Letter: tackling the deficit doom

I’ve written another letter to the Shields Gazette, in response to a letter from a Mr Dennis Thompson where he makes the case for the Con-Dem cuts by raising the myth of the debt doom. I don’t know if he’s aware of Keynes’ pet concept of the ‘paradox of thrift’; in these terms during periods of economic uncertainty people spend less which further depresses a nation’s economy. In these cases, a government should step in and invest to increase employment, prosperity and investor confidence. The current economic situation could actually be a great opportunity to invest in the future – infrastructure projects for better transport links, develop new renewable energy sources, countrywide house modernisation to improve domestic energy efficiency and many more. As prosperity returns so does the nation’s ability to reduce its debt.

Here’s the letter:

The deficit panic gripping the nation has manifested itself locally in the form of Mr Thompson salivating over cuts (Have Your Say, April 26th), cuts which are purely ideological in nature, unsupported by economic theory, precedent or evidence.

The deficit doom-mongers are promoting a spectacular myth to shock and subdue the public with fear and uncertainty. In the history of audacious political con jobs, it ranks alongside weapons of mass destruction, ‘we’re all in it together’ and ‘big society’.

Mr Thompson’s letter conjures a bogeyman of unmanageable debt and warns of us ending up like Greece or Ireland. Well, Ireland followed George Osborne’s prescription of cut, cut, cut. Look at them now.

True, the UK deficit seems too big to comprehend. But to put it into perspective, public sector debt in 1946 was 250% of GDP; today it’s 60%. In 1946 we started building the NHS and the modern welfare state. Today, despite being one of the wealthiest nations on the planet, we’re destroying it all.

Deficit ‘shock troopers’ like Mr Thompson are promoting a flawed view of economics to support a cuts programme which won’t do any favours for the economy or ordinary British people.

Time and again it’s been proven that when times are tough, a state can jump-start an economy by spending and investing in infrastructure and services, even if it means debt.

Borrowing may be a problem, but it’s also the cure.

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