Postpone some of the cuts?

ILW

Wheezy wrote: »

Government is not a business and shouldn't be viewed as one. If it was, forget about getting cancer treatment on the NHS because it's not cost effective. Libraries maybe? Nope, can't do...not profitable. Free schooling? You must be kidding...where's the shareholder value in that?
Government should be there to provide services the private sector can't/won't do for various reasons and although it doesn't create profit it surely does create wealth.
By all means, make it more efficient where needed though.

I do not disagree with you, the point is though that all of the above costs have to be funded. The only sources of this funding are revenue and borrowing. The only source of revenue is taxes on individuals and businesses which needs to be found from profits. If a government continually spends more than it's revenue and borrows to make up the shortfall, it will eventually get to a point where the cost of just servicing the debt (interest) will exceed revenue. Over the last decade or so we have been heading in that direction.
I believe the UK at present has interest payments alone of around £120,000,000 per day.
If we had been a little more careful in the past, that money could be doing a whole lot of good for the genuinly needy of the country.

Wheezy_2

Graham_Devon wrote: »

Even the royal mail?

Last I saw, they were riddled with debt?

I believe they posted profits over the last couple of quarters, but have huge pension deficits.

Graham_Devon

Wheezy wrote: »

I believe they posted profits over the last couple of quarters, but have huge pension deficits.

Well that's what I mean. They owe more than they can bring in. Whether the pension things is looked at as debt is another matter I guess.

ILW

Hereward wrote: »

Here are the ones off the top of my head:

1. Royal Mail
2. the Royal Mint
3. Ordnance Survey
4. The Forestry Commission
5. The Bank on England

I'm quite sure that there are plenty of others.

Cannot deny that the royal mint does "make money".

Generali

Hereward wrote: »

I agree. Lots of money is spent on creating policies that encourage the right environments for wealth to be created. It's difficult to calculate the value of these policies...

Perfectly true.

There are also plenty of things that the Government does that creates genuine output in competition with the private sector, eg health care and education. Generally, the Government doesn't do these things very well.

ILW

The government also spend a lot of time and effort on policies that discourage growth and innovation.

naughtybish

DervProf wrote: »

Unemployed ex public sector worker can't afford night out at local restaurant/pub ?

There is a knock-on effect.

yes but .. if our public sector was shrunken it would require
a lot less tax from the rest of us to fund it.

therefore restaurants/pubs could offer meals / drinks at a lot less
thus driving up business.

( tax churning ) by taxing all of us and businesses more so some
public sector worker can sit on their fat backsides all day
and move a couple of pieces of paper around and then go home
is NOT the way forward.

Hereward

ILW wrote: »

Cannot deny that the royal mint does "make money".

Using that sense, not just for the UK.

Kohoutek

If you believe in the chartalist theory of money, then the government by definition creates wealth, because it creates money.

When the government “spends,” the Treasury disburses the funds by crediting bank accounts. Settlement involves transferring reserves from the Treasury’s account at the Fed to the recipient’s bank. The resulting increase in the recipient’s deposit account has no corresponding liability in the banking system. This creation is called “vertical,” or exogenous to the banking system. Since there is no corresponding liability in the banking system, this results in an increase of non-government net financial assets.

When banks create money by extending credit (loans create deposits), this occurs completely within the banking system and results in a liability for the bank (the deposit) and a corresponding asset (the loan). The customer has an asset (the deposit) and a corresponding liability (the loan). This nets to zero.

Thus vertical money created by the government affects net financial assets and horizontal money created by banks does not, although its use in the economy as productive capital can increase real assets.

http://pragcap.com/resources/understanding-modern-monetary-system