16 Mar 2011 - Bruno Prior
Is Ed Balls a knave or a fool?
On Newsnight, he just compared eliminating the deficit in four years to paying down a mortgage in short order.
Let's consider the form that analogy should take if it were to reflect reality. Having engaged in rampant mortgage equity withdrawal over the past decade, we find that the interest on our escalating debt looks likely to consume an unsustainable proportion of our disposable income (particularly if interest rates rise above their artificially-low levels), forcing us to cut back on essential household expenditure on things like education, healthcare and security in order to pay our interest bills. Do we carry on regardless with further mortgage-equity withdrawal for the foreseeable future, or do we discipline ourselves to bring the growth of our debt to a halt as soon as possible?
Does he not understand the difference between debt and deficit, or is he consciously mixing the concepts to mislead the public? Once we've eliminated the structural deficit (if by some miracle the Government actually delivers on its promise), we haven't even begun to pay off our debt, we've just stopped it increasing. All we've done is stabilise our debts to some degree (if continued growth in the absolute levels of government debt is balanced by growth in GDP) at a grossly-inflated level. That's not remotely like paying off the mortgage, and it's a gross deceit or folly to suggest that it is.
My impression is that he is one of the nastiest pieces of work to hit the political scene in decades, but not stupid. This man looks like a dangerous and effective liar. Classical-liberals should not conclude from the ease with which they can see through his rhetoric that this sort of deception will not be highly effective amongst large sections of the public. After all, most of the media don't get it (or call him on it) either, so how are the public to know it's a fiction?