Darling will spend his way out of recession

clobber_2

How very Keynesian.

hethmar

Lilac, your teacher was probably talking about the USA - it wasnt just holes in roads, they completed huge building projects like dams, whole new towns and road systems.

Darling and Brown and looking at bringing forward large scale regeneration projects in a similar way.

Generali

lilac_lady wrote: »

I remember my History teacher at school talking about the 1929 depression. He said that if the Governments of the day had paid people to dig holes in the roads then had paid others to fill them in the problem would have been solved. Was he correct?

We have a different problem to 1929. In 1929 there was plenty of supply of goods and services but not enough demand for it. This time around, thanks to the bubbles we've had in various assets, we are producing the wrong stuff.

That's why Keynsian demand management of that sort won't work this time around.

baby_boomer

16 economists have combined to condemn Darling's "plan" as too risky.

".....could boost the state to such a "dominant position" that it would "stunt the private sector's recovery once recession is past". They argue that taxes should be cut and interest rates varied to cope with economic downturns, rather than spending being ramped up.."

Telegraph

wymondham

baby_boomer wrote: »

16 economists have combined to condemn Darling's "plan" as too risky.

16 economists v Alistair Darling..... mmmmmm which is right?

baby_boomer

Telegraph - Brown's Keynesianism will bankrupt us all

"...anyone who tells you inflation isn’t a problem is ignoring that borrowing itself is inflationary, and that the latest bank bail-outs will see the Bank of England printing money on a scale unprecedented in modern times. This is the first serious slowdown under Labour – since 1976 – and a moment of acute economic danger. A wounded, desperate Prime Minister is making a final roll of the dice.

Faced with a desperate electorate, he is reaching for Keynesianism. It serves, also, as a fig-leaf for his previous profligate spending and as a bone to the Labour left..."

No wonder that Brown now feels capable of going back to his native Scotland to campaign in Glenrothes,, instead of staying away as an electoral liability!

scousethife

wymondham wrote: »

16 economists v Alistair Darling..... mmmmmm which is right?

I wouldnt trust either of them to be honest.

Did these 16 economist predict this situation last year?

baby_boomer

No-one has the gift of certainty but

It's not an economist's job to predict or regulate the financial markets which caused this crisis as opposed to assessing the real economy to which the crisis has now moved.

It was the government's job to regulate the financial markets, but we can't cry over spilled milk. We are where we are.

olly300

Generali wrote: »

We have a different problem to 1929. In 1929 there was plenty of supply of goods and services but not enough demand for it. This time around, thanks to the bubbles we've had in various assets, we are producing the wrong stuff.

That's why Keynsian demand management of that sort won't work this time around.

It should be noted in China and India workers are being sacked because the demand from the West has been greatly reduced.

Generali

olly300 wrote: »

It should be noted in China and India workers are being sacked because the demand from the West has been greatly reduced.

So the Indian and Chinese Governments should consider demand management.

I still have my doubts TBH.