What needs to be taught
The Prime Minister advocates that the teaching of Maths should be a priority, although one suspects that he really means numeracy, as the ability to add up a few figures is more useful for the average person that knowing all about the calculus of the hyperbola.
However the level of debate concerning economic matters in this country makes clear that this is a subject which should be made a compulsory part of the curriculum, as even the most basic features appear to be unknown to the majority of people. There are inescapable truths, which many, particularly politicians, try to obfuscate, but nevertheless they remain true.
- the use of the term investment, instead of expenditure, conceals the fact that, while investing in a stock market issue, with a view to making a profit, is an example of the former, the government increasing the funds available to organisations such as the NHS is straightforward expenditure
- although a degree of inflation may be imported, the root cause is the devaluing of the currency, due to the government spending more than it obtains in taxes, the expedient of borrowing to cover the difference being limited, and creating a debt which, together with interest must be paid at some point
- a deficit in trade between imports and exports can be sustained for a while by attracting foreign investment, but cannot continue indefinitely
- demand exceeding supply leads to an increase in price, while supply exceeding demand leads to a fall
- the proper operation of the market allocates resources in a way that bureaucrats trying to pick winners can never do
- to attempt to protect failing industries would have led to us continuing support companies which are of no further use, such as those who once manufactured hansom cabs
- the law of diminishing returns means that taxes cannot be increased without limit, as the income generated will eventually fall
- a developed economy can only survive if it possesses effective supplies of energy, and does not try to run on wishful thinking.
None of this means that we should not do our best to support those who are disadvantaged, but a contracting, declining economy is less able to do so, nor to finance the health service, nor to defend the nation. If we are ever to restore a stable, prosperous economy the above principles should be understood, and accepted by all reasonable people, and policies must be based upon them, not on some magic money tree, which exists only in the imagination of those who prefer for political reasons to deny reality.