Lockdowns and money printing have destroyed Western economies

Just one word of apologia for the Budget, then normal service will resume. No elected government and no political party that hoped to be elected could provide painless solutions to the economic problems of our time. They could not even begin to give a truthful account of the crisis itself, the ramifications of which are beyond the conventional conceptual framework for describing these things.

What is worse from the politicians’ point of view, is that this is almost entirely the result of grievous mistakes by governments (not just ours), which cannot be admitted now that their catastrophic consequences are so obvious. If Jeremy Hunt’s proposals seemed inadequate, wrong-headed, or even absurd, that is because he could not begin to deal with the full dimensions of the dilemma that he was pretending to address.

No one, for good electoral reasons, can speak the truth. Western free market economies have tanked, and the only way they can recover is by enforcing measures that would probably be morally repugnant in social democratic societies.

Future historians will devote vast works to the bizarre decisions made in the early 21st century by governments which might have been expected to know the fundamental rules of capitalist economics.

Let’s go back a bit to the earlier events of this new century. Faced with a disastrous bad debt epidemic – the subprime mortgage fiasco – which undermined the US economy and then that of the other nations exposed through the derivatives in which those bad debts were packaged, governments found a magic solution.

Is your country’s economy flagging, failing to produce enough wealth to sustain a mountain of debt? Well then, just print some more.

For a scary moment you will have lots and lots of fake money, backed up by nothing truly solid, circulating in the system. But confidence will return (even if it is based on a lie) and so transactions will resume. Naturally buoyant conditions will soon, surely, be restored.

And it seemed to work. The value of the dollar, the pound and the euro became, for a time, as apparently fictional as the currency of some Soviet autocracy – rather like the worthless ostmark which West Germany arbitrarily designated as equivalent to its own Deutschmark when the country reunified. But capitalism – with the robust flexibility of human nature on its side – bounced back.

So what did the governing elites conclude from this? That pretty much any crisis that undermines confidence in economic activity can be remedied in the same way.

Are you having to cope with a pandemic that obliges you to shut down all human interaction and pay people to stay at home? Or faced with an unexpected war which causes drastic, unaffordable increases in the cost of energy?

Never mind, you can maintain the appearance of normal economic life the same way you did before: just keep that supply of funny money rolling off the photocopier. For a brief moment, that seemed to work again.

The trouble is that these more recent experiments were messing with people’s minds in a profound way. The changes that were being financed by a flood of fiat money now went very deep in the consciousness of ordinary people whose attitudes to social contact, human relationships and – critically – paid work were being manipulated to suit what governments had decided were the requirements of the moment.

Many of the traditional assumptions about what constituted virtuous behaviour in adult life – affection to elderly relations, attendance at family gatherings, participation in community events and earning a living, were suddenly turned upside down. It was now wickedly irresponsible to hug your grandparents, to join in any gathering of more than a few people or to leave home to go to a place of work.

Who would have thought that such unnatural enforced social prohibitions would have been adopted so readily by the great majority of the population? But that is a subject that has been exhaustively discussed. What matters now is what seems to be the ineradicable damage that has apparently been done specifically to the attitude toward work.

The number of working-age people who are now apparently unwilling to seek employment is astonishing, and it is growing, not shrinking.

As we know – because the figures have been widely disseminated – a great proportion of those choosing unemployment are claiming disability benefits on the grounds of mental-health conditions, specifically anxiety and depression. Such symptoms are, of course, often associated with precisely the isolation and futility of unemployment.

But whether you regard this benefit dependency as a cynical con or a genuine pathological reaction to the experience of lockdown, it is the reality of where we find ourselves.

Not choosing to work – as opposed to being out of work – has become socially normalised. That is what the present Chancellor – or any other one standing in his place – has to confront. We now have an increasing population due to migration, lower labour participation and an exponential growth in welfare costs. Put simply, relatively fewer working people are paying to support relatively more non-working ones.

This situation is unsustainable and everyone in the governing class knows it. They also know that the only way of reversing this is for governments to stop being complicit with it.

Taxation must be drastically reduced by raising the absurd thresholds that make taking on an entry-level job a fool’s mission, thus ruling out the route to any future career. That will be costly in the short-term but will pay for itself quite quickly. Even more important, the benefit system, which locks those who may be anxious and depressed as a consequence of their isolation, into permanent inactivity, must be dismantled.

The immediate effect of this will be uproar from the usual sources, but it will pay for itself too, not just in fiscal terms but in wellbeing in the true sense of the word.

It will take nerve to speak those truths that everyone can recognise, but the alternative is economic ruin and the collapse of what has been the most successful political formula in human history for liberating potential talent and personal responsibility.