We’ve maxed out our kid’s credit card. Can we stop now?

There is an expectation endemic throughout most of UK society that the government ought to do an awful lot of things for people. From education, to healthcare, to housing, a great many people think that if there is a ‘social’ need it is for the government to sort it out. They habitually use the collectivist nouns of “we”, and “society” as if those others that fall under those terms are all equally consenting participants in whatever is being proposed in their name. And while “we” and “society” can be invoked for what they perceive to be good (helping the poor) or evil (yet another war in the middle east), the concept remains resolutely fixed, and the evil result quickly forgotten. We should not be surprised, people love sweetness and light – especially sweetness. We are experts at ignoring those things which conflict with our world view and with which we disagree, while simultaneously supporting policies which bring about those very ends we hate. In spite of this, in their own mind these people by and large are honest, hardworking, genuine people who, at the bottom of their hearts, believe in what they espouse regarding the welfare state to contribute into it and take out when you need it. They, many of them, honestly believe it to be a moral good to pay tax and leave it to the state to then look after them.

On it’s own perhaps that wouldn’t be such a problem. But there is a problem. It isn’t and never was, viable. The notion that a person can ‘pay in to the system’ their whole life and expect to be taken care of cradle to grave is, forgive the pun, bankrupt. The generation who bought into it was sold a lie. The generation that followed it, believed the lie, and by now it is plain that this was a con. Yet successive governments, and generations of voters, have kicked the can down the road term after term, none of them having the guts to point out what is made clear with common sense and simple accounting – there isn’t enough money to do this.

So what was going on? If you think you can pay into a pot, and then withdraw at some later date some needed amount, then logic dictates you, “we”, “society”, must have expected to pay in some amount of money in the equivalent of what you, “we”, “society”, later withdraws. If this was your bank account you could only work on such a principle, and only withdraw up to that amount that you had previously paid in. Amazingly this logic was not applied to the welfare state, and still isn’t. Instead a woefully inadequate amount (though costly to the individuals) gets paid in compared to what gets paid out. The welfare state, after all, may attract infinite demand… which it must then meet from only finite resources. But these trifling small details never mattered because as a philosophy it feels good. The collectivist nouns come out, “society” will look after us. “We” are all in it together. The warm fuzzies displace rigorous accounting, and visions of utopia dance in our heads, even though it runs headlong against everything that is common sense. Even if half of the “we”, rich or poor, don’t want to be “in it” with anyone – they are coerced into it, they don’t have the right to do their own thing, they are made to join in – how warm and fuzzy that must be (another topic).

By now it is clear that the promised socialist utopia is not coming (it never was), yet almost religiously the creaking left over institutions are clung to and worshipped by weeping masses of people to beatified relics with magical properties begging for healing. Or they stand mesmerised by the smoke and mirrors while studiously, or ignorantly, paying ‘no attention to the man behind the curtain’.

Many who supported this at point of origin would have been familiar with the warning words of Kipling who, long before our failed socialist experiment was really begun in earnest, observed that the unfashionable age old wisdom was being replaced by wishful thinking:

‘In the Carboniferous Epoch we were promised abundance for all,
By robbing selected Peter to pay for collective Paul;
But, though we had plenty of money, there was nothing our money could buy,
And the Gods of the Copybook Headings said: “If you don’t work you die.”‘ (Kipling, 1919)

With every ounce of the common sense of our forefathers forgotten, with Dicken’s words of Micawber – that we should live within our means – ringing unheard after us, and with the copybook headings abandoned, the wisdom of ages was put to one side, and replaced by belief in something akin to fairies, unicorns and magic dust. What in fact? Belief in a politician’s lies (that the collective noun will look after us). Do we never learn?

Under these conditions expectation and demand was divorced from actual effort, results or resources. As a result, over time, what was no doubt a boon to some people in dire need, became an entitlement for many and then a right enshrined in law for all. The law is, after all, an ass – but must we be reminded in so dire a fashion?

You see, it is easy to declare things in law, it is quite another to provide them. As former Secretary of Agriculture under Eisenhower, Ezra Taft Benson, put it:

“Unless the people bake one loaf of bread for each citizen, the government cannot guarantee that each will have one loaf to eat. Constitutions can be written, laws can be passed, and imperial decrees can be issued, but unless the bread is produced, it can never be distributed.” (Ezra Taft Benson, October 1968)

Except that, as usual with such systems, there were never enough ‘loaves of bread’ being baked for these projects, and there were never going to be. Quite early on this must have been obvious to some few or many holding the reigns of power. Yet, for whatever reasons of their own, perhaps popularity, the foolish path was continued down. So in thrall of the philosophy, and so ignorant of the lie, the population would not see it any other way than their right. It must have been clear that this could not work, but pride, ignorance or dissonance or whatever it was provided a powerful anodyne. Whatever the source of the deception or reason for the ignorance, what should not have been forgotten, was lost – that the system was not self-funding, and so to perpetuate it, to meet demand, it was, to all intents and purposes, a ponzi scheme.

A ponzi scheme is a form of fraud in which belief in the success of a non-existent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors. An apt description of the welfare state. In essence it was necessary that for the system to keep going without revealing its failure the withdrawals would have to be bailed out by those who perhaps thought they were contributing to their own futures. No such thing was the case. In reality it was more like current workers paying for current pensioners, and current healthy people paying for current sick people, and current working people paying for current unemployed people. The word for the contribution was insurance – perhaps with Lloyds origins that should have been the clue – except that Lloyds had enough to pay the claim. How do we know this is what they thought? Because this generation is now retired, and in all honesty and sincerity do say, I have heard them, “I paid into this my whole life”, and no doubt the vast majority did. Unfortunately when they came to make their withdrawal there was no money building up, there was no policy maturing, it had already been spent on other people.

Even worse than that, it had not only gone on other people, it had gone on other things. There had been no transparent link between contributions and their promised purpose. Government after government had directed funds however they pleased, no wise provision had been made for the future as would have been the case were individuals to have kept their money for their own future savings or pension. None of that had happened. No, it had been spent. It was a fraud on a massive scale. But rather than revolution an utterly bizzare stockholm-esque expecation set in. Instead of “what have you done with my money?” it was “I’ve paid in my whole life now it’s someone else’s job to pay for me”. But not in those words, because the connection is rarely made. You see rather than fully realising the awfulness of the situation – that, yes, we are really asking future generations to pay for our lack of preparation, wisdom and austerity – we blame government. “It’s the government’s fault”. Well, in many ways it was, because they lied, and they covered up failure. But it was also our fault, because this was flipping obvious! Or ought to have been.

On top of that the government employs quantitative easing to provide more cash which in turn drives inflation devaluing the money we on the bottom rung have, and transferring some of its value to the ones holding the fresh money (the government), which is in effect another tax, all to help pay quickly for what we cannot afford but continue to demand. OK, technically the Bank of England is independent of government, but it’s remarkable how well they work together shall we say.

But it gets even worse than that. Because not only did successive governments, with a blithely complicit population, reach the point that they dared not tax current workers any more than they were, and yet still could not pay for all the demands, they also decided to borrow. To borrow!? What were they going to pay it back with if we can’t pay our bills now? On who’s authority? On mine? On yours? Did you sign a credit agreement? I didn’t, but we are on the hook for it, with national debt now equivalent to £78,000 per person. How much? Would any of us, if offered a £78,000 credit card have maxed it out on all the things our government did? No. And over the years they just didn’t stop. And now the government is signing credit agreements that people will have to honour who have not even been born yet! We really have maxed out our own cards and are maxing out our kid’s credit cards too.

And in spite of all of that no one seems willing to address this! All the sympathy is, perhaps rightly, with those who are now tight on funds who expected better care from the fraud and now can’t have it. The chickens are home to roost, this should have been stopped decades ago. Barely one in ten has the guts to sit down, to do the figures and admit that what we thought we were owed we cannot afford to be given. The ponzi scheme is still running, so something needs to be done to wind it down, but that is not happening. Instead government continues to be blamed, which makes us feel better because we complained a bit, and we can pretend it’s not our fault, and that means we can still demand ‘our rights’ no matter what the cost to future generations – whether that be NHS, or pensions, or vanity project or anything the government does that we want. In so doing we claim to be aggrieved in the very act of being selfish. The same voters who demand pensions for pensioners, demand the NHS gets more money, and  better policing, and support for fire fighters, also want a new Leisure Centre in their neighbourhood. It is clear this is just monopoly money to many when they cannot even decide on a scale of priorities which of these unaffordable things they might do without.

I agree pensioners should not be in poverty. They were sold and bought a lie and now this is the consequence. But what is not happening is the hard conversation! When does it stop? If we spent our money when we should have saved it who can we blame? Who else can suffer for our failure? Will we never own our part in this?

MEP Godfrey Bloom summarised this whole debacle in a now viral speech to the EU Parliament that has done several laps of the internet:

“Now, it always seems to be a complete surprise to politicians how countries get in debt. Let me explain, because I don’t think you really understand it.

“It’s because politicians consistently spend more money than they raise in taxation (more money than they can possibly raise in taxation), most of which, in point of fact they actually waste. The reason we’re talking about countries, which are broke – and they are broke – is because their ridiculous, ineffective, ignorant politicians, consistently spend more money than they can raise and then they borrow.

“Even worse, they the print money because politicians and their central banks have a machine, which prints money. You do that – as a private citizen – and it’s a criminal offence. You would go to prison for doing that and politicians and their central banks do it all the time.

“Let me explain to you that these countries are broke and they’re broke because of their own stupid leadership and politicians, and it’s immoral to ask ordinary taxpayers of any country to pick up the tab for failed politicians and failed banks. They are defrauded. They are broke. …let us all admit it.” (Godfrey Bloom, EU Parliament, 2014)

I’m not sure sure it really is a surprise to governments how they get in debt, but it certainly seems to be a surprise to many of us voters. Otherwise surely we would stop demanding what we stopped being able to afford long ago. Otherwise surely we would stop maxing out our kid’s credit cards.