The purpose of morality is to teach you,
not to suffer and die, but
to enjoy yourself and live.

Anybody with any knowledge of economics should feel uneasy at the sight of a country where half of recorded economic activity is conducted by the state. Are such semi-socialist societies operable, and if so, for how long?

Read the article via Deceits and delusions – Some thoughts on the euro-crisis and democracy.

Here’s the growth of the British Government to over half of GDP:

The growth of the British Government

We can escape this mess towards sustainable prosperity, but that escape will require substantial reforms towards sound institutions of social cooperation: honest money, strong property rights, freedom to contract, an end to trade barriers and lower, simpler taxes.

The economic facts behind the Autumn Statement, in as far as they are known or forecast, are available in the Economic and Fiscal Outlook from the Office for Budget Responsibility. Table 4.7 provides forecast current receipts. Table 4.18 provides total managed expenditure. So, here’s a chart of current receipts (i.e. tax) and total managed expenditure (i.e. spending) for the next few years:

The reality is that the Government intend to increase spending every year of the forecast period and to meet that spending with increased revenues. There will only be cuts as a proportion of GDP, and only if it grows. There will only be real cuts if there is inflation.

It’s tragic that we have created for ourselves a state which cannot provide more with more money and that, from the perspective of real public services, there are cuts at all.

There’s much to be said about inflation, inflating the debt away and, indeed, inflating away public expenditure. There’s something fundamentally dishonest about it. That’s why I co-founded The Cobden Centre to press for honest money: our inflationary financial system is undermining society, just as Keynes and Mises said it would.

Keynes wrote,

There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

And Mises explained,

Inflation is the last word in destructionism. The Bolshevists, with their inimitable gift for rationalizing their resentments and interpreting defeats as victories, have represented their financial policy as an effort to abolish Capitalism by destroying the institution of money. But although inflation does indeed destroy Capitalism, it does not do away with private property. It effects great changes of fortune and income, it destroys the whole finely organized mechanism of production based on division of labour, it can cause a relapse into an economy without trade if the use of metal money or at least of barter trade is not maintained. But it cannot create anything, not even a socialist order of society.

We have been plunged into the present misery by a long credit boom caused by low interest rates. Politicians now seem to be helpless in the face of a crisis caused by the inflationary financial institutions they have allowed for the decades following the collapse of Bretton Woods. The only prescription for recovery appears to be more inflation or, as they call it today, “quantitative easing” and “credit easing”.

Yet more money and bank credit may lead to a boom initially, or perhaps merely to a moderation in our difficulties compared to our neighbours, but it is bound to erode the capital stock, to hide losses and to cause a yet worse problem later. The illusion of prosperity created by “monetary activism” cannot last.

If we are to have lasting prosperity and a just socio-economic system, we need instead, as the Chancellor used to say, an economy based on save and invest. That requires, as prerequisites, honest money which holds its value and a state which lives within its means.

Via HM Treasury, where all the key information may be found:

Responding to the Office of Budget Responsibility’s (OBR) updated Economic and Fiscal Outlook, the Chancellor has set out details of further action the Government will take to protect the UK from global instability and the euro area crisis and build a stronger, more balanced economy for the future.

Via Andrew Lilico on ConservativeHome:

When we criticise Osborne – and I do – we must not forget either the huge task he faces, nor the political constraints under which he operates, nor the remarkable scale of the plan he actually has.

Via John Redwood’s Diary:

There is a small shift from current to capital spending within the same increases in total spending.  Over the five years capital spending will increase by a total of  £5.8 billion. Current spending will be £1.1 billion less than the old plans in 2014-15.  Total spending rises from £669.7bn in 2009-10 to £736.4 billion by 2014-15, an increase of 10% in cash terms.

I’m still reading…

The latest figures for apprenticeships show an above average increase across Buckinghamshire. The average South East increase of 44% was also bettered by our neighbours in Beaconsfield (50%) and Chesham and Amersham (53%).

Wycombe’s own increase of 51% should also be seen against the total number of places. We saw an increase from 420 to 640 places: over 200 more places than our neighbouring constituencies. This shows that youth employment prospects in the South East are increasing through business investing in local talents.

Futhermore, I was delighted to attend the Wycombe Business Expo 2011 that showcased the many diverse companies based in the Wycombe area. It was encouraging to see local business coming together, sharing ideas and best practise. The welcome news of local apprenticeship growth will add to this practical effort to create jobs and boost growth based on real value.

HM Revenue chiefs were yesterday ordered by MPs to stop sending threatening letters to people who owed them money, warning that cars and televisions would be seized and sold off for a pittance.

In a scathing rebuke, tax bosses were told by the Commons’ Treasury committee that the ‘widely used’ practice of mailing out threats to auction off people’s property was ‘completely inappropriate’.

via MPs order tax chiefs to stop posting out ‘horrifying threats’ | Mail Online. Moreover,

In a damning report this weekend on HMRC’s performance, the Treasury committee said: ‘These letters appear to have been widely used without sufficient thought to whom they were sent to, even being sent to people who did not actually owe money.

The report is available here. It says,

It is inevitable that HMRC will have to pursue some taxpayers for outstanding debts and it may have to be forceful in doing so. However, the tone of some of the letters being sent out suggest the “potential consequences” are inevitable unless payment is immediately forthcoming. These letters appear to have been widely used without sufficient thought to whom they were sent to, even being sent to people who did not actually owe money. Such language is appropriate only where there is strong evidence of persistent and deliberate non-payment; it is completely inappropriate where the amount owed is in dispute, where the amount may be zero, or where the recipient is vulnerable. We recommend HMRC take steps to ensure such hard-hitting correspondence is used in a more proportionate way, is better tailored to individual case histories and contains information on the specific debt in question.

Quite right too.