What’s happened to those of us who believe public spending cuts aren’t the answer?

Politics seems to be on a collision course with economics at the moment. With the right-wing press screaming for cuts and the polls showing a majority of voters agreeing, the main parties are now positioning themselves as cutters.

This is not democracy at its best. The arguments against any major and urgent cuts programme are extremely strong but they are now being crowded out by a debate that is shaped by the desire to win the political rather than the economic battles ahead. Adam Lent, Touch Stone.

Adam goes on to explain why cuts are ineffective, unnecessary and dangerous – I urge you to read his full post – but here’s why he views cuts as dangerous.

Cuts are dangerous; a major programme of cuts risks forcing the UK back into recession and damaging our economic prospects for a generation. It doesn’t take much economic nous to recognise that sacking tens of thousands of public sector workers and reducing the amount of money the state spends in the wider economy will increase unemployment, increase bankruptcies and other financial difficulties for companies and will reduce demand and further constrain bank lending.

This is, of course, bad enough in itself. But there is a further threat. If the UK struggles on under recessionary conditions while other economies grow, we will not be able to seize global market share and we will not be able to attract new investment. The result will be a UK economy back in the doldrums for years just as it was in the 1970s and much of the 1980s – the “sick man of Europe”.

This is a much greater threat to our well-being and the future prosperity of our children and grandchildren than public debt. Asia is emerging from this recession far quicker than Europe and America. China is expected to post a stunning 8% growth soon despite the global crisis. If we take shallow economic decisions now, the UK will be left behind as the new economies rush past us in the innovation, productivity and investment stakes.

None of this is to say that we do not need to address the problems of the public finances. Having to service very large interest payments over the long term is clearly not the best use of taxpayers’ money. It reduces the state’s scope for action particularly when there is a need for public investment and if any major and unexpected spending need arises. But introducing cuts in the short-term for fear of some impending crisis on the money markets (as promoted by the Tories and others) is spurious and will leave us a weaker rather than stronger nation. Adam Lent, Touch Stone.

I’d also go one further as regarding cuts and that’s before we consider cuts we ought to consider how to make the wealthy pay their share – too many of them avoid paying almost any tax and it’s about time it stopped. In the long term we’re probably going to have to pay more tax, but let’s pay that against the background of a vibrant growing economy and not the opposite.

Hat Tip: Duncan’s Economic Blog.