Friday, 8 April 2011

"There is an overpowering logic in putting people back to work"

Letter in today's Independent from Kelvin Hopkins MP

Stephen King's "Economic Outlook" (4 April) did at least cast doubt on Osborne's pipedream that savage cuts in public spending will usher in a private-sector supply-side economic recovery.

Price Waterhouse Coopers estimate that every job lost in the public sector will mean another job lost in the private sector, so if 450,000 jobs in the public sector are lost, we could be looking at close on a million extra unemployed some three years hence. It could actually be worse than that with powerful downward multiplier effects kicking in.

King goes on to reject the Keynesian alternative, too, suggesting that whatever governments do, we're all doomed. He should be reminded that in 1945, with gross government debt four times larger than now, Labour and subsequent Conservative governments spent their way out of debt by maintaining high levels of employment, thus maximising tax receipts and minimising the bill for benefits. The National Health Service was created, living standards rapidly rose, and inequality was reduced. More of the same now would have the same effect, so why not just do it?

The alternative is to leave millions of ordinary people wishing to consume goods and services but without the income to do so, and millions of people willing to produce those goods and services but unable to do so because they are unemployed.

There is an overpowering logic in putting those people back to work. That cannot happen unless the government takes action to create jobs, raising spending in the most labour-intensive areas such as construction and the public services. Annual deficits and Britain's gross debt would then start to fall just as they did in the quarter century after 1945.

Kelvin Hopkins MP (Lab, Luton North), House of Commons, London SW1

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