Tuesday, 1 February 2011

The Flaws of Economics.

I keep hearing (not literally) this claim from George Osborne that the private sector will be there to provide jobs for ex-public sector workers. I don’t pretend to be any sort of economics expert, but that seems such a sloppy and wishful hand to play when betting on people’s livelihoods and future.

At the same time as cutting jobs, Mr Osborne is also cutting welfare (or at least trying to.) I wonder if it could be argued that welfare can also be seen as a sort of ‘quantitative easing’ – people are given money to survive and they spend that money on products and services provided by the private sector. So it helps to keep the economy ticking over.

If welfare is cut, people will no longer have the money to pay for these goods and services, so that can hardly be good for the private sector, can it? With business quieter, they will be less likely to create new jobs, not the other way around.

So what will be the effect of job cuts? These are people who might be buying things from certain parts of the private sector. If they are put out of work they will be less likely to continue this trend. So the private sector is hammered again. And of course, if all these new jobs turn out to be one big mirage, then isn’t welfare spending likely to go up rather than down?

Let’s hope that there are big thumping flaws in my logic.

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