Monday 1 September 2014

Political engagement and the debt clock - http://www.debt-clock.org/

Many people are not politically engaged - they talk into terms of "the government" as if they are a different species and nothing to do with us. They are wrong. They represent us and do things in our name.

In sweeping and in very broad terms the UK political spectrum ranges from socialism to capitalism. I am not going to define those for you - determine that yourself. They are characterised by the Labour and Conservatives, employee and employer, poor and rich, big government and little government, public sector and private sector and left wing and right wing.

We have a democratic election process in this country and government priorities and therefore policies change depending on who is elected.

Which party - which politicians reflect your views - what do you want to happen in your name? If you do not vote you are not having a say - you are leaving it to others to decide on your behalf - your future - your children's future. (to those that say it doesn't make a difference - they are all the same - I would say by voting and by political engagement you can change that.)

So where to start in engaging with the political debate?

Perhaps the biggest area of debate is the ECONOMY- the one that affects us most directly. The economic jig saw includes issues such as taxes, prices and inflation, jobs, rates of pay, interest rates, benefit levels, public sector (government and local government employees) , NHS cost, pensions, import and export levels, austerity measures, government spending levels, deficit and debt, the need for economic migration, the EU etc etc etc.

A complex and overwhelming list.

A simple analogy - a real one. The GOVERNMENT SPENDING CAKE - to be eaten (spent) - on all the things the government spends money on and undertakes to do - from the army to job seekers allowance - from schools to prisons - from welfare benefits to the NHS to overseas aid

How big is the cake to divide up? DETERMINED BY WHO YOU ELECT (how much tax revenue (determined by tax rates and state of the economy) it has coming in and how much it borrows.)

Who gets the cake? DETERMINED BY WHO YOU ELECT

REALITY The government is always under pressure to spend more in particular areas. It is constantly being lobbied and pressured. It has a choice.

1) Increase taxes so it can spend more.
2) Spend more in one area but cut spending in another area to compensate.
3) Borrow more!

The reality of increasing taxes is it can act as a disincentive to people and businesses to work. High taxes makes businesses uncompetitive because prices have to go up. We import instead. Companies move abroad. There is a limit that you can tax because it will reduce personal spending. Shops suffer.

So my pointer to you when deciding if you support government spending is to ask :-

1) If we spend more in this area - what are we going to cut to compensate. (the answer to everything cannot be efficiency savings and taxing bankers bonuses.)

2) If we are not prepared to cut something to compensate we are going to have to borrow to cover it - given that the government spending cake is finite without borrowing

2) above is what we have been doing in this country for years. We cannot make hard decisions so we borrow the money. We are massively living beyond our means as a nation. We cannot get the deficit down. Soon or later our national debt will overwhelm us. It is a shocking legacy for our children. See the debt clock link below.

http://www.debt-clock.org/

There is only one answer sensible and responsible answer in my view - CUT SPENDING and at the same time be aware that higher taxation rates demotivates and inhibits and consequently reduces the overall tax take.

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