Oh heaven help us is all I can say. The last thing this country needs right now is a budget surplus.
The trouble with George is he has never studied either economics or accountancy.
So, let us turn our minds to the Keynesian macroeconomics that the Murphmeister is so fond of.
In a recession allow that deficit to balloon out so as to offer fiscal stimulus. OK, we’ve done that.
So, what happens when the economy comes back on track? Some might say that you need to run a budget surplus to pay back all that was borrowed in the recession. But that’s not actually the Keynesian point. Instead, you’re supposed to be doing macroeconomic management. And a roaring boom is just as bad a thing to have as a recession is (not least because roaring booms tend to produce recessions at some point).
And thus during a boom you have to be practising fiscal austerity. That is, run a budget surplus. Not because you need to pay the debt back but because you need to be cooling the economy as part of your macroeconomic management.
And this is utterly absurd. First we do not need a surplus: when the government has control of its currency it can run a deficit equivalent to debt multiplied by the interest rate and sand still – so £30+ billion a year of deficit is balance right now.
You can see what he’s doing here. He’s setting up the argument that we should use Keynesian economics in the recession, spend lots of cash on his friends, then we should abandon Keynes in the boom so that his friends still get lots of cash spent on them.