1138 Hrs GMT London Sunday 26 October 2008: KHOODEELAAR! TOLD YOU SO! Especially when we pointed out in the past weeks, that the over-peddled ‘economics expert’ on the DAILY MAIL group, Alex Brummer, was not upto the task . We said that in view of Brummer’s quite unjustified and baseless promotion of the Big business lobby line that public money should be wasted in bogus projects as a way of creaking fictitious stimulus to the economy……..We can see today that the DAILY MAIL group web site is reporting on the same group of economists which we have been reporting on all this m morning…. Here is how the DailY mail Group web site covers it. [To be continued]
Darling’s plan to use taxpayers’ money to beat off recession is ‘misguided’, say senior economists
By DAILY MAIL REPORTER
Last updated at 9:34 AM on 26th October 2008
Chancellor Alistair Darling in Downing Street
A group of senior economists have branded the Government’s plan to spend its way out of a looming recession a “misguided and discredited” approach that could make things worse.
Chancellor Alistair Darling revealed a week ago that he wanted to bring forward spending on major state-funded projects in order to kick-start recovery.
The proposal was subsequently defended by Prime Minister Gordon Brown, despite a massive rise in public sector debt to record levels.
But in a letter to a Sunday newspaper 16 economists blasted the policy.
The signatories – including Lloyds TSB corporate markets chief economist Trevor Williams and Peter Spencer, chief economist to the Ernst & Young ITEM Club – wrote: “We would like to dissent from the attempt to use a public works programme to spend the country’s way out of recession.
“It is misguided for the Government to believe that it knows how much specific sectors of the economy need to shrink and which will shrink “too rapidly” in a recession.
“Thus the Government cannot know how to use an expansion in expenditure that would not risk seriously mis-allocating resources.”
They went on: “Furthermore, public expenditure has already risen very rapidly in recent years, and a further large rise would take the role of the state in many parts of the economy to such a dominant position that it would stunt the private sector’s recovery once recession is past.
“Occasional slowdowns are natural and necessary features of a market economy. Insofar as they are to be managed at all, the best tools are monetary and not fiscal ones.
“It is inevitable that government expenditure and debt naturally rise in a recession but planned rises in government spending are misguided and discredited as a tool of economic management.
“If this recession has features that demand more active fiscal policy, which is highly disputable, taxes should be cut. This would allow the market to determine which parts of the economy shrink and which flourish to replace them.”
Official figures showed net borrowing hitting a record £37.6 billion between April and September – higher than the whole of the previous year.
The sharp increase left Mr Darling’s forecasts of £43 billion of borrowing this year in tatters and led to warnings that debt could balloon to £120 billion in three years.
The Prime Minister, however, insists that public finances are in good shape and the Government can afford to borrow to finance a major programme of public works.
Last week, Mr Darling singled out housing, energy and small businesses as sectors where spending could be brought forward as well as continued spending on major defence projects, the London Crossrail project and the 2012 Olympics in the capital.
