Chap in Charge: We have a problem with debt, chaps!
Spotty researcher 1: Eeeerrrrgh! Debt! (throws up in the bin) Sorry sir, the very word is poison to me. Brown is using it to bring our country down, and I love my country sir, really, I do (gulps).
CiC: There there. We must find an answer. There must be one.
SR1 (wiping chin): Cut spending sir! Cut it now! It’s being wasted as we speak!
CiC: I like your thinking. But Camilla has found a problem. Camilla?
Spotty Researcher 2: Thank you sir. It seems, in brief, that when the government cuts spending, the people who were selling what we were formerly buying no longer have someone to sell to and . . .
CiC: Spit it out, fella
SR2: And they no longer have sales, sir. Then they don’t have profits. Then the economy goes down the Swannee.
SR1: But if we raise taxes we are siding with the Devil! Goddamit, can’t we just cut the waste? We’re riddled with waste!
SR2: Even waste provides some economic demand, it seems. It seems, sir, that we have to face it: the government is our salvation. We need to tell the Boss to scrap all this stuff about the small state . . .
CiC (sotto voce): . . . safe seat . . . Buckinghamshire . . .
SR2: I’ll find an answer! later Look here! All that happens when the Gov cuts G is that r goes down and then I goes up and so does X and the AS and AD just meet at another, happier place. Look, it’s on a chart. Clever stuff
CiC and SR1: Gosh! Um . . .
SR2: It means that the exporters fill the gap, plus a few other chaps who decide to go ahead and invest because, you know, money is so cheap. Like Maggie did it. You know, back in 1981
CiC: Of course! When the Lady was not for Turning (looks wistful). Put it in a speech, chaps. Put it about that we’ve found the answer.
SR2: Good news sir! Our plan is all over the Press! Philip Hammond has been boasting to the FT about how there will be only 2 years of pain! A hundred billion deficit wiped away in 2 years! The NIESR has endorsed it. Just two years of excruciating cutbacks, a pound worth, ooh, half a euro and no spending on anything, anywhere, and we’ll be home and hosed. And, best of all, Lord King is behind it too. He says we should
rebalance the economy, with more resources allocated to business investment and net exports and fewer to consumption
CiC: Poetry. Job done.
SR2: Just one problem sir. I’ve been doing the sums. Do you know how much stuff we need to sell to, um, the foreigners? Well, it’s rather a lot. Or rather: it’s more than we have ever ever done, well, except for when we had gun boats and plantations and all those jolly things. Are you sure we can do it?
CiC: Oh, sure. I’ve heard these extraordinary things about China. My brother in law has an office there. Toddle off now.
SR2: And as for the business investment . .
CiC: Yes, we’ll just lean on soon to be Lord K and get him to lower rates a pip or two . . . It worked a treat in 1980-something. Or 1990-something. Whatever. Always works a treat. Toddle off fella
SR2: But sir, the rates are already . . .
CiC: Then tell him to print more money. Oh, hold it a mo, the Boss says that malarky will have to end. Well, something will turn up. Off. Toddle.
meanwhile, in the 12 other countries:
CiC: We have a problem with debt! But fortunately I think we can export our way out of this one . . . . etc
Look, sorry for the leaden satire. But we can’t all export our way out of trouble. And if anyone is going to do it, it will be the countries that have a big ready to go manufacturing sector. We’re good at a lot of things in the UK. I’m proud of us, all of us. But turning a trade deficit into a surplus while the developed world struggles, wheezing, to its knees, is not one of them. The last time we could expect to dominate exports that way, we’d bombed the f*ck out of the major local competitor.
And, also, we can’t all be investment champions, can we? Tell me if I’m wrong: investing is like building loads of offices and flats, spending is like inhabiting all those offices and flats. Now, suppose you go a place, call it, say, Dubai, and they are putting up loads of offices and flats. Fine, you think: some look lovely. But then you ask the agent “who’s going to use them” and he says “well, there are loads of good businesses setting up here”. “Fine” you say. “What businesses?” “Oh, mostly real estate and property” he replies.
Someone has to consume. Maybe the Conservatives have a big plan to manage this major rebalancing that the G20 keep talking about. But I thought they didn’t see the UK’s economy as the World’s business.
Oh, and before anyone accuses me of being rabidly anti-Conservative: no, I’m not . I am pro sensible economic policies. I’ve written leaden Anti Fiscal Denialism Satire too.