Paul Krugman had a column in the New York Times on Saturday that suggested that there is strong evidence to suggest that for every 1% of austerity that is imposed by a government then 1% of capacity is lost in the economy. The argument appears to be compelling.
Now think about this in the UK context. If 1% of austerity really does reduce GDP by 1 percent, then the current government's austerity programme from 2010 to 2015 might have reduced potential output by 6 percent (although I accept that this arguable). That may equal about £90bn. If the tax share in GDP is 40% then that equals £36bn - enough to reverse all the social security budget and some of the other cuts as well, without having to make additional tax rises.
If only Labour would think in these terms rather than accepting George Osborne's austerity economics we'd face real choice at the next election, and the prospect of retaining incredibly valuable services.
The fact is that the multiplier works, even in reverse. And that is what the evidence shows.
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What you are saying it quite obvious but unlike you a large percentage of the electorate do not see it that way they have been brained washed by the Tory’s and their allies in most of the press that the deficit needs reducing by less government spending.
It is just quite impossible to get through to them that there is another way and tht the running of a country is nothing like running a household in respect to money
That is why I believe Labour are acting in the way they are because they are frightened that they will be labelled as economically illerate which is a complete lie
However if you read another one of Richards posts today, you will see that infact it was A Darling who started this trend of deficit reduction.
The GDP figures are becoming less reliable and the Tories privatisation of the NHS will be another mirage much like the housing bubble they have inflated..
It’s shame that many of our “wonderful entrepreneurs” prefer to take on the form of piranhas and strip the carcass of the NHS bare, now that this noble beast has stumbled and fallen completely into the lake of “crony capitalism”….
Meanwhile, the people take the brunt in all ways. Such as this pensioner being arrested at Sheffield station while taking peaceful action to have OAPs travel concessions reinstated in South Yorkshire. One pensioner protester was also hospitalised. https://www.youtube.com/watch?v=Svv9YcyZ6Os&feature=youtube_gdata_player