Long ago, most people believed that the sun revolved around planet Earth, instead of the other way around.
Today, most people still believe that a government gathers up all the money paid in taxes, and then uses that to pay for all the things that governments provide.
It’s actually the other way around-people pay tax out of the money that governments put into the economy, when it provides what the country needs. (Unless it chooses not to, in which case you get all the hardship and decline that comes from “austerity” policies.)
Think that’s wrong?
Taxpayer’s Money
We’ve all been told about “taxpayers’ money” for years, so it must be true?
Well, have a little think about what happened in 1940.
Funding WWII
The government had to find a mind-boggling amount of money to provide ships, planes, armaments, servicemen, in order to fight the Second World War against Nazi Germany.
Did they go to the bond markets to borrow the money?
No, there could not possibly have been enough money to be had like that, even if the bond markets were functioning in the normal way.
Did they raise taxes, and then wait for the money to roll in?
Of course not, it would have taken many years, by which time tax would have been paid in German Marks, after the War was long lost.
Did they outsource the war effort to someone like Richard Branson, believing that the “private sector is more efficient”?
Hardly, they needed to run a successful war, not be ripped off royally.
So they just authorised the expenditure. They told the Bank of England to create the money needed! Governments wilfully “printing money” leads to rampant inflation, destroying the economy!
Right? Was there an economic catastrophe after the War?
No! In the 1950s, the UK was actually more prosperous than ever before in history.
All these things came about because the Labour Government of 1945-1951 had the vision to provide them and created the necessary funding.
Just like the War government did between 1940 and 1945 to provide what they needed. The whole economy started to boom in a way it had never done before.
The Tories Agree!
In 1957, even Conservative Prime Minister Harold Macmillan made his famous “You’ve never had it so good” speech, in which he said:
“Indeed let us be frank about it – most of our people have never had it so good.”
What he didn’t mention, was that this fairer, more equal prosperity was the consequence of what the Attlee government had established.
And it was the same story in the USA, but bigger!
So, still think governments can only spend “taxpayers’ money”?
You’ll be telling me the Sun revolves around the Earth next!