That was the mantra coming from Theresa May yesterday – ‘We have to live within our means’.
Well I agree and will put aside the fact that we aren’t doing so at the moment. Despite 7 years of austerity we are still borrowing. Austerity has definitely not worked. There are far better ways – but that’s for another post.
So why aren’t we living within our means?
What can we do about it?
Well basically we are not living within our means because we are not taxing enough.
There are many ways to live within your means:
a. Tax people more
b. Spend less
c. Create more growth and hence more tax income
This government chose to tax the rich less (giving away higher end tax cuts and corporation tax cuts) and spend less by applying pay cuts for the public servants. In the process they shrank the economy and reduced income. The more they applied austerity the less income was generated.
The end result was that the rich bankers who had caused the crisis were rewarded and the poor public servants who serve us all have suffered seven years of misery for nothing.
A sensible way forward is to tax the rich more, pay public servants more (what they deserve), borrow, if necessary, to expand the economy by funding infrastructure improvements. If people have more money there will be greater economic growth that will decrease the debt. Borrowing to invest in growth makes sense. The rich are not investing the bonanza they have been given. They are taking it abroad or sitting on it. Money given to the poor is mainly spent in the country generating further tax income for the government.
Austerity hasn’t worked.
Public servants have been victimised.
It’s time for a big change! More fairness! More equality!