Labour’s Spending Plans Are “Physically Impossible”

So says Paul Johnson of the IFS at least, telling us that it’s simply not possible to ramp up public spending by £50 billion a year rapidly.

He’s right of course:

However, Mr McDonnell was committed to far higher spending, Mr Johnson said. “The capacity of the public sector to spend that effectively and in short order must be in doubt. There is next to no chance that investment spending could sensibly be increased by more than £50 billion a year within a year or two,” he said.

Note what this is supposedly about. Investment, and on infrastructure as well. This isn’t about “investment in the NHS” by raising nurses’ wages. This is about building new train lines and the like. And that simply cannot be ramped up in that sort of timescale.

Remember when Obama said that they’d spend $800 billion on “shovel ready projects” as a way of beating the recession? And two years later had to admit that they’d found not one single shovel ready project in the entire country? The reason being that we just don’t do things that way any more. We need to have plans, and planning enquiries, and environmental reports and bureaucracies that mull over decisions.

One effect of this is that you can’t use, any more, infrastructure spending as part of Keynesian demand management. Because you’ll not manage to fit even the planning stage into the one business cycle, let alone start to build anything. The other of course is that you simply cannot ramp up spending in the manner described.

There is another issue here as well. Where the hell is the labour to come from? We’re at generational lows in unemployment, generational highs in the employment to population ratio. There simply isn’t that reserve army of the unemployed to go dig ditches with. They don’t exist.

All this before the fact that we know Labour’s just going to piss the money up against the wall anyway. It’s just not a good idea, is it?

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DamoMichael van der RietBarksSpike Recent comment authors
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Spike
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Spike

Moreover, for the politicians embracing jump-starting the economy through government projects, the “environmental reports and bureaucracies” are a given. They never consider streamlining or eliminating the paper-pushing, which might indeed let a project finish in a single business cycle, increase a nation’s efficiency, and thereby its wealth. Once again, the emphasis is not on getting work done but keeping everyone in his “job.”

Barks
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Barks

Following on from Spike’s comments: were the government to simply do away with the endless (and mindless) reviews, planning and etc there would be no need to increase anything as the act of getting on with already authorized infrastructure would do the stimulating.

Michael van der Riet
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Michael van der Riet

But those SRPs do increase employment. It works very well in my country. You start a new government department and fill it with cadres earning megabucks and driving Benzes.

Damo
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Damo

Wouldn’t it be best just to hand out a cheque to everybody?