I've prepared a new FAQ on this topic this morning. It's available for download here and reads as follows:
No wonder many now think Osborne the worst Chancellor in living memory.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Not quite as bad as America, which over the last three decades has run surpluses during recessions and deficits during booms: the exact opposite of what’s needed. See:
http://www.project-syndicate.org/commentary/the-first-world-s-fiscal-follies
In the West we are governed by idiots.
Re the popular claim that government should borrow and invest because interest rates are low, that argument does not stand inspection.
First, that’s exactly the sort of policy that results in the above mentioned farce that has occurred in America: reason is that by the time infrastructure projects get going, the recession is usually over.
Second, interest rates are not low because any sort of drop in genuine free market rates. They are low because central banks have manipulated them downwards (by printing money and buying government debt). Indeed, when it comes to stimulus spending, governments do not need to borrow a penny. They can simply create new money and spend it.
As to HOW they should spend it, I suggest CONSUMPTION spending (public and/or private sector) is preferable to INVESTMENT spending for reasons given above.
Our Government is not interested in investing. It is interested in outsourcing.
As you say in your book Richard our Government does not believe in the job it was elected to do. It thinks our democratic institutions are incompetent. It believes the markets and the unaccountable private sector know best and thinks it would be better for everybody if they just went ahead and ran things for us.
This is nowhere better illustrated than their ‘Civil Service Reform Plan’ I’ve just found, published last month. A love letter to the private sector. Downsize, outsource and otherwise invite corporate reps in to advise and/or run government departments. It is so terribly important to ‘modernise’ you see! And as rapidly as possible by the next election! And before people notice!
http://resources.civilservice.gov.uk/wp-content/uploads/2012/06/Civil-Service-Reform-Plan-acc-final.pdf
We are fast developing a real democratic problem in this country.