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Debt isn't Shrinking, It's Just Being Moved Around

28/06/2013 11:14 BST | Updated 27/08/2013 10:12 BST
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The country, we are repeatedly told, must pay its debts. This week George Osborne introduced another round of harsh spending cuts as part of this process. Notably this included an extension of the waiting period for those claiming job seekers allowance, which immediately lead to suggestions that the real winners would be the payday loan companies like QuickQuid and Wonga who would become the last resort for the countries least well off.

Both companies have flourished since the start of the great rescission despite a tidal wave of bad publicity. Players at Newcastle United will wear the Wonga logo on their kit next season, but Bolton, Sheffield Wednesday and Millwall have all rejected offers from QuickQuid for similar sponsorship deals. Meanwhile both companies have recently been banned from advertising at three universities.

It is said that the only people who see the world without empathy are economists and psychopaths and from a sinister angle the ascent of the payday loan website coupled with the diminished welfare state, could be seen as an example of how rolling back government assistance can lead to private sector growth. The economists however, should be concerned. Because what we are seeing is a simple shifting of the economic burden. Because not only does private debt exacerbate inequality, with the poorest paying a toll to the richest just to make it though the week, but the financial obligations remain. They do not simply cease to exist. Public debt is merely being transferred and divided into personal debt and it's not just a working class problem.

According to the Office for National Statistics, since the austerity program began in 2010 British household have taken on an extra £9billion in non-mortgage debt. With wages stagnant and the cost of living rising, this financial albatross represents a significant barrier to consumer confidence and economic growth. Our GDP is tied to consumer spending and if the public reaction to excessive debt mirrors that of the government's, our economy would starve to death.

It's not the first time this government has undermined its moral objection to debt by outsourcing it to the general public. When increasing tuition fees the same effect was achieved. Today's higher education still has to be paid for tomorrow, the debt didn't disappear, it simply moved house. And as I write this news has broken that the student loan book itself is set to be privatised to make a quick buck.

The primary aim of this government has been to reduce the deficit so public spending wouldn't depend on unsustainable borrowing. The motivation was not simply one of pragmatism it was also sold to us as a moral endeavor. The image evoked was that of a baby chained to a weight several times its size, unable to crawl into the future due to the bills that had been stacked up by his parents. Despite all the austerity measures, that weight is getting heaver not lighter. The only difference is that it will sit at the end of a seperate chain.

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