Sunday, 28 June 2009

Cuts - an historical perspective

Suddenly, everyone thinks they're a good thing, it seems - even if our dear* PM can't bring himself to admit that spending less next year that you did this year is a cut**.

But let us remember this quote:

"Though, it is true, there is always talk of cutting public expenditure, it has remained almost entirely talk. Cutting public expenditure has come to mean juggling with figures ... But whereas cuts in public expenditure rarely eventuate, squeezes on the private sector are "for real". The interest rate is increased, bank lending is contracted, taxes are raised, other old-fashioned deflationary measures are used. The private sector is punished for the state sector's profligacy."
So said Keith Joseph, in his Stockton lecture in 1976. The means are different - we have deflation and low interest rates (for now), but the effect is the same. That last sentence rings as true now as it did 33 years ago.

*I use the word in its financial sense, not its affectionate sense.

**With arithmetic abilities like that, he could go far. If only he would....!


  1. The mood has changed. The Tories can easily win an election promising severe cuts in public spending. If they go into the election promising a 20% reduction in overall spending with a few notable departments protected (I would have police and defence protected) they can win and have a mandate for a serious emergency budget on day one.

    When the Labour party start kicking and screaming let the Tories point out that the Canadians managed a 20% cut and their economy has since been one of the strongest in the world. The Canadians are sitting watching us saying "credit crunch, what credit crunch?".

  2. I agree completely.

    Funnily enough, that was the stance they took in 1979... cuts will be needed all round, except for health, police and defence which we will protect.