John Maynard Keynes’ biographer, Lord Skidelsky tells Robert Miller of the Telegraph that the economist would have been completely horrified at the ‘economic illiteracy’ of the coalition government and its drive to slash the deficit at all costs.
Anyone who believes the across the board cuts will bring the UK out of recession needs their head examined – cutting government spending has proven to be a failure everywhere it has been tried, whereas stimulus spending has done the opposite. For a highly detailed account of this, read Naomi Klein’s ‘The Shock Doctrine’ where Klein proves beyond dispute that the fiscal policy adopted by right wing governments around the world are hugely damaging to the poor in times of crisis, and can often have irreversible effects. This isn’t to say that the issue is completely black and white – there are obvious cases when governments need to reign in spending, particularly if their military budget is over blown or they are doling out cash and tax breaks to companies that are shipping jobs abroad etc, but there is a simple rule of thumb: To pull out of a severe recession, government MUST stimulate the economy by spending because private companies become too risk averse and stop pumping money into the economy themselves. We did it with the banks, the government does it frequently to giant corporations that are deemed too big to fail, yet people still believe that cutting welfare for the poor is the best way to get ourselves out of an economic funk.
Ben Cohen is the editor and founder of The Daily Banter. He lives in Washington DC where he does podcasts, teaches Martial Arts, and tries to be a good father. He would be extremely disturbed if you took him too seriously.