The Coalition’s False Economy

At  the recent launch of a Labour Society for Sheffield Hallam University there was much discussion on particular points. When discussing the experiences and conversations on the door step with the ordinary public, one area kept coming up as a place where the public is being worryingly misled by this tory-led Government. This area is obviously the economy and in particular the deficit.

Now I am not an economist by any stretch of the imagine but from what I have learned from the last few years of interest is that an recovered economy does not result from ideological cuts. There is an incredibly simple example with which we may show that our point is much more logical. Please stay with the analogies I use, I apologies if I decide to be confusing.

If a Government decides on massive cuts to public services, it is very hard to cut the budget without cutting those employed. Taking the example of a council such as Sheffield (it could be anywhere in the country), this council, being forced to cut say 1000 jobs in order to cut the budget to the extent demanded. Each person of this 1000 will then be forced to spend less while looking for another job. The crucial part of this is that these people will then be spending much less money in the local economy. This would then lead to less money in the retail sector of this area. Then of course there is the issue of Job-seekers’ allowance having to be paid to each of this 1000, taking more money out of the Government coffers.

What we must both understand and put across to the sensible person on the street is that there is an alternative. what has been shown to us by the US is the not entirely new but very practical idea of a Fiscal Stimulus. Now take our original example of Sheffield City council. If, in partnership with the government the council decides to lets say spend some money in order to make some by, lets say, building a school which is vitally needed. The injection of public money to do this would mean that in building the school you need builders. This would mean at least one company has a solid contract in a time when many private projects are folding, and of course these builders would spend there pay in Britain meaning and Increase in retail moneys.Employment would also  be boosted in there area, needing, teachers, teaching assistants, administrative staff, cooks, cleaners. Another very important part of this is that the builders, architects, and the shops where they spend their money should all pay tax, so hey money back to the Government as well, this would of course mean that we could start to pay of the deficit.

By simply laying out the case for a coherent growth strategy for our economy, leading to the deficit being naturally paid off without the need for extreme cuts. This is argument that Labour and the sensible left must win if we are ever to show people we are ready to lead. I would thoroughly recommend the False Economy Website

Incidentally, we had a MUCH larger deficit after the second world war and Labour did not cut like crazy, they founded the NHS…



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