Boris Johnson has urged the Chancellor George Osborne to cut National Insurance to boost economic growth after official figures showed the economy stagnating.
am converted to your proposal…for varying rates of contributions in
good and bad times. (June 16, 1942). Keynes, Collected Writings, vol.
27, p. 208.
are able to show fluctuations in income of an order of magnitude which
is significant in the context… So far as employees are concerned,
reductions in contributions are more likely to lead to increased
expenditure as compared with saving than a reduction in income tax
would, and are free from the objection to a reduction in income tax
that the wealthier classes would benefit disproportionately. At the
same time, the reduction to employers, operating as a mitigation of the
costs of production, will come in particularly helpfully in bad times. (July 1, 1942). Keynes, Collected Writings, vol. 27, p. 218.
Which leaves us with the obvious question, why don\’t Keynesians propose this themselves?
Which is where we get into the nitty gritty of politics, not economics. There\’s more than a suspicion that those arguing or \”stimulus\” aren\’t in fact arguing for stimulus. They\’re arguing for their favourite piece of spending rather than any effect on aggregate demand. They specifically desire, say, more public transport and this is a good excuse to get it. Ignoring entirely that more public transport, with its never ending need for subsidy, is a forever increase in the size of government, not the required by the theory temporary boost to aggregate demand.
Or perhaps not ignoring it, just hoping that we will.
There has to be some reason that those claiming to follow The Master don\’t actually follow The Master doesn\’t there?