Public Expenditure and the depression
I have just been reading Sidelski's one volume biography of Keynes and have read the stuff about the great crash & depression that followed. Listening to the right wing commentators nobody seems to have learned anything, I suppose it was nearly 80 years ago and all the young people writing don't know any proper history.
The whole point is that in times like this it is essential that the government keeps spending or the situation will spiral down and down. Many think that the unemployment after the great crash went on until the WWII and that was a great bout of public expenditure.
Economies depend on money circulating and when things get bad, people stop spending, so less goods are sold and more people are out of work and the situation just gets worse. It becomes imperative for governments to borrow to spend. There is an argument that says that if the government is borrowing to fund public expenditure that takes money away from the private sector. That might well be true in the good years but not now. How many businesses are going to be borrowing millions for major works at the moment.
Those like David Cameron and the Liberals and, I am afraid, some in the government who are going on about cutting public expenditure are condemning millions of people to unemployment. It is essential to maintain public expenditure over the next few years. Those in what should be secure jobs need to feel they are secure so that they will not cut their expenditure.
It will lead to an increase in public debt and the government will owe money but it can be paid back over time. Even 40 years ago it was normal to borrow up to two or three times income to buy a house. My calculation that would be equivalent to a public sector debt requirement of 200% and we were not too worried. The current debt of the government is far to low to sustain the economy when the private sector has let us down so badly. It would also seem unfair to attack the wages and pensions of public sector workers for the failure of the private sector.
The whole point is that in times like this it is essential that the government keeps spending or the situation will spiral down and down. Many think that the unemployment after the great crash went on until the WWII and that was a great bout of public expenditure.
Economies depend on money circulating and when things get bad, people stop spending, so less goods are sold and more people are out of work and the situation just gets worse. It becomes imperative for governments to borrow to spend. There is an argument that says that if the government is borrowing to fund public expenditure that takes money away from the private sector. That might well be true in the good years but not now. How many businesses are going to be borrowing millions for major works at the moment.
Those like David Cameron and the Liberals and, I am afraid, some in the government who are going on about cutting public expenditure are condemning millions of people to unemployment. It is essential to maintain public expenditure over the next few years. Those in what should be secure jobs need to feel they are secure so that they will not cut their expenditure.
It will lead to an increase in public debt and the government will owe money but it can be paid back over time. Even 40 years ago it was normal to borrow up to two or three times income to buy a house. My calculation that would be equivalent to a public sector debt requirement of 200% and we were not too worried. The current debt of the government is far to low to sustain the economy when the private sector has let us down so badly. It would also seem unfair to attack the wages and pensions of public sector workers for the failure of the private sector.
posted by Unknown at
12:07 AM
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