The prospect of a double dip recession — not just for the UK but across much of the world economy — seems to increase daily.
US house sales slumped by 27% in July.
Mortgage lending in the UK fell by 18% in the same month.
Confidence has been sucked out of both economies; in the US by fear that the stimulus is ending, in the UK by the ferocity of the ConDem attack on jobs, spending and demand that can only and inevitably mean that they want and are planning to deliver a recession, or a depression.
In both cases — and throughout the Eurozone where austerity has become the norm — even in Germany where more than anywhere the opposite policy is needed — this austerity is absolutely the wrong policy.
It is only government spending that can keep us out of recession now. What is more — as I have shown — cutting jobs now saves the government no money at all, and in all probability imposes considerable costs after multiplier effects are taken into account.
This means this is not the time for cuts. This is the time for government spending — selective spending with a focus on investment admittedly — to create the demand that will get us out of recession and deliver the new economy we need.
This is, of course, the Green New Deal. For more detail, there’s much here.
It’s the alterative to the inevitability of stagnation, recession or depression that neoliberal politics is offering.
It’s hope when all the ConDems are offering is fear.
It’s a no-brainer for the people of Britain. Unless of course you’re seeking to increase the power and wealth of an elite by abusing the population of the UK — as this government's regressive policies seek to do.
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It is absolute rubbish that “it is only government spending that can keep us out of recession.” Look at what happened during the depression of 1920-21:
“The economic situation in 1920 was grim. By that year unemployment had jumped from 4 percent to nearly 12 percent, and GNP declined 17 percent.
…
Harding cut the government’s budget nearly in half between 1920 and 1922. The rest of Harding’s approach was equally laissez-faire. Tax rates were slashed for all income groups. The national debt was reduced by one-third.
The Federal Reserve’s activity, moreover, was hardly noticeable.
…
By the late summer of 1921, signs of recovery were already visible. The following year, unemployment was back down to 6.7 percent and it was only 2.4 percent by 1923.” — http://mises.org/daily/3788
Contrast this with the results of the New Deal:
“In May 1939, Treasury Secretary Henry J. Morgenthau Jr., one of Franklin Roosevelt’s best friends, testified before the House Ways and Means Committee: ‘I say after eight years of this Administration we have just as much unemployment as when we started… And an enormous debt to boot'” — http://mises.org/daily/3234
Spending cuts and tax cuts are the only thing which can deliver growth that lasts.
The PSG agrees with Richard particularly where cuts do, by various means, affect the welfare of elderly people. The way forward is to employ more people not sack them, this whilst addressing the problem of welfare abuse and inefficiencies in government spending.
@A.T.
Hmmm, that 1920s boom went well didn’t it? Laid great foundations for 1929, heh?
Whereas the New Deal laid the foundation not just for growth at the time but for post war growth too
Now take your pick……
And spot the nonsense you’re written