The cruellest cut — or a brave new world?

Beneath the endless gloomy headlines about job losses and closures there lurks an ideological argument about the role of the state in the future of Britain.

Cuts, cuts, cuts — the word pops up all over the papers today. They are writing with a growing sense of doom. The reason for such blanket horror? The government is emphasising the financial crisis. David Cameron warned that spending cuts will change our whole way of life for a generation, perhaps for ever, and that finances are “worse than we thought”. A major thinktank predicted that 750,000 public sector staff will be sacked, including workers in local government, police and schools, and unemployment will soar to three million. The new Office for Budget Responsibility is announcing growth forecasts for Britain’s economy today. They will be worse than predicted. Gloom all round.

Arguments about the deficit — the gap between what a government earns in taxes and what it spends on public services — defined this year’s general election.

When governments borrow too much, as happened in Greece, markets begin to worry that these ‘sovereign debts’ may never be repaid, and start charging higher fees for lending money. If a government can no longer afford the interest, whole countries can go bankrupt. Consequences are disastrous — unemployment soars, schools, hospitals and other services are slashed — and long term.

Fitch, the internationally accepted credit ratings agency, is warning that it may downgrade its estimate of the reliability of British debt, leading to much higher borrowing fees. With the deficit running at £156 billion, and total spending predicted to hit £1.4 trillion (or £1400 billion) by 2014, it believes current cuts are just a drop in the water.

Cameron’s opportunity

The underlying issue is: what sort of economy do we want in the UK? More of the same i.e. a mixed economy in which a strong state sector sits alongside a thriving private sector. Or something radically different, more like the USA, with a reduced state and greater emphasis on entrepreneurs and free markets. Labour supports the state sector and says that cuts are like taking away a life support system before the patient is cured. Since Conservatives believe in cutting the size of government and encouraging individuals to fend for themselves it may be just the opportunity they have been seeking.

You Decide

  1. In China the government is involved in almost every area of life including how many children you should have. In America individual freedoms (like the right to have a gun) are fiercely protected. Which system would you choose? Which country would you like to live in?
  2. If our hospitals and schools were run by a famously efficient company such as John Lewis or even Tesco what do you think they would be like? Better or worse?
  3. Do you think that politicians are the best people to run things like the army, navy, air force, pensions, roads, police forces and so forth when they have never usually had a job outside politics?

Activities

  1. Find out what the school budget is. Imagine you had to save 10%. What would you cut?

Some People Say...

“I beat the people from China. I win against China. You can win against China if you're smart.”

Donald Trump

What do you think?

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