The Fall of the United Kingdom – Coming Catastrophes in the UK Economy
The state of the United Kingdom economy including government spending, budget deficits, interest on the debt, unfunded liabilities, public sector worker pensions, retirement savings, educational spending, health care costs, the death pathways, the myth of austerity, taxes, military spending, monetary policy, inflation, standard of living, income distribution, unemployment and mental health.
Transcript Hi everybody my name is Stefan Molyneux. I am the host of ‘Freedom in Radio’. Hope you are doing well. This is the presentation entitled ‘The Fall of the United Kingdom’. I hope that you will enjoy it. It can be some tough stuff but it is pretty essential as to how you are going to be living your life for the next 5 or 10 years. So what are we trying to do here? What am I trying to do?
Well, I want to look at the present state of the UK economy and attempt to shine a spotlight on, well let us call them areas of concern shall we. So mainstream media, government officials point to the picture of rosy economic growth of the green shoots of recovery and impending financial recoveries.
Just around the corner we are going to have a look at the hard numbers and empirical evidences that are just making blind decisions. Of course the media wants you to keep spending. Government officials want you to keep spending. They may not be telling you the unvarnished truth.
The United Kingdom, unsustainable yearly deficits in the Government, record levels of household debt, double digit cost of living increases, staggering amounts of unfunded future liabilities. Stuff that the government has promised to people but it simply does not have the money to pay. Disastrous central bank key monetary policies and the health care system that has been described as being on the brink of collapse. Hopefully this information will help people brace themselves for the unfortunate reality that there will be no economic recovery. You need to prepare yourself accordingly.
Total Government Spending from 1985 to 2015. So the red bars on the right, estimates and of course the government is low balling these estimates and high balling the amount of taxes they expect to receive. As you can see these are all suggesting inflation. This goes pretty catastrophically higher over time. The end results of this is bankruptcy of course.
In 1985 the total United Kingdom Government spending was £ 150 billion which amounted to £ 2657 per person. In 2000 it had skyrocketed £ 338 billion or £ 5735 per person, 115% increase from 1985. A near 13 years later, ladies and gentlemen UK government has been spending £ 668 billion, £ 10,527 per person. A 342% increase from 1985. Madness.
So a way of looking at this is to think of government in terms of years, to think of you in terms of months with your credit card debt. In a staggeringly short amount of time in a matter of a dozen or 2 dozen months you have added 342% to your spending. This is completely unsustainable and we will go into, why?
The UK office for budget responsibility [Laughter]. I am sorry, it is just hard to say that with a straight face, has predicted a budget deficit of £ 151 billion in 2013 and £ 120 billion for 2014. It is amazing that despite all the historical momentum it comes down in the future.
In the last 44 years the UK has only had an annual budget surplus 6 years to a total of £ 46 billion. In those other 36 yeas United Kingdom has run up a budget deficit of over a trillion pounds or 1038266000, donut, donut, donut. So that is of course not good enough sustainable.
Of course when UK runs a budget deficit it offsets the difference by selling bonds and bonds are give me money now and some government in the future by taxing the unborn will give you more money back later. That is pretty ruinous. Of course the government doesn’t make any money. I mean it prints money but that is like saying that a counterfeiter makes money. He doesn’t, he just steals money through inflation which is kind of what Central Banking is all about.
These bonds also known as guilts because that is what you should be feeling for shafting the unborn, is guilt. Add it together to make up the UK’s national debt not including unfunded future liabilities. Unfunded future liabilities are not counted in the national debt. Of course they should be.
Public Net Debt United Kingdom from fiscal year 1965 to 2015 and again the sources for all of this will be available in the lower bar. You can go to www.fdrurl.com/UK and you will see all these.
So you can see that it cooks along until the ‘70s goes mad through the ‘90s and of course to 2005 onwards. It just goes completely mental. The estimates are going to be even worse when the facts come in.
The United Kingdom’s National Debt not including again Unfunded Liabilities is estimated at around £ 1.2 trillion quid and increases at a rate of, drum roll £ 5169 per second, £ 310212 per minutes, or £ 18.6 million per hour or £ 446.5 million per day. So this is almost £ 20,000 for a man, woman, and child in the UK and over 42,151 for every employed resident. For the sake of generosity if not reality we will count everyone in the government as gainfully employed. Take those people out of the equation I think it is you, and me, and one guy in Warwickshire who is paying for the entire government.
Let us take a look at interest on the UK national debt from 1985 to 2015 against some projections. So in 2009 to 2010, a nap and a half ago the national debt stood at £ 759.5 billion. The national debt now is more than £ 1.2 trillion, an increase of 60% over a just a few years. This is the rollercoaster that makes fetuses go “Ahhhh”. This year the interest alone on the debt will be almost £ 50 billion costing every household over £ 1900 per year.
2017 – 2018, guess that sounds like science fiction numbers but frankly it is the entire hobbit movie twice and we are there. It is estimated to be atleast [Laughter] £ 1637 billion an estimated increase of 34% over the current deficit. Interest payments will amount to over £ 71.3 billion. So to put this in context, the interest payments alone are more than the current annual budgets of the Home Office, the Police, and the Department of Education which spend around 65 billion in a year combined. Interest will eat our children.
Let us take a tasty dip into the inflaming fiscal helm of unfunded liabilities. The office for Budget Responsibilities, there it is again has estimated total government pension obligations at 5.01 trillion. 5 trillion would be fine but .01 complete disaster. 342% of gross domestic product, so you owe the loan shark known as the Central Bank and other people who bought bonds and guilts 342% of even the highly inflated GDP number put out by the government. In other words you have 2 kidneys, you owe 19 kidneys to a loan shark. Not going to be a good weekend for you.
These obligations, the government knows about all these obligations and remember, democracies are not about short term vote getting. They are all about long term fiscal responsibilities. Like you know how you change the oil on the car that you rent, exactly the same thing. Because of these obligations the £ 5 trillion worth of obligations how many of them have been funded? 6.25% have been funded or about £ 313 billion of the £ 5.01 trillion. This is according to the government numbers so you can trust them.
Social Securities related unfunded liabilities are estimated at £ 3.843 trillion or 263% of GDP which is why cannibals among the old is not far away practically. Unfunded public sector employee pension liabilities are estimated at £ 852 billion or 58% of the Gross Domestic Products. So tens and millions of people have put up with indescribably boring jobs and little career advancement and putting up with other people in the public sector for 40 odd years they are counting on all these benefits and what is going to happen when they can’t be paid? Well, the usual.
Price controls, rationing, a semi-slide into fiscal cow, and all of this is easy to see. It is not even around the corner. It is about to splat into the windshields and of course no particular politician wants to take on these issues because why would you want to fix the economy, get it really when it mattered to you and hand a little better economy to the idiot they go to next because they are upset with you?
It is just not the way the system is. The system is not broken. It is designed to work this way.
How the household is doing? Well of course as the economy slows, as cost of living increases go up, as inflation eats your savings and your earnings, what do people do? Well to maintain the lifestyle they go into debt you know in the same way that a vampire to maintain his lifestyle goes into jugulars.
Household debt, percentage of GDP oh my goodness! Look England number 1. “Ooooh, Britannia”. Household debt amounts to 98% of United Kingdom’s GDP which is one of the highest percentages in the world for comparison, household debt amounts to 87% of GDP in the US, 81% in Canada, 82% in Spain, 67% in Japan, 62% in Greece. You know what, if there is one thing that you want to be better at than the Greeks it is not tzatziki, it is not spanakopitas, it is the debt. That is really when you know that you have achieved the world championship of debt. 60% in Germany and 48% in France.
Total outstanding percent on debt stood at 1.425 trillion dollars at the end of June 2013, up only .28% from the previous year. Average household debt in the UK excluding mortgages is almost £ 6000. Average household debt in the UK including mortgages is over £ 54000. Total outstanding secured mortgage lending is 1.267 trillion and we all know how that mortgage lending works out in the long run. Outstanding consumer credit card debts stands at $ 157.8 billion. The OB operatics total household debt including mortgages will reach almost $ 2 trillion by 2018. The average amount owed per UK adult including mortgages is an estimated £ 29000. This is approximately 117% of average earnings.
So if you imagine that England was a man, a bloke who wanted to apply for a car loan. There would be a fair amount of giggling from the bank you are applying to the car loan for followed by a trap door and a falling to the heidis of, “You’ve got to be kidding me.”
The average household debt would reach approximately £ 73000 and change in increase of over 36% per household. Every 16 minutes and 26 seconds a property is repossessed. Tragically we are no longer talking about the Falkland Islands. Every 5 minutes and 7 seconds somebody will be declared insolvent or bankrupt.
Public sector, okay let us say workers they earn an average of £ 4500 a year more than those in the private sector with the gap only continuing to grow. See one of the things that happens when you have to voluntarily get your money from willing customers is those willing customers don’t want to pay a whole lot more. One of the great things about being a public sector worker is debt, counterfeiting or violation of taxation is what pays your salary and so there are not a whole lot of people who are going to say no to that, right? If the local hit man parks on your lawn you are pretty much going to look the other way. The typical full time public sector employee is paid 565 quid a week while their counterpart in the private sector earns just 479. Of course as the public sector money goes up the private sector money goes down. It is less than a zero but it certainly shows up that way.
Private sector employees have a longer average week at 33.4 hours compared with the public sector average of 30.7 hours. The only thing that is important about that really is that if you work in the private sector you really don’t want the public sector workers to be very busy because they are usually very buys messing up your lives in staggering ways. The widening proactivity gap between the private and public sector costs the British tax payer almost £ 60 billion per year.
Center for Economics and Business Research found that the public sector’s productivity performance had been even worse than previously reported, declining 3.4% between 1997 and 2007. One of the things that they found was difficult was that when measuring the productivity of public sector workers they found that a lot of them had historically died in their chairs but nobody had noticed and so it was a little difficult to figure that out objectively.
During the same 10 year period productivity in the market sector rose by almost 30% trying to outrace the rocks sliding down from the State.
The cost of paying pensions for the United Kingdom’s public sector employees will double up the next 6 years to the equivalent of £ 1500 per household. These households of course include those households receiving public sector pensions so again multiply that as you see fit. Of course as we all know one of the things that politicians do is they promise benefits to be paid to public sector workers long after they are out of office and they do that to avoid strikes, riots, and problems in the here and now basically shafting those to come with a bill that would pretty much eat the planet. This is again not because the system is broken but that is the only way that the system can function.
Between April 2011 and April 2012 the net cost of paying and pensions for retired public sector employees was £ 8 billion. However according to the OBR this figure is said to more than double to £ 16.2 billion in 2017 to 2018. They could project after that but that is like asking, “How fast will you run a marathon when you are 250 years old?” It is kind of academic because you will be dead as well is the British economy to a large degree. To make that worst these estimates don’t represent the full cost of taxpayers as they deduct the amount contributed by the employer to their employees pensions but in this case the employer is the state paid for by the taxpayers. When calculating the full cost of these pensions analysts predict that the total figure will be closer to £ 39 billion.
Now to nobody’s great surprise public sector unions have seriously resisted even moderate reforms which is the only time you will see serious dedication from any public sector employees. Meanwhile private sector pensions have been drastically reduced and the Bank of England’s quantitative easening which is also known as Monopoly style money printing has obliterated returns of private savers.
So the retirement savings shows up of the global average of 44% and 63% in UK. “Yay”, 50% in China, 48% in Brazil, 42% in Canada, 35% in Hong Kong, 33% in the USA, and 33% in India. So this, eat the future to feed the present. Eat your seed crop to feed the beast has been occurring of course for a few generations in England certainly since the post war period when all of the useless eaters of the empire came home and you had to setup a socialist government because they weren’t fit for the private sector. This has been going on for quite some time.
I wish to say that the average retirement in the United Kingdom is expected to last 19 years but typical retirement savings would only last 7 years at which point hungry eyeballs turn to cats. This 12 year shortfall in the UK is the worst identified by this international study which covers over 15,000 people in 15 countries around the world.
Normally of course when governments get into this kind of fiscal problems they just start a war to kill off the excess population but nuclear weapons have kind of landed a lot of the leaders of the West and of Europe to be in the blessed and the peace makers category because their families can also be turned into nuclear shadows not just the children of the working classes.
Two-thirds in England believe that their financial preparations for a comfortable retirement are inadequate, 34% are not preparing at all, and 33% believe they are not doing enough. So atleast somebody in England is good at math. More than any other country surveyed UK residents were found to prioritize savings for a vacation over saving for retirement. When asked if they could only afford to save for one of these options, 58% chose a holiday while only 32% chose retirement. It may sound idiotic but it is actually not because what is your money going to be worth when the government performs a soft defaults and prints pounds like crazy to pay off its liabilities, why not have a vacation now?
There is a fellow whose grandfather I knew he was in the Weimar Republic you know when they printed all this money to pay off the war debt from the very unwise Treaty of Versailles. He took his life savings across the treaty. He had to run across the street because he was losing money as he was crossing the street and he bought a lovely, I am sure very tasty cup of coffee with it and then he was done.
The average UK resident believes that 42% of their retirement income will come from the State and for 18% the State pension will be the most important source of retirement income other than lemonade stands. Given the aforementioned unfunded social security and pension liabilities and the ever increasing national debt the economic reality is that millions of UK residents will be forced to work much longer than planned or face a drastically reduced standard of living.
Education, so let us have a look at these numbers. State spending on education in England started out in the 20th century at a little less than 2% of GDP. Spending increased steadily reaching 4% in 1960. It doubled but of course there was a baby boom, peaking at 6.5% in 1975 before declining to a low of 4.25% in 1989. In the 2000s education spending increased rapidly rising from 4.34% of GDP in 1999 to a peak of 6.07% in 2010. So the UK spent a total of £ 42.69 billion on education in 2000. This has increased to an estimated £ 87.27 billion in 2013. A 104.4% increase in 13 years. Have the children split like Meiosis and Mitosis? No, of course not. What happens is we have to look at people dependant on the State whether they are welfare recipients, military, industrial complex recipients or students, retirees. They are livestock for the bureaucracies.
If the farmer wins the lottery he doesn’t start spending money on making his cows more comfortable. He doesn’t install IPad and down pillows in their stalls. No, he just spends money on his own stuff and keeps his cows in the same state. So it doesn’t really matter if you add money to government programs because it doesn’t improve what they generally do and often it makes it worse because we fail to remember that this is a livestock situation not a charity situation.
In an assessment of the education system in 50 countries, we UK was ranked 6th trailing Finland, South Korea, Hong Kong, China, Japan, and Singapore. For comparison the US was ranked 17th despite having the highest levels of educational spending in the world. On the plus side the farmers all have big screen TVs.
Health Care, oh Lordy! The United Kingdom health care spending grew by 5.75% per year on an average between 2000 and 2009 in GDP adjusted terms. Some people say there is more technology in health care but that is nonsense. You only invest in technology when it saves you money for the most part. Technology has driven down the costs of say getting information from one place to another through Faxes and emails and 3D printing. So it should be driving cost down to have technology in health care, not up.
Well the actual amount spent on health care rose in a continuation of the long term trend. It shrunk as a percentage to GDP by 1.9% in 2010 and 0.4% in 2011. In 2000 almost £ 50 billion was spent on health and that grew to an estimated £ 124.35 billion in 2013, a growth of over 250% in 13 years. In the UK 82.8% of health care spending was funded by the government down from 83.5% in 2010 but still well above the world wide average 72.2% because you get more communism for your health care dollar in the UK than in almost every other country.
The UK had 2.8 practicing physicians for 1000 residents in 2011, a large increase from the 2.0 doctors per 1000 in 2000 but well below the world wide average of 3.2. There were 8.6 nurses per 1000 residents on par with the worldwide average of 8.7. Number of hospital beds in the UK is 3 per 1000 residents is well below the worldwide average of almost 5 and down from 4.1 in 2000. In line with many countries in the number of hospital beds per capita in the UK is fallen gradually over the past decade. This decline has coincided with the reduction of average length of hospital stays and increase in outpatient surgeries. This of course is at a time when the population is generally is ageing you would be expecting it to be going the other way but you have to control costs and certainly you wouldn’t want to cut any bureaucratic salaries or public sector pensions in order to actually take care of poor people who will suffer in almost every political system. The people who suffer are those with the least power, the children, and the poor, and so on.
There has also been a significant growth in the availability of diagnostic technology such as CT scanners, and MRI units in most countries in the last decade. UK has also seen an increase in such technology. Number of MRIs in 2011 was 5.9 per million residents. It is less than half the worldwide average of 13.3.
The number of CT scanners is at 8.9, less than 40% of the average of 23.2 per million population. These costs don’t show up very obviously. If somebody gets a late diagnosis and somebody dies and so on it doesn’t show up as the cost of health care system. In fact it shows up as savings to the pension system. So how the government measures what is worthwhile and what is valuable is quite a bit different from how you and I would do so to the catastrophic decrement of money.
UK health spending accounted upto 9.4% of GDP slightly above the worldwide average of 9.3%. Health spending as a share of GDP is much lower than the United States which spends 17.7% of its GDP on health in 2011. It is also lower than other countries. You can read these for yourself if you want of course.
In terms of the per capita spending the UK spends slightly more than the average on health, £ 2183 compared to the worldwide average of 2141. Health spending per capita in the UK is only 40% of the US which spent £ 5453 per capita in 2011. Of course one of the things that has happened in the United States is you have 50% of the spending on healthcare in the US is from the government but you still have private industries attempting to get their hands on that money.
So you have private profit and public funding which is kind of a fictitious model and you have huge restrictions on who can provide health care and write prescriptions and so on. I mean the requirement that only physicians could write prescriptions dates to somewhere after the second world war. It is really very old. So in the US you have got a lot that is interfering with the free market delivery of health care which has the usual results of driving up costs.
Most countries have experienced significant life expectancy increases in the recent decades attributed to progress in medical care and improvements in living conditions. Life expectancy at birth in the UK is 81.8, sorry 81.1 years in 2011 a year more than the average of 80.1. That being said several major European countries such as Italy, Spain, and France have registered a higher life expectancy than the United Kingdom. Although to be fair given how much it rains and it is drab and foggy and it is dismal in the United Kingdom it certainly feels longer.
Obesity rates of course has increased worldwide in the recent decades. In the UK the adult obesity rate was 24.8% in 2011. This is lower than the US which is at 36.5% but still higher than the average of 22.8%. of course obesity’s going prevalence points to a further rise in health problems and a higher health care costs down the road for an already strained system. What is interesting of course is that the biggest problem that the poor face these days is obesity which is quite a bit different than the problems that the poor faced in the past which generally was eating each others, a step forward.
A recent report suggest that health and social care could account for 50% of all government spending in 50 years a massive rise from the 20% currently spent. The care and quality commission a non-departmental public body has identified 45 hospitals about 20% of the total of the UK because serious quality and financial problems dating back over 5 years. Another 20% of the hospitals were described as coasting along and not doing terribly well. These reports come amid a slew of additional scandals involving NHS care and new research that reveal that 1 in 10 patients, about 1 million patients in a year suffers avoidable harm in NHS hospitals and care homes. Well, let us just let that settle in. One in 10 patients suffers avoidable harm in the very place that they go for healing. It is like having 1 in 10 IPad blow up in your lap.
Recent hospital enquiries have noted serious departures from the standard of basic care which every patient is entitled to expect including physical abuse of patients, patients and bedding being soiled with urine and feces for considerable periods of time, as if a shorter period of time is not so bad and other sanitation problems including medical waste being improperly disposed off leading to potential contamination.
It was also reported that upto 10,000 cancer patients were dying in the UK each year due to late diagnosis well of course that saves the system money. In a private insurance system a late diagnosis actually is a big problem. You got to pay off the life insurance when the person dies and you also get bad press, people don’t want to do business with you and so on. So in a freer system, a free market system it is a negative, one of the particular negatives in the UK for these kinds of late diagnosis. David Prior the head of CQC, has warned that the country’s health care system is personally on the brink of collapse.
According to the office of national statistics as many as 1165 people accidentally starved to death in NHS hospitals over the past 4 years. In 2011, 43 patients starved to death and 291 died in a state of malnutrition. Well the number of patients discharged from hospitals suffering from malnutrition doubles to 5558. 6 children are also being discharged from NHS hospitals to die at home or in hospices on controversial Death Pathways, fine name for a heavy metal band, not a good name for a health care policy.
Until now this was thought to have involved only elderly and terminally ill adults however the practice of withdrawing food and fluids by tube has been found to be used on young patients as well as severely disabled new born babies. One doctor admitted to starving and dehydrating 10 babies to death in the Neo-Natal unit of a single hospital. In a leading medical journal the physician revealed that the process can take an average of 10 days during which a baby becomes smaller and shrunken which again will also be true of the doctor’s heart if it were even present at all. Over 130,000 patients are known to die each year on these Death Pathways. NHS hospitals have also been accused of distorting numbers to mask the number of patients dying under these conditions.
Hospitals are paid millions to hit targets for the number of patients who die on the Liverpool Care Pathway and center has said to have paid hospitals that ensure that certain percent of patients to die on their wards have been put on the controversial regime. In some cases hospitals have been set targets that between a third and two-thirds of all deaths should be on the Pathway.
Over £ 30 million in extra money from taxpayers is estimated to have been handed to hospitals over the past 3 years to achieve these goals, which is a medical hit frankly. Among trusts that confirm the use of targets was Aintree University Hospitals NHS foundation trust which said that the percentage of patients who died on the pathway was 43% against a target of 35%. Good job. Over the years the trust received £ 308,000 for achieving goals involving the Liverpool Care Pathway. There are also countless stories from doctors of fighting uphill battles to have patients taken off the pathway only for them to quickly recover and be discharged from the hospital.
So let us try and close you about the myth of austerity. So with great fanfare in 2010 were announced the great dragons of austerity had been released from the Bastille and these which include tax increases and spending cuts designed to slash the budget. I don’t know how to use these dramatic words. “I was eating 9000 calories a day. I am going down to 8800 calories a day. I am slashing my food intake to a near starvation diet. I am cutting to the bone.” This is the nonsense they expect people to swallow and of course most people do.
Spending cuts of course haven’t taken place at all. That is austerity in the UK. it really just comes down to tax increase. Just because it is lot easier to force taxpayers to fund people who might otherwise cause you deep trouble if you cut their budgets. So this is the same as it is in the US. the UK politicians use the deceptive practice of baseline budgeting as part of fiscal policy. What that means is you can actually still increase your spending but claim that you are cutting spending. How is this is going to be achieved? Well, what you can say is, “Well we were expecting to grow at a 6% rate but you see now we are only growing at a 5% rate. That is like 1% lower man. We are slashing to the bone. We are cutting. It is austerity man.”
To quote Daniel Mitchell from the Cato institute, that is sort of like saying your diet is successful because you are only gaining 2 pounds a week rather than 5 pounds. For all the talk about drastic cuts and cutting spending to the bone public spending has increased every single year going all the way back to 1954. In government press conferences might as well be this, “Buga, Buga. Buga, Buga, Buga, Buga, Buga, Buga.” And people going “Huh, interesting. It is nonsense.” According to the governments own budget from 2011 – 2012 to 2016 – 2017 public sector expenditures will increase from £ 647 billion to £ 700 + billion
Because that my friends is what the government calls austerity.
Taxes, from debt to death. The United Kingdom’s federal tax revenue is forecasted to be £ 568.8 billion or 36% of GDP in 2012 – 2013. This is equivalent to just over £ 11,000 for every adult in the United Kingdom. So of an adult population in the UK of about 51.4 million people it is estimated that there will be 29.7 million taxpayers in 2012 – 2013.
Around 3.8 million of these will pay at a tax rate of 40%, providing 36.7% of the total income tax revenue. 307,000 taxpayers paid an additional 50% on all income over a £ 150,000 providing 24.6% of total tax revenue. This would in fact even be higher if it wasn’t for the fact that a lot of champagne socialist lefty types like Bono and so on who would normally be paying for all the government programs that they advocate as necessary to help the poor except at the moment they see that the true results of that which they advocate are high taxes they vanish like phantoms to tax free havens in like places like Switzerland and so on to avoid falling into the bear trap of the policies that they recommended as useful to the society.
In 2009 – 2010 tax year more than 16,000 people declared an annual income of more than £ 1 million. To HM revenue and customs after the new 50% of top rate of income tax was introduced that number fell to just 6000 because the rich really know how to call. It is believed that the rich citizens moved abroad and took steps to avoid paying the new levy by reducing their taxable incomes.
Increase in the highest rate of tax actually led to £ 7 billion in the last tax revenue. Well it is nice to think that it is not that England is losing tax revenue, it is other countries that are gaining less. But still some tax revenues so we will be charitable. The 50% top tax rate was reduced to 45% in April 2013.
The VAT, Value Added Tax because we all know how much taxes add value this rate has been 20% since January 2011 as part of the austerity measures. Previously it was 17.5%. see when a government goes through austerity it may wreck its books to sort of indicate somehow that its rate of growth is slightly, slightly slowing but it is still going to grow. But when austerity hits you, you just got to pay more. Sorry or you are going down.
In 1994 – 1995 a reduced rate was introduced for domestic fuel and power, originally 8% but now 5%. The reduced rate has been extended to other products and other goods are exemption taxation. One of the great things about having exemptions in general policies is then people will donate money to your campaign to become a politician, to become a political leader. People will donate money to you so that you will give them exemptions from the universal law. You can just check out all of the 1000s of exemptions that have been handed out like candy for Obama Care in the United States. It is just the same thing all the time.
The VAT is expected to rise a little over £ 100 million in 2012 – 2013. This is equivalent to the aptly, numerically, precise 1984 pounds for every adult in the UK or 1626 per person. The United Kingdom has a corporate tax rate because we all know that legal fictions, pieces of paper actually pay taxes. It doesn’t come out of the salaries of the employees or the profits of the shareholders or it really doesn’t come out of the wages of the executives.
So we all know that corporations, pieces of paper can be taxed the same way they send pieces of paper to war or marry them or roll them up and have sex with them. So it is really important to remember the corporate tax payer never hits any individual, it never hits workers or anything like that. there is a corporate tax of 28% with comparison with the highest rate of corporate tax in the world is in the US it is 40% and in Japan it is at even closer to 40%, France 34.4%, Belgium 34%, Germany 30.2%, Spain, New Zealand, Mexico, Australia are all at 30% and Canada at 29.5%. That is why I am here.
Military spending because you know it is an island so got to be involved around the world. United Kingdom military spending has fluctuated in the last century peaking at 46.4% of GDP in World War II and declining from 10% of early years of the Cold War to 3% today.
So in 1985, again all inflation adjusted £ 19.10 billion was spent on defense increasing to £ 42.11 billion in 2013. This is a 120% increase in 13 years. The interest on the national debt was 46.5 billion if you remember and so interest on the national debt is more than what is called defense. We would call government military spending defense in the same way as we will call welfare charity and government schools say education. So this is £ 1700 per UK household. I hope you feel that you are getting your money’s worth.
According to a recently released book “Investment in Blood – The True Cost of Britain’s Afghan War”, the war in Afghanistan has caused the UK atleast £ 37 billion. So in 2006 it has caused an estimated £ 15 million per day to maintain the military presence in Afghanistan’s Helmand province. You know that a mad American military in Iraq and Afghanistan uses more oil a day than the entire billion person economy of India. It is an environmental catastrophe. An equivalent of £ 25,000 has been spent for every one of these 1.5 million inhabitants which is more than most of them will earn in their lifetime. But on the plus side we do leave them with land mines. So you know these things do tend to balance out if you are Satan.
This breaks down to 31.1 billion military costs, 3.8 billion for the future care of veterans and 2.1 billion for civilian development in Afghanistan which is also known as bribing everyone in a turban. This guy calculates that by 2020 more than £ 40 billion will have been spent on the war in Afghanistan which is equivalent to more than £ 2000 for every taxpaying household in the country. Of course this is how wars should work. You should of course say, “Well this is going to be the bills. Do you want to be patriotic and wave the flag or do you want to save 2000 + taxes equivalent interest over that time period?” Well I think a lot of people would find that they would side with the blessed peacemaker people and a little less the war mongers. It is easily war monger when it is subsidized by the people, particularly people that have been born here.
The official claimed cost of the Iraq war is £ 9.24 billion which includes 577 million in humanitarian reconstruction and development aid because you break them, and you build them. Obviously that is the point of war. This figure does not include routine training, maintenance, soldier salaries, running costs due to their long term injuries and needed mental health care. As with most government figures it is not a question of if, but just how much more or how many multiples the real economic cost happens to be. This doesn’t include the opportunity cost had on people blowing people up over there rather than actually doing something productive for their domestic economy.
If you want to know more about the Iraq war, you know I have a couple of shots, sit back, grit your teeth, bite down on something hard and check out my presentation on “Iraq – A Decade of Hell”. It is important to look at it.
The Libyan war, recently the Defense Secretary Liam Fox claimed that the Libyan war would cost taxpayers around £ 260 million but gave limited information as to how that figure was reached. He may have not been flexible enough or have enough rubber gloves to show you how that figure was extracted. An independent researcher estimated that cumulative cost of the operation upto the end of August 2011, the war continued for another 2 months was between 1.38 billion and 1.58 billion. Five to six times is not a bad rule of thumb when it comes to estimating how much stuff is going to cost. The one thing that you want to be really careful of is when government State stuff as though is the stuff is revenue neutral that means it is wildly unpopular and it is going to be astonishingly expensive in the long run.
Using another method the costs were potentially higher between £ 8 and £ 15 million and £ 1.75 billion. This conservative estimate for military expenditures in Libya is upto 7 times greater than the figure originally claimed. The figures give the cost incurred due to military operations in Libya alone ignoring routine training, maintenance cost and other expenses not to mention of course the aforementioned opportunity costs. Official numbers are included in the Core Ministry of Defense Budget and remain unavailable.
A recent study found that young men who have served in the British military are about 3 times more likely than civilians to have committed a violent offence. The violent offence is not war. I mean obviously it is but the violent offence in this category is at home, afterwards and to serve of course you don’t serve you are paid.
I mean you serve coffee. You don’t serve the war machine. What happens is that you may join voluntarily but everybody’s money is conscripted by force to pay for this stuff. Here is the quote from the study, “Being deployed in the self wasn’t a risk factor for violent offences but being exposed to multiple traumas like seeing someone get shot increases the risk by 70% to 80%.”
The researchers who desperately didn’t want to lose their funding stressed that although the study pointed to a serious problem for those affected it did not mean that all ex-soldiers would become violent criminals, of course. In July 2013 it was reported that more British soldiers and veterans committed suicide last year than those that were killed in battle. 77 soldiers were confirmed to have killed themselves while 14 died in suspected suicides. The Ministry of Defense doesn’t track what happens to veterans so no one knows how many are suffering from post-traumatic stress disorders or taken their own lives. This is true in America as well. Many more soldiers are dying through suicide than roadside bombs.
Monetary policy, since 2008 the Bank of England has purchased 21% of government guilts aka debt holdings. This means that the significant portion of UK debt is being financed by the Bank of England. This is as I said before like attempting to pay your Visa bill with your Visa bill. The Bank of England has used quantitative easing otherwise known as trading money out of thin air otherwise known as counterfeiting to purchase 300+ odd billion pounds over the government debts since 2009. For those yanks, the Bank of England is to the UK as the Federal Reserve is to the US. A somewhat private but politically controlled entity which lends money to the government in return for stealing the souls of the reserves.
Large nations use their Central Banks to create new money to finance government debt which in turn devalues all the currency presently in circulation and disrupts market price signals. These incredibly destructive boom and bear cycles are primarily due to these disruptive market signals leading to a misallocation of resources in the market. I won’t get into all those, I think exciting technical details. I have got a number of shows, podcasts. You can find them on my website www.FreedominRadio.com.
Talking about the Austrian cycle of the, the Austrian theory of the business cycle is very interesting stuff. So of course when the misallocations like you get all the weird price signals and interest signals because the government is screwing around with the money, and interest rates. This confuses entrepreneurs and they then invest in a whole bunch of stuff that they think people want because they are reading the price signals wrong. I am not reading them wrong they are just being manipulated. Then when it turns out that people don’t actually want all this stuff you know like housing that people have built for them you get a massive bust. It is not due to the market. It is due to the government putting everyone in amnesty and rolling them down the hill in a barrel full of monkeys. Actually that would be better monetary policy. Make a note of that.
So this process allows governments to continue their deficit spending by stealing values from citizen savings and using the hidden tax of price inflation. Government prints a lot of money and the first people that they give it to get the full value of money and then the last group of people that get it usually will be the poor and those on fixed incomes. I really get it in the shorts because it is really worth so much less by then. Same amount of goods more money means that you have spent more money per good which is of course inflation. Inflation technically is the printing or creation of money. Price increase will simply be the effect of the inflation of the money supply.
When prices go up of course the governments love have a convenient intermediate scapegoat because people blame the greedy business owners and not the government and the Central Banks for shift in value of their currency. Like people say, “Oh, man I can’t believe they are putting less coffee in my coffee tin.” It is like well no it is not the fault of being cheap, it is just that the money is being screwed up.
The Bank of England’ monetary policy committee has also kept the interest rates at a record low level of .5% as of June 2013 with the stated goal of stimulating economic growth which may be due to some degree but of course when it does is it kills savings and thus job creation, entrepreneurship, capital investments, and future work or productivity. Work or productivity is the absolute king when it comes to economic growth.
A group of global banks and funds have warned clients to stay clear of purchasing UK guilts fearing that the Bank of England has opened the door to stagflation and risks losing credibility. So a stagflation is when you have a stagnant economy plus inflation which according to Keynesian Economics is impossible and since you are supposed to inflate the money supply to deal with a stagnant economy when you have already increased the money supply to a point of where you are getting inflation but the economy remains stagnant you are out of tricks. You are out of con games in the Keynesian model. Look into von Mises, look into the Austrian school it is a sane, that is the way of understanding how this stuff works.
The UK lost its top in Credit rating for the first time since 1978 in February 2013 when the credit rating agency Moody’s downgraded the rating due to a weakened economic forecast of the country. Don’t know where they might be getting that from. In April 2013 the Fitch Credit Rating Agency followed suit.
This is the inflation rate as you can see it is trending upwards. Again the rollercoaster of ZOMG continues. According to the Office for the National Lies and Statistics the official inflation rate in, I repeat myself in the United Kingdom was 2.8% in July of 2013. From 1989 until 2013 the official inflation rate has averaged almost 3% to 2.81%. Real inflation adjusted incomes have been declining since the onset of the global financial crisis in 2008. It has wiped out 40% of Americans wealth. Between ’07 and 2012 the approximate 10% growth in average wages was far exceeded by the consumer price index inflation of 17%. You don’t just feel poorer you are poorer even though you may have more money. To be exact real incomes are 6.3% lower in 2012 than they were 5 years earlier due to price inflation which is the result of money inflation which is the result of government printing money rather than lowering spending or raising taxes. Inflation is a hidden and terribly hidden tax. It hits the poor the hardest.
The situation in the UK appears even more grim when you look at the price increases of non-discretionary essential purchases including food and energy. So let us do that shall we. Between 2002 and 2012 cumulative inflation of 29% was measured using the CPI. It was far exceeded by increases in the prices of essentials.
The price of gas and electricity increased 142%, 10 years 142%. Vehicle tax and insurance 108%, Fuel costs 71%, Food 43%. In the same 10 year period average wages increased 36%. If you just look at the last 5 years since ’07 it has been even more alarming. Between ’07 and 2012 cumulative inflation of 17% was measured. Gas and electricity just in the short term period ran, you had cumulative inflation of 17%, gas and electricity rose 46%, vehicle tax and insurance 88% and fuel cost 56% and food 30%.
If you really want to know what is happening to your money you can look this up if you want but you need to look at the price of the stuff in silver and gold. So in America for instance people say, “Well gasoline is so expensive.” Well, maybe it is. In Federal Reserve notes but gasoline has never been cheaper in gold because gold is something that has real value unlike the toilet paper monopoly crap that they spew out of their asses in the States. Rented housing cost also increased 24% from £ 467 to £ 577 for an average household according to another survey. In the same 5 year period average wages only increased 10%, Vehicle tax and insurance 88%, Fuel cost 56%, your wages 10%.
Inflation is like eaten to death by mosquitoes. Once some vampire you can wack a stake through its heart. You can’t possibly deal with the theft that occurs through inflation and of course this only helps if you actually have a job. For reference of course in the last 5 years the price of gold has risen by 9%. Do not even get started on the Bitcoins, eh. Britain slipped down the European League Table on living standards as families continue to fall open to the economic downturn.
An in depth analysis by the EU measured material consumption in 37 European countries including both private purchases and State spending to give an accurate measurement of how well off people really are. In the latest figures which covers 2011, Germany and Austria jumped ahead of Britain which comes out at 6. A year earlier in 2010 it was 4th. The UK had the biggest fall in living standards of any EU countries except for Greece, Cyprus, and the Netherlands in the past 2 years. Greece which was you know lied and cheated its way into the European Union, Cyprus which has the government ripping people’s money out of their bank accounts, and the Netherlands.
So we are just ahead of that rat pack.
Income inequalities have been increasing both recently and over longer time periods. The poorest have fallen further behind the average and the richest have moved further ahead. So if you remember somewhere in the socialist paradise post-war period, particularly in the 1960s all of these programs were put in place to make the rich give a little more and to make the poor a little richer to close income inequalities.
Of course State programs, government programs are all based on coercion on taxation, on laws, on prisons and so on. Coercion, one of the interesting characteristics is that it generally achieves the opposite of its stated goals. Like you know if you say well in john fowles collector style “I am going to kidnap this woman until she loves me.” She is probably going to end up loathing you from here to eternity. The same thing is true here, from the ‘60s and ‘70s onwards the whole goal was to close income inequalities but because we used coercion with a lie of virtue through guns, we used coercion in an attempt to achieve this and we have achieved the exact opposite which is to be expected.
The poorest hands of the population have between them now 1.3% of the country’s total income and the second poorest hands at 4%. The richest hands have 31% and the second richest hands have 15%. The income of the richest hands is more than the income of all of those below average incomes, bottom 5/10th combined. The proportion of total income going to the richest hands is notably higher than a decade ago. 31% in 2009 compared to 28% in 1999. The rest of the income distribution hasn’t changed much over the last decade.
The official number of unemployed people in the 3 months period between March and May 2013 was 2.15 million people or 7.8% according to the official statistics. This of course doesn’t count people who are underemployed, working temp or part time jobs or those who simply given core banking to their mother’s womb and left the work force. According to a study from last year when the official number was 2.671 million, the true state of British unemployment was estimated more than double the official number at 6.269 million people including underemployed or discouraged workers so almost 30 million out of the 60 million UK residents are employed.
Over 915,000 people have been unemployed for over 12 months in June 2013 up 32,000 or 88 a day from a year earlier. An estimated 763,000 are 18.7% of economic deactivating to 24 year olds are presently unemployed, if you count soccer riots as being unemployed. A total of 843,000 or 17.6% of 18 to 24 year olds are not presently in school, employed, or undergoing any type of formal training.
The number of economically inactive people aged between 16 and 64 reached 9.04 million people or 14.4% of the total population in June 2013. Approximately 992,000 people over 65 years old are presently employed which is up 64,000 or 6.9% from the previous year. The claim and count, the number of people claiming the job seekers allowance and unemployment benefit was 1.4 million in July 2013. There were 5.6 million working age benefit claimants at the end of 2012. 5.697 million people are employed in the UK’s public sector. The office for budget responsibility forecast a reduction in public sector workers of about 1.2 million staff or 21% between 2011 and 2018.
It is believed to be none of that and there will be a smoking crater or there will be a lot more than that and we will start to see a few green shoots of genuine freedom. An abundance of unemployed young people feel marginalized, pessimistic, and lacking in control over their lives according to a recent survey. This is important.
I mean the reason that we included this in the presentation is that society has a problem which is that young people don’t really want to conform to old conscious rules and what society does to get all these teenagers to conform is it promises all of these goodies to them. You know, “Conform, get a job and you will get a house and you will get a wife and you will get kids, and you will get stability and you will save.”
If society can’t offer these benefits to the young then the young are basically going to give the middle finger to society and say, “Well, screw you. Why should I obey these rules when you don’t have any goodies to offer me?” you can’t bribe the youth into compliancy and make offers to them. It is quite important to see what is happening with the young because that is really the future of any stability in society. So we found that of those young people aged 16 to 24 who are unemployed and not pursuing formal education 33% have experienced depression.
Of that age group 40% feel ostracized from society, 36% believe that they will never be able to find employment, and 37% rarely go outside their house.
In another survey of people experiencing issues with debt, 75% that the debt had a negative impact on their mental health and 50% said it was causing problems at their place of employment. The majority said, Financial concerns had caused problems with their partners, while 33% said they had a negative impact on their relationship with their children.
The UK has one of the highest rates of self harm injuries with 1 in 250 adults self poisoning or self injuring. I am not just talking like running for office. This is like really, really toxic stuff. This of course is the human cost of these disastrous policies and programs in this massive tumor style growth of the State.
Now, what really is to be said about all of this? I know it is a doom and gloom rollercoaster but it is in point to of course understand where we are and where we could be going as a society. A lot of the west was really founded on skepticism of the power of the State to soft complex social problems on a rejection of the medieval style guilt system where you had to pretty much do the job that your father had and you couldn’t really change anything, a rejection of the sort of aristocrats of relationship and the retreat of centralized coercive authority from people’s lives. That really was the foundation of the modern west of prosperity and for a variety of reasons. I have gone into this on a series on YouTube called “Death of the West – The 3 positives”. I hope you will check it out.
But for a number of reasons we kind of broke that coffin into the 20th century and we began to turn as a society got power over to the State solve all kinds of complex social problems how people should be educated, how people’s health care should be taken care of, how people’s retirement should be funded, how money should be dealt with, how employment, unemployment, rules and regulations and safety and insurance and you name it we just turned everything over to the State.
This was a pretty sneaky job on our part of course. It wasn’t really very noble. We were just bribed. We were told we were going to get free stuff and we were like, “Okay, free stuff means freedom and so let us do that.” It was a slimy bargain with a particularly squid like oily devil and the result of that has been that we really unleashed a State which will forever grow until it collapses in the Roman style, in the Empire style. It has been the case for almost all of human history.
We are in the later stages of that. This process really has to play itself out. Too many people have become dependent on the power of coercion epitomized by the modern State and so it simply is going to have to play itself out but hopefully the lesson we can learn from the coming challenges is that there is no good, no service, no money that is worth surrendering your freedom for. If we care about the freedom in the future of our children we will then strain our spines, stick out our chest, and never make this unholy bargain again.