Michael Taft: Joseph Stiglitz, writing in the Sunday Tribune, warns against trying to reason with ‘markets’:
‘Appeasing the markets is like trying to reason with a crazy man: after Spain announced its cutbacks, the ratings agencies downgraded its debt because of lower growth prospects as a result of those cuts! You can't win with markets. Better to follow the right policy: supporting growth through higher spending on public investment and infrastructure, which will help the economy grow faster in the long term.’
David McWilliams, in another infuriatingly common-sensical column, writes in similar vein:
‘If the government increases spending to invest in productive assets, like education or infrastructure, it means that, on one side of the balance sheet is debt, but on the other side is an asset, the productive investment which increases the long run growth of the country. This is beneficial spending, because it increases productivity and thus offers a return on investment.’
Have a read and then forward them on to the relevant Minister.
2 comments:
You are missing a ':' in the Joseph Stiglitz link Michael.
Michael,
You may find this "Letter from 100 Italian Economists" (Translated) interesting. http://rwer.wordpress.com/2010/06/18/letter-from-100-italian-economists/#more-1512
They state that "The extremely serious global economic crisis, and the related crisis in the euro zone, will not be solved either by wages, pensions, social services, education, research, culture and essential public services, or by directly or indirectly increasing taxes on employment and on the weaker social classes.In fact, there is the grave danger that the introduction in Italy and Europe of so-called “austerity” measures will further accentuate the features of the crisis, making insolvency, business failure and unemployment grow faster, and in all likelihood forcing some member states at some point to withdraw from European monetary union."
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