What about the digestives?

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A Labour MP has produced a short video which has gone viral in an attempt to explain the so-called government debt crisis in terms of the ratio between bourbon biscuits (debt) and custard creams (GDP). I’m not sure whether he’s fully thought through the possibility that, for those of us (count me in) who prefer bourbons, this might make the idea of bigger debts more attractive. More worryingly, it made me wonder whether the budget to be announced by the Chancellor later today might itself be based on biscuit mathematics rather than economics, although that might help to explain the odd choices she seems determined to make. One thing that was clear, as the MP piled up his biscuits, was that there was a remarkable lack of crumbs. I suppose that might well be another accurate budget prediction.

What biscuit-based economics skates over, however, is that underlying it is the same set of assumptions as are used by government and opposition alike in their own money-based economics. Treating the amount of money which savers queue up to place on deposit with the government as though it’s a serious debt problem, pretending that the UK has a maxed-out credit card, and ignoring the fact that a goodly chunk of the interest payments being made by the government are actually paid to, er, the government itself so that that element of expenditure immediately also becomes income, are all signs of a commitment to the ridiculous household analogy for government finances. Doing the accounts in biscuits might be mildly entertaining, but it is still economic nonsense.

The number of custard creams and bourbons isn’t actually the limiting factor on what we can do. As Keynes would probably have said, if he’d decided to base his major works on biscuits, if the biscuit factory has the capacity to produce more biscuits, if the materials are available, if there are enough available workers, and if the environmental impact of making biscuits can be met, then we can make as many biscuits as we want. Although, speaking personally, I’d opt for a nice chocolate digestive.