The consensus on printing money reminds me of the case for global warming

We all have a pretty good idea of why the Soviet Union collapsed: it’s because its state-run planned economy wasn’t as efficient as its rivals in the free-market West. The lesson we’ve learned from this is that capitalism won the political argument. But it’s a false lesson, because capitalism didn’t. The problems that made the Soviet Union such a failure are now endemic in the West. To give one tiny example, in my Sunday paper last weekend was a story about how the Culture Secretary, Jeremy Hunt, is launching ‘a drive to encourage Britons to holiday in their own country… with discounts worth a fifth on breaks booked during the Olympic year’.

Who is paying for this scheme? You are, of course. The government has no money of its own. It finances its expenditure in one of three main ways: through taxation; through borrowing; through money-printing. So whether through confiscation from the present generation (tax) or future generations (borrowing, money printing), the government has decided on your and your children’s behalf that rather than allowing you to keep your money to spend on trivia like food, healthcare, education etc it would be better deployed on a whizzo scheme to discourage British people from taking their holidays abroad.

Put like that it sounds stupid, doesn’t it? But that’s how we ought to put it, every time. Until we can educate ourselves that, as Frederic Bastiat put it, ‘Government is the great fiction through which everybody endeavours to live at the expense of everybody else’, we will never get out of the ginormous heap of economic and sociopolitical ordure in which we find ourselves buried up to the neck.

It is in the nature of politicians to imagine that doing something will always make things better than if they had done nothing.