Re: High-speed rail back on agenda


On 30 Oct, 22:25, allan tracy <thunderbird57...@xxxxxxxxxxx> wrote:

I'm no economist but I don't believe there is anything in the theories
of Keynes that says it's OK to borrow your way out of a recession.

  Exactly that is the essence of Keynes recipes, according to what I
remember from my university studies on economics.

Quite. Keynes' emphasis was on spending, but if government borrowing
thus had to rise then so be it.

Keynes prescribed that during a recession that it was acceptable for
Government spending to rise above Government income on the assumption
that this was paid for from the boom years when spending was expected
to be below income.

He also prescribed deficit spending but was careful to define it in
terms of those things it was acceptable (things like railways
actually) and unacceptable (public sector spending departments) to
spend it on.

He warned that deficit spending spent in the wrong way could lead to a
spiral of decline.

I’ll leave you to decide which bits of our Government's handling of
the economy, over the last twelve years, have been in line with this
thinking.


Dare I suggest that if Mr Tracy wishes to give lectures on the virtues
of monetarism, he should at least be in possession of a basic outline
of what his enemy looks like. Being unaware of these fundamentals
doesn't do anything towards lending credibility to his supposedly
authoritative pronouncements.

I choose to hang my reputation on the comfort zone of the statement
that what Brown and Darling are engaged in is not Keynesian.

Do you wish to hang yours on it being otherwise?


No, but that's because that's not the issue I pulled you up on -
instead I was just challenging your statement where you said - and I
quote - "I don't believe there is anything in the theories of Keynes
that says it's OK to borrow your way out of a recession."

I would instead assert that he did say that was OK, so long as the
borrowing was financing the right kind of spending. Your statement
simply appeared to me to imply that you didn't really have a clue
about this, and I was thought it brought into question many of the
other statements about economic policy that you'd come out with in the
past - however, before you get livid with me, I can quite clearly see
from your far more nuanced post above that you do actually have a
clue, in fact you have what appears to be a fairly solid grounding in
Mr Keynes' theories. So I made a wrong judgement earlier, though given
the evidence at the time I don't think I was really out of line in
doing so.

Anyway, point being is that thankfully I can now remove my short-lived
spectacles of extreme scepticism when it comes reading your posts and
at least take the points you make seriously, even if I may not
necessarily agree with them (and no I don't think I easily fall into
the category of being either a pro or anti monetarist or Keynesian -
truth be told is that like a lot of people I probably hold a number of
rather conflicting views simultaneously).

I do absolutely take your point about the government not taking the
opportunity to pay back more of the national debt during the good
times, and I think it is one of the key points on which the Tories can
and will attack Brown. I suppose one counter argument that I can
imagine might be offered to that is that the public services had been
under-resourced under the Tory governments and thus needed more money
to renew themselves. Of course there are then a whole host of counter-
arguments to that, including challenging the underlying notion of that
point that all the Thatcher government did with regards to public
services was cut them (e.g. I think I heard lately that under every
Tory government NHS spending had gone up each year).


One word of warning those within the party (for example Hattersley on
last weeks Question Time) have been very free and easy with their use
of Keynesian but I have yet to hear the K word on the lips of a single
Government minister so far.


I didn't see the 'tub of lard' but yes, that's a good point - though I
might add it's not just coming from Labour politicians, it's coming
from commentators in the media, and I'd suggest that perhaps to an
extent these commentators and hacks don't really need to be prompted
by Labour politicians to label such ideas with the K word - instead
for them it's just an easy shorthand for something that sounds vaguely
similar, rather than something which is rather more nuanced and
complicated than that.

Do note earlier that when I used the term "purported neo-Keynesian
spending spree" I managed to insert two terms of qualification into
it, which isn't bad considering my post was a fairly light-hearted
spiel that I just bashed off quickly. Nonetheless I dare say one could
argue I'm as guilty as the lazy hacks in employing the K word (as you
so splendidly put it!), in which case I'd argue in my defence that I
was just reflecting the zeitgeist of the moment. Judge me as you
will...
.

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