Selling off state-owned assets should be part of a package to drastically cut public spending
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The current flirtation of the main political parties with cuts cannot hope to solve Britain’s financial problems. We need to take dramatic action and make substantial structural changes over the medium term to pull the country back from the current crisis.
Consider the size of the national debt. Its vastness is demonstrated when measured against some of our state assets. The sheer depth of the fiscal hole is so immense that you’d have to make an enormous transfer off the state’s assets sheet to even dent it. Flogging off Royal Mail might bring in £6bn. BBC Worldwide – the corporation’s vociferously carnivorous commercial arm – might bring in £10bn or so.
Flog off Ordnance Survey, the Met office, the Tote, the National Air Traffic Services, the Hydrographic Office, the Queen Elizabeth II conference centre, Channel 4, the British Waterways Authority, the National Nuclear Laboratories, the Forensic Science Service and Bradford and Bingley’s and you’ve brought in about another £5bn. All of that amounts to a little more than a tenth of the deficit the Government is running this year. Meanwhile, the overall £1 trillion debt continues to rise.
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The first mistake above is that selling national assets is a once and for all operation: in contrast, excessive government spending is an ON GOING problem.
Second, the question as to which assets should be state owned is separate from the question as to what the optimum size of the national debt is. The two should be kept separate. Absent the sale of state assets, reducing the national debt is not difficult. Mark Littlewood has presumably fallen for the currently popular bit of false logic which is that reducing the national debt is necessarily deflationary because this involves tax increases or spending cuts. I’ve explained the false logic here: http://cutdebt.blogspot.com/