You can’t ignore the basic rules of economics …
In response to predictions that child poverty is on the rise as family incomes plummet, business minister David Willetts, speaking on behalf of the Government on on BBC Radio’s Today programme on Tuesday 11th October, said:
“We’ve tried to do the things that help but you can’t ignore the basic rules of economics, that when you inherit a situation where the economy has shrunk by 7% there isn’t the money there“.
He’s got that the wrong way round.
Governments can and do ignore the basic rules of economics, if, when the shops are full of goods, and materials, labour and human ingenuity are abundant, they make no attempt to put money in circulation to tap these resources and help families to maintain a decent standard of living.
The basic rules of economics do not require child poverty – or indeed any other kind of poverty.
It is the present rules of finance, not the rules of economics, which encourage poverty, by insisting that the number of financial units lent into existence by profit-making private businesses should determine both the level and nature of economic activity and the distribution of purchasing power.
The rules of economic prosperity are very different from those of finance. The rules of economic prosperity do not state that financial scarcity rules, ok. The rules of economic prosperity put money firmly in its place by requiring that anything which is physically possible and socially desirable should be made financially possible.
The Government may have inherited a situation where the money isn’t there: but it should stop acting helpless and ignoring the basic rules for a thriving economy.
Instead, it should accept its responsibilities, and legislate for a stable money supply, issued free from any debt at source, and spent into circulation on projects which increase the nation’s real wealth.