September 11: Alternative to austerity doesn’t add up in real world
From: Gordon Lawrence, Stumperlowe View, Sheffield.
JOHN Cole, in his interesting letter (The Yorkshire Post, September 1), is rather scathing of those, especially Conservatives, who advocate a tight budgetary policy in order to reduce the deficit and £1.4 trillion National Debt. In fact. he concludes by calling them economically illiterate.
Supporting his assertions, he cites that the low interest regime (generated by quantitative easing of the money supply) makes the rate of return on public works highly advantageous and, therefore, extremely profitable, for the Government to further its borrowings in order to implement new infrastructure projects. He emphasises the benefits of higher employment, income and tax receipts emanating from this paragon of leftist economic policies.
It sounds all so convincing and simple. Indeed, simplistic would be more of an appropriate term. The assumption is, that like the additional borrowing, the pay back on infrastructure will be immediate or short term. Unfortunately, for Mr Cole, public works often take years to construct and the return on investment is loaded with uncertainty and long on fruition. Meanwhile, that £50bn per annum we owe, has to be paid.
Ah! Print more money a la Jeremy Corbyn, but the foreigners who buy much of the debt are not impressed as they see their returns devalued sterling drop like a spent rocket. They sell, This pushes up UK interest rates in order to attract replacement funding and GDP growth contracts. Your house of cards is rapidly collapsing.
Now comes the retrenchment as the fiscal authorities batten down the hatches, stall the infrastructure, and tighten budgetary and monetary policies in an act of artificial respiration on the economy.
Left-wing idealism will always ignore, like great war commanders minimising the strength of enemy positions, the complexity and interrelationships of a modern economy and hallucinate on the joys of government spending.
No matter how important infrastructure investment is, it should be integrated into the fiscal aggregate in order to manage a workable debt and healthy economy.
From: David Treacher, Hull.
WITH cuts in council funding, the number of buses is being cut. We must remember that there is a older population who must get out to shop . The Government should have a duty to provide buses and make funds available as a social factor.