This is by J Bradford DeLong,a former US assistant secretary to the Treasury and now a professor of economics at the University of California at Berkeley:
To borrow from your own people is especially non-humiliating when your economy is in depression, when the interest rates at which you can borrow are at near-record lows, and when every economic argument cries out for spending now and taxing later.
What is humiliating is to have a government that cuts a half-million public-sector jobs and causes the loss of another half-million jobs in the private sector. In an economy of 30 million jobs, that translates into an increase in the unemployment rate of 3.5 percentage points — at a time when no sources of expanding private-sector demand exist to pick up the slack. Britain’s finest hour this is not.
I think he's got it right.
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He may well have it right. But only from his viewpoint.
Such cuts as are being made may make little ECONOMIC sense, but they may not be being made for economic reasons.
A large pool of unemployed has a great tendency to drive wage demands down and lower wages/salaries generally.
Politicians [of all parties] are not going to suffer from this since the public are primed to “go with the flow” by the media.
And with benefits being lowered (or removed) the cost is not going to be as high as might be expected.
In any case, as has been pointed-out, the deficit is not being lowered as such; its rate of increase is being reduced a little !
@JohnM
I frequently wonder whether people like you have any understanding of economics at all. The claim that the deficit is not being reduced is absurd. Government spending is falling by 9% of GDP. If that is not a real decrease, what is?
Thank you.
Strange: I noted that the deficit is forecast to not be lower next year, but still increasing: Albeit at a lower rate than the past.
Still, not to worry.
Maybe other economists are wrong, which has happened. Economics tends [from my viewpoint] to be not an exact science but more a combination of science and voodoo, which one you use depends upon which outcome you want/prefer ?
Anyway, I live and learn.
I frequently wonder (based upon my reading of this blog and others) whether those that rule us have any understanding of economics either. But then….they may not require, or want, any such understanding ?
Except it isn’t. Government spending is set to increase year on year and will be 15% higher by the next election than it was at the beginning. All that is being cut are spending increases, not spending. Let;s wait until the next Budget and see how much spending has actually increased.
@Alex
Oh the blissful ignorance of ignoring inflation, the demands of the population, GDP growth and more besides
Is there any fact that gets in the way of your prejudice, analysis or reason?