More on the Tories and the myth of government “waste”
John Maynard Keynes pooh-poohs Sir Stuart Rose et al.
By Mehdi Hasan Published 08 April 2010 19:12My NS colleague and good friend, the economist and former MPC member David "Danny" Blanchflower, has asked me to highlight this letter, published in yesterday's Financial Times, which he co-authored with Robert Skidelsky.
Sir, How many of those business leaders who complain that raising National Insurance contributions is a "tax on jobs" realise that the "efficiency savings" that they demand would destroy jobs just as certainly?
Raising National Insurance contributions attacks jobs by reducing profits per unit of output: an "efficiency saving" by government cuts costs by putting someone out of work. Both measures aim to reduce the government deficit at the expense of jobs. That is why the government has wisely postponed raising NI contributions and cutting "waste" until economic recovery is under way.
The general point is that expenditure that would be "wasteful" in normal times can be useful in depressed times. When an economy is growing strongly we need to cut out waste; when it is depressed, what is called "wasteful" spending can keep up aggregate demand, employment and sales. Keynes might have been thinking of our eminent business leaders when he wrote that "common sense" is apt to prefer wholly wasteful forms of public spending such as unemployment benefits to partly wasteful forms such as over-manning in government agencies.
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8 comments
So Labour plans job cuts and savings on the public sector. I m still nice enough to vote Labour as I have done since 1983 (excluding 2005). At least I'm as nice as Stuart McLennan.
I did enjoy learning about the 50% tax rate for earnings over £150,000 too.
Some seem to think the public sector is the largest employee in the country. Perhaps it is. I only get to deal with people in Revenue and customs or the job centre. Some of them are first class and some (fewer) are so useless, rude or lazy they need to be sacked or given more to do. Maybe I was unlucky in meeting these people or that my stardards and expectations are unrealistically high. Its all our money which goes on these jobs. I want it to be spent well. At the very least is a pay freeze acceptable? And what about helping people access the huge amount of unclaimed benefits by making the system more user friendly? I ve also heard about insider fraud and tax favours for the rich from those whose job it is to collect it.
As for taking on the bailed out bankers and the alien super-rich ask why Brown and Darling have n't taken them on. They appear gutless here. It is they who need to use their power to make change.
Concerning unsupportable benefits, how are the police given generous pensions for early retirement at 51? The inequality is n't just between the rich and the rest of us, its within the larger sector of society. The focus must be universal and egalitarian.
What I would hate to see attacked are the winter fuel payments and things like sure start and tax credit.
Mr Brown is calling / designing measures to control banking. He quite rightly states however that these measures MUST cross all borders as banks are international monsters!
Mr Brown IS a hero of the age.
A measure of Mr Brown is....Can you imagine yourself being as dedicated to his job for this long already - at No 11, now No 10....He's not a social climber like cameron but a HARD WORKING PRO'. Thank God!
Lets get the theory out of the way. As a self-employed tradesperson my income has since late 2008 been very reduced. Yet I've just had to pay tax for my 2007-8 earnings. I found the Revenue and Customs robots to be, well, robotic. Lets spread the pain here to those who also dole it out on the little people.
I won't be voting for Cameron but if he gets in I'm going to enjoy seeing the axe fall on public sector pay and jobs. We are all in this together. You can go back to the theory now.
You're going to "enjoy" the axe fall on public sector jobs? You're a nice bloke, aren't you?
Ha! And as a tradesperson presumably enjoy watching demand for your services drop further as more people are out of work or tighten belts in fear of unemployment? The Tories can't seem to get their head around this one either.
It is interesting how many people now see public sector employees as underworked, unnecessary or enjoying unsupportable benefits. The corporate media have managed to persuade us subsistence living and an early grave is somehow noble and patriotic, and joining an union to improve conditions as treacherous and a refuge of the lazy. We're not all in this together. There is a tiny minority of people that own most of the wealth in this country, and they're not in it at all. You've got the wrong target mate.
Does "efficiency savings" have to equate to job cuts, how about dealing with sticky wages in the public sector,how about taking a few percent off public sector wages, and You never know it might even encourage people to give up a couple of packs of fags a month
The non-unionised private sector appears to have bit more fexibility in adjusting remuneration to economic circumstances.
Mark, be careful what you wish for. Is it the ambulance driver's job you'll enjoy watching disappear or the firefighter's job or your daughter's teaching assistant?
The axe should fall on those that created this mess in the first place, the bankers and financial institutions who were responsible for putting in place the stretched and distorted models that brought about the collapse. Again these people seem to be able to walk away with their ill gotten gains whilst the rest of us suffer the humiliation of having to prop up the banks with our own money. The Tories will use the situation to justiy even more attacks on ordinary working people while at the same time enacting laws for their friends in the city to start the whole rotten process all over again. So don't enjoy the axe falling on other working people continue to vote Labour, and insist on the sort of changes to banking practises and regulation that will stop these people from destroying society with their greed.