On his blog, Daniel Hannan preempted the pre-Budget report with a recipe for economic disaster. He urges the UK to adopt Ireland's catastrophic policy.
The gift that keeps on giving, is at it again. On his Telegraph blog, Daniel Hannan preempted the pre-Budget report with a recipe for economic disaster. Repeating his post in full he says:
“If you were overdrawn and in negative equity, with debts on a dozen credit cards and unpaid bills littering the table, what would you do? Would you try to spend less, or would you set out to spend more?
“Ireland is trying to spend less, with cuts across the board. Everyone will share the pain, from cabinet ministers to benefits claimants. The Taoiseach, who is expected to take a 20 per cent salary reduction, reckons that the new budget will reduce Ireland’s deficit by 4 billion euros.
“The United Kingdom, by contrast, wants to spend more. Alistair Darling will continue to expand the budget, and will raise taxes accordingly.
“I have been disobliging about Biffo Cowen in the past, but the fellow is at least trying to do the right thing, acting in the national interest, even if that means dropping in the polls. Labour, by contrast, would rather bankrupt Britain than alienate its remaining supporters in the public sector. Who are the patriots here? Who the rogues?”
The facts:
– Irish unemployment is 12.5 per cent
– the country is experiencing deflation at -6.6 per cent deflation
– GDP has fallen 7.4 per cent over the past year (and GNP by 11.6 per cent).
– And despite the cuts they have still had their credit rating downgraded.
Don’t forget the Chancellor’s line that, “The choices are between going for growth or putting the recovery at risk.” Well said, Darling.
27 Responses to “Is Daniel Hannan insane?”
The Echo Chamber on the Righ | Think Politics Blog
[…] LeftFootForward has the goods: […]
Helena
Came across this Blog within the last hour and have read through some of your content.
It feels like I’ve just found a convenient pub in a downpour, and the guy behind the bar is annoying me with his knowledgable but a-la-carte political banter.
And as I get up to leave I overhear the counter-argements of the clientele.
And I order another.
Nice place. :0)
Josh
Cutting spending in the middle of a recession will not deepen it.
In 1920, America was in a depression. President Warren Harding lowered taxes for all income levels. He cut spending by 50% and reduced the national debt by a 1/3. The Federal Reserve did not pursue an active monetary policy.
The economist Kenneth E. Weiher said of the Federal Reserve, “despite the severity of the contraction, the Fed did not move to use its powers to turn the money supply around and fight the contraction.”
It was the closest an economy has ever approached a laissez faire approach to a recession or depression and the results were astounding. The unemployment rate in 1920 stood at 12.7%. However, two years later, it was 2.4%. One can argue that the tax cuts provided fiscal stimulus, but Keynesians believe in spending increases rather than tax reductions because they believe the multiplier is greater, and tax cuts may lead to an increased savings ratio, which Keynes was apoplectic about. This led to the roaring twenties. Some historians argue that the tax cuts of Harding favoured the rich, thus widening inequality, which led to the depression. If wealth inequality caused economic slumps then we would have recessions in perpetuity.
In short, fiscal stimulus is useless.
Ireland: a glimpse into the UK’s future? | ToUChstone blog: A public policy blog from the TUC
[…] hope it’s not a glimpse into the UK’s future particularly since the Irish approach is not actually working. Related posts (automatically generated):A glimpse of a fairer tax systemPublic spending: can this […]
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[…] Hannan on his Telegraph blog (via Left Foot Forward) “If you were overdrawn and in negative equity, with debts on a dozen credit cards and unpaid […]