David Cameron’s speech on the economy presents public debt as if it’s the cause of the economic crisis, when the actual cause is private debt, created by the same de-regulated ‘enterprise economy’ which he offers as a solution to the crisis (1).
Most public debt is not the result of ‘big government’ over-spending on the public sector, but of big companies donating to political parties and getting massive subsidies from the public sector as a result.
The most notorious example is of course bailing out debts run up by private banks due to a mixture of deregulation by liberals and conservatives alike on both sides of the Atlantic and an attempt by the Clinton administration to provide housing for the poorest without public spending or public housing , by requiring banks to fund it. The banks refused to accept a loss on this and played pass the parcel with the debt instead (2).
Much of the rest of the public debt, from PFIs and PPPs to Export Credit Guarantees for British Aerospace, is also due to government subsidies to big private companies under both Conservative and Labour governments.
Cameron claimed he would end the “undermining of our public sector professionals”, while simultaneously instituting a public sector pay freeze and cuts.
This continues the strange belief that all money going to the public sector impoverishes the private sector. In fact private firms would struggle to operate without education, transport and law enforcement; and cutting public sector pay and jobs is likely to lead to knock on job losses in the private sector.
If we were living under a vast state economy that allowed no private firms to compete he might have a point. The reverse has been true under Labour and Conservatives though - a few huge private firms in each sector buy massive public subsidies with relatively small donations to party funds.
The last time the Conservatives won an election claiming it would reduce unemployment caused by Labour was 1979. Thatcher’s government rapidly increased unemployment to over 3 million.
(1) = Conservative Party 02 Jan 2010 ‘Speech, David Cameron: We can't go on like this’,
(2) = NYT 30 Sep 1999 ‘Fannie Mae Eases Credit To Aid Mortgage Lending’,