Bob-be-Quick's fundamental breach

I wrote last December about a police officer called Bob Quick. On that occasion he panicked and blurted out the truth, namely that he is biased against the Conservative Party. He remained in his job because hapless Jacqui, the so-called Home Secretary, is even more unfit for office than he is. Or so we thought.

Yesterday, Wednesday, a coordinated raid took part in the north of England and a number of suspected terrorists or terrorist supporters were arrested. It has now emerged that the raids were brought forward because Mr Quick disclosed a briefing paper about the suspects to the press. He did it in a particularly stupid and incompetent way, by holding the paper in his hand while stepping out of a car in Downing Street thereby allowing it to be photographed by the press. There is a fine example of one such press photograph in the BBC's report of the matter.

What wonderful irony. Last year he came up with a lunatic conspiracy theory that the Conservative Party was acting corruptly in association with some newspapers to obstruct a police investigation. Now he has obstructed a police investigation through his stupidity.

When I was in practice at the Bar I often had to read confidential papers on trains or in restaurants or hotel dining rooms. There was rarely anything in them of interest to anyone other than the parties to the case I was involved in, but the information contained in the documents belonged to those people and their interests had to be treated with respect. It was not a difficult exercise. If anyone was sitting next to me or opposite me on the train the papers would be held so that they could not read them. In a restaurant or hotel the arrival of the waiter would result in the file being closed for the duration and reopened only when any possible prying eyes had departed. It was done automatically because it was such an obvious and important part of my job. I could put it pompously and call it a matter of duty, technically that would be correct, but I prefer to look on it as a matter of not disclosing private information to people with no right to know about it.

To step out in front of press photographers displaying sensitive information about an anti-terrorism operation really is crassly incompetent. Had you or I been emailed such information by mistake and then disclosed it to the press we could rightly expect the law to come down on us pretty hard. Had a General or Admiral during wartime disclosed tactical secrets in this way we wouldn't expect him to retain his position for very long. So, can we expect Bob Quick to fall on his sword or be reassigned to count traffic bollards in Cornwall? Oh no. That is not how it works when you are one of the current government's favourites. And what a favourite he is. Hapless Jacqui referred to him by his first name when addressing the press, as I noted in December. No word of censure or criticism has come from the government this time round. Even the sweetly-pensioned has-been known as "Red" Ken Livingstone has spoken out in support of this clumsy dolt. Having lost his poodle Sir Ian Blair as Commissioner, Mr Livingstone couldn't bear the thought of another tame lackey departing the senior ranks of the constabulary.

Mr Livingstone is quoted as describing what Mr Quick did as "holding a piece of paper the wrong way", as though he had used the butter knife for the fish course during a Royal banquet. This was not a matter of paper etiquette, the man disclosed highly secret details of an ongoing delicate investigation. It was a fundamental breach of duty.

Let's go back to the General and Admiral I mentioned earlier. I can be pretty sure they wouldn't wait to be asked before tendering their resignations. They would do so as a matter of duty because they would put their duty above their personal interest. Then let's ask what would happen if a probationary Constable had been sent with this document to Downing Street because Mr Quick had left it in his office. How long would he remain on the public payroll if he stepped out of the cab brandishing it in exactly the way Mr Quick did? One only has to ask the question for the answer to be obvious. The moment his error was exposed he would be made an example of and sent packing without so much as a "thank you and good luck". Mr Quick and hapless Jacqui would be at the forefront of those decrying the irresponsibility of the probationer and warning of the need for eternal vigilance in the war on terror. And they would be right.

If, as I am happy to assume, Mr Quick is a highly experienced and highly skilled anti-terrorist police officer his departure from office would probably be a loss to public service, at least in the short term, although there are perfectly well established ways in which he could be consulted for a fee were his expertise needed.

I am troubled that this is yet another illustration of someone who holds high office in this country putting themselves above their duty. Their duty must always come first. Their personal pride, their ambition and their pension must always give precedence to their duty. Many think they are indispensable but history shows that not to be the case. American Presidents are limited to a maximum of ten years in office no matter how successful they have been (or think they have been). The world continues turning when they leave office even if they have more to give. Whether you are a police officer or a President there is always someone capable of taking over, indeed someone has to take over some day. Breach of a fundamental duty should always accelerate that day.

Update
Well, well, it seems the power of my little blog is greater than I thought. Mr Quick has now resigned. Well done Bob, you got there at last.

Capital gains in the trough, an answer

Following on from the interesting comments under my previous piece I want to make clear my position about what MPs should and should not be allowed to claim by way of the second home allowance.

For the reasons I set out on Sunday, I think it is only fair that MPs who have to take on an additional home in order to fulfill their duties should have the reasonable costs of doing so reimbursed from the public purse. The main reason I believe this is that it would be quite wrong for an MP for a far-flung constituency to have to spend a substantial proportion of his salary on something that is necessary for his work whereas an MP for a London seat would not have to do so. From that starting position a number of questions arise.

First, how much should they be allowed to spend? Clearly there must be an upper limit. Currently it is just under £24,000. I am not minded to disagree with that figure because I am not in a position to say whether it is too high or too low.

Secondly, what particular expenses should be included? To my mind the only supportable answer is that the additional costs the MP incurs, over and above the costs he or she would incur if living in their constituency home. This means that it is not just the acquisition or rental costs of the second property that should be allowed but also a reasonable sum to kit it out with furniture and the usual kitchen and laundry appliances. In most cases it would also be fair to include things like cutlery, crockery and bed linen because it will not be practicable to split existing supplies used by the MP in the constituency home.

Thirdly, what should happen to the things paid for out of the public purse? This, I think, is the key to the whole issue. We needn't worry about a few napkins or fish knives, it really is neither here nor there whether these are retained by an MP when he is voted out. The honest ones will donate them to a charity shop or pay the Treasury a rough estimate of their value. The greedy will just take them anyway but at such minor cost to the taxpayer that there is no need to make a fuss. It's houses and flats that cause problems because substantial capital profits can be made during the course of a five-year Parliament, profits that result from money spent by the taxpayer not the MP. I'm not sure why this is seen to be an insoluble problem, because it arises frequently in the real world and the law has had an established answer for many years.

Let me introduce you to the resulting trust.

Say Alice, Bill and Charlie have been flatmates while at university. They graduate and start work, still sharing a rented flat. They decide to buy a property together and each chips-in a different proportion of the deposit and a different proportion of the interest on the loan required to buy the property. Who owns what? They might all have their name on the Land Register as owners of the property, or just one might be the registered owner, it doesn't matter either way. The law imposes what is known as a resulting trust so that each owns a share of the property equivalent to the proportion of the purchase price he or she has paid (interest payments being treated as contributions to the purchase price because they are a necessary part of the process of purchase). There are circumstances in which this general rule does not apply, but we needn't trouble with those for present purposes.

The general principle of the resulting trust is very simple and very fair. If you have paid 60% of the purchase price and someone else has paid 40%, you receive 60% of any profit or incur 60% of any loss on the transaction. You can't say fairer than that, you pays your money and you takes your chance. If Alice, Bill or Charlie pays less than one third they can hardly complain if any capital gain accrues to the benefit of the flatmate who has put more into the deal.

It seems to me that the resulting trust provides the perfect answer to allegations of MPs profiteering from houses and flats bought in their names but at taxpayers' expense. To the extent that an MP makes payments towards the purchase price out of his own resources, it is fair that he should share in the proceeds of any subsequent sale in proportion to his input. If all he has done is live in the place he can have no complaint about those who have paid for it receiving every single penny when it is sold.

Stamp Duty Land Tax - a red herring in the trough

Day by day further examples are given of MPs, including government ministers, being recompensed by the taxpayer for the sort of ordinary living expenses we little people have to pay from our own shallow pockets. Mr Kitchen has a helpful summary of the most recent exposures, expressed in his customary forthright terms. Outrage has fumed from all quarters and accusations of fraud and theft are rife. I want to look at one aspect of the matter in which I believe the criticism to be ill-founded.

Take two MPs, one representing a rural constituency 200 miles from London (Outer Farflung) and the other representing an area of inner London (London Nicepart). Each is paid the standard salary of £64,766. Whether we think that salary is too much, too little or just right, it is the set rate for the job and each is entitled to receive it. Each is allocated an office in Parliament but no staff. It is unrealistic to expect them to be able to perform their duties efficiently without at least one assistant to help with correspondence and at least one researcher to help keep him abreast of current legislation and other matters relevant to any particular issue the MP wishes to promote or question. These staff could be employed directly as civil servants and allocated to MPs randomly but conflicts of personality are much more likely to arise under such a system rather than where each MP hires his own staff subject to an overall cap on the cost. Whatever system is in place, some MPs have special interests in areas that require more research help than others, so it would be unrealistic to expect each to spend exactly the same.

The big difference between the two MPs is that one cannot readily commute from home to Westminster whereas the other can hop on a bus or tube train and get there in a few minutes. It makes no sense at all to expect the MP for Outer Farflung to pay out of his salary for accommodation in London in addition to his home in his constituency when the London-based MP does not have to do so. A second home allowance of some kind seems inevitable otherwise MPs representing areas outside reasonable commuting distance of London will, in effect, receive salaries substantially lower than some of their colleagues.

The MP for the constituency of Outer Farflung might rent a property in London or he might buy. If he rents he risks having limited security of tenure and having to move several times during the course of a five-year Parliament. I would suggest that would not be conducive to the proper performance of his duties and that buying a flat or house is a perfectly sensible course to follow. That being the case, there will be costs associated with that purchase. Because the purchase is only made necessary by virtue of his need for a London base to allow him to represent his constituents to best advantage, I see no reason why he should have to bear the costs of purchase. Say he buys somewhere for £350,000, even after recent falls in prices this will hardly buy a palace. Among the costs of purchase will be Stamp Duty Land Tax of £10,500. Much has been made today of MPs being able to reclaim this tax, but the system would operate very unfairly if they were not allowed to do so. The MP for Outer Farflung would have to fork-out more than one fifth of his net first year's salary whereas the MP for London Nicepart with a home close to FatBigot Towers would not.

There are plenty of valid objections to the way the second home allowance operates, in particular that it can be manipulated by MPs to make profits rather than to reimburse necessary expenses. But I can see no valid objection to the reimbursement of Stamp Duty Land Tax itself, it is a genuine expense for those who follow the reasonable course of buying somewhere to live in London in order to allow them to do their job.

Whatever other complaints we might have about trough-swilling politicians, the reimbursement of a genuine expense is not one.

The Grand National

This afternoon I watched the Grand National horse-whipping contest on the television. I have no idea why, because I've never bet a single penny on a horse and have absolutely no interest in the whole absurd "business". It made me realise that I simply don't understand horse-whipping as a sport.

OK, I think I can grasp the basics. A number of horses have to run over a prescribed distance, with or without hedges to crash into, each of them with a very small person sitting on them and beating them furiously. The horse that gets to the end of the course first and is still carrying its minuscule tormentor is the winner, unless the stewards have put their money on the nag that came second in which case the first horse will be disqualified. That much is fairly comprehensible. But what's the point of it?

As far as I can tell the only point is to deprive idle speculators of a few quid and put that money into the pockets of hard working bookmakers (maybe they are still called "turf accountants", I always liked that fine example of linguistic whimsy). But is there any point other than the betting? Without betting would anyone have the slightest interest in watching potential cans of dog food and pots of glue running round in circles?

It all seems pretty pointless to me, particularly because the vast majority of those who have put a few quid on a race will lose and those that win might only get a tenner profit. Oh well, that's their choice I suppose.

There is a serious point to this. Although the whole thing seems utterly absurd to me, others derive pleasure from it. In the process money gets swilled through the system and people are employed as jockeys, bookies, starters and manure shovellers when otherwise they would have to find something sensible to do. No doubt this year's race will be followed by bleatings from humorless harridans in macrame smocks that it involves cruelty to dumb animals. But someone needs to provide jobs for the jockeys, so I'm not so quick to condemn it. It is a fine example of how private enterprise can create employment simply by tapping into gullibility at a price people are happy to pay because the thrill of following their £20 note round the course is, to them, worth the money.

Iceland, charities and councils

There has been much talk about charities over recent years. The very word "charity" conjures up images of starving children and scraggy donkeys calling out for a few pennies to save them from a cruel fate. Reality, of course, is very different with many organisations being registered as charities by the Charity Commission when their main (or sole) function is to lobby government often using money given to them by government to mount advertising campaigns and dubious research. Some have objected to this. There is even a dedicated website (fakecharities.org) that names and shames those so-called charities that receive substantial funding from either the UK government or the EU (or both).

Charitable status is about tax. Many charities are very substantial businesses and work both to distribute money to what they consider worthy causes and to make profits so that there is money for distribution in future years. It would make little sense for any charity to spend the whole of its income every year because some of the projects it supports might require a commitment to funding over several years to have any chance of achieving their desired end, or there could be years in which an insufficient number of deserving cases require help to justify spending the whole pot. That means there is something left over at the end of the financial year, a profit. If charities were taxed on its retained profits there would be less to distribute, so we have a longstanding exemption from tax for those organisations deemed worthy of charitable status. There are other incidental benefits to being a charity, but the tax benefit is by far the most important.

One characteristic of charities is that they are concerned with administering money. They might also engage in trade in order to increase the amount of money at their disposal, but essentially their task is to distribute money to supposedly worthy causes. Once an organisation has that characteristic it is necessary to identify whether the cause(s) it supports are sufficiently beneficial to justify exemption from tax. English law has never defined charity, instead it has identified characteristics or purposes that are charitable. I am not going to bog this essay down with unnecessary technical law, so I will get to the nub of the matter. Certain purposes are recognised as being charitable purposes and some are not. The Charities Act 2006 contains the current recognised charitable purposes in section 2 (subject to section 3's requirement of "public benefit"). We can argue as long as we wish about the adequacy or otherwise of the purposes set out in section 2 and the proper scope of "public benefit", but that debate is for another day. In order for an organisation to be a recognised charity and enjoy the benefits attached to that status, it is necessary for it also to be registered as such with the Charity Commission. For so long as it is registered it enjoys the benefits.

Because charities are involved in the administration of money it is necessary for certain rules to exist about how the administrators should act. Every time a pot of other people's money is put in the hands of anyone we need rules about how the recipient should deal with it in order to prevent misuse. The rules relating to the trustees of charitable funds are strict and, in some respects, complicated. One of their primary duties is to maintain the fund. Keeping it in a biscuit tin under the bed is not permissible if it can be invested for the future benefit of the purposes the charity supports.

Many charities sought to increase their funds by investing them in Icelandic banks. As we know, many local councils did the same with their reserves. Oh dear. Charities are estimated to have lost something like £120million and councils managed almost eight times as much. The Treasury Select Committee has recommended that the charities be compensated by the taxpayer and that the councils be left to stew in their own juicy losses. The justification for councils not being compensated by central government is reported as: "They have a duty to the taxpayer diligently to protect the money they are investing on their behalf". I can see the sense of that argument but cannot see how the same reasoning does not apply to charities.

Trustees of charitable funds are under a strict and well-established duty to act with care, it would not be wide of the mark to describe that duty as "a duty to the potential beneficiaries and to the donors diligently to protect the money they are investing on their behalf". On the face of it they and council treasurers were in exactly the same position. Trustees are entitled to take advice from those with apparent expertise and to act according to that advice if it appears sound, but so are council treasurers. Trustees are obliged to investigate risk, so are council treasurers.

There are two possible differences between charities and councils on this issue. Charities do not generally have access to advice from the most knowledgeable repository of information about the status of banks, the Treasury, whereas councils do. Indeed, central government sends information to councils and volunteers advice about how they should invest their current surpluses. One might think central government to be under a particular duty to compensate for the consequences of its own advice being defective. In addition, the trustees of charitable funds are under a duty to preserve the fund first and to grow the fund second. That being the case, one might think their lack of caution disqualifies them from a bail-out.

It seems likely that the size of the sums involved and the political timing of the whole thing have something to do with the committee's recommendations. Charities are generally perceived to be fluffy and friendly and a general election is no more than a year away. £120million, what's that in the scheme of the absurdly large numbers in which government debt is now being calculated? Could they recommend £1billion for the councils that impose fines for putting glass bottles in your plastics recycling box and vice versa? No, they couldn't sell that to their constituents.

I hope the recommendation to reimburse charities, if accepted, will be met with an investigation of where the money came from in the first place. Say a particular charity lost £1million and receives 20% of its income from government. It would be wrong, on the reasoning of the committee, for the taxpayer to have to pay more than £800,000 because the other £200,000 was in exactly the same position as the taxpayers' money lost by councils.

And what a double-whammy of sweet irony the whole exercise produces.

A government dedicated to maintaining its own bloated level of spending will have to tell local councils that they must make cuts in their budgets to cover the cost of the losses suffered. Central government cannot, it claims, make cuts because to do so would mean reducing the services received by the public. We know that is their position because it is the standard line they spout when anyone suggests reducing government spending: "which schools and hospitals will you close?" they cry, with sheer intellectual dishonesty. Yet local councils must make cuts. Which services does the government want councils to restrict? Or do they, perhaps, know that it is possible to reduce expenditure without affecting anything that really matters?

The second whammy is that maintenance of governmental expenditure is promoted as an essential tool of economic stimulus to haul us out of recession. Poor Gordon's attempt to persuade the G20 love-in to back his plans for increased spending fell on deaf ears and now, if he follows the committee's recommendation, he will be agreeing to the withdrawal of about £1billion from the public sector's potential spending pot. I wouldn't put it past him to blame this loss by councils for the recession going on longer than necessary, so shifty and mendacious is everything about the man. When he borrows another £1billion to bail out his failed bail-outs any such argument will collapse.

The capitalist anti-capitalists

I've never been on a march or engaged in any organised act of protest against anything. It's just not the sort of thing I do. For all I know the vast majority of protestors on any march-type event might be genuinely concerned about something and opposed entirely to the use of violence to seek redress for their complaints, but as an outsider to such events I see violence as an inevitable result because there are always extremists who will latch on to the naive and hide behind them in order to seek to achieve something they could never attain by debate or through the ballot box. Of course it's always the same people. The anti-everythings. All you have to do is announce a protest that includes the word "anti" and they will be there.

Pootling (within the speed limit) to-and-from my Wednesday round of golf I occasionally turned on the radio. The BBC has a radio station called Radio 5Live and advertises it as a 24-hour news and sport station. Much of its sports coverage is excellent, the football and rugby commentaries are unrivalled in my opinion, but when it comes to news it's a rather different matter. As I turned the radio on all I seemed to hear was gushing sympathy from the presenters for the so-called anti-capitalist protestors in London and copious interviews in which people with matted hair advanced their bizarre anti-ness. Control of my blood pressure eventually required switching to a channel playing music. I don't "get" music so after a while it was me, my car and a packet of ciggies against the world.

Being "anti" something is the easiest thing in the world because you are under no obligation to argue a positive case, all you need to do is complain. When the anti-brigade hold a big rally they are unable to just complain because professional loudmouths see an opportunity to further their careers by making speeches, such speeches won't make them a penny unless they put forward an inflammatory positive case. The more outspoken they are the greater the chance they will be noticed, have their egos massaged and provide opportunities for their agents to secure them highly paid engagements. There isn't much of a market in arguing for pure anarchy, after all true anarchists will not pay to hear someone tell them there should be no laws and no prices. The real market is in trying to sell the beguiling religion of socialism.

You see, there is a bizarre parallel universe in which socialism is the epitome of virtue despite every example of socialism in action being an object lesson in social repression and economic misery. But there's a book, a few books actually, in which the theory is set out in a way some find convincing. Others have not read any of the books but have been persuaded by summaries of those books' conclusions into believing it really can provide material comfort for all with absolutely no downside. The effect is hypnotic. Facts and practicalities have nothing to do with it. If the facts don't fit the theory it is because the facts are a tissue of lies spun by a cabal of wicked capitalist liars. Or it is because they are not true facts, true facts will only emerge once real socialism has been put into practice. All previous attempts at applying socialist theory have failed only because they were not implemented properly. This is how they think, or at least how they express themselves. It is pure, unbridled, fundamentalist religion. There is no difference between the millions killed on the orders of Stalin and Mao and the (so far) thousands killed in the name of radical Islam.

I have never been a one to promote theory above observation of fact. Any theory is nothing more than a suggestion that particular acts will produce particular consequences. The only way to find out whether the theory is sound is to do the defined acts and see whether the predicted consequences follow. Putting into place socialist economic policies has never produced the consequences predicted by their advocates, yet capitalist economic policies have produced (albeit imperfectly) beneficial consequences.

Capitalism can have a downside if it is not managed properly. World War II spivs selling stockings, cigarettes, petrol coupons and gin at exorbitant prices on the black market engaged in purely capitalist activities. Shops that sell dangerous electrical goods engage in purely capitalist activities. As do restaurants selling tainted food, dealers selling unroadworthy cars, banks passing-on their bad loans to mugs foolish enough not to ask questions and all the other rogue traders of the world. The State steps in to manage capitalism and prevent its rawest form from doing disproportionate harm. At least it does with black-market racketeers, dangerous irons, unsafe food and unroadworthy cars. Except in sensible places like Canada it did not step in to prevent banks buying and selling each others bad debts. I fail to see how that is a failure of capitalism. It is not, it is a failure of the State to exercise its supervisory role to prevent the potential harm from capitalism coming to fruition.

The very nature of capitalism is that the increase in comfort for real people, for the little people, can come about only by the creation of new wealth. And new wealth can only result from using some of the stuff we currently have to produce new stuff. You can't have new bricks with which to build a new house unless you spend money making those bricks. If no one buys your bricks you're stuffed , but if people do buy your bricks you can then produce more bricks and, most importantly, you have produced a product that increases the sum of human comfort. Whether you call your system capitalism, socialism or avocado dip it can only work in one way. To make new stuff you have to forgo current stuff and use it as fuel for new production.

Anti-capitalism is true anti-capitalism for only a few anarchists and ascetics. For the majority who sign up to the notion, it is not anti-capitalist at all. They don't suggest we should not use some of what we have now to provide the means to create more stuff. They accept the need for capital to be provided in order that new wealth can be created. Frankly, there is no other way of producing new stuff to make life comfortable for those in discomfort and more comfortable for the rest. The argument is not about capitalism, it is about who should decide where, how and in what quantity capital should be expended.

You could leave it to the State to produce the stuff, sell the stuff and control both the quality and safety of what is produced, but in doing so you build an impractical conflict into your system. The State creates a duff item, what is it meant to do? Scrap it and waste the capital involved? Or let the little people have something defective because the alternative is waste? When the quality is poor how does the State protect potential consumers from its own defective products? Once you have made a washing machine that works, where is your incentive to improve it? And if you do find a way to improve it what do you do about the existing specification, cease production or make both the old and the new model? If the improved model costs more to make do you keep the old one in production for the benefit of those who cannot afford the new one, or do you price some out of the washing machine market? These questions result in internal conflicts for a State run economy but not for an economy in which the State has a supervisory jurisdiction over quality and safety but no role in the production and sales processes themselves.

All the usual suspects were out and about giving speeches and interviews on Wednesday. Arguing their so-called anti-capitalist position. The reality is that they argue for a capitalist system but one that is under the total control of the State rather than in the hands of individuals and companies. For many of them I have no doubt that the principle of the thing is far less important than the promotion of their own careers, after all they know the UK economy probably won't descend into State socialism within their lifetime and they want a nice series on the BBC. Others really believe the State can produce, sell and supervise everything efficiently. They point to specific failures in private sector production and selling to advance their case, yet that case is incomplete because they don't address the failure of the State to supervise. By ignoring this vital part of the equation they also fail to recognise the essential weakness in their position - if the State cannot supervise effectively when it has no other role, how can it possibly be expected to produce, sell and supervise?

There is no case against capitalism other than the readily dismissable arguments for anarchy or economic stasis. You cannot create new wealth, so as to improve the lot of the least well off, without investing capital to make new stuff. That is capitalism. The only argument is whether the State can do it better than the imperfect private sector. All the evidence is that it cannot. That will never satisfy the radical religionists, but it is true.

Pain now, gain later

In the comments to my last piece Mr James observed that substantial reductions in public sector employment would make things worse by taking a fat chunk out of aggregate demand (I hope that is a fair summary of his position). I would suggest that his observation is (i) correct in part, (ii) incorrect in part and (iii) neither here nor there, all at the same time.

He is correct in that sacking a civil servant from his job and giving benefits instead will reduce his spending power. Sack a thousand and collective spending power is reduced even further, sack the half million or so who need to go and shops will be hit. The songwriters Kander and Ebb knew about this sort of thing when they wrote the song Money,Money, including the line "money makes the world go around". Spending power from private sector employment falls as jobs are lost and this impacts directly on shops and thence on wholesalers and manufacturers. Whether a job is lost in the private or public sector, the direct loss of spending power is the same at the same salary.

He is incorrect in that the saving does not just disappear. Rather than being spent by the sacked civil servant it is now available to be spent on something else, be it repaying debt to reduce future expenses or reducing taxes to increase the spending power of others. No doubt there will always be a time-lag in which the additional fall in spending power can have a damaging impact, but it is not a one-way street. Private business doesn't shed staff in difficult times just for the fun of it, it does so because it has to in order to stay alive. No one would argue that the private sector should just rack-up vast amounts of debt in order to keep people employed and thereby maintain aggregate demand, this would just increase costs in the long run and add to the risk of businesses folding completely. The fall in aggregate demand is an unpleasant consequence of planning practically for the future. I see no reason in principle why the public sector should be different.

The reason why I say his observation is neither here nor there follows on from my last point. There will come a time, sooner or later, when the recession bottoms-out. Any real growth in the economy from then on will be a consequence of all the factors that apply generally, including having as low a burden of costs as possible. Maintaining public sector spending on fripperies rather than reducing government debt or taxes will necessarily add to costs in the longer term (subject to being inflated away, which gives rise to different problems). Growth can only occur out of profits; the higher the costs the lower the profits at the same selling price. Much of current government expenditure on pet projects (such as regional government, fussing about food and doing a King Canute on the climate) was only entered into because they felt it could be afforded out of the tax proceeds from poor Gordon's boom of doom. Those proceeds aren't there any more and these projects (along with many others) are now plainly unaffordable. Retaining the unaffordable out of stubbornness or a misplaced desire not to add to current problems merely bottles up the problem for a later date.

In the same way that I consider it sensible for individuals to live within their means rather on credit because they will find their money goes further, so the enormous sums raised in taxes will go further if they are not having to be spent paying interest on accumulated debt, a pretty large chunk of which will go overseas, and on non-essential matters.

What I am suggesting is a wholesale change in the way the public sector views itself. In a narrow way maintaining public sector employment in the short term can be beneficial in that it can help ease the effects of recession, but it cannot do so free of charge. The charge bites in the future, and will inevitably slow recovery. In the long term I suspect the detriment will outweigh the short-term benefit by quite some margin. Just as taking your golf clubs out of the car benefits fuel consumption, so taking unnecessary weight off the back of the private sector (the only sector of the economy that can create wealth) increases its ability to perform efficiently and profitably.