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September 5, 2011

Britain: Cutting social programs can be very expensive

Reuel S. Amdur

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Nick Clegg, the Liberal Democratic deputy prime minister of Britain, told the world that the riots in London, Leeds, and Birmingham had "absolutely nothing to do with the death of Mark Duggan", who was killed by police in circumstances that raised question about police conduct in the situation. Wrong, Nick. The death of Duggan served as a trigger.

But without other factors, an event such as Duggan’s killing would not ignite riots.  Reaction would fizzle out.  In this case, the other factors were there in spades.  We can also identify those responsible for creating essential conditions that led to the riots.  They are the leaders of the British government, Tory Prime Minister David Cameron and his faithful follower Deputy Prime Minister Nick Clegg.  Let me explain.

To begin, in its campaign to drive down the deficit and debt, the British government has engaged in slashing services.  The areas impacted by the riots are marked by large-scale unemployment, especially for youth.  In addition to unemployment, young people in the impacted areas are affected by the service cuts.

According to Reuters’ Jodie Ginsberg, “Haringley’s youth services budget was cut 75 per cent this year, as part of $135 million in budget cuts planned by the council over the next three years.”  The facts are in.  Teens and young adults with nothing to do are a recipe for trouble.  The devil has work for idle hands. 

And rather than address the underlying problems faced by these pockets of poverty, the government’s policy is cut, cut, and cut some more.  These wild cuts of social programs are very expensive.

What are the costs of these false economies?  In the immediate sense, there is the massive destruction of property. Next, with the destruction of property comes an elimination of economic infrastructure.  Businesses have been destroyed and many will not be rebuilt.  As a result, more jobs are gone and needed retail services are gone as well.  The overtime for police and firemen is in this context a minor consideration. 

But what did Cameron and Clegg expect?  Just a reduction in deficit and debt?  Surprise!  The economic decline due to the riots will make economic recovery more difficult.

Canada has also experienced unexpected consequences due to budget cutting.  When Paul Martin reined in expenses by cutting health care transfers, he created a serious shortage of nurses and hospital beds.  A number of hospitals were simply closed.  Some foolish economists call his exercise in balancing the budget and creating surpluses a success, forgetting that he gutted health care for decades to come.  We still have a serious shortage of nurses, long waits in emergency, and a lack of hospital beds. 

The conclusion to all of this is simple.  Cutting social programs can be very expensive.  Penny wise and pound foolish.

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