Reflections from an Indian summer in England
Posted on 26 June 2010 with 2 comments from readers
It is impossible not to dream of the future when sat on the lawns of Trinity College, Oxford. You see the bright young things celebrating the end of their exams in style but they are in for a nasty shock.
Perhaps it is too early to say whether this will be an Indian summer in meteorological terms but from an economic perspective that is certainly the case. Prime Minister David Cameron is promising that nobody will be left untouched by his new age of austerity, and that is easy to forget on an Oxford lawn in the summer.
Reality check
Reality will come soon enough. This is the end of a golden era financed by public borrowing. It cannot go on, like any party paid for on credit. The bills have to be paid. One pound in every four spent by the UK government is borrowed.
But getting out of debt is never much fun. The lifestyle changes can be drastic. And for all the new British government talks about fairness and protecting the weakest and elderly, they will suffer most. The reality of austerity is going to be far harder than talking about it, and that is all that is being done this summer.
House prices have recovered mainly from their 2007-8 fall . Everything in the Trinity garden is fine again. Except that we all know this is not true. It is actually back to the future that faced this writer on leaving Oxford almost 30 years ago.
Then the economy was mired in the 1981-2 recession with unemployment over three million. But Mrs Thatcher only cut back public spending. She mainly cut taxes, apart from making the same inflationary error of raising VAT (a highly unfair tax). Mr Cameron is raising taxation while slashing public spending.
Thatcherism returns
This is going to be horrible. Mrs Thatcher’s government was only saved by the popularity of the Falklands War. Perhaps some other non-predictable event will secure Mr Cameron. It is his only hope. As for England, well expatriate options are more limited these days but escape is advisable for those who can.
Then you could return at the depths of the recession, buy that dream home for a bargain price and hope to participate in the recovery. That would be my advice to graduates today. Sticking around for an age of austerity is foolish when you are young and have so much to offer the world.
2 Comments posted by readers:
Being 59, I can remember the Thatcher era, and before. I can remember seeing news stories from the UK during the late 60’s and 70’s, and remember thinking how everything looked like it was in an early state of decay. That was just the visual impression I got. It wasn’t based on any data or analysis. I can remember thinking, ‘Wow, they’re going down fast.’
As the years passed during the 80’s and 90’s, I got the impression that things in the UK were getting a lot better. The TV showed public buildings being cleaned and new skyscrapers going up. I wondered what had turned the country around. Then I read that because of the North Sea oil discoveries, the UK was one of the few highly developed countries that didn’t have to import oil. What fraction of the turnaround was due to the oil wealth, I have no idea. Reagan’s cold war spending, and the spending of other borrowed money, may have helped boost the UK economy during, and after, the Thatcher era. The rapid expansion of the financial sector, no doubt contributed to the apparent boom. The decline of unions may have played a role. Having never been to the UK, I could be totally wrong.
As far as the future, if I were a talented graduate in the UK, I would sure check out Australia. Forget about that austerity stuff. As far as I know, we only live once. As long as China doesn’t completely crash, and STAY crashed, which is unlikely, Australia will probably boom for the next several decades. The climate along the coastal areas is better than most places on Earth. There is plenty of open space, beaches, and mountains with no shortage of sunshine. Like here, north of Slidell, you still don’t have to be rich to be able to own a nice brick single family home on your own 24X40 meter lot. In a city like Perth, everything is a lot newer and more modern than in most of the world’s cities. The chance of being invaded is low, at least for the first half of this century. The country is left leaning politically, but there is plenty of natural wealth to go around because of the small population. No, Australia isn’t paradise. I have seen the dust, fires and water shortages. But the only country that I can think of that has as bright an economic future, along with a pleasant physical environment, is Brazil. This is Brazil’s century. But Brazil has a LOT more poor people, and social problems, than Australia. Quality of life means a lot.
If, as it looks increasingly likely, we go into another Great Depression, I would rather be in a country with vast natural resources, especially energy and food, like Australia, or too cold Canada, than in the island UK. In a global economic collapse, being in the UK you could face cold, hunger, and social strife. Unfortunately, with the massive debt mess that has been created, such a situation is no longer a remote possibility. I doubt that it will happen, but it could. Ask yourself how many people saw sub-prime collapse coming? Not the head of the Federal Reserve Bank, with his army of Ph.D.s.
And remember, cyclones hit the northern Australian coast. So build your sea side mansion above the flood surge level.
Now I’m off to check the world’s first oil hurricane forecast. No boredom around here. At least I got the grass cut before the lawn could catch fire. It sounds like the plot of a bad Hollywood movie – ‘Oilworld.’ Kind of like ‘Waterworld’, only with hydrocarbons. No wonder Kevin Costner is down here. It took me until now, to figure that out.
Dear Colleague, interesting and timely points; as are so many of the exceptionally well informed articles on this website. However this affirmation that just so happens to follow the prevailing view of the ignorant majority, begs correction. To suggest (even so subtly) that the Conservative party was and will potentially “once more” be responsible for the fiscal pain so many British citizens have suffered over the last 40-odd years, is to miss a crucially important point.
In some ways we should wish that the pathetic excuse for a political party that has been Labour had remained in power. The world would then have seen the true extent of their ineptitude and how dangerously close to irretrievable national and individual bankruptcy they have brought us. The foundations of every Labour policy have been based on flawed modeling.
After the abysmal and true to form failings of Labour tenure, the Cons have yet again come in to pick up the pieces, but this time they might fail. Not because of their incoming (and desperately needed) policy changes – that the emergency budget meets some relevant needs but fails others was to be expected. But because the negative spiral of debt we now find ourselves in, the double dip depression we are due, and the total loss of control over both personal and public spending, as you say – the snowball we’re in is now too big to stop. Inevitably it will be during this incumbency that the results of 13 years of Labour’s career-serving politics (rather than in the service of the people), negligence, and criminal ineptitude will actually crystallize, capitulating our broken coffers into the worst fiscal breakdown in the country’s history. Without wishing to sound melodramatic, nothing short of the proverbial can save us this time!
Not one pre-election mandate improved under Labour – unemployment, poverty, education, infrastructure or national expenditure/deficit balances have worsened under the unrelenting pressure of three main “folly policies” –
Equalise/homogenise nationwide (dumb down and lower the bar in every sphere) – has made us a nation of illiterate and inept pseudo-graduates, globally under-average workers and incompetent ‘experts’, and with a greater gap between the haves and have nots than ever.
Spend and credit culture – has indebted not only the state but also every private individual more than they will ever be able to repay, and is still due to hit critical mass, with the unimaginable fallout it will bring to bear.
Use immigrants to increase job occupation and revenue (the prequel of which was admittedly a huge Thatcher mistake) – has totally backfired as the immigrant population has slowly taken over, again lowering the bar across every sector of performance, increasing exponentially the burden on the welfare state (depriving the truly needy in the process), and costing the UK several times more than it gained, while they send all their earnings back home.
Furthermore, after being “poodle to the US”, the UK has been reduced to going cap in hand to some of the least trustworthy, and potentially most dangerous states in the world, just to try and reduce its financial losses.
The current budget needs tweaking, and will again, along with other incoming policy changes, but our new coalition government will also need time to just begin the process of undoing the damage wrought by Labour. It will be very painful, for everyone, but that is the price to pay for such misguided administration. But then with such a sharp eye on both public and private sector performance, you know that better than I.