Nick Clegg’s doublethink on cuts

Clegg admits the cuts are having a “chilling effect” (but supports them anyway).

In today's Financial Times, Nick Clegg makes the startling admission that the coalition's spending cuts are having a "chilling psychological effect" on the public. Clegg's words put him at odds with George Osborne, who has consistently argued that the cuts will increase confidence and that excessive state spending is "crowding out" private investment.

As Anatole Kalestky pointed out in an important column in the Times (£) on Thursday, Osborne's views are based on the theory of Ricardian equivalence (propounded by the economist David Ricardo) – the belief that whether a government finances its spending through borrowing or taxation, the effect on demand is the same.

Kaletsky wrote:

In a paper written in 1820, Ricardo examined whether a government that went to war would be better off collecting £20m in taxes or borrowing the same amount at an interest rate of 5 per cent or £1m a year. "In point of economy, there is no real difference," he concluded. "For £20m in one payment and £1m per annum for ever . . . are precisely of the same value.

Osborne and other anti-Keynesians have since exploited this theory to argue that the public treats government borrowing as "deferred taxation" and, therefore, spends more when the state spends less.

But as Kaletsky notes, this respone ignores Ricardo's explicit rejection of the doctrine. Immediately after the passage on the theoretical equivalence of state borrowing and taxation, he wrote: "But the people who paid the taxes never so estimate them, and therefore do not manage their private affairs accordingly . . . It would be difficult to convince a man possessed of £20,000, or any other sum, that a perpetual payment of £50 per annum was equally burdensome with a single tax of £1,000." In practice, human beings do not see borrowing as being comparable with taxation.

The disastrous final-quarter growth figures proved that the public is reducing, not increasing, its spending in response to the cuts. The widely predicted surge in consumer spending, as shoppers rushed to beat the New Year increase in VAT, never materialised. Yet in spite of all this, Clegg insists that the coalition will maintain its "fiscal stance". With the economy at renewed risk of a double-dip recession, he will have to perform many more intellectual contortions in the months to come.

George Eaton is political editor of the New Statesman.

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The section on climate change has already disappeared from the White House website

As soon as Trump was president, the page on climate change started showing an error message.

Melting sea ice, sad photographs of polar bears, scientists' warnings on the Guardian homepage. . . these days, it's hard to avoid the question of climate change. This mole's anxiety levels are rising faster than the sea (and that, unfortunately, is saying something).

But there is one place you can go for a bit of respite: the White House website.

Now that Donald Trump is president of the United States, we can all scroll through the online home of the highest office in the land without any niggling worries about that troublesome old man-made existential threat. That's because the minute that Trump finished his inauguration speech, the White House website's page about climate change went offline.

Here's what the page looked like on January 1st:

And here's what it looks like now that Donald Trump is president:

The perfect summary of Trump's attitude to global warming.

Now, the only references to climate on the website is Trump's promise to repeal "burdensome regulations on our energy industry", such as, er. . . the Climate Action Plan.

This mole tries to avoid dramatics, but really: are we all doomed?

I'm a mole, innit.