It was Giles Wilkes who pointed out that the New Economics Foundation is really Not Economics Frankly. A contention nicely proven by the latest screed from the CEO of NEF.
The government’s fiscal rules, in effect, have been shot to pieces: rules that have been a centrepiece of successive budgets that have driven cuts in public spending for nearly a decade.
Tax as a percentage of GDP is higher now than it was under the Brown Terror. Public spending is higher now than it was under said Brown Terror. What damn cuts in public spending?
But then we get to the really weird:
This was always the wrong remedy for our economy. There were many different ways to get to grips with the public finances after the 2008-9 crash.
The government could have opted to raise rather than cut taxes for those who are well off.
Somewhere just before “ignorant” and “insane” in the dictionary is where we’ll find “increase taxes in a recession”. That would be expansionary austerity, the very thing being complained about. It can indeed work, as 1930s Britain showed, but only if you have a massive dose of looser monetary policy – like coming off the gold standard – to go with it.
The point about anti-recessionary policy being that it should be stimulative. We need a larger gap between tax and spending that is. Which we can achieve by having lower taxes, or higher spending. But to increase taxes in a recession is to make Keynes have another heart attack.
But then, NEF, y’know?