6th June, 2010.
I am privileged to have as a mentor Professor Victoria Chick, Emeritus Professor of Economics at University College, London. Prof. Chick is both an eminent and distinguished Keynesian, but also a fine teacher and a woman of great taste and sensibility. She bears an uncanny resemblance to Virginia Woolf, and has reached the top of a very male-dominated profession, although her work has not always been fully appreciated by neo-liberal colleagues.
Anyway, she and I have become alarmed by the overwhelming political consensus, parroted each day by the BBC’s economic correspondents, that ‘balancing the budget’ and ‘slashing the deficit’ must now become a national priority. We are particularly alarmed because this analysis, based as it is on micro-economic reasoning, has dire macro-economic consequences. These consequences appear not to be understood by EU and US politicians and policy-makers at the OECD, the ECB and IMF. As a result the world now faces the terrifying prospect of globally synchronised austerity.
As my readers know, I have long argued that Britain needs to ‘spend away the debt’, and in earlier posts have demonstrated the consequences of the 1945 Labour government’s post-war spending: namely, a steady reduction in government debt. Prof. Chick and I have been digging deeper into the numbers, and have produced the attached paper on the evidence that fiscal consolidation increases, rather than ‘slashes’ the debt. It is a more academic document than my readers will be used to, but riveting all the same.
Click here to download the PDF.