Monday, 8 April 2013

Public money

In 1983 Margaret Thatcher made what is still nowadays one of my favorite political speeches of all times. One that, unfortunately, was never sufficiently advertised in my own country, Portugal. This is notorious nowadays. However Portugal may be used as an example of a situation that is seen in many other countries, such as France, Italy, Greece, Belgium...
Thatcher reminded the British that the money spent by the state is, in fact, tax payers' money and that the more the state collects, the less the economy has. Even if some of it eventually is invested in the economy... And this happens for two reasons. The main one is that between the moment in which the tax payer gives up his money in favor of the state and the moment the state invests in the economy a lot is lost in red tape, civil service, etc.. The second one is that generally private stakeholders are better at making money grow than the state.
In the day of Lady Thatcher's death, I would like to take a look at the Portuguese situation in light of this idea.
The Portuguese state got into too much debt over too long. To run a huge deficit in the end of every yearly budget became the never disrespected rule instead of the exception. And this was the will of the tax payers / voters: if any politician had had the courage to say that they would slash on public expenditure, that was a politician doomed to failure.
After the 2011 international rescue it seems that few people in Portugal learned the lesson. The government in power since the rescue has failed to really cut expenditure. It is true that some expenditure has been curbed, but that's far from enough. It has, instead, increased taxes in a way that is killing any chances the economy might have to grow again. And if the economy goes down, so does the tax revenue...
The opposition suggests economic stimulus to the economy. However, it fails to explain which money would it use. Again, the taxpayers' money? 
Lady Thatcher's ideas and political example are extremely valuable. In this sad day of her death, let us not forget them. RIP

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