Wednesday, 3 August 2011

Socialism's Achilles Heel?

The situation in Britain after a little over a decade of socialist "Tax and Spend" economics coupled with the landslide of nannying legislation, much of it conflicting or duplication of older and better drafted, thought out and crafted law, the British economy is in the same state as many "developing nations." The one difference is that it now has a government that has at least made a start at slashing the vast amounts of money Whitehall squanders annually.

Across the pond, political brinkmanship seems to have brought a small breathing space for the socialist inclined Democrat regime. They have a budget settlement it appears for this year which doesn't seem to cut any of the Washington "Tax Spend" - instead it does a "Gordon" and raises the Overdraft limit. The interest payable on this "overdraft" must be horrendous - certainly the one Britain inherited from Liebor's Blair/Brown regime has interest repayments that would allow the Royal Navy to pay for both its Aircraft Carriers in two years and fit them out with a full complement of aircraft and manpower.

Everywhere "socialists" manage to get their hands on government it is the same. Taxes rise exponentially, vast numbers of parasitic bureaucrats are recruited and "administration" exponentially expands, spending increases in line with this expansion and the propaganda machinery cranks out the same message. Any non-socialist voice must be instantly stifled as "fascist" and reasonable debate goes out of the window as labels are applied and repeatedly used until any dissent is quashed or driven underground. We can see this happening in a number of "socialist" organs - the Guardian is typical - with an editorial attempting to blame the Oslo tragedy on "conservatism and right wing thinking." I've even seen some trying to link the actions of this pathological murderer to "climate deniers."

This is, I believe the greatest weakness of the socialist ideology. It is founded on some pretty good ideals of a fair share and a fair reward for everyone, but it does not actually work in practice. It falls apart very quickly under the pressure of simple economics. As one economics lecturer told me many years ago, increase in demand has to be met by an increase in supply. Any imbalance quickly sees prices either rise or fall. So too with wages, as they rise the cost of whatever is produced must rise to cover them - or the workforce must shrink. But you cannot shrink the workforce without reducing production, unless you find another means of producing the goods or services using fewer workers. Then the social services kicks in and now you are paying workers not to work ...

But government's have no money of their own to pay this, so they have no option but to take it from those who are working. There lies the weakness of the socialist ideology. The true socialist genuinely believes that all goods, services and wealth belong to the "state" and it is the "state" therefore that has the sole right to apportion rewards to the workers. There is the conundrum. In order to get money to spend, the "state" must first take it from the working people and they do this in the form of tax. Gordon Brown proved that he had no understanding (and nor, apparently did anyone in the Treasury!) of economics when he began to desperately look for ways to get the money for all the handouts he had promised. He didn't dare to raise Income Tax, so he did some very shady dealing in hidden taxes, one of the most infamous ruined the private Pensions system - a fact he still denies. In taking GBP8 Billion out of the funds in a "tax raid" and then imposing a tax which raises some GBP6 Billion a year subsequently, he left the majority of these funds unable to meet their commitments and several went bankrupt.

A popular - to the "Green" lobby - tax is always a hit on the price of petrol and diesel. But the Treasury fails to take into account - as did Brown and his fellow socialists - that the price of fuel impacts on food prices. As these rise, wage demands increase, as wages rise, so do the cost of other goods. Mass immigration encouraged by the socialist tendency has produced another cost spiral - housing. It has a secondary impact as well - benefit claims have gone up exponentially under the Liebor government and so has fraud. As the strain on the Treasury increases, so do the taxes and when they can't raise the money through tax - they borrow it ...

As anyone who has ever taken out a longterm loan knows, it isn't the capital that is the problem, it is the interest. By the time a large loan is repaid, the interest has usually almost doubled the original amount borrowed. If, as all socialist regimes do, you "roll the loan over" year on year and keep borrowing more to cover the interest payments and your spending plans, you eventually reach the situation of Greece, Spain, Portugal, Ireland and now, it seems, the US.

The complete failure of the socialist intelligentsia to understand the operation of a simple economic market model is the Achilles Heel of the entire ideology. Unfortunately, it seems that this lesson is beyond the understanding of the majority of voters who are beguiled by the image of a "paradise" State that provides for their every need. What the voter's forget is that they end up paying for the extravagance of the politicians and the incompetence of the civil servants. That is, perhaps, our Achilles Heel.

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