Before I start my rant, I thought you might like to view what I think is a nice “divine retribution” youtube clip; an example of age taking revenge inadvertently. Try and ignore the skate boarders; it is the next bit that makes watching worthwhile.
I start my state pension later this year, if I am spared (old people use that phrase a lot – I am just getting into the swing of it!). So the working population will be paying me for doing nothing, if that is what I choose. Is this really fair, bearing in mind it is my generation that has voted in Governments that have pushed the national debt up to its current figure of roughly £1,022,000 million. Actually, that was the figure in March 2012 according to http://www.economicshelp.org/blog/334/uk-economy/uk-national-debt/ it is almost certainly bigger now. But this is not all the debt. If you count in the “intervention” made to save UK banks, the debt figure is £2,300,000 million. The smaller figure represents 66% of our annual GDP. The GDP being roughly what the whole of the UK earns in a year. In 2002 the national debt hit a minimum of around 30% of our GDP, which gives you some idea of the spend-easy behaviour of the past ten years. In 2011, interest payments on this debt cost more than all our spending on defence, which puts it in some perspective, I think.
It seems that many commentators comfort themselves by observing that many other countries also have a very high debt level, which is true, but I do not find much comfort in it. As with individuals, a debt is entered into to get something now that will be paid for later. My fear is that the national debt is now so high that it will be future generations that will eventually have to pay. I think it is revealing to look at Government spending over the past 30 years, which illustrates that Governments have got into a habit of increasing spending, possibly in the belief that they are buying popularity. (Incidentally, the graph is in constant money terms so any effect of inflation has been removed.)
While the cuts introduced by the coalition might appear to some as being “draconian”, it is also clear from the graph above that spending has hardly been slashed. I can only just discern a slight decrease in spending in the graph. You might think that things are bad enough with the current debt level, but the national debt is forecast to get worse even with the current planned “austerity” or “efficiency”, whatever you choose to call it. This is illustrated below in the graph also taken from http://www.economicshelp.org/blog/334/uk-economy/uk-national-debt/
I fear that this indebtedness, which has become the norm around the world, may cause political problems in the future. I suspect that the democratic process will find it very difficult to solve the problems that arise due to the state of the economy. Greece is currently finding this, France also. In the future I think it also entirely possible that political processes will polarize along lines of age. Younger people will understandably resent the state of the economy they inherit and insist that the older generation pay now for the things they had in the past and did not pay for then. I just hope my state pension is safe and the key to this must be for Government to start decreasing deficits and stop the mind-set of “buy today, pay tomorrow”. That will not be easy or popular, but something has to be done. Perhaps we could start by recognising that saying “the government should pay for blah” is really the same as saying “the rest of you should pay for blah”.