As soon as the money supply was checked house prices had to fall
and there had to be a recession. If property prices collapse
so will the UK banking sector.


2. The role of Government

Most people believe that government is in place to make society work and that the political establishment is intended to make their life better. Since the current Labour Government came to office in 1997 people's expectations have grown considerably based on the level of 'growth' in the British economy. The electorate had little faith in either the Conservative Party or the Liberal Democrats until the current spate of 'difficulties' manifested themselves because the Labour Government was being credited with success in just about every area of endeavour. However one characteristic of the last ten years is that all political parties have tended to produce policies that appear to be so similar to one another that the average person finds it hard to tell them apart. Few people ask why all party manifestos now sound the same. It is not particularly surprising as all the main parties are trying to appeal to the same group of people and any government, whatever its political persuasion, will have to fund its proposals from the same diminishing income stream. The simple truth is that the bulk of society is now largely or totally dependent upon the State. Link that with the real decline in financial resources and no government, whatever its political persuasion, has much scope for change. The Conservative Party might talk about tax cuts but in reality there is no way that any British Government can contemplate making any meaningful change to the current tax regime. The bulk of the population want to believe that things will always get better - this is why democracy works. Things are going wrong and Labour is in power. Vote the Conservatives into power and everything will get better again. It will not make any difference to the final outcome but a change always gives the illusion of progress. There are no easy fixes to the current problems with the British economy.

All democratic governments have an interest in making the voting population feel increasingly wealthy - more leisure time, more foreign holidays, more cars, more consumer goods, more processed food and all with less effort. Few people seem to wonder how ever increasing levels of consumption in Britain can continue when fewer and fewer people are engaged in productive work. Around Europe today it is possible to see large numbers of healthy able bodied people wiling away their days in retirement. There are millions of people working in the service sector that add nothing to society's long term wellbeing. On the other side the UK's manufacturing capability, in which so many people once worked and which created the nation's wealth, is now being transferred to places like India and China. Even the bulk of the food that we are now eating is being produced outside the Western World. It is obvious that this situation cannot continue forever but few people are concerned because they choose not to ponder the long term implications of this trend.

Many people find that they have difficulty reconciling the policies and data produced by the Government with their experiences, and have even more difficulty in making sense of the Government's projections. The reality is that Government policies are prepared to reassure the electorate and to address what are seen as immediate problems on the political agenda. The simple truth is that Government policies are not supposed to work. If they were they would be co-ordinated and remain unchanged for at least a decade. They are replaced every few years or even months to address the concerns of the day. They are merely examples of the use of smoke and mirrors to confuse the electorate. A detailed examination of Government policies soon shows that none of them will ever work or produce the outcome that is claimed. Most people are confident that they live in a democracy and that therefore there will always be scrutiny of proposals and that an alternative way forward will always be on offer. The problem is that there is no organisation which will or can openly criticise any Government policy in a way that will attract the attention of the general public. There is no mechanism in place to force a government to put the well being of the country above their own short term political objectives.

The British Government's Sustainable Communities Plan is a good example. It was not a plan, it would never have produced communities and what it would have produced would never have been sustainable. The fact that only one tenth of the land that the Government claimed was available was really available was ignored although it was common knowledge. However hundreds of articles were written about the brilliance of the policy, conferences were held to discuss its merits and almost 1 billion was spent on it and as soon as Gordon Brown became Prime Minister it vanished. Nobody wrote articles saying how sorry they were for giving their support such a silly idea. Instead as soon as the new Eco-Towns policy was announced the same group of politicians, professionals and hangers on rushed off to support it although it will fail for exactly the same reasons that the Sustainable Communities Plan failed. The wrong number of homes, in the wrong place, at the wrong price with no new infrastructure and no jobs. The problem for any government is that finding a solution to the housing problem is politically impossible. The housing problem could be solved but it would mean upsetting a lot of middle classes voters. No politician is going to do that whatever party they belong to. Conservative Shadow Ministers have always made it clear that topics like housing will be left well alone as "there are no votes in it for us". Even the Labour Government's political advisers have made it clear 'that nothing will happen to solve the housing crisis until the middle classes are hurt and by then it will probably be too late'. The question then is if the worthlessness of Government policies is known inside Whitehall why none of the professional bodies seem to be aware of that fact. More importantly not a single professional publication is prepared to print an article pointing out the deficiencies in such policies. It was clear that both these policies were fundamentally flawed the minute that they were announced and any professional should have been able to work that out.

It suits most large organisations to accept what the Government says even if they know it to be wrong because it provides them with a stable marketplace. For the many pressure groups and professional bodies some influence is better than none at all so there is usually great willingness to go along with any policy providing that they have a 'seat at the table'. Governments also have a great deal of largesse and can dispense favours to organisations and in particular individuals who follow the government line. Anyone who is critical of the Government gets pushed to one side and if necessary publicly ridiculed. There is therefore an inherent corruption throughout the systems that inform society based upon telling people what they want to hear and in not causing them concern. For example it would not benefit the pensions industry, the banks or the Government to admit that any young person that saves for their old age is wasting their time. In our modern society there is no body of people who is willing or able to carry out a critical review of any Government policy.

This makes it clear that there is another big problem with the modern World - the phenomena of The Emperor's New Clothes. Most people will believe anything that they are told by the Government, or that they are told by the media, or read on the Internet. The fact that Government policies are technically or financially illiterate is never stated publicly. When the Government announces a policy that is clearly nonsense nobody challenges the fact and forces the Government to withdraw. When challenged those working in the media will always use the excuse that the people want to find out what the Government is proposing as it is 'news' and that it is not their job to make critical comment. This lack of any desire to undertake a critical review of Government policies makes the media a vital part of the Government's propaganda machine.

The senior Civil Servants who work in Whitehall will never address the fact that Government policies will never work even when the evidence is placed before them. They just chant the mantra that it is the Government's policy. Political advisers are probably the only people who will admit, in private, that the latest policy is nonsense and then they usually add that there is nothing better on offer at the moment so it will have to do. The level of this cynical manipulation of reality is not appreciated by the bulk of the electorate or apparently by the army of professionals who are always willing to march behind the Government's standard.

Only conventional wisdom is acceptable in our modern society and logical deductive reasoning is apparently a thing of the past. If the British Government says that this is how things are then almost all the professions will line up to support it. The rate of inflation is officially between 4 and 5%. Nobody can believe this to be true but nobody forces the Government to rescind its statements. It is this blinkered unquestioning behaviour that is largely responsible for this country being in the state that it is. Making people feel confident about the future is vital for every Government whatever the reality of the situation. This then poses the question of whose job it is to describe the truth. The answer would appear to be no one. Increasingly the population is becoming accustomed to believing what it reads and hears on the Internet or gains from the media. If the Government says something then it must be right. If it is on the television then it must be right. If it is on the Internet then it must be right. The truth is that almost everything today is propaganda in one form or another. Few people seem to know how to put forward the pros and cons of an argument for people to consider. Few people today are trained to critically review the information that is placed before them so the Government makes an announcement, the media regurgitates it and it becomes accepted as being factually correct.

Most people tend to believe what they want to believe and many appear to be incapable of reasoned thought. If the Government and the media keep on repeating something over and over again most people will eventually believe it to be true. If we recycle our domestic waste and turn off unnecessary lights and unused computers we can save the global environment. It is even possible to sign up for UN certified emission reduction projects when you book a plane flight so that you do not have to feel guilty about using a plane. That anyone can have such a simplistic view of the world seems impossible but millions of people do.

It is interesting to see how the political establishment abuses the English Language to justify a policy. There was the Sustainable Communities Plan that was to have built large numbers of houses very close together on unsuitable land. There is now the new Eco-town policy. The idea has to be that no one can argue with terms like Sustainable or Ecological. All new development is bad development from the environmental point of view. The term Sustainable Development originated in the USA where it had more to do with applying democratic principles to the use of nature's resources. The UN definition of Sustainable Development is about the need to leave options open for future generations. The British Government's definition appears to be based on wasting money and resources to clean up previously used land and to jam in dwellings at a very high density on the back of inflated property prices. Once again there was no one who was, or is, willing to question the logic of these policies as this would be heresy. No one in or close to Government wanted to listen when they were told that house building would end as soon as interest rates rose. Everyone in a position of responsibility was apparently convinced that house prices would continue to rise forever.

There is also a widely held belief by most people that no matter how bad things are that it is the job of the Government to put things right - and even more astonishingly that any Government is capable of putting things right. The notion that it is the Government's fault that Britain is in a mess is still not seen to be a reason for questioning the ability of a Government to solve problems. The idea that the Conservative Party will be able to do any better than the Labour Party when it gets into office is equally strange. Maybe the reason that the Chinese are so much better placed to face the future is because they are not a democracy. One thing that is for sure is that the British Government will be publishing policies right up to the bitter end.

Published: August 2008