Paralympians work hard for years to overcome incredible obstacles. The Paralympic Games is their moment of glory, the payoff for their amazing effort. So it was sad when three Paralympians had their moment spoiled last week when a boorish crowd decided that booing George Osborne was more important than honouring the athletes.
But what elevated this sad, selfish incident into the realms of the bizarre was that Osborne’s predecessor, one Gordon Brown, was cheered by another Paralympic crowd the very same day.
I have written the following or variations of it so often over the past couple of years that it’s depressing that it needs saying again. But the behaviour of the Paralympic crowds indicates that it does. We must hope that if truth doesn’t blast away ignorance like dynamite it may erode it like water, one drop at a time.
When Labour took office with Gordon Brown as Chancellor in 1997 they inherited the most benign set of economic circumstances since before World War One. When they left office in 2010 they bequeathed the worst set of economic circumstances since World War Two.
In 1997 Labour had committed themselves to Conservative spending plans, so ruined was their reputation for economic management. A budget deficit which had fallen from £51 billion in 1993 to £29 billion in 1996 continued to fall and surpluses were recorded in each of the years from 1998 to 2001. Government debt fell from 42 percent of GDP in 1996/1997 to 30 percent of GDP in 2001/2002. And all this happened as unemployment fell from 3 million in 1993 to 1.5 million in 2001.
So far, so good for Brown, even if he had been following Conservative policies. But when re-election was secured in 2001 hubris set in and Brown began going round telling anyone who would listen that we’d seen an end to “Tory boom and bust”. Worse, he actually seemed to believe this and embarked on a historic spending spree.
Between 2001 and 2007 government spending increased by 54 percent in real terms. The economy was booming, tax receipts rose by 40 percent, but this was still not enough to cover Labour’s mammoth spending binge.
In every year from 2001 until 2008, before the first banker was bailed out, the Labour government spent more than it received, applying fiscal stimulus to an already growing economy. In these years of economic growth Gordon Brown added over £200 billion to British government debt which increased from 30 percent of GDP to 35 percent on the eve of the crisis.
If this doesn’t sound like much consider that, if Brown had maintained the downward trend of his ‘conservative’ years, government debt would actually have been below 20 percent of GDP when the crash came.
It came in 2008 with the biggest bust since the 1930s despite what Brown had been telling us all those years. Faced with collapsing tax revenues and feeling the need to engage in some (highly dubious) stimulus spending with an election due, the deficit rocketed from £35 billion in 2007 to a peacetime record £153 billion in 2009.
This unprecedented binge of borrowing and spending generated growth of 1 percent of GDP. It wasn’t enough to save Brown from richly deserved defeat in May 2010.
This was the coalition government’s inheritance courtesy of the Labour Party. British government debt was increasing at the rate of £420 million per day, or £5,000 per second, on its way to a projected figure of almost 80 percent of GDP, a figure not seen for fifty years as Britain paid off the costs of World War Two.
The coalition does not, in fact, propose to bring this debt down. Instead it is simply reducing the deficit, the amount by which the debt increases each year. In fact, by the end of this parliament the national debt will actually be 60 percent higher than when the coalition took office.
Despite what you may have heard, there is no austerity. Since taking office the coalition has cut spending by just 1 percent in real terms. True, we have seen cuts to departmental budgets and we will see more. But this is not because government spending is falling but because government is having to reallocate more and more money to debt repayments as our debt rises.
During the boom years of 2001 to 2008 British government debt payments rose from £21 billion a year to £31 billion as Brown piled up debt. Since the crash they have shot up to £48 billion a year, more than on defence or law and order. By 2015 this is projected to have reached £70 billion a year. And this, remember, is with record low interest rates on British government debt. Imagine what would happen if those interest rates rose.
To meet these rising costs spending is being switched away from nurses, teachers, and welfare recipients, and towards holders of British government gilts.
Increasing interest payments are the inevitable, unavoidable consequence of increasing debt and so, equally obviously, are cuts in spending elsewhere. So if people want to boo someone about ‘cuts’ they should boo the guy who ran up the debts. And while they’re at it, boo the people who voted for him.
It has now become de rigueur to roll one’s eyes, maybe groan a little, and profess boredom when told that Labour and Gordon Brown are to blame for our current dire mess. But it’s true. And it doesn’t become less true because someone is bored of hearing it.
A joke was quickly going around about the Osborne incident;
Q) Why did 80,000 people boo George Osborne?
A) Because that’s the capacity of the Olympic Stadium.
It would have been more accurate to say
A) Because they are utterly ignorant of public finance.
This article originally appeared at The Commentator