Wednesday, 21 March 2007

The Budget 2007

Gordon Brown made his 11th Budget today. This probably might be his last, if he really is going to take over from Blair as PM and Labour Party leader.

As usual, it was chock full of big government pap and statist drivel. OK, granted, such a thing was only to be expected.

It was surprising to hear that Labour would cut the basic rate of income tax. Yes, taxation is theft, nonetheless I didn't expect Labour would have the balls to cut taxation. In regards to growth and inflation (neither should be measured anyhow), Brown made his usual quip about "record periods of sustained GDP growth". Well yes, since New Labour won the 1997 election, GDP growth has been reasonable, especially in comparison with the other G8 countries. Still, the economy was growing healthily under the last Conservative government led by John Major. From 1992 (the end of the last British recession) to 1997, average GDP growth was above trend (which is about 2.5%). Brown and New Labour therefore can only claim credit for the maintenance of a strong economy, and certainly have not created economic strength. Inflation, from 1992 to 1997, was also reasonably low.

I'm not a minarchist, nevertheless a libertarian budget should only set aside government funding for:

- Law and order
- the armed forces
- courts and judicial system

As stated earlier, inflation (via the means of the CPI, RPI and RPIX) should not be measured. Such measurements are not accurate gauges of inflationary pressures in the economy, since they are only a basket of commonly purchased consumer items. Not every price rise in the economy is noted in such records. Besides, inflation (if defined as a rise in prices) is only caused by increases in the money supply and we have the Bank of England and Royal Mint to thank for that. Commodity-backed currencies (using gold or silver) would drastically reduce price rises in the economy and retain the purchasing power of currency.

As for GDP growth, the concept of GDP per se is a faulty one. In a free market (without any government intervention), individuals should choose whether they desire to consume greater quantities of goods and services. It should not be a goal for an entire society to meet x GDP growth target. Such a move only smacks of central economic planning, which evidently is contrary to the concept of a free market.