Oh no! It’s a links post!

I don’t make a habit of “links posts”, but here are a few responses to the budget that have caught my eye today, until I have time to write anything myself:

  • David Byrne at Compass: the budget is “completely and utterly wrong in macro-economic terms” and “will be regressive”; but Labour is “flailing about” in the absence of a credible alternative to the deflationary orthodoxy. Byrne also links this article by Tory peer Lord Skidelsky warning of the need to keep pumping money into the economy – a warning the chancellor has chosen to ignore.
  • Shelter on how the reforms to housing benefit could “push many households over the edge, triggering a spiral of debt, eviction and homelessness”.
  • The FT on one of the “real little horrors” buried in the fine print: the proposal to cut housing benefit by 10% for those who’ve been on the dole for a year: “It basically delivers an ultimatum to hundreds of thousands of long term unemployed: find a job or move house. This is the Cameroon version of ‘on yer bike'”.
  • David Osler on a budget “purposely designed to bring about the withering away of the welfare state”, going far beyond anything attempted by Margaret Thatcher: “This is a move for which no obvious parallel in twentieth century British history comes to mind. Cuts of this magnitude can only have wideranging impact on the fabric of the life of this country.”
  • A personal perspective from someone whose employment and financial prospects have been devastated by the budget: multiply this story by hundreds of thousands to get the real picture of what this government is already doing to people.

Though the last word has to go to the inestimable Infobunny, who chose the medium of sculpture in which to give her response to Osborne’s debut:

I commend this post to the house.

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3 thoughts on “Oh no! It’s a links post!”

  1. “In brutal summary, in a recession when monetary policy – already tried by the last Labour Government – does not really revive the private sector, then demand has to be maintained by the public sector and cuts make a bad situation worse.”

    If I had a million dollars for every time fiscal stimulus rescued a flailing economy, I’d still be broke. I suppose that there are legitimate reasons to be upset at your government’s spending cuts, but appealing to a failed economic theory isn’t one of them. I can come up with at least two examples off the top of my head where the government cut spending in the middle of a downturn with no ill effects, and I suspect I can find more. On the other side, I can’t find any historical examples of fiscal stimulus working. After decades of such policy, your own country was a complete wreck by the end of the 1970s, and mine wasn’t much better off (nor did FDR’s spending in the Depression do us a whit of good). Neither did decades of Keynesianism bring India out of the pit, and 20 years of stimulus has left Japan only with a mountain of debt and a looming currency crisis, as interest payments will soon exceed total tax revenue.

    In fact, spending cuts *can* be stimulative. For example, if capital is staying out of your currency zone because government’s profligate habits lead investors to fear inflation/devaluation/crisis/etc, a spending cut can send the signal, “Hey, investors, our government is run by adults now. It’s safe to build new capital here!”

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