Are the cuts a help or a hinderance?

Having read over my blog for today I need to add a point to the beginning - I am not a supporter of any political party and am not a political activist in any way - these are just thought and arguments that I feel should be discussed.

The general thrust of the current government is to accept the credit when things are going well and to blame the previous governments 'reckless spending' when it is not going their way. I am sorry but I am fed up with it and I fail to see how cuts (that had not even started) were leading to falling unemployment up to December, but when it started to rise again, this was somehow the fault of the previous government because they had not spent the money efficiently.

There is only so much of the 'blame the previous guy' that we can put up with and I believe it has been and gone. We are already in a situation where the tide has turned very sharply against the government and they tactic appears to be - keep a stiff upper lip and a straight bat - blame the riff raff and keep the fingers crossed. this government is starting to unravel already and the pace of this will accelerate rapidly over the coming year as more of the LibDem core voters are affected and some of the Tory 'swing voters' that won them the slimmest majority, start to question their decision.

So lets deal with the BIG question, the deficit!

My understanding is that the deficit is very close to where the Labour party took over from in 1997 in percentage terms. This was mainly due to the debacle surrounding the ERM and the loss in confidence in the Pound if my Economics degree is to be believed. Was there a need for 'Urgent Action' - in the end yes there was because the voices of spin worried the market traders (or chums as they are better known) to the point where they had to take action. If they had put a 5 year plan on the table for fiscal control and a gradual, sustainable tightening of government spending the effect would have been the same. The fact that they continue to spin this line about the biggest ever deficit in £'s, while failing to recognise that in % terms it is actually very manageable over a fiscal cycle (between 8 and 14 years) says to me that they know that will be caught out at some point and therefore they need to make some rapid changes before something stops them from making these changes e.g. commonsense.

These current cuts are politically driven and not financially driven and therein lies the problem.

If you or I need to pay off a credit card, we plan to pay it off gradually over a period of twelve months or longer. We don't decide to stop eating and putting petrol in the car for three months so we can pay it off sooner. If you eat a little less each month and drive a little less each month - you can pay it off in a much more comfortable way.  I don't need to tell you how this translates to the economy.

So the size of the cuts is unnecessary, while the speed of the cuts will damage the long term growth prospects of the country.

What is does do is make it easier for gamblers who play the stock market and international finance markets - I will call them 'bankerchums' to get hold of credit as the 'urgency' that was created has now subsided and we appear to be a better bet than before the cuts were announced.

So, rather than bleat on and on about how deceitful politicians are being around the deficit and how bad it all is - I will give you an alternative to mull over.

I am in favour of a much smaller government at the top level with much more power being moved to local council level. But this also means that the benefits also need to be moved down to the local level. If we take the example of a Power station, it is a decision made by national government, the negotiations and payments are made to national government. The local government then has to cope with the extra traffic and road repair, extra signage, often extra waste created by workers who are mainly 'shipped in' not local, which seems to me to be unfair. It is usually justified through ' local jobs' but local jobs are usually temporary with very few permanent well paid positions going to local people. The workers who are shipped in, often stay in rented accommodation which is quite often bought up by large companies so the money leaves the local economy.

Central government then takes the credit for the creation of new jobs etc and takes the tax from the power station back into central funds.  The local government is left with very little to show for it.
This will act to re-balance the economy as the urban areas which attract much of the development and investment - cannot also have large installations. Funds therefore start to re-distribute away from the centre.

As money and investment and therefore power, becomes less centralised, so the gap between top and bottom become smaller. Yes, this will mean that some of the very wealthy will not have things their own way and may feel like they are working hard to support others but to quote a current wealthy politician 'Everyone needs to do their bit!'

As central government shrinks (along with the size of Parliament etc) so their role changes from one of controlling everything and everyone, to one of supporting the needy and reducing the gap between rich and poor. Think of it a bit like building a road - you take soil from the hills and use it to fill the valleys so that the road is easier for everyone to travel.
This change will be very difficult for local and national governments to understand - they will be giving away more power and accepting new roles, but it needs to be done and the sooner it gets done the better.