by Iain Donaldson on 18 January, 2012
Keynsian economics is often quoted as being the right option for Britain’s current economic crisis. The irony is that if my understandin of Keynsian economics is correct that this coalition is doing exactly what Keynes recommends in the current circumstances.
The spend to grow argument does not stand in isolation, but is in fact subject to conditions, one of which is that the growth needed for it to work must exceed the structural component of the deficit.
It therefore follows that with growth at best below 1%, and at worst flatlining and with the strucutural component of the deficit exceeding 4% we must bring the structural deficit down whilst simultaneously promoting growth.
According to Keynes, the only choice right now is therefore austerity and that leaves us with some very difficult decisions.
Balancing a budget that has been left in the current mess is not an easy task, and most people in this country whilst loathing the situation we are in, understand the decisions that have to be taken.
Some of those decisions will hurt, and the Government must listen to the concerns of the vulnerable in our society and protect them from the worst aspects of the mess we are in. That being said, there are steps which the Government could take now to more effectively tackle the deficit, not least of which would be the cancellation of Trident.
It’s about priorities, and whilst most of this Government’s priorities (tax breaks for the poorest paid, increasing pensions in line with inflation, ringfencing spending on education and health) are right, if it comes to a choice of owning a nuclear arsenal or providing the cash needed to support the much needed reform of our disability benefits system, then its a no-brainer. Cancel Trident.