April 10, 2009

Gordon Brown, Economic Genius

There is a lot that you can complain about of Gordon Brown, an aweful lot, but with the joys of spring bursting around me I decided to see if I could think of anything good to say about him instead. It turns out that there is.

Firstly thanks to Gordon Brown being in the treasury for the past decade we are probably in a better place now than if he had not been there. Yes the country is bankrupt, but this is a Labour government and that always happens under a Labour government. Yes he has spent far too much on the Labour payroll vote with nothing to show for it, but again this is Labour so there was no way around that. However had Gordon not been chancellor, and a chancellor with enough power to say 'No' to the Prime Minister, it is almost certain that Tony Blair would have lead us into the Euro. Had we been in the Euro then the country would still be bankrupt, Labour would still have spent billions bribing their payroll vote, but the interest rates would have been a point or two lower for the last decade and if you want to now what that would mean just look at Ireland or Spain.

One of the reasons for the current recession is the bursting of a ginormous property bubble. Had we been in the Euro the property bubble would have been that much bigger, due to the lower interest rates, and so would the bust. Also being outside the Euro it means that the value of the currency can float downwards, as it has. This imports inflation so removing the risk of debt-deflation, exactly as happened during the Great Depression and why the UK escaped that relatiely well, and reduces the prices of our exports so making them more competitive and helping to price us back into the market. We are not in the Euro and for that we should heartily thank Gordon.

Secondly he has bankrupted the country. There is no money left. This means that whatever they want to do the incoming Conservative government is going to have to cut back on the size of the state, they have no choice in the matter. Over the last decade the size and intrusive nature of the state has grown and grown, but it has grown based on putting the costs onto the nations credit card. Now that card is maxed out and the money needs to be repaid. The size of the state has to be trimmed anyway, because a smaller state is a better state, but now there is actually a chance that it will be trimmed simply because there is no money to keep paying for its current bloated excess. For that too we can thank Gordon Brown.

He didn't mean to do either of these things. Staying out of the Euro was simply a way of putting one over Tony Blair so he could get the 'credit' later. Nor he did not inflate the size of the state to make it go pop, it was because he is a statist that equates spending money with doing good. However the results, staying out of the Euro and setting up the conditions for shrinking the state, will aid this country in the long run.


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