Today I listened to David Cameron’s Conservative Party Conference speech on the wireless. Below is a transcript of what he said about the economy and (roughly) what I said back at the radio.
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David Cameron: To help our people rise, then – number one – we need an economy that creates good jobs. We need businesses, of every size, in every type of industry, in every part of the country – investing and taking people on.
RedEaredRabbit: Sounds good.
DC: There are some basic things they need to do that. Low interest rates so they can afford to take out a loan. And confidence that it’s worth investing – because the customers will be there, whether at home or abroad. Getting the deficit down is essential for both.
RER: No it isn’t. Throughout the last few years when we have had a large deficit and interest rates have been the lowest in living memory. I would also argue that confidence in the economy comes from people seeing sustained economic growth and job creation, neither of which we have.
DC: That’s why our deficit reduction plan is not an alternative to a growth plan: it’s the very foundation of our growth plan.
RER: I realise it’s the foundation of your growth plan but two and a half years in it has yielded precisely no growth. That doesn’t suggest it’s a particularly good growth plan.
DC: Now I know you are asking whether the plan is working.
RER: No I’m not. I know the answer to that.
DC: And here’s the truth: the damage was worse than we thought, and it’s taking longer than we hoped…yes it’s worse than we thought, yes it’s taking longer, but we are making progress. Thanks to the grit and resolve of George Osborne, we have cut a quarter off the deficit in the past two years.
RER: I’m confused. In 2010 you said that if we didn’t cut spending the deficit would, by this time, only have reduced by 25%. You said this would be disastrously slow so you needed to cut spending to do it much faster. You’ve cut the deficit by the amount you said would be disastrous but have additionally killed the economy in the process. Is that good now?
DC: That’s helped to keep interest rates at record low levels, keeping mortgages low. Leaving more money in your pockets. Giving businesses more confidence to invest.
RER: I’ll take these one by one.
- Interest rates are low because the economy is screwed
- If you think people have more money in their pockets you are even more out of touch than I thought
- Businesses are not investing. I have no idea where you got that idea from.
DC: Now, the Labour politicians who got us into the mess say they have a different way out of it. They call it Plan B and it goes like this: “We should stop worrying about deficit reduction, borrow more money and spend it to boost the economy.”
RER: Ah, those bastards are using “macroeconomics”. I think though, you’re giving them a bit too much credit by suggesting they invented it.
DC: Right now, while we’ve got a deficit, the people we’re borrowing money from believe that we’ll pay it back – because we’ve set out a tough plan to cut spending and live within our means. That’s why our interest rates are among the lowest in the world…
RER: They believe we’ll pay it back because we are a large developed economy whose debt is in its own currency. We have never been at any risk of default. See my previous point on interest rates.
DC: If we did what Labour want, and watered down our plans, the risk is that the people we borrow money from would start to question our ability and resolve to pay off our debts. Some may actually refuse to lend us that money.
RER: No they wouldn’t. People are queuing up to lend us money. In an era where banks are risky and Eurozone economies borrowed in a currency they can’t control the UK has been and will always be a safe bet.
DC: That would hurt the economy and hit people hard.
RER: So your plan is to cut out the middle-man and do this yourself?
DC: If you have a mortgage of £100,000, just a 1 per cent interest rate rise would mean an extra thousand pounds to pay each year.
RER: I don’t know if you’ve looked at mortgage rates offered by banks recently. They bear no relation at all to the rate at which the UK government can borrow.
DC: Labour’s plan to borrow more is actually a massive gamble with our economy and our future.
RER: Whereas at least with you we know we’re fucked.
DC: And it would squander the sacrifices we’ve already made.
RER: You have sacrificed jobs and growth. Wouldn’t squandering those disasters be quite good?
DC: We’re here because they spent too much and borrowed too much.
RER: No, the banks caused the crisis, it had nothing to do with government borrowing at all.
DC: How can the answer be more spending and more borrowing?
RER: Are you familiar with the book, “Economics for Dummies”?
DC: I honestly think Labour haven’t learned a single thing.
RER: As opposed to your “learning” government who has blindly pursued an economic policy that has continually delivered the opposite of what they said it would?
DC: When they were in office, their answer was always borrow more money.
RER: Actually their borrowing level in 2007 on the eve of the crisis was almost exactly the same as their borrowing level they took on in 1997 and was fairly flat throughout. The numbers are not hard to find.
DC: Now they’re out of office it’s borrow more money.
RER: Ha, those fools! Pursuing their “macroeconomics” again!
DC: I sometimes wonder if they know anything about the real economy at all.
RER: If only they could know all that you do because you’re really good at it.
DC: Did you hear what Ed Miliband said last week about taxes?
RER: No? Did he think it was the plural of taxi?
DC: He described a tax cut as the government writing people a cheque.
RER: Oh.. he got it right. That’s not nearly as funny.
DC: Ed… Let me explain to you how it works.
RER: Time to dispel the macroeconomics witchcraft.
DC: When people earn money, it’s their money. Not the government’s money: their money. Then, the government takes some of it away in tax. So, if we cut taxes, we’re not giving them money – we’re taking less of it away. OK?
RER: Ah.. you’re not giving them money, you’re taking less of it away. Got it. Ed probably hadn’t realised he could make tax-cuts for rich people sound that nice when he said it.
DC: And while we’re on that – who suffers when the wealthy businessman goes off to live in Geneva?
RER: His new neighbours?
DC: Not him – he’s paying about half the tax he would do here…
RER: Well I for one have stopped feeling sorry for the poor and the unemployed now. That rich businessman is clearly the victim. Also, did you know that women are allowed to be successful business people now?
DC: …it’s those who want to work who suffer because the jobs aren’t being created here.
RER: Oh, I see! The jobs aren’t being created here because the rich aren’t rich enough. And all the time I thought it was because of that depression you created.
DC: We promised that those with the broadest shoulders would bear the biggest burden and with us, the rich will pay a greater share of tax in every year of this Parliament than in any one of the thirteen years under Labour.
RER: Yes, but I don’t think cutting the poor’s tax burden by making them all unemployed was what they had in mind.
DC: We remember who busted our banks, who smothered our businesses
RER: Yes, the banks busted themselves, which led to an economic disaster that smothered our businesses.
DC: …who wracked up our debts, who wrecked our economy…
RER: Really glad you’re finally going to have a go at the banks.
DC: …who ruined our reputation, who risked our future…
RER: You tell those banks, David!
DC:…who did this?
RER: I seem to recall it was something to do with the banks.
DC: Labour did this.
RER: Damn. I honestly thought you were going to get something right then.