Where is the Problem?
Government debt is accepted by all economic schools as a fiscal drag on growth. Yet in the UK, the national debt grows at 10% per annum with monotonous but frightening regularity. This year alone Treasury overspend was £70 billion. The numbers now are beyond comprehension. But the current spendthrift administration squanders money that would be instantly reversed if the electorate could have closer control. Some random examples, £60,000,000 cyclist lobby group, £30,000,000 to the Football Association, £12 billion per annum on foreign aid, £12 billion on lobby groups with charitable status, the list is endless. Google ‘The Tax Payer’s Alliance’ for eye-watering examples of other waste.
All this spending is met by borrowing, taxation or money printing. This haemorrhages resources from the wealth-creating sector.
Too Much Government
A seemingly insurmountable problem with representative democracy and its limitless self-imposed remit is the impossibility of ever meeting the electorate’s expectations.
When you book a holiday the hotel brochure manages your legitimate expectation. Pool, restaurant, beach, bars, bedroom you make an assessment then you make your choice, the hotel is under contractual obligation to meet these promises. If you buy a car you expect the colour, engine and model of your choice. Representative democratic governments promise the electorate everything.
There is no aspect of your life in which they do not claim an interest. Social welfare, health, consumer and employment protection there appears to be no limit to State munificence.
All this is, of course, undeliverable; democracy is brought into disrepute. Yet the paradox is that with each State failure, we seem to demand more rather than less government. The costs spiral. The ordinary family suffers; the burden of the State bureaucracy crushes the spirit as well as the budget. Savings become impossible even discouraged by the establishment steeped in failed Keynesian theory which abhors thrift and worships consumerism.
The result is the middle-class aspiration for a better life is stifled. Working hours get longer, life becomes more stressful, income stagnates, real inflation gnaws away at family budgets every year.
Pension subscriptions become impossible, the future becomes increasingly bleak.
For those that are already asset-rich things look alright on paper, but young people cannot break through. Housing is unaffordable, college fees are driving out all but the wealthy.
In America where life for the middle class has stagnated for years, they turn in frustration for alternative solutions. Unrestricted immigration is turning Europeans similarly to what was the fringe of politics.
The inevitable banking and fiat currency crisis predicted by the IDDE will present some desperate problems requiring draconian solutions. Democracy will suffer just as historically it always has, yet it could have been so different.