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The wall of lies – “cuts” that leave government spending HIGHER.

“Why do people not resist the endless increase of government spending? Can they not see it will lead to economic collapse? Are the people stupid? Insane? Just concentrating on internet porn? What?”

These are the sort of questions that free market people ask. But all the questions make an assumption – in fact several assumptions.

One unspoken assumption is that most people believe in “Keynesianism” – that they do not believe that increasing government spending is “good for the economy”.

Actually I think this assumption (that most ordinary people reject Keynesianism when they hear it) is actually valid. When people come home from a hard day at work and they see on the news (if they even watch the news) so obviously deluded person (such as the “Nobel” prize winners Krugman and Stiglitz) demanding more government spending on X, Y, Z, they know it is nonsense – at a gut level they reject this insanity known as “Keynesianism”. With its “monetary stimulus” and “fiscal stimulus” and other vodoo.

However, there are other assumptions which I do not think are valid.

For example, it assumes that most people know (know CLEARLY) that government spending is still increasing. And, in an American context, know that BARACK OBAMA has been the main driver in the increase in government spending in recent years.

The media reporting of this whole area is a TISSUE OF LIES.

The Economist magazine (“oh Paul not your favourate whipping post again” – it presents itself as a free market magazine, so of course I single it out) every week talks about the “cut” in government spending in Britain and United States and other countries.

Regarding the United States (week after week) it will write about the “hundred of billions” of reductions in government spending – whilst (in the real world) government spending continues to go UP. “Paul hardly anyone reads the Economist magazine”.

No – only people who are not satisfied with the ordinary media might do so. But what does the ordinary media teach?

The ordinary media teach that Mr Cameron and co have made savage cuts to government spending in Britain. That wise and noble Obama is struggleing for a “balanced approach” of “cuts” in government spending in the United States together with the “tax dodgeing” rich “paying their fair share”.

All of this is a tissue of lies (it is all false). But if people turn away from the general media to the specialist economic (and “free market”) media – they hear and see THE SAME THING.

In some corner of their minds most people have some doubts about what they are being told, but they are told it (including via the ENTERTAINMENT media – if they do not watch news or current affairs), government spending is being “cut” – Cameron and Osbourne are super “tough”, Obama is wise and noble struggleing against evil Republicans in Congress……

And on and on.

So the population (or most of them) are left confused – a WALL OF LIES keeps them from the truth.

22 Comments

  1. bloke in spain says:

    Public spending? Well yes. If you ask most taxpayers whether the government should spend more of their money, you tend to get a no. But that’s not the question that’s put. It’s always talked about in terms of investment. It’s entirely possible to get a political statement along the lines of “We will reduce government spending to enable investment in…” “Investing in services”, despite being an entire contradiction, is on the title page of half the local authority handouts in the country.

  2. Mr Ed says:

    It takes a peculiar type of political ‘genius’ to increase spending, and yet talk of ‘cuts’ as if real cuts were being made.

  3. Paul Marks says:

    Yes to both comments.

    As for the people – I am not saying that most people actually believe the stuff the media (and the politicians and academics and…) say, but they do not need to be convinced.

    For the farce to go on – the people just have to be CONFUSED (baffled – messed up), and remember most people have busy lives (“one vote is not going to alter anything”) and are not paying closer attention to any of this stuff.

    So the B.S. from the media (and so on) does its job – it leaves people confused and most people turn away from the whole discussion.

    The farce will go on – till the collapse….

  4. JohnM says:

    The problem with all the modern “Keynesianists” is that they extend Keynes’ ideas beyond what Keynes intended.
    Keynes advocated the use of monetary and fiscal measures to mitigate the effects of economic recessions and depressions, and not to prop-up a system suffering from endemic failure (such as ours), and certainly not to support a system that failed due to widespread financial incompetence and fraud.

  5. R Richard Schweitzer says:

    The place to begin is right here in the accurate use of language for the subject under discussion.

    The subject is not “***cuts***in spending.”

    The subject is “reductions in the increases in spending.”

    The results under consideration are the effects of reducing the ***rates of increases*** in spending.

    We have never been discussing reduction of spending. Government spending in both the US and UK has steadily increased, and will continue to increase, because “spending” through political actions is not tied to any determining source for that spending. Instead there has been unlimited resource to borrowing and increasing sovereign debt.

    Both nations continue to increase sovereign debt without limitation, even though the US has an imaginary mosquito net of debt ceiling, never really limited.

    To constrain spending, the authority for increases in sovereign debt should be tied to the sources for ultimate payment which, absent debasement and inflation, are the revenues that can be, and are, collected by extractions from the private sector.

    For a considerable period of time in the US the federal debt has increased at the rate of $60 for each $100 of collected revenues. Quick calculation will show that 37.5% (60/160) of all spending has come from increased debt. If the current rate of spending from increasing the debt is approximately 31%, then we are increasing the debt by $45 for each $100 of collected revenues. That is the principal source of increased spending, going beyond collected revenues.

    If it is necessary to continue increasing the debt at the present rate, or at any established rate, then the authority to issue additional debt should not rely upon some nonexistent “ceiling,” but should be measured by collected revenues which are established by the ability of the federal government (and congressional will) to extract funds from the private sector.

    A limit should be imposed upon any authority to increase the sovereign debt in any four fiscal months in excess of specific percentages of collected revenues measured as the greater of the average of 4 months collected revenues in the preceding fiscal year or in the immediately preceding 4 fiscal months, without application to, and approval by a super majority of legislative or parliamentary actions. Those specific percentages can be determined and adjusted for future fiscal periods in order to decrease progressively the rate of increase in sovereign debt.

    This will require constant attention of legislative doors. It may require legislation which adjusts appropriations and spending authorizations to conform to the limitations on increases in sovereign debt.

    There will be no end to the increasing spending so long as there is constantly increasing sovereign debt tied to know standard to measure that increase.

  6. Paul Marks says:

    John M. – the problem with Keynesianism was (and is) J.M. Keynes.

    He was wrong – not just wrong now, but wrong in the situation of 1936 (when the “General Theory….” came out).

    See (for the latest book on the matter) “Where Keynes Went Wrong” by Hunter Lewis.

    Richard S.

    The Economist magazine (and the rest of the media and the political class) do not talk about “cuts in the increase” they talk about cuts (period).

    Someone who says “I am cutting the rate of increase” is like a junkie who says “I am cutting down, I really am, just give me some money for another fix”.

    The first step to dealing with a problem is to admit that it exists.

    And “cuts in the increase” is NOT admitting the problem if government already being unsustainably large, exists.

  7. Schrodinger's Dog says:

    The problem is that, while government spending may be at an all-time high, cuts are occurring at the individual level.

    I have a couple of relatives with government jobs. Out of a team of eight, one saw three of his colleagues recently made redundant (laid-off for you Americans). He dodged the bullet this time, but reckons he may suffer the same fate next year. The other one last had a pay increase at least three years ago, then subsequently had his hours and pay cut by 5%. More generally, he and his colleagues have been told there is a lot less money to go round.

    How to resolve the seeming conundrum of record government spending with individual cuts. One explanation might be declining worker productivity. Studies have shown that, while worker productivity in the private sector tends to increase over time, in the state sector it tends to fall, typically by 1% per annum.

    Empirical observation would appear to confirm this. Under the last Labour government, spending on healthcare more than doubled in real terms, while spending on education rose by 60%, with little corresponding improvement in either service. Indeed, there were reports of Tony Blair, when he was Prime Minister, getting angry in cabinet meetings, because so much was being spent to so little seeming effect.

    Hence the paradox of record government spending, while at the same time people are convinced jobs and services are being cut.

  8. Paul Marks says:

    S.D.

    I have heard that story about Mr Blair as well. For someone who was, in some ways, such a skillful political operator – he was also oddly innocent. He really seems to have believed that if increased a the budget of a department “the people” would get a better service.

    Only someone with no practical experience of government (as well as no understanding of economic law in theory) would make such an assumption.

    “Better people in charge” is normally the default position of a person caught up in such a deluded state of mind.

    As for cutting government spending – it can only be done by picking out FUNCTIONS.

    Looking at what the state does and saying “these are the things we are not going to do anymore”.

    For example, it is absurd for a near bankrupt nation such as the U.K. to engage in “overseas aid” – so this department should be abolished (even this minor cut saves ten billion Pounds).

    The E.U. is also a luxury we can not afford. Nor is the absurd U.N. or the I.M.F. and World Bank.

    The arts and higher education (the universities) were a matter for civil society (not the taxpayer) before World War II – and must be again (again the government is near bankrupt there is no room to spend a fortune turning out university graduates for whom there are no “graduate jobs” anyway – voluntary aid will pick up the slack for young people of real talent).

    Transport did not use to be a government matter – and the department can not be afforded either.

    As for the Department of Corporate Welfare (sorry “Department of Trade and Industry”). And the demented “Regional Aid”…..

    Then we get on to the really hard areas…..

    Defence, education (not higher education – that is dealt with above), welfare (including pensons) and health.

    Traditionally speaking only defence was a spending responsibilty of national government.

    However, people have come to expect their children to get “free” education, and they expect income support (in old age and unemployment) and they expect “free” healthcare.

    I do not believe that this situation can be changed overnight – not without great suffering.

    However, I could reduce British government spending by about a third without even breaking a sweat – and without even touching defence, healthcare, education of children and pensions.

    Of course there is no chance what-so-ever of me (or anyone else) being allowed to reduce British government spending by about a third (which would still leave government spending about the same percentage of GDP that it was in 1963-4) or me (or anyone else) being allowed to reduce British government spending AT ALL.

    We are doomed.

    It is as simple (and as brutal) as that.

    We have savage taxation (as bad as the Roman Empire in its final days) and we have a vast government deficit on top of that – and an economy where real economic growth is not even a realistic possiblity.

    The consequences of this do not take much working out.

    There may be some American State Governors who understand the nature of the crises the West faces – and are prepared to do what must be done (if some part of civilisation is to survive).

    But I see no one of this sort in any major European nation. And the handful of American State Governors who understand the situation – still have to break away from the lunatic empire that the United States has become.

    Not exactly an easy task.

  9. R Richard Schweitzer says:

    Paul Marks,

    Perhaps you mis-read me.

    (I thought you had dropped the “Economist”)

    But, when “they” et al. use the term “cuts,” to what to the cuts actually apply? To the gross amounts of spending; certainly not!

    Surely you are familiar with “baseline budgeting,” or whatever it may be called in the UK. No one is talking or writing about the various “baselines” or their re-ordering.

    So, let’s be frank about what is really currently and immediately at issue. Surely an ultimate goal must be to reorder the baselines and the factors that created and sustain them. Meanwhile, ’til we can get back to the ranchhouse, let’s at least apply a tourniquet.

  10. JohnM says:

    If the government did not assume responsibility for things, transport for one, then they would just not get done. Even councils do not build or maintain roads anymore, they contract the work out.
    I would be interested to see a scheme that would work for road maintenance with no government input at all. It would, of course, mean people paying directly to use the roads.
    As for health….I note that a friend of mine (of old) now resides in the US and pays a family insurance of $1300.00 per month for healthcare.
    Maybe it is time to let those without stay without: Anything.
    With the current deficit (the difference between incoming and outgoing) being some £106 billion/Yr at the moment it may be time for some hard facts to surface. The country cannot afford foreign aid, but it cannot, also, afford state pensions (at £63 billion for 2011-2012) (forecast at £120 billion/Yr by 2030-2033).
    Public service pensions, at the ground level, are funded. Private pensions are wallowing in a pit and show no evidence of climbing-out anytime soon.
    I’m very afraid that the country may be beyond recognising that all the easy options are non-available. As they have been for 20 years. The transition from now, to what has to be, will be traumatic and violent.
    Ask a “dedicated” green for the route to go, and you’ll get one option: Population reduction.
    And they do not mean birthrate reduction, which is the worst option anyway. None of that will get to the ears of those facing culling.

  11. Spinny says:

    “Why do people not resist the endless increase of government spending? Can they not see it will lead to economic collapse? Are the people stupid? Insane? Just concentrating on internet porn? What?”

    I’ve tried. I’ve written to my MP, I’ve commented on the blogs of councillors, I’ve told my local councillors on the rare occasions that they actually appear in public, I’ve discussed it endlessly with coleagues in work and friends in the pub, but to what effect? Nothing changes, no-one who is in a position to change anything is listening. Perhaps my only option is to start lobbing grenades at the powers that be. I can’t see any other way of getting my message across.

  12. Single Acts of Tyranny says:

    “Perhaps my only option is to start lobbing grenades at the powers that be. I can’t see any other way of getting my message across”

    Setting aside the immorality of using violence, it is not smart to use violence against an institution which has a massive advantage in the use of force. But you make a reasonable point.

  13. JohnM says:

    And, of course, if the government bring troops to quell the disturbances (as they will) then it will be the end of the country as it is.
    And can the use of force be immoral when used to defeat/destroy those who would enslave and beggar you ?
    After all, we now have three neo-liberal political parties vying to be the same and criticising each other for being no different from each.
    We do have, in fact, a truly democratic dictatorship.

    Worth a read:

    http://www.mindfulmoney.co.uk/wp/shaun-richards/todays-uk-public-finance-bulletin-is-51-pages-of-spin-obfuscation-and-misrepresentation/

  14. Mr Ed says:

    Libertarian violence is an oxymoron, defending yourself in, say, post-WWI Munich against a Communist putsch is simply self-defence.

    The practical reality is that as the State grows through force (the implicit threat violence usually, and ultimately however grudging, consent, rather than force). The only way to defeat Statism is by persuasion, it is not a physical battle, but a battle of ideas. The Soveit Union lost its grip in a quite unexpected way. If you have seen Michael Palin’s Pole to Pole, he was in Estonia in July 1991 and filmed a wistful Estonian chap singing about lost freedom. 6 weeks later the whole ‘accursed, groaning slave Empire’ as the late Auberon Waugh called it, shattered.

    The problems are apathy and examples. Too much of the former, insufficient of the latter.

  15. Paul Marks says:

    Richard S.

    Perhaps I did misread you – but I do not misread (or misread) the “mainstream” media, they do NOT say “cuts in the increase” (Neil Cavuto might say that – but they do NOT).

    John M.

    “If government did not do it , it would not get done”.

    Did you really mean that (really mean that people are no longer capable of setting up turn pike trusts and so on) or am I misreading you?

    As for “neo liberal”.

    Spare me the Communist bullcrap. You will be talking about “transnational corporations” next. You are not a Communist – so do not use their silly language “neo liberal” indeed.

    We have three wild spending interventionist political parties.

    And the reason for the high cost of American health care is the vast interventions that have already taken place – the insane web of regulations, and the subsidy programs (Medicare, Medicaid, the “free” E.R. Act, SCHIP, and so on) which have had the same effect on health costs that the subsidies for higher education (student loans and so on) have had on American tuition fees (over the same time period).

    In the 1950s the United States had a distorted health market (with licensing, FDA regulations and so on), but it had a market. But to talk of a health market in the modern United States (as the media do) is absurd – it is a government dominated mess.

    Mr Ed.

    We are both agreed this is a tactical not a moral question. You know what I would do with the collectivists (if I had the chance) and that they deserve what I would do to them (deserve it a thousand times over).

    The moral right can not be doubted.

    The physical capablity is very much a different matter.

  16. JohnM says:

    I remain less than convinced:

    http://healthland.time.com/2013/02/20/bitter-pill-why-medical-bills-are-killing-us/

    As for turn-pikes, the highways agency has [arguably] the largest single-organisation fibre-optic data network in the country, the National Roads Telecommunications Services.

    http://en.wikipedia.org/wiki/National_Roads_Telecommunications_Services

    No prizes for who is going to be charging, and no toll-booths/turnpikes etc.

    With nearly 20-millions “hits” on vehicles each day by the police ANPR system, we know that the policies instituted decades ago are coming to fruition and that any system will work.

    I’d like to discuss politics, but fear it is a waste of time. Few of the current crop are politicians. Fewer still are saying anything interesting. None are interested.

  17. Paul Marks says:

    John you may “remain less than convinced” of what?

    I have simply repeated facts – historical facts and modern facts.

    There is nothing for you to be “convinced” of.

    No doubt you know most (if not all) of these facts, before I typed them.

    “I fear it is a waste of time” to discuss politics.

    You may well be correct John.

    But in the period of time before we die we might as well waste our time on this. As anything else we might do is also going to be a waste of time.

    Unless, of course, you have an idea for actually saving our lives.

    As it will not have escaped your notice that I have no idea at all of how to get the government spending cuts that need to be made, actually made.

    Indeed I may well have been much too moderate – as the spending cuts I have suggested may well be not enough (not nearly enough).

  18. No Paul you haven’t given facts, you have given your opinion of what you say the facts are. You never give sources for any of your statements. You may be right about some of it, even all of, it but until you provide credible sources you won’t convince anyone. Ranting here is simply preaching to the converted (well, mostly converted.)

    Now, I know you will tell me to look for myself, but it is you who wants the huge changes, who wants to take away my pension, all support for my wheelchair bound wife, all funding for education and health care and goodness knows what else – while at the same time spending other people’s money as a district councillor. So prove it will work – don’t just spout the same millennial nonsense as the Marxists and Trotskyists.

  19. Paul Marks says:

    Ian (not that one) b – I mistook you for another person (and had to apologise to him), your names are similar (and the site crashed as I was looking at what you wrote – so there we go).

    First of all I should reply to another point above – no I do not buy the Economist magazine, but that does not mean that I do not see it (I am NOT making stuff up, they really are that bad).

    Well basically Ian – you have not read what I wrote. Or rather you did read it – and present a picture of it which is UNTRUE.

    I did not say I wanted to take your pension away – in fact I actually wrote out a list of ALTERNATIVE cuts. I actually listed pensions as something NOT to cut – although I may well be wrong (I may have suggested far too little in cuts for us to survive).

    “You never give sources for your statements”.

    That is a cowardly way of calling me a liar. Not happy with that – not pleased at all. Especially as you could check the facts yourself.

    You also say that I want to take away “health care” and education for the kiddies.

    On education you may have got confused between “universities” and “schools” – so I will give you a pass on that one.

    But on health care there is no way you could have got confused.

    I took a vast risk and said we should NOT cut the NHS (again I may well be wrong – not cutting it may doom us) and you say that I do not want to just cut it – I want to take away “all support for it”.

    Then you throw your “wheelchair bound wife” into the mix.

    Why do you not accuse me of putting this lady in the wheelchair?

    After all if you are going to saying A, B, C, things that are not true – you might as well say D, thing that is not true as well.

    “millennial nonsense as the Marxists and Trotskyists”.

    Thank you very much.

    And I do actually thank you.

    My point was that even if someone (such as me) listed as series of alternative cuts (that did NOT touch pensions, healthcare, education for the kiddies and income support) there was no chance of them being done.

    Say you want to get rid of the Deparment of Overseas Aid – and someone will say you want to get rid of the NHS.

    Say you want to get out of the European Union – and someone will say you want to get rid of pensions.

    There is no hope – none.

    You, Ian, have just proved it.

  20. Paul Marks says:

    I actually typed “and without even touching defence, healthcare, education of children, and pensions”.

    But I might as well have typed nothing.

    The population have given into fear (in fact – terror). Suggest cutting anything (anything at all) and they think you want to get rid of their welfare – and they go nuts.

    Sadly this is the attitude that makes de facto bankruptcy, economic breakdown, inevitable.

    And then the welfare WILL go.

    I am dirt poor and have few skills.

    I will not survive.

  21. Paul – you are right – you did not in this thread mention doing away with pensions. I apologise for attributing that to you. You have consistently talked of doing away with the NHS, benefits and with state funding for schools however in many similar threads, even if not in this one.

    You have accused me of lying several times. I have never done it to you before and I didn’t do it in this thread. Asking for evidence is not an accusation of lying. It is a fundamental requirement in setting out an argument. I actually said “You may be right about some of it, even all of, it but until you provide credible sources you won’t convince anyone.” Perhaps you don’t think convincing others is important. If you don’t though, why are you here?

  22. Paul Marks says:

    Ian I (and many better people than me) I are trying to PREVENT the suffereing of collapse by reform (by rolling back statism rather than just allowing it to collapse into de facto bankruptcy). However, I strongly suspect that this is impossible – partly because of people like yourself.

    You deny lying – and yet you the picture you paint, even in your latest post, is wildly wrong.

    You ask for “credible sources” when everythiing I have pointed to is a matter of public record.

    You could check the rise in government spending (in Britain, the United States and elsewhere) without difficulty.

    Yet you write as if I am making some sort of strange claim based upon unpublished sources.

    I am tired of you.

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