The End Of Britain?

This video has been produced by Moneyweek Magazine.  Moneyweek is part of the Agora Publishing Empire whose publications are ideologically sympathetic to "Libertarian" (Anarcho-Capitalist) ideology, and Neo-Austrian Economic theories of Von Mises.  I've already dealt with much of the main thrust of the video whose ideology flows from the above.  For example, although they admit that private debt in Britain is much worse than Public Debt, most of the film is about the Public Debt.  They admit that when many of the basic elements of the Welfare State, such as the State Pension were introduced at the beginning of the last century, most workers were never going to benefit from them, but they don't base their argument on the idea that for years workers were paying for something they didn't get, instead they base it on the idea that now workers might actually get back something of what workers for the last few generations have paid in!

The figures for total public debt look scary, but are misleading.  The total figure including for future pensions etc. is very misleading, because it lumps all of those future payments into one sum as though they were liable to be paid now.  They are not, they only accrue over the next several decades, and during that time, the country will have income to cover them, so measuring it against just one year's income is rather disingenuous.  In fact, as I showed some time ago, as a percentage of GDP, Public debt today at around 70%, is way below the 250% figure it was at after WWII, when the economy was still able to grow strongly and build the welfare state.  It is well below a similar 250% figure it reached ahead of the Industrial Revolution, as the country borrowed to produce the primary capital accumulation it required, and to build the infrastructure that a modern capitalist economy of the time required.

However, the Austrian School has always had some links with Marxism.  Some of its originators were actually admirers of Marx, even Marx's fiercest critic of the time - Bohm-Bawerk - gave some praise to Marx, whilst Marxist economists like Rudolph Hilferding were students of Bohm.  The neo-Austrian theory of the crack up boom is almost lifted entirely from Marx's analysis of the role of credit in exacerbating crises.  The difference is that for Marx, the credit was a secondary issue, with the real basis of the economic crisis residing in the relations of capitalist production, whereas for the Neo-Austrians, capitalism would work just fine if only the state would keep out of the way, there would be periodic cycles, but they would be mild and quickly self-correcting.  It is the state, and its activities, such as borrowing which are the external influences which cause the crisis.

But, having said that, they do have some useful insights, and a significant problem facing developed economies at the moment is debt - though mostly private debt, and in particular bank debt, built up on the back of speculation in property etc.  So, its worth watching.  I'll be dealing with some of its other points in future posts.