I concentrate on one point: the Chancellor’s failure to meet his budgetary targets.…
Ever since I started writing and speaking about these matters in 2010, I have been predicting that the Chancellor would not meet his budget targets.
The reason I gave was that the pursuit of those targets in itself slows down the economic growth on which their achievement depends.
Why? Because it slows down the rate of spending in the economy, and growth depends on spending. The cuts have hit the spending, and the spending has hit growth.…
So why has the British economy been growing at all? The answer is very largely because there are more people. The population was 62.3 million in 2010, today there are 64.1m, 2 million more, virtually all of them of working age. And more people are coming.
Any economy will grow if has more people to do the work. The only relevant welfare measure –the measure by which the government should be judged –is GDP per head. GDP grew by 4.1%, between 2010 and 2013, but GDP per head has grown by only 2.3%, and the typical earner is £1600 a year worse off.
So we are left with the prospect of another round of brutal spending cuts with the rolling five year programme rolling ever further into the future.Speech on the Autumn Statement, in the House of Lords, 4th December 2014
It sometimes helps if people running economic policy know some Keynesian economics.
Robert Skidelsky
h/t Brad DeLong
5 comments:
"on which their achievement depends"
What does he mean by this??????
Skidelsky: "What happens to the budget is determined by what happens to the economy,"
Whaaaaaaattttt????????
Hey moron Skidelsky: WE control both the budget and the economy you dope!
"The only relevant welfare measure –the measure by which the government should be judged –is GDP "
Whaaaaaaattttt?????????
Hey Skidelsky: Would you f-ing retire already!?!?!?
Matt,
You ask what he means by “on which their achievement depends”. I’m almost certain he’s saying that if government adopts arbitrary deficit reduction targets, that can easily cut growth which in turn exacerbates the deficit.
Ann Pettifor and Victoria Chick made that point even more forcefully in their book “The Economic Consequences of Mr Osborne” (see link below). That is, they argued that attempts to cut deficits actually INCREASE the deficit.
http://www.primeeconomics.org/wp-content/uploads/2011/06/The_Economic_Consequences_of_Mr_Osborne.pdf
There is no significant difference between Skidelsky and MMT. That is, he argues that the deficit should be whatever is needed to give us full employment.
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