Taxpayer can bear no more!

So says no less than UK Chancellor of the Exchequer Alistair Darling!

In an interview with The Times he has said that UK taxpayers are at the limit of what they are prepared to pay for "public services". Well, that's not going to stop him taking more money from my pay packet assuming I get another pay increase this year and a bonus. Nope, can't see my taxes being capped.

Of course what this is about is that the UK Treasury is in a rather dire state. On the one hand, the British government continues to be profligate with its state sector, the most recent profligacy being the nationalisation of Northern Rock, a building society that had clearly loaned too much to too many who couldn't pay them back. It also is running a substantial budget deficit, £24.4 billion in the three months to June alone. National debt (government debt) threatens to rise above 40% of GDP and there is now talk of borrowing to pay for current spending, not just capital investment in hospitals, schools, defence and transport. On top of that tax receipts are down, as the economy slows down.

In short, the newLabour reputation for fiscal prudence is looking badly damaged. The solution it chooses? Borrow more.

During the good times, the UK government didn't run budget surpluses - which it could have to lower debt and build a buffer of financial capacity to borrow during bad times. No, it continued to pour money down the enormous fiscal black holes of social spending, subsidising more housing, little used (and extraordinarily well used) railway services and the every hungry NHS.

So, whilst the Keynesians out there aren't worried - they always advocated borrow, spend and hope, the truth is that more borrowing is going to hurt.

Borrowing more means the UK government is competing with others for credit - given how tight credit has become for businesses and homeowners, this will only exacerbate the problem. In short the state sector will be competing with the private sector for credit. This only makes sense if you think the state sector can spend money better than the private sector, which is dubious at best. So expect interest rates to rise, further hurting businesses and mortgage holders (and so further dampening down house prices).

Secondly, borrowing more, particularly from offshore, will be inflationary, as it pumps more money into the economy.

There is, of course, the demographic timebomb contained within the UK national debt. The £640.5 billion of national debt consists of 44.2% of GDP, and this is at a time when the population is progressively aging, putting a higher strain on an already undercapitalised "national insurance" fund (which is no more a fund than any other Pay As You GO tax funded system) for pensions and the NHS.

So with credit tight, housing prices (and much of the private sector savings) heading downwards in most of the country, fuel and good prices soaring, the trade union movement is also starting to be restless. Calling for state sector wage increases well above inflation, naturally not giving a damn about the rest of us who would be forced to pay for them.

The Daily Telegraph editorial on Saturday does suggest a different approach, which is simply to do what householders and businesses are doing in a recession. Look for efficiencies in government spending. When the government spends money it is taken from elsewhere, taken from consumers and businesses. So when it is spent on wasteful activities that generate little return it is destructive to the economy.

For far too long the answer to problems in the UK has been to ask the government for money, and the new Labour administration has obliged. It is time for the Conservative Party to out the waste of government, and to wage war against it. Some simple questions could be asked of all government spending by those in control of it:
1. Will the spending genuinely generate more money for taxpayers than was taken away?
2. Would taxpayers voluntarily cough up funds for this spending if given the choice?
3. What harm would happen if this money wasn't spent at all?

Those are questions politicians of the British Labour Party seem unable to ask, it's about time they were.

Free trade could ease global recession

In a couple of weeks time the Doha round will stagger on. If the governments of the EU, USA, Japan and poorer countries were rational actors they would treat this as an opportunity, a huge one - to inject some growth into the world economy. The Daily Telegraph tells how important this is.

It would be a chance for the price of food to be relieved by multilateral agreement to abolish agricultural export subsidies, to end non-tariff barriers on agricultural trade, and move towards decreasing tariffs and domestic subsidies. That requires the EU, Japan and the US - whilst Barack Obama seems distinctly unenthused.

It would be a chance for developing countries to respond in kind by reducing their tariffs and non-tariff barriers to manufactured goods and services. That requires India, Brazil and African states.

However there isn't much chance for optimism. In the US, the Democrat led Congress is in protectionist mode, and in the EU Nicolas Sarkozy as EU President is really not interested at all. Meanwhile, the Observer reports how Oxfam and ActionAid are showing their socialist colours, with little interest in the Doha round. It also presents Haiti as an example of how liberalising agricultural trade can go wrong - which of course, ignores the truth that without EU, the USA and Japan liberalising as well, and without the rest of the economy opening up, then Haiti was only going to be half successful.

EU bureaurats strangle consultation

When the EU engages in "stakeholder consultation on the Commission's smoke-free initiative" you might think it would at least allow a smokers' lobby group to participate.

No. According to the Daily Telegraph's Simon Clark the European Commission has no interest in the views of smokers. Liberal? I think not.

"World's worst building" getting minor upgrade

Not PC described it as such, as has the Daily Telegraph and Esquire magazine.

It's the Ryugyong Hotel in Pyongyang, which is itself an empty shell. It is a concrete monstrosity, it has no utilities or rooms. Construction started in 1987 as a showpiece against South Korea, the host of the 1988 Olympics (which the USSR and China, North Korea's then allies, refused to boycott), construction stalled in 1992 after US$750 million had been spent on it, and the aid flows from the USSR (and the USSR itself) had disappeared.

According to the Daily Telegraph, a handful of top floors are to be refurbished at considerable cost. I wonder how this will happen, given it has no elevators and rumour has it that it was so badly designed and built (by North Korean state "companies") that the elevator shafts are not plumb (so elevators are out of the question using those.

The reports of "refurbishment" are most likely to be the use of the structure for telecommunications according to the Daily Telegraph report. This is surely the building that would be one of the first to get demolished when this enslaved country is finally freed.

How nasty can someone on the left be?

"Poisonous, spiteful, and bitter" is how Idiot Savant described Dr Michael Bassett. I think he ought to look in the mirror.

He has posted on how Margaret Thatched is to get a state funeral when she passes away, and he's gotten nasty about it.

He described Margaret Thatcher as "Britain's most hated woman", but the link he places that comment on gives NO evidence for this. Even though it is the Guardian, the most leftwing mainstream paper. Controversial yes, but most hated? How does a NZ blogger make that call?

Then he says "On the plus side, it will at least give her victims a final chance to throw excrement and rotten fruit at her as she goes past". Yep, poisonous, spiteful and bitter for sure. Nice stuff really. David Lange led reforms as radical as Thatcher, but he didn't say that about him did he? However executing Saddam Hussein is "barbaric revenge" which even he didn't deserve. Apparently being filthy and disgusting at someone's funeral is ok.

Now I accept he'll have a Marxist position on her saying "She deliberately drove millions into poverty and destroyed British society in pursuit of a demented dream of unfettered capitalism. Her economic "successes" (if you can call them that) were won over the bodies of the poor. And that makes her a criminal, not a hero". Although there is NO evidence she "deliberately drove" millions into poverty, although there is mountains of evidence that decades of postwar socialism stagnated Britain into decline and locked generations into low income low education based jobs like mining. By no means is the UK close to unfettered capitalism, and the economic success is patently obvious with low unemployment, inflation and economic growth that much of Europe has envied. The "bodies of the poor" were kept there by decades of leftwing patronising and pretending that government could protect them from the economic reality that the British economy had to move on to be cleverer and more productive. Frankly Britain has only gone part way down that process, with mountains of whinges and moaning in much of the country about why the "guv'mint don't do nout for them".

Yes she mistakenly supported Pinochet, but her political opponents wanted unilateral nuclear disarmament (UK disarms, kicks the US out of the UK, but the USSR can remain a nuclear power), to remove itself from NATO (so basically being neutral between the free West and the totalitarian Soviet bloc) and remove itself from the EEC (so economic autarchy, ala Eastern Europe).

I for one am glad she defeated tired old unionist Labour in 1979 to turn the bankrupt British economy around, defeated the blatantly Marxist indifferent-to-the-USSR Labour in 1983, and the clothcap moaning reborn old Labour in 1988.

I can appreciate people not supporting her policies, but to say people should throw excrement and rotten fruit at her funeral is simply vile - but I guess the left is allowed to do that, much like some on the left turn a blind eye when picketers initiate violence against workers who don't want to strike, and their families. This is not a time to give a eulogy to Lady Thatcher, but for the handful of errors she made (Pinochet, Poll Tax and social conservatism) she did much more to save Britain than any other Prime Minister since Churchill in WW2. Indeed, the telling legacy is that no major UK political party even approaches destroying the bulk of her policies. That is worth far more than the venom of a leftwing New Zealand blogger.