Cutting Costs

The private sector has a bee in its bonnet about cutting costs, to the extent that it is also trying to pare its workforce to the bone.  Only by doing this, it is thought, will they recover to economic growth and stability. It’s accountant logic.  After a point, it’s also utter bullshit. Sadly, the public sector seems to be catching on to this fatuous idea too.

It should be obvious why this theory is flawed. Firstly, each head sacked is an additional head that requires unemployment benefit, an additional head that will have to be paid for by the state from the diminished revenue gained by taxing a dwindling workforce. And each head sacked is an additional head with insufficient economic security to make impulse purchases or buy anything other than that which is absolutely necessary. And, of course, if these discretionary purchases aren’t made then the manufacturing sector, banking, entertainment – virtually every industry that you can think of – will be unable to grow its business, and it will eventually have to start laying off staff too.  Vicious cycle.

In the past, government had a mechanism for dealing with this. It was called the public sector and, in times of crisis, it was possible for the government to help pull an economy out of crisis by artificially boosting employment itself. This isn’t pie in sky theory – this actually happened. By selling off the public sector, we not only have a diminished quality of service and increased costs (because we have to pay for additional bureaucracy and management), but we have lost a vital means of preventing the country from falling into recession.

As another thought, it is self evident that tax cuts should be given to the very poorest in society and tax should be increased to the very richest.  You might call this socialism, a word now considered to be ‘dirty’ in some sectors. I prefer to think of it as civilisation. 

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