Jeremy Corbyn is in trouble over an apparent backtrack on an election pledge.
In an interview with that celebrated political journal, the New Musical Express, he promised, when asked about the student ‘debt burden’, that he would ‘deal with it’.
This typical kind of vague promise by Corbyn was widely interpreted as debt cancellation.
It was only when it was pointed out, weeks after Labour harvested the votes of those with student debts, that debt cancellation would cost the taxpayer £100 billion, that Corbyn modified his stance. Interviewed by Andrew Marr (salary £400,000), Corbyn (salary £137,000) tried to clear the air by saying, “[…] we would look at ways of reducing that debt burden.”
The ‘debt burden’ is not actually that burdensome. Once graduates start earning more than £21,000, they make payments of 9 per cent of their earnings above that threshold. A person earning £20,000 will repay nothing. A person earning £31,000 pa will repay £900 a year. A person earning £41,000 will pay back £1,800 per year, which is £150 from a monthly salary of £3,146 before tax, less than 5 per cent.
All the news reports concentrate on the amount of the debt, but not the terms of repayment, which are very generous. There is interest on the debt, but it is accepted that the full debt may never be repaid if a person does not earn enough. After 30 years, the debt is wiped. It is only because these terms are being compared with paying zero towards a university education that it seems unfair. This is, in itself, an unfair comparison. People like getting something for nothing. They forget that someone else will always have to pay.
So, how could Corbyn reduce the burden, without using taxpayers’ money? There is one solution: inflate the debt away.
Labour plans to dump half-a-trillion pounds of borrowed and printed money on to the British economy. While this is defined by Labour as ‘investment’, it will actually be inflationary.
Inflation is the beast that has been locked up in the UK for the last quarter of a century after ravaging the British economy during the 1960s, 70, and 80s. Socialism, with its free-spending policies, will release the beast. In fact, true socialists will welcome this. Inflation is the ultimate anti-capitalist weapon, as it destroys money’s ability to be a store of value, a reliable unit of exchange and also to provide honest price information in free and open markets. It destroys wealth and promotes barter and graft, which makes it the weapon of choice for socialists. It promotes poverty and encourages dependency. The economist John Maynard Keynes stated:
“Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. […] As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.”
Under Labour, it is likely that a student will be able to easily pay back their debt as inflation reduces the burden as Corbyn has promised. They will use John McDonnell’s (salary £76,011) inflated pounds as the spending power of money goes down and wages rise in currency terms rather than in real terms. The price of relieving the burden, however, is economic ruin, but then socialists still hold the economic disaster that is Venezuela as a model to be admired and emulated.
(Image: Garry Knight)