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Gordon Brown Doesn't Understand Economics

by Darkademic in Politics   0 comments

After watching most of the two UK election debates these past two weeks, I've become infuriated with Gordon Brown because of his pathetic lack of understanding of economics. Brown has accused David Cameron — leader of the Conservatives — of planning to "take £6 billion out of the economy" by not implementing the NI increase and/or by cutting funding to public sector institutions. This is nonsensical. Gordon Brown seems to be oblivious to the obvious difference between the economy and the public sector (i.e. government funded sector). The £6 billion won't be going to the government, but that doesn't mean it just disappears. The £6 billion stays in the economy, just in private hands (where it should be).

Similar logic lies behind the idea of stimulus packages. A stimulus package is nothing more than a massive shift of money which would otherwise be spent according to the judgement of private individuals (it doesn't just disappear). A stimulus distorts the market by putting money where it otherwise might not go. Taken to the extreme, this type of government intervention is socialism - the failure of which is blindingly obvious.

Money which is forcibly extracted from all of us via taxes can be managed neither efficiently nor in a manner which reflects the market (i.e. the real value of things), so Gordon Brown's accusations should be levelled against himself, not his opposition. An increase of National Insurance, which is a tax on ordinary jobs, will slow growth by deincentivising A; employers to employ more people and B; the unemployed to seek employment.

A Lib/Lab coalition in a hung parliament would not bode well for the UK at all. Although the Conservatives are nowhere near perfect, their economic policies are at least somewhat geared towards deregulation and spending cuts, whereas the other two parties are completely clueless.

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