I guess it’s settled then. Liberals, spend away because it’s the only way our economy is going to work. Better yet, double the spending. This way, the economy will perform twice as good.
At every stage of the experiment, critics (myself included) have warned that Osborne’s austerity policies would prove self-defeating. Any decent economics textbook will tell you that, other things being equal, cutting government spending causes the economy’s overall output to fall, tax revenues to decrease, and spending on benefits to increase. Almost invariably, the end result is slower growth (or a recession) and high budget deficits.
“[O]ther things being equal:…Talk about weasel words.
Our weasel-like ”The New Yorker” blogger John Cassidy is trying to portray any effort to gut government spending (i.e. austerity) as a dangerous thing. However, as pointed out several times here at MCT, what’s needed is a pro growth agenda with tax cuts and reductions in onerous regulations to put more money back in the economy and cutting the costs for business.
Furthermore, it would be best if our weasel-like blogger move beyond dusty left wing high school text books and spend some time reading something a little more informative.