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Tired of Waiting

Government Can’t Help

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The housing crash is bringing the banking system down, which in turn is bringing the economy down. Unfortunately, the government is in no position to protect the economy because the government is also deep in debt, and was already running a huge annual deficit BEFORE the crash.

The question is: Why the government finances were so bad after so many years of boom?

Along with huge wastes on government inefficiencies, such as the civil/public services, the biggest waste was on benefits (unemployment, incapacity, lone-parent, housing, child support, etc) = some 32 billion ponds per year, or some 320 billion in the last 10 years.

According to a reliable source on the BBC (Radio 4, 21 Jan, 5:10PM) each person on benefits cost an average of £5,000 per year (including also housing, children, etc.). Add the loss of taxes these people would be paying if they where in work – on average of £3,000 lost per year – and the net loss is £8,000/y. (source BBC Radio 4, 21 Jan, 5:10PM)

In the last 10 years we had an average of around 5 million people in benefits/year: Around a million in unemployment benefits, another million in lone-parent benefit, and some 3 million in incapacity benefits. Of the latter, it estimated that around 1 million are really incapacitated to work, and 2 million could work.

So we have 4 million people on benefits that could work, costing an average of £8,000/year. The annual cost is then 32 billion pounds per year. Times 10 years = 320 billion pounds. This is already more than half the national debt at the start of the crash in 2007. But we still should add 2 things here:

1) The interest the government had to pay for it.

2) The most damaging: the extra weight in taxes over the productive sectors of the economy, the private sector, for all these years. This has reduced the structural, sustainable economic growth. This problem was masked by the rising in personal/private sector debt. An economist good in econometrics (I’m not) could calculate it. If one did, and we saw the numbers, I’m pretty sure we would weep.

- - -

And there is another point even worse. (Sorry.) Another BBC article interviews a young couple on benefits. And the Ghastliness of the culture this benefits system created is all too horrendously apparent.

The young man says that there is no point in working, as after taxes and bills, he would be left with “only” £30 per week. He doesn’t realise that most people can’t save anything. But much more importantly, he didn’t even realise that the main point would be that he would be paying for his living costs himself. Instead, he prefers staying on benefits, and make the rest of us pay for his living. He also says that he would like to work, but in the “right” job. For example, he would like to work in the “East Enders” soap opera...

Take a look: http://news.bbc.co.uk/1/hi/magazine/7816500.stm

Suppose many (most?) in a generation thinks like that!

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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