5.3% over the year, the implied rise in prices took up 60% of that — climbing by some 3.2% — which left a measured and superficially creditable 2.1% over for the rise in ‘real' activity.
Fair dinkum, you might say. Not such a bad showing under our beloved Chancellor's inspired leadership.
However, let's strip out the government component from the private sector's contribution and we have before us a much darker tale.
Now the private sector is seen to have grown 4.1% in terms of pounds, with this being split by the bean counters into a 2.2% ‘real' growth rate, together with price rises of ‘only' 1.9% — meaning ‘inflation' ate up just under half the total expansion in the pie.
Government numbers, however — fuelled by all those tax rises, as well as by a hefty increase in net borrowing — showed a startling 10.2% jump in the sterling total, amounting to 53p in every extra pound recorded in the overall numbers.
This alone means the meddlesome and wasteful tax-EATERS coddled in the public sector boosted their outlays more than penny for penny with the total population of hardworking tax-PAYERS in the private sector — hardly a ratio commensurate with the sustenance of a free market economy.
Worse still, of this 10.2% increase, fully five-sixths simply served to boost prices — an implied inflation rate of 8.3%, fully 4 ½ times higher than that endured in the private sector — and thus the State only managed to extract 16p in calculated extra value out of every extra pound spent.
If you want to see how bad this really was, consider also that the accounts thus estimate — however flawed these calculations are — that in terms of extra goods and services provided, Culpability managed to chip in just shy of an extra £800 million in socialist goodies in the third quarter of this year compared to the like period in 2002.
Yet, to do this, he borrowed £34.2 billion extra and levied an extra £4.8 billion in taxes, meaning all his efforts yielded a miserly 2% real return on that vast swathe of capital which he has effectively confiscated from present and future taxpayers!
Truly, if this were a business — rather than a racket — the receivers would have long since called in, though they might have found precious little to distribute to its creditors, once they had been through its books!
Moreover, if he left all that in the hands of private corporations, not only would these perforce have to match their output to their customers' demands, rather than to bureaucrats' whims and to realizing social engineers' visions of Utopia, but THEY typically return six times as much on their capital employed! Thus, on a back of an envelope basis, we can reckon that the immediate cost of Brown's rapaciousness this year amounts to around an extra £3.8 billion in forgone private additions to national wealth!
As it is, private industry has become so disheartened, that, amid a slump in manufacturing investment to 20-year lows, it has decided it has no better use for fully £19 billion pounds of its net returns this past year and has lent this onward to fund household expenditure and government excess — turning a possible source of useful capital (the provider of a more bounteous tomorrow) into today's overpriced bricks and mortar, imported merchandise and government vote-buying.
As for householders — they spent an extra 4.1% over the year, but had to borrow — net, not gross — £1.35 for every extra pound spent.
Already, as the Scotsman reported, UK individuals are the most indebted in the EU — collectively owing £158 billion, more than twice the personal debt of any other country in Europe, while the position north of the border may be even more parlous.
No more thrifty Scots it seems, for, sporrans stuffed with credit cards, Caledonian company directors have almost five times the UK average of unsecured personal debt, while senior managers, driving instructors and military personnel all owe four times the UK average
Lockhart Bruce, a director of Glasgow-based mortgage group Opus which commissioned the research, commented:
"It is quite clear that a number of professions and trades are in danger of being consumed by unmanageable levels of debt. Something has to be done sooner rather than later to tackle this growing problem, which threatens the future wellbeing of many Scots."
With this level of capital consumption and with this rapidity in the cancerous growth of the State, we should all enjoy the illusion represented by these GDP figures while we can, for the Ghosts of such Christmasses, Past and Present, must surely mean that Tiny Tim will be unable to rely on too large a portion of turkey for many more Christmasses Future to come.
December 25, 2003
Sean Corrigan [send him mail] writes from London.
Copyright © 2003 LewRockwell.com