The remedies on offer are well known. Reduce budget deficits by cutting spending – especially \”unproductive\” social welfare spending that reduces growth by making poor people less willing to work. Cut taxes at the top and deregulate business (euphemistically called \”cutting red tape\”) so that the \”wealth creators\” have greater incentives to invest and generate growth; and make hiring and firing easier.
It is increasingly accepted that these policies are not working in the current environment. But less widespread is the recognition that there is also plenty of historical evidence showing that they have never worked. The same happened during the 1982 developing world debt crisis, the 1994 Mexican crisis, the 1997 Asian crisis, the Brazilian and the Russian crises in 1998, and the Argentinian crisis of 2002. All the crisis-stricken countries were forced (usually by the IMF) to cut spending and run budget surpluses, only to see their economies sink deeper into recession. Going back a bit further, the Great Depression also showed that cutting budget deficits too far and too quickly in the middle of a recession only makes things worse.
Umm, the UK\’s reaction to the Great Depression was to cut the deficit and devalue the pound. Worked very nicely, much better than the US response. Immediately post WWII Major Atlee reduced the budget deficit to a surplus: economy grew quite nicely as well.
It\’s just fine to have different views but you\’re really not allowed your own facts you know….