And still the Chancellor borrows

And still the Chancellor borrows

We are happy to believe in markets in the good times. When times are bad, we run to the state, says Kwasi Kwarteng

We’re all Keynesians now: bank nationalisation; huge public borrowing; Alistair Darling boasts of spending our way out of the coming recession. Even Boris Johnson has backed 1930s-style public works to boost the economy.

Herein lies madness.

It's all very well spending money you have. At the heart of Keynes's ideas is the notion that when times are good, the government builds up a surplus. This can then be spent in bad times to stimulate the economy. It's not that different from the story about Joseph and his dream of the seven fat cows and the seven lean ones. The seven fat years were followed by seven lean ones. The idea is that you save in the fat years to spend in the lean ones. Some of us learned this at Sunday school.

In the first half of this year we reached the highest level of public borrowing since 1946 (when we at least had the excuse of the aftermath of war). And the Chancellor wants to make the deficit even larger, by borrowing.....

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