George Osborne is wrong. Austerity is for the boom years, not the slump
But given that we didn\’t have austerity during the boom years, given that during the longest bopopm the country has ever known we have a monocular Scot pissing our money in every direction, we don\’t in fact have much of a choice, do we?
I\’ve said it before and no doubt I\’ll have to say it again, the problem with Keynesianism is that even if it does work on the blackboard (something I\’m unconvinced of but so what) it doesn\’t work in that real world.
We\’ve just had, what, three years of 10% of GDP budget deficits? OK, some of that will be reduced as a problem by economic growth, when it happens (as it will, eventually). But to get us back to where we were, with the ability in the national debt to finance another such blow out in it if there\’s another economic bust will require a primary budget surplus of 2-3% of GDP for a decade.
And remembering the cries for extra spending in the 1997-2003 period, when we were in fact running a budget surplus or close to it, does anyone think that that is even remotely politically possible?
No? Quite then, Keynes might work on the blackboard but it doesn\’t in the real world.