Having been reading Fred Clark's blog at the Slacktivist for some time, I've been very struck by his argument that it is not only possible for us to do something about the stagnation of economies, it's actually a moral duty.
Now, Fred approaches his moral decision-making from a Christian, Baptist, evangelical viewpoint. In fact, he is the one man solely responsible for salvaging 'evangelical' as anything other than a term of abuse in my lexicon. However, one of the things I respect most about him, is that he bases most of his reasoning on good secular reasoning that is accessible to all of us, whatever our faith (or lack of it).
Now, while Fred is very USA-centric, a lot of his arguments apply to the UK as well. However, it's all too easy to do a down-home, folksy argument about household budgets. For instance, this. So, I want to find a way to put in terms that bring it home.
So, we have Sam Smith. Samuel? Samantha? Who knows. All we know is, that Sam is an electrician. As an electrician, Sam does emergency repairs, upgrades, major remodelling of internal wiring, Portable Appliance Testing, the works. So in the recession, Sam's income has dropped quite sharply. People still need emergency repairs, and PAT is a legal requirement, but the upgrades and remodelling has dropped off a lot, as has new construction.
So Sam, who used to be on £40,000 a year, has dropped to £25,000. Times are tough, and Sam's savings have disappeared to cushion the blow and cover current expenses. The mortgage is still there, demanding paying.
And now, as one blow on another, Sam's van is breaking down. It's been everywhere, carrying Sam's tools all over the place from one job to the next. It probably won't last much longer.
So Sam has a big decision to make: take a small loan to fix up the van for a little while; take a large loan to buy a new van; or wait for the van to break and then only take jobs in walking distance; which will, incidentally, drop Sam's earnings to more like £12,000 a year.
Bring it back to the macro scale of the entire economy. Yes, we have a lot of debt; paying it off takes money. At the moment, we are not stuck for ability to borrow more money; and cutting government spending GIVES US LESS MONEY TO PAY OFF OUR DEBT.
Sorry about the shouting, but it's true.
Time to reconsider spending cuts, maybe? Yeah.
Keynes was right. He remains right. The fact that we failed to control spending and build a cushion of budget surplus when times are good, does not make cutting the way to escape a recession.