Government doesn’t have any money of its own

“The state has no source of money, other than the money people earn themselves. If the state wishes to spend more, it can only do so by borrowing your savings or taxing you more. It is no good thinking that someone else will pay – that ‘someone else’ is you. There is no such thing as public money; there is only taxpayers’ money.”

It is now 37 years since Margaret Thatcher made that statement in a speech at the 1983 Conservative Party Conference in Blackpool.  And she went on to say;

“Prosperity will not come by inventing more and more lavish public expenditure programmes. You do not grow richer by ordering another cheque-book from the Bank. No nation ever grew more prosperous by taxing its citizens beyond their capacity to pay. We have a duty to make sure that every penny piece we raise in taxation is spent wisely and well.”

And; “How very pleasant it would be, how very popular it would be, to say “spend more on this, expand more on that.”

A lot of people hated Mrs Thatcher for speaking those words, but they were true then and they are true today.  Government raises all of its money by taking it from other people’s pockets.  You may not think you are a taxpayer, but you are, either directly, indirectly or both.

This is why all of us need to watch what our governments are doing especially in these challenging times. In the United Kingdom with one hand our government is taking away our freedoms without a thought for the impact it is having whilst giving hand-outs which will have to be clawed back sometime soon.  I have lost count of the amount of money the government has committed to giving away to various groups because it has chosen, on scientists’ advice, to lockdown our country.

Now we are heading into yet another national lockdown with promises of more government support.  Of course I understand that businesses and individuals need support if we are to stop them from going bust or starving because of government decisions.  But every time a new group demands financial support no-one is taking the time to remind them that what the government gives out today it will have to scrabble back in taxes tomorrow.

In the United Kingdom there has been a pitiful lack of debate about doing a cost benefit analysis on the approach the government has taken.  I have not heard a single government minister talk about the cost to taxpayers over the actions taken, or discussing the cost in lives of having a lockdown.

What is emerging is truly terrible.  During the first lockdown very many people died because they were unable to get treatment for cancer, heart attacks and many other illnesses.  Suicides were up as mental health declined.  As we emerged from lockdown unemployment, with all the misery that entails, started to shoot up.

Had we not had lockdown, the government says, the National Health Service (NHS) would have been overwhelmed and the number of deaths would have been much higher.  So we had lockdown, the cases of Covid 19 were suppressed thenlockdown was relaxed and the number rose once more.  Soonce again we go into lockdown.  How many more times will we go into lockdown to save the NHS only to come out and,as cases rise again, the government takes fright and takes us into another lockdown.

At some point someone has to say enough is enough.  The same is true in Sri Lanka.  When you next hear a government minister announcing some wonderful scheme or project which is going to cost billions of rupees just ask yourself – where is the money coming from to pay for this and what is the wider impact on society.

Nothing could illustrate this better than the two sombre interviews in Counterpoint with former CEO of SriLankanAirlines Suren Ratwatte.  He rightly points out that the national airline had long been a plaything of politicians.  Even worse, this very costly vanity project has been hijacked by intransigent unions who have no interest in the profitability of the airline whilst the politicians keep bailing it out.

Shockingly an article in Aviation Voice in June revealed that the airline now owes some billion dollars (c. LKR184 billion) in debt.  Even more shocking is that much of it is owed to state entities such as Bank of Ceylon, the People’s Bank and Ceylon Petroleum Corporation (CPC).  Add to that the twelve million dollars (c. LKR2.2 billion) a month being paid to leasing companies whilst the aircraft sit idly on airport tarmacs and the numbers are starting to look deeply worrying.

That’s an awful lot of your taxpayer’s money going down the drain which will, at some point in the future, have to be paid back.  Margaret Thatcher’s words are still poignant today;government doesn’t have any money of its own, only that which it takes out of your pocket in taxes.  Perhaps it’s time to say enough is enough.

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