Yesterday George Osborne, the shadow chancellor, laid out an economic policy that looks to any Keynesian like the perfect recipe for turning recession into deepest depression. It\’s Margaret Thatcher in 1980 all over again – cutting, sacking and reducing debt just when the state should expand. Here\’s his programme: cut corporation tax and stamp duty on shares; abolish tax on savings;
Cutting taxes would, of course, to any Keyensian, look like a bit of fiscal expansion. That is, precisely what is needed to stop a recession turning into the deepest depression.
True, Keynesians of various stripes would argue over whether tax cuts are as good as spending increases in doing so, but all would recognise that tax cuts are fiscally expansionary.
The rest of the piece is that Labour\’s going to lose the next election so obviously we have to change the rules.