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Just How Much S**t Is The Economy In?

By Andy Shaw | November 21, 2010

I’d like to let you in on a TV program I found out about the other day. My wife sent me this link:-

http://www.channel4.com/programmes/britains-trillion-pound-horror-story/4od#3139408

If that link is dead then it’s in full on Youtube here: – http://www.youtube.com/watch?v=iOsqBf5hDjI

Or if that’s gone too, then it’s broken into sections here: -

1. http://www.youtube.com/watch?v=7gd6-zfeeaM

2. http://www.youtube.com/watch?v=KrASFrpi8zA&feature=related

3. http://www.youtube.com/watch?v=thUrVB7bFdE&feature=related

4. http://www.youtube.com/watch?v=-kotac3meVM&feature=related

5. http://www.youtube.com/watch?v=ZPtayYoHoCY&feature=related

The program was “Britain’s Trillion Pound Horror Story”

She said to me it was all the stuff I had already said but she thought I’d enjoy it and she was right. I personally think this is the best program I have ever seen on the economy. And these guys have come up with some of the best metaphors to describe the size of the problem.

I wasn’t going to add this here, instead I was going to hide it in the forum, however, I thought you may want to pay attention to it.

Now I was speaking with someone the other day and he was saying how the underlying trends were converging to bring about a cultural shift because of our indebtedness as a country. And how people were going to be forced into creating the governments out of the crisis they have dropped us into. I agreed with him of course as I am a fan of Ayn Rand. And it also matched what I was discussing recently with someone else regarding what Daniel Priestley describes as the Entrepreneur revolution.

So if you wish to know the scale of the problem, get a little angry for the sake of your grandchildren, have a far greater understanding of where the country is going and where it could go instead (but won’t) then I suggest you watch this.

The reason I say won’t is that Britian is following the same pattern of self destruction that Greece, Rome etc did, the empire is dying but the people at the top are trying to milk it for all they can. Instead of turning the ship away from the Iceberg.

NB If you think this stuff won’t effect you then you are wrong, as unless you do not live in the country then it will effect you. You may be able to survive yourself as I will, however, friends and family around you may well not, and this is how it will effect you. So I strongly suggest you take an interest.

There are some really great bits in the program and here are some notes I made while I watched it for a second time:-

I loved the metaphor about the height of the debt in £50 notes… you know, these things are really thin! It would go into space over 6,500 miles high!!!! If they sold every house in the country and every flat, then we would still be over £1 trillion in debt!!!

They did a bath water analogy which demonstrates the problem so well… I wish I’d thought of it. It is worth watching the program just to see this. Effectively they are  have a flow of debt coming into the bath because the taps turned full on. Yet they are using an egg cup to stop the bath overflowing which depicts the UK going bust… Like Greece and then Ireland did last week. Ireland by the way is in for a world of hurt and could even be much worse off than Greece. The coalition government has got to go down the nasty road of sacking millions or print more money.

So they are going to print more money then! This could be Zimbabwe on steroids if we are not careful. And trust me, these guys are not careful… as they don’t know what to do. This exact senario was written so well by Ayn Rand in Atlas Shrugged. She described it as the inevitable conclusion to Government interference in the economy. The book is hard going, so I listened to it on Audio, but it was brilliant when it got to the point.

Did you know last year the government spent more on welfare alone than it raised in total on income tax!!! Just in case you were wondering, this is not good!

Let’s make it simple. You have the private sector which creates wealth and you have the public sector that consumes wealth. So making it simpler, if you have one person in the private sector on £25k/ year and he produced say £9k tax to pay for the public sector.

Then as a guess to include all other costs of running the country, it seems logical that to employ one person in the public sector we must have say at least 6 people in the private sector. So for an economy to be doing well, we need to have a ratio of 15% only employed in the public sector, (this is the level we had before World War 1, when we led the world!).

Well in parts of the country now we are at 61% in Scotland, 77% in Wales, 81% in Northern Ireland, North East 73%. At 70% that’s more than was in the Communist countries!

When will they stop the madness? Well according to Ayn Rand… they won’t the world will have to fall into chaos, before the powers that be will get it, that their party is over.

The guy in the documentary said anyone who ‘believes’ that huge amount of spending will stimulate economic growth should go to Newcastle! If state spending did stimulate economic growth then Newcastle should be buzzing. This was brilliant! He nailed it perfectly, it doesn’t work, it never worked and it never will work… however, the governments love trying to fix problems they cannot fix… Problems they could fix they don’t touch, but tricky ones they can’t fix are their prime concerns… I would call them morons, but I’m sure even morons would stop doing stupid things after decades of having failure rammed in their faces.

The crux of the matter is what I have been saying for years, and years, and years… if you want a vibrant economy then you cut taxes and cut them hard. In other words, get government out of the way so that the entrepreneur can get us out of the mess the politicians got us into by over spending so that they got elected. This really isn’t rocket science… but unfortunately it does not fill the politicians need and thirst for power.

Did you know we now have nearly 7.5 million people on the public payroll. Yet only about 2.0 million make up front line services like Doctors, Nurses, Firemen, Teachers etc.. So that’s 5.5million in the back office, which happens to be twice as many people as there are in manufacturing. Does anyone at all on earth think that this is a good thing?

Now anyone in business will tell you, for every non-producer (back office) you have to have a multiple of producers… No business would survive unless they were allowed to print money. Failure in management to this scale results in bankruptcy. The UK pays its bills, because it prints money to do so.

I loved this description… When a private company does something which is rubbish it goes bust, but in the public sector, when they do something which is rubbish it expands.

Communism proved beyond a shadow of a doubt that monopoly’s don’t work and the government knows this so well that they made them illegal. Yet at exactly the same time as banning the private sector on having any monopoly’s… which in my opinion is a good thing… yet it insists on monopoly’s in education and health.

Did you know the biggest state monopoly outside communist China is… the NHS.  I have said for years that the NHS should be privatized as this is probably the worst business model I have ever seen. How can they hope to provide the best service, as they have no reason to compete.

Big bureaucracy’s don’t work… this really is not rocket science. And don’t get all caught up in the well the poor couldn’t afford healthcare… the government provide for the poor, everyone who can afford it would pay far less in a premium than gets wasted in tax, and then we would go from one of the worst healthcare systems in the world to one of the best inside 10 years… This again is not rocket science.

Do you know how much money you would save right now if they refunded the tax they take off of you and get you to pay insurance instead… The figure is different for each, but we are talking several thousand for the average wage.

Let alone all the money they could raise by selling off the hospitals and equipment. Back office non-producers would be replaced by producers. You would save 10 non-producers wages and replace them with one producer… this is nothing more than good business sense.

Not only that but think of the brain drain, some really smart people work at the NHS currently in meaningless jobs… If they went into the private sector the economy after a short period of sort out time would receive a massive boost of new entrepreneurial start ups…

If you doubt what the nhs could be turned into then just go and have a look at the American Insurance based healthcare system, or the German one…

The country is living beyond its means and if it couldn’t print money then it would have gone bust by now!

Now we come onto the best government official of all time… John Capathwaite

He was sent to Hong Kong in 1961 to sort it out and get out of the way… in other words do exactly what Ayn Rand said in Atlas Shrugged… You must watch the program for a real understanding of just how good a job this guy did, and what the UK could do too, if the politicians weren’t in it just for themselves.

The basic problem with this country is when you tax people, you punish success, no vat, no cgt, no inheritance tax, and only the richest people pay 15% tax in Hong Kong. And Hong Kong is a world leader!

There’s a story in English history about when Prince John kept raising taxes. You cannot punish success and expect people to continue to want to succeed. You will kill the country in the process or drive your brightest offshore.

The problem is the politicians are all unconscious and don’t want to look at the truth, they are in their own matrix and they think it is real and they think they are doing the right thing… Who knows maybe one of them will wake up, or maybe the riots will have to happen first.

There’s a storm coming unless they change, but I don’t know how far away it is right now.

Andy

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Topics: Business, Free Content, Government, The Economy | 1 Comment »

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