Deal Or No Deal

SUNDAY, JANUARY 04, 2009

Deal Or No Deal

He's certainly barefaced

Is there anything you wish to tell us Prime Minister?

Setting aside Gordo's exclusive and cosy fireside chat with Andy Marr this morning, the Observer has the world exclusive reply:

"Gordon Brown today unveils ambitious plans for a 1930s American-style programme of public works to ease the pain of recession by creating up to 100,000 jobs.

School repairs, new rail links, hospital projects and plans to usher in a new digital age by investing in superfast broadband will be used to keep unemployment down. The plans will also be used to tackle climate change, by means of investments in eco-friendly projects such as electric cars and wind and wave power that would also create jobs.

His promise to use public money not only to create short-term jobs, but also to build a low-carbon economy for the future, will be seen as a modern reworking of Roosevelt's New Deal - a massive programme of public works, such as dams and roads, to help America recover from the Great Depression."

A new New Deal, huh? 100,000 new jobs, huh?

To start with, where's the money coming from? It's presumably not the cashalready announced in the Pre-Budget Statement just before Christmas, because that would be double counting something we already know about, and only aBarefaced Liar would pull a stunt like that.

So what money is it?

Yet more borrowing? But his reckless government is already borrowing more than that of any other major economy, and is well on track to borrow more than anypeacetime government in our entire history.

And how much spending would it actually take to create 100,000 new jobs?

If they were all directly employed in the public sector, it would cost about £4bn pa (equals 100,000 times £40K pa, being the average employment cost of a full-time public sector worker).

But these people are evidently to be employed in grandiose public works projects, including tech-intensive high speed rail, superfast broadband, and low-carbonwossnames. That would cost a lot more, on account of having to import virtually all the whizzo kit and technology from abroad. Let's say another £5-10bn.

What's that? It's "investment", and there'd be a pay-off?

Don't be daft - there never has been before (see this blog).

And do we want a new New Deal anyway? Roosevelt's famous New Deal projects may have made for great newsreel footage, but they could never absorb all the millions of unemployed. Moreover, their huge cost burden may have actuallydelayed a self-sustaining recovery.

The truth is that despite all the money Roosevelt spent, and all the regulation he enacted, the US economy still didn't get back to 1929's level until WW2 came along. Indeed, in 1939 his own Treasury Secretary, Henry Morgenthau - a man who had been in the very cockpit of the New Deal throughout- wrote this damning assessment:

"We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and now if I am wrong somebody else can have my job. I want to see this country prosper. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. I say after eight years of this administration, we have just as much unemployment as when we started. And enormous debt to boot."

Brown's New Year package is the usual triumph of flim-flam over substance. Shame on him, and shame on the fawning journos who once again relayed his line without pinning him down on any of the above.

PS As we've blogged many times, our current predicament is all horribly reminiscent of the 1970s. Back then, even though the economy was propped up on four piles of bricks, Callaghan always used to bang on about leap-frogging us forward into a technomarvellous future by "investing" taxpayers' cash in chips (egsee this blog). Not to mention this little job-creating lunacy (cost us £100m, around £1bn today):

Costs Of EU Membership

Building a new mountain

One of BOM's very first posts highlighted the fact that we derive no net economic benefit from EU membership.

Every serious analysis (eg the classic IEA paper by Brian Hindley and Martin Howe) shows the economic costs and benefits are now pretty well a wash. And while we might suffer some disadvantage from being outside the EU tariff wall, world tariffs are much lower than when we joined 35 years ago.

Moreover, as Global Vision argues, we'd almost certainly be able to negotiate withdrawal from the EU's political union while retaining the free trade arrangement (see this blog). We’d thereby escape the budget contributions, the CAP with all those inflated food prices, the social chapter/human rights/eco wibble costs, and of course the Euro.

As it happens today brings some excellent examples of just how those costs bear down on us:

EU Budget costs

You will recall that one of Blair's last great failures was to give away our budget rebate (yet another squandered jewel from the golden Thatcher legacy). When we blogged it here, we reckoned the new arrangements would cost British taxpayers a staggering £100bn over seven years.

But it turns out to be even worse: because the EU budget is denominated in Euros, and because sterling has collapsed against the Euro, yes, that's right - the cost of Tone's failure has rocketed even further.

The Independent reports:

"Sterling's plunge close to parity with the euro has added more than £3bn to the amount the Government must pay to Brussels over the next three years... [the most recent Treasury] figures were calculated at a time when £1 was worth €1.4."

EU eco costs

The arbitrary EU diktat that Britain must cut waste sent to landfill by 50% is now set to cost us even more:

"Taxpayers are facing a multi-million-pound bill to store 100,000 tons of waste paper and cardboard as the British recycling industry plunges into crisis.

Rubbish carefully sorted by householders is piling up in vast warehouses as the market for waste paper collapses, and experts have warned that the mountain of garbage could double in the next three months.

Waste paper is now virtually unsellable, so the private firms contracted to deal with household rubbish have been forced to put it into storage, incurring huge bills. Some companies have begun to claw back the cost from local authorities, prompting fears of hikes in council tax bills."

What is it about the EU and mountains? No sooner does it get on top of its 40 year old butter mountain, it immediately builds a new one from waste paper (pic shows the unwanted waste paper building up at a mill in Essex).

Of course, all these mountains are really made out of money - our money.

EU organ costs

Because of EU rules, transplant organs donated by British citizens to the NHShave to be (effectively) sold to Europeans:

"THE organs of 50 British National Health Service donors have been given to foreign patients who have paid about £75,000 each for private transplant operations in the past two years, freedom of information documents show... It comes as a record 8,000 Britons are on NHS lists waiting for transplant organs...

A spokesman for King’s College hospital said: “We are continuing to treat citizens of the European Union as they have the same entitlement to treatment under the NHS as UK patients under European law.”

For the last 15 years Tyler has carried a donor card in his wallet. Right now, he's thinking of tearing it up, and selling the rights on ebay.