Your story “Osborne turns to ‘Micawber’ economics” (10 June) is very disturbing. As someone born in the mid-1930s who grew up in the postwar period and spent his working life studying, teaching and writing about democratic capitalism, I wonder if policymakers know anything about modern history. After the first world war the search for budget surpluses of the kind Mr Osborne now seeks destroyed national economies and world trade, brought ruin to millions and led to fascism, militarism and the second world war. After 1945, years of government borrowing and spending of the kind he deplores rebuilt democratic capitalism in western Europe, restored its democratic institutions and doubled standards of living by creating more wealth more equitably distributed. All this rested on new notions of economic management. Their abandonment in the 1980s and 1990s to the siren call of Reaganomics ushered in the era of unregulated world finance capitalism that crashed and burned in 2007-08 and led to our current woes. Yet like the Bourbons our leaders seem to have learned nothing and forgotten nothing.
Patrick Renshaw
Sheffield
• Osborne’s new “no borrowing” rules are pure hypocrisy. They will force privatisation, because private investment “does not count” as national debt – so new roads, rail and other infrastructure will need to be done that way. But to build them investors will have to borrow – no one has enough to build an airport without a huge debt. The money will have to come back via tolls or guaranteed share of government revenue.
So borrowing overall will rise even more because investments will have to cover not only the cost of a project but the return, and usually a very handsome return, for the investors (as we know from the crippling expense of the hospitals and schools that Labour put out this way). This is a means of guaranteeing profit for private owners who cannot find such profitable opportunities on the open market (trillions of dollars cash are lying around at present). Private owners, “consultants”, contractors and above all the banks, already grossly and disproportionately wealthy, will gain. The rest of us will have to pay new tolls and taxes.
Britain is in hock to the City because the rest of its economy is shot through. That is why Osborne is doing this – to grovel to the banks like HSBC, now threatening to leave London unless they get given even more than ever.
Don Hoskins
Economic & Philosophic Science Review
• In arguing for an end to government borrowing, what George Osborne is proposing now is austerity for ever. The truth is, we have had increasing public debt and borrowing since 1692 and that is what we have used to build schools, houses, roads, hospitals. In 2008 when the banks couldn’t borrow, the government did. It put £900bn behind the very same banks to stop them from closing and injected £150bn into the economy to prevent businesses closing and unemployment rising to 4 million.
Our national debt of 80% of GDP has only been lower in 50 out of the last 250 years. Economic growth can reduce it back to the 40% level of the last Labour government. So yes we need growth, but what is it for if it is not to create a society that educates, heals, protects and supports its people? That is what public spending and public services are all about. So after five years of cuts, we need to talk about what kind of country we want and what the government can do to make that happen. What we don’t need is a generation of austerity.
Cllr Barry Kushner
Liverpool Labour councillor
• So George Osborne has finally been let off the leash. He is proposing that the government will no longer be allowed to borrow for infrastructure projects. Can the Conservative party not see the irony in promoting the funding of UK projects (infrastructure, utilities, property etc) by government-owned corporations from various regimes (communist, military junta, dictatorships) throughout the world, whereby all profits made from such deals return to foreign coffers, leaving the UK at the mercy of those corporations, while at the same time trying to distance the UK from the EU? This is a position sought from a shortsighted and warped ideology that refuses to allow our own government to invest in public projects.
Claire Hunt
Yeovil, Somerset
• Before the banking crisis, I don’t remember either Osborne or Cameron going on about the modest deficits under Labour – in fact, in the last years of the Labour government they are on record as having pledged to equal Labour spending. It is also interesting that neither Cameron nor Osborne has ever said what they would have done during the banking crisis, faced with queues of people threatening a run on the banks and empty cash machines. Can we now assume that Osborne bailing out the banks during the next (inevitable) crisis is no longer an option?
Terry Goodhill
London
• The principle that Messrs Osborne and Micawber espouse, of budgeting for a (small) surplus, is sound and responsible. Everyone being able to live with dignity and the provision of a reasonable level of public services are also appropriate expectations of a civilised and responsible society. But financial responsibility and social responsibility need not be mutually exclusive – as so often portrayed. They can be integrated by the raising of income tax – for top earners. Well done to Charlotte Church for her recent intervention in the austerity debate (Report, 5 June). The Guardian’s comment that “paying taxes is a contribution to the common good” (Editorial, 6 June) is well-founded, as is Paddy Ashdown’s portrayal of taxes as a “subscription charge we pay to live in a civilised society”. Such a policy is of course a hard sell to an electorate mired in individualism. But will someone please demonstrate leadership that sees beyond the next election, and convince us that each of us thrives most, when all around us also thrive.
Andrew McWilliam
Altrincham, Manchester
• Is Mr Osborne likely to apply his adoption of Micawber economics to the UK’s household debt, predicted to exceed £2tn by 2020 and already one of the highest in the world?
Chas Lillystone
Chippenham, Wiltshire
