The Independent reports that the Chancellor ‘is drawing up plans for a major growth package to boost the British economy’. Good: that’s what Chancellors are supposed to do, isn’t it?
So what are the elements of this package? Is George Osborne sweeping away the legislation that puts so many firms off hiring people? Is he slashing National Insurance? Is he scrapping Labour’s equality laws? Is he withdrawing from the EU’s 48-hour week rules, or refusing to implement the Temporary Workers Directive?
Not according to the Indy. The package will mainly involve spending money and ‘creating’ jobs – especially in the field of alternative energy. ‘The move follows President Obama’s $450bn (£280bn) plan to create new jobs’.
Who knew it was that easy? I mean, if Obama can ‘create’ jobs by spending $450 billion, why not spend $900 billion and ‘create’ twice as many? Why not go all the way, and do what the Soviet Union never quite achieved, by placing every citizen on the state payroll? Just think of the stimulus effect that would have!
The truth, of course, is that governments have no money of their own. Every penny they ‘inject into the economy’ has to be taken out of the economy, either through immediate tax rises or through deferred tax rises (borrowing). A stimulus package is nothing more than a transfer of wealth from individuals to the state. Far from catalysing growth, it removes resources from the productive sector.
What makes Obama’s new splurge so bewildering is the palpable failure of the last one. The uselessness of pump-priming is no longer theoretical: we have the hard evidence before our eyes. The countries that decreed the biggest bailout and stimulus packages are the ones which suffered the worst recessions – and, of course, they face more to come, having racked up higher debts.