Appeasing the crazy

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.

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Michael Taft     @notesonthefront

Michael Taft is an economic analyst and trade unionist. He is author of the Notes of the Front blog and a member of the TASC Economists’ Network.