Muppetry of the highest order.

We have a massive deficit, are running up huge debts which in themselves act to choke growth, and despite the “cuts” Labour and it’s union paymasters are so happy to talk about, government spending is still set to increase in real cash terms to 2015. Spending jsut won’t increase as fast as Labour had planned, given Labour’s absoluate denial when it comes to public sector spending reviews….

Tyler,

We’ve had this debate 3/4 times now. I don’t see te need to have it again.

I did think Stephanie Flanders set out the pros and cons of cutting now/later well though:

http://www.bbc.co.uk/blogs/thereporters/stephanieflanders/2010/09/austerity_plans_where_do_you_stand.html

On Ed Balls’s economics, it’s worth reading Sam Brittan in the FT on 10 September: The secret of Osborne’s popularity

“According to the pollsters Ipsos Mori, George Osborne is the most popular Conservative chancellor since its records began in 1976. The knee-jerk media reaction is to say: ‘You wait until the public spending cuts bite.’ But I want to dig a little deeper.”
http://www.samuelbrittan.co.uk/text376_p.html

Unless I’m greatly, Sam Brittan is saying that Ed Balls is talking sense.

Duncan,

not directly related to this post, but here is an excellent column about the politics of stimulus, and how economically effective policies may be politically unpopular:

http://www.newyorker.com/talk/financial/2010/09/20/100920ta_talk_surowiecki

This also relates to a conversation I’ve been having with Sunny, here:

http://www.sohopolitico.com/2010/09/who-do-tories-want-to-win-labour.html

and here:

http://www.sohopolitico.com/2010/09/sunny-hundal-on-deficit.html

I think we may be in agreement (and therefore in disagreement with Sunny) at least on the fact that dropping the 4 year timetable now would not be a credible move for Labour.

Let’s recap. Martin Wolf is also saying Ed Balls is talking sense:

Why the Ed Balls critique is correct:
http://www.ft.com/cms/s/0/119c59ac-b6c3-11df-b3dd-00144feabdc0.html

How can you have an interesting debate on Twitter? All you can say on it is about six words.

“still set to increase in real cash terms to 2015″

LOL! So a nominal increase (and a real terms cut) becomes a “real” increase when you want to propagandise?

Large resources and ceaseless efforts are being directed into convincing us all that there is no alternative to the scale and timing of the public spending cuts proposed by George Osborne.

Public opinion polls report majority support for the no alternative claim. But it is simply untrue – there are alternatives, as Martin Wolf and Sam Brittan have argued in the FT.

There is the real risk of a double-dip recession if the spending cuts are applied too steeply and too soon.

(Bob if you read that New Yorker article I link to above, it argues that in addition to Conservatives making an effort to sell the no-alternative argument, that stimulus is inherently politically unpopular, and that the no-alternative side has far the easiest job, things are tipped in their favour from the get go. This is in US context but I think it reads across)

@Luis – thanks for that.

In the pensioner circles I move amongst, it’s taken for granted that a budget deficit is a “bad thing” – with much quoting of Mr Micawber from Dicken’s David Copperfield:

“Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”

It seems stark staringly obvious that paying down the deficit as soon as possible must be a good thing.

There’s no understanding of the consequential impact on aggregate demand. Notions of keynesian functional finance and contra-cyclical fiscal stabilisation policy are completely alien – a government should run the country like a good company – hence Paul Krugman: A country is not a company or Sam Brittan on: Why UK should not fret about national debt
http://www.samuelbrittan.co.uk/text333_p.html

And, of course, there no shortage of folk ready to claim all that keynesian stuff is old fashion and rubbish anyway. This from John Kay in the FT (again) relates:

“The macroeconomics taught in advanced economics today is largely based on analysis labelled dynamic stochastic general equilibrium. The unappealing title gives the game away: the theorists are mostly talking to themselves. Their theories proved virtually useless in anticipating the crisis, analysing its development and recommending measures to deal with it.

“Recent economic policy debates have not only largely ignored DSGE, but have also been remarkably similar to the economic policy debates of the 1930s, although they have been resolved differently. The economists quoted most often are John Maynard Keynes and Hyman Minsky, both of whom are dead.”
http://www.ft.com/cms/s/0/19491372-472c-11df-b253-00144feab49a.html