Sunday, 30 June 2013

False Economy

"Every time a politician says we have to do with the nation's finances what a prudent householder would do with a credit card bill, you can stop listening. It's nonsense."

"We are not working full-time. We have high unemployment and high levels of people with part-time jobs who want to work full-time. If we have policies that get people back to work, and doing good, economically productive jobs, then the deficit falls because the costs of unemployment go down, and the income from tax goes up – even without changing a single tax rate."

"So the best way to cut the deficit is to encourage growth. That's not always easy for governments to do, but consider the environmental challenge. To make the transition to a low-carbon economy we need to stimulate a huge investment programme in new forms of energy and energy efficiency at work and home. That's a good thing to do in its own right, but will also create jobs, help companies and cut the deficit."

"While the national debt is higher than it's been for some time, it's still lower than it's been for most of the last century. Debt has often been higher in the past – and it goes up after national emergencies such as wars and worldwide recessions. Of course the recession should not be compared to the second world war, but it was still the one of the most catatastrophic events short of a world war."

1 comment:

Jonathan said...

I think the Tories would argue that one of the main reasons why businesses find it so difficult to borrow money to invest in expansion that would create new jobs is because the banks prefer to lend the money to the government instead. There is less risk that the government will default. The huge demand for government borrowing as a result of the deficit "crowds out" private borrowing, and the solution is to reduce the deficit so that more money is available for businesses to borrow.

I don't know if that is correct or not, but it is a widely held opinion.