Friday, 19 February 2010
Cut now or cut later? 80 economists have it wrong!
The letters in today's Financial Times from a combined sixty economists are a welcome rebuke to the nonsense from 20 mates of David Cameron's (aka leading economists writing in the Murdoch press).
Today's letters point out some very salient facts that correct the Times letter. The letter headed by Lord Layard is spot on when it says:
"immediate cuts - even supposing they are practicable - would not produce an offsetting increase in private sector demand, and could easily reduce it."
"Britain's level of government debt is not out of control"
Likewise the letter headed by Lord Skidelsky and signed by David Blanchflower (among others) is correct and quite amusing in pointing out:
"In urging a faster pace of deficit reduction to reassure the financial markets, the signatories of the Sunday Times letter implicitly accept as binding the views of the same financial markets whose mistakes precipitated the crisis in the first place!"
The problem though is that both letters back cuts* - they simply argue about timing. The solution to this crisis would be to collect the taxes that are currently going uncollected, evaded and avoided - as much as £120bn a year. Then bring the banks into public ownership and invest their profits in public services.
Update 22/02: TUC now calling for petition to Darling and Osborne against 'premature cuts' in new press release. This is supported by the Fabians and others.
*let's be clear some cuts would be welcome: Trident, ID cards, military spending (including getting our troops out of Afghanistan)