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Budgeting from Bankruptcy

April 11, 2013

The annual budget has been delivered, decried, denounced and damned. 'Twas ever thus. 

It's a very long time since we had an empire to plunder. The British Empire was the nation's bank of Mum and Dad. Mum and Dad are long deceased and we have to stand on our own two feet. And we're finding it a bit of a struggle. We've borrowed up to the hilt and we can't face the idea of payback. 

The problem with payback lies with who should do the paying back. Those who have never earned any money have no means of paying back, and those who have earned have been paying for those who haven't so they don't see why they should pay in duplicate or triplicate or any other multiple. But you can't get blood from a stone.

There is a strong argument for borrowing more: borrowing to invest such that the investing generates the dosh with which to do the repaying. This could and would work if the circle were closed in upon the UK. Or, better still, closed in upon the UK in such a way that it was sucking dosh in from the greater circle of the world beyond the UK. The problem is that this would not happen. The problem is that what is happening would continue to happen: the additional borrowings would be spent on goods from China and other lands in the greater circle. It would feather nests external to our own. And reduce their debt but not our own. 

If a million people each have a thousand extra pounds, what will they spend it on? A Toshiba telly, the latest Apple pip and designer denims from anywhere in Asia. Asia may or may not deserve - that is some other question - but the diversion of dosh in that direction will not and cannot reduce the indebtedness of a post-imperial anywhere else.

Until such time as we get our heads around the fact that Buying British is the only possible route to paying off British debt, we will have to allow our elected representatives to punish   us. Or perhaps we just don't care about being in debt enough to make the sacrifices necessary for its elimination. If that is the case, then we risk - and deserve - the wrath of the next generation who will be saddled with a sad inheritance.

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