Suppose, for example, that you have
now a total budget of 900 million pounds, and that, in the course of
time, all values are expressed at half the present currency figure.
Imagine that the national income in this instance is 3600 million
pounds. Then the burden, on a first approximation, is 25 per cent. Now,
if the whole budget is responsive, we may find it ultimately at 450
million pounds out of a national income of 1800 million pounds, _i.e._
still 25 per cent. But let the non-responsive portion be 400 million
pounds, then your total budget will be 650 million pounds out of a
national income of about 2000 million pounds, or 33-1/3 per cent., and
every alteration in prices--or what we call "improvement" in the cost of
living--becomes an extraordinarily serious matter as a burden upon new
enterprise in the future.
Let me give you a homely and familiar illustration. During the war the
nation has borrowed something that is equivalent to a pair of boots.
When the time comes for paying back the loan it repays something which
is equivalent to two pairs or, possibly, even to three pairs.
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