Wednesday, June 23, 2010
Beyond Camelot : Britain's un-American austerity program
Our British cousins have come up with an economic policy that could not be more different from what we Americans have been doing for decades. I rather like it.
According to an article in yesterday's New York Times, "Britain Unveils Emergency Budget" (shorter and perhaps easier for Americans to follow than a similar article from the BBC News), "the government of Prime Minister David Cameron took what his coalition of Conservatives and Liberal Democrats acknowledged was a historic gamble: that austerity measures will help balance the government’s books without pitching the country into a double-dip recession."
The austerity measures include major tax increases and spending cuts. The VAT (value-added tax) will increase from 17.5% to 20% in January, and the capital gains tax will go up immediately from 18% to 28% for the upper brackets. In addition, government spending will be slashed by 25%: "roughly four pounds in spending cuts for every pound in tax increases."
Interestingly, there will be no cuts to the National Health Service.
It all sounds rather shocking from this side of the pond, where for years we've been told that if we only lower taxes enough, we can all be rich; where we seem unable to cut federal spending even for manifestly silly pork-barrel projects; and where half the country - maybe more - thinks health care for everyone means the death of liberty.
To Britain's leaders, I offer Queen Guinevere's words to the three knights about to take on Sir Lancelot : "I do applaud your noble goals; now let us see if you achieve them." If they do, and if the U.K. manages to pull itself out of its economic mess, perhaps the U.S. will take lessons from the land that brought us the stiff upper lip.
But I'm not holding my breath. Lancelot roundly bested the three knights, and most Americans, despite all evidence, continue to believe in Camelot, where the climate must be perfect all year.