torsdag 24 januari 2008

How to fight recession

Maidstone West, originally uploaded by Boxley.

Memo to George Bush

You do not fight recessions by giving away tax and running a budget deficit in an attempt to try and sustain consumer spending. In that direction lies inflation and a growing balance of payments deficit.

If you want to run a budget deficit, and it should only be a temporary thing, it should be spent on infrastructure so that there is something to show at the end of it which adds to the nation's stock of wealth.

The railway here was electrified in the 1930s as part of a series of measures designed to alleviate mass unemployment. This was a permanent addition to Britain's wealth, and a tangible one as it resulted in enhanced land values.

The same principle was applied by your predecessor F D Roosevelt, in the policy known as the New Deal.

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