Now is Not the Time to Write Off Capitalism
We had our biggest run on a British bank in 100 years in the form of Northern Rock last year. Since then things have spiralled downwards. In September Bradford and Bringly was nationalised, and in October the government delivered a £50 billion bank rescue package. Gordon Brown is mortgaging our future, conservative estimates suggest public debt is 60% of GDP, this rises to a staggering 100% or £3.4 trillion, if pension debts are included. Far greater than his golden fiscal rules.
Some will use the downturn as an excuse to denounce market freedom, in favour of more state planned control. For those who hail for the nationalisation of banks, what makes you think the government will do a better job than the market? Regulation where it works well, is of the utmost importance. When Brown’s ‘big idea’, The Bank of England Act 1998 was implemented, a tripartite regulatory regime was established and the banks powers of regulation removed. This has turned out to be devastating in today’s recession, as no individual organisation has complete responsibility for financial regulation, and the Bank of England is no longer involved in day to day money markets. It is therefore deadly slow to react.
We’re in this situation despite IMF borrowing warnings from as far back as 1999, and despite Gordon Brown having a bigger insight into the world economy than most, whilst chair of the IMF’s International Monetary and Financial Committee for 10 years. The government have failed miserably to prepare us for this recession. If the government cannot even regulate the banking sector correctly, to stop over borrowing, why exactly should we allow them to regulate themselves, while simultaneously taking on the additional role of running the countries banks? If the recession is due to over borrowing in the private sector, why is Brown countering it by over borrowing in the public sector?
Reckless borrowing, and disasterously irresponsible deregulation. This is Gordon Browns legacy.
3 Responses to “Now is Not the Time to Write Off Capitalism”
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Anon on November 15th, 2008
Interesting analysis, although not without its fundamental flaws.
“For those who hail for the nationalisation of banks, what makes you think the government will do a better job than the market?” Doesn’t this one answer itself? If we take out the greedy fat cat bankers, paying themselves bonuses totalling up to hundreds of thousands of pounds whilst individuals lose their life savings, then we get a better, fairer banking system.
Not to say that Brown’s economic methods are perfect, or even necessarily good, but at the end of the day, he’s nowhere near as bad for the country as your lot were last time they were in power. It says something when even after 11 years of reasonably good economic policy this country is still in the mess it is in.
At the end of the day, we – the British people – have two choices. We can either have the world-class services provided under labour, but pay for them through higher taxes (preferrably) or borrowing or we can leave the public sector to rot like Thatcher and Major did, and leave millions of ordinary British people without even the most basic of public goods and services.
I know which I’d rather have.
Dan on November 15th, 2008
“It says something when even after 11 years of reasonably good economic policy this country is still in the mess it is in.”
17 Years of growth I think? Labour inherited the economy off of the Conservatives. It’s in the ‘mess its in’ now because while the economy has grown a lot, our public spendings grown even more, increasing debt and sucking up everybodies savings rather than saving for the inevitable bust. Now we’re at the far end of that, about to have a great big recession, and all that public spending has nothing to show for it.
It would be more reasonable to see how ‘far’ labour has brought us when we’re at the other side of this crunch. It’s going to hurt.
Andrew Barrett on November 15th, 2008
As I said previously in full, unlike the Conservative government, this one has failed to regulate the banking sector, leading to the UK being worst placed to weather the recession. The STATE has failed in its role. To suggest they should play more of a role is irresponsible.
“11 years of good economic policy” – The IMF has been warning us since 1999 about reckless irresponsible borrowing. They were told they were wrong, turns out they were right.
It’s time we realised we cannot keep spending, as the bubble will eventually burst. Are we going to keep borrowing to sustain the bubble, or will we learn to live within our means.
Borrowing irresponsibly today means higher taxation tomorrow, burdening future generations.