Weekly Reflections: Living within ones means.

Posted: 5th Mar 2016 in Short: Uk Politics, Economy, History
Tags: , , ,

Good-Debt-vs-Bad-DebtThe financial policy that the conservatives have adopted has been harsh and unrelenting, but it is becoming increasingly obvious that their financial mindset is becoming less and less sound. ‘Live within your means’ seems to the buzz-phrase for Osbourne as he tries to bring some sort of legitimacy to austerity. But in my opinion, he is simply alienating all political perspectives. Firstly, if look at this from a leftist perspective, the phrase itself simply does not make sense. Many citizens fall in to debt and bankruptcy, but it isn’t because they couldn’t resist the urge to ‘live within their means’ rather that they had no choice. Medical treatments, redundancies, the rising cost of utility bills are all factors that we can’t control and force us to borrow from lenders just so that we can survive. Those at the bottom of the social ladder simply don’t have the luxury to ‘live within their means’. The state can’t just simply withdraw its funding towards society and say we ‘have achieved our budget surplus so everything will be okay’, because at the end of the day if the current prosperity of your populace is dwindling, then eventually your nations finance will begin to stagnate, as we have seen the tax receipts have fallen short of expectation by £1.1 billion.

If we look at this financial policy from a right-wing perspective, we also see its short falls. Traditional right-wing political economic theory tends to have strong links with business,  private enterprise and commerce. Pumping money in to certain schemes can have strong long term benefits for society, as more jobs and services become open to the public thus creating more avenues for wealth creation. Hence the term ‘you reap what you sow.’   But if one ‘lives within its means’, then one is prevented from investing in profitable projects due to the fear of debt. Now no one likes the idea of risk but if there is a strong potential for a positive turn, then the state should take it. As the UK shadow chancellor recently commented ‘If you borrow to invest, the debt will more than pay for itself in the long run as the investment matures and raises the economy output, and thus tax revenue‘. There is a longstanding concept that debt is always bad, but debt that is controlled, regulated and planned can have social benefits.

In the 1640s, Oliver Cromwell pumped huge amounts of money into his republican navy to defeat royalist forces across the European continent. Some would argue this was a reckless ill-thought venture which plunged Britain into debt. But because Cromwell had used the military to help abolish the monarchy he was allowed to build a financial system that moved away from old medieval ties of feudalism and towards more innovative ways of generating a steady and strong revenue. If there is one historical lesson that the current chancellor George Osbourne can learn, is that taking economic risks can be a responsible way of sustaining security for the future. Mr Osbourne if you want our UK economy to grow and develop, loosen the shackles and let it flourish.


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