Will nobody think of the children? Andrew Fisher explores a hollow argument for more cuts
Not rapidly reducing the deficit through cuts would be saddling future generations with debt - that's according to Mark Littlewood (Director General of the Institute of Economic Affairs - IEA) on last night's Any Questions?
The IEA advocates more rapid and sharper cuts to public services than both Osborne has already implemented and what he proposes to implement by 2020. Littlewood also calls for corporation tax to be abolished (which would necessitate the further cuts they want).
This is a position that believes the best thing for our children and future generations is to leave them minimal public services, no safety net, and a country in which they are more likely to live in poverty. But better poverty, and the lack of opportunity and brutalisation that brings, than some debt?
Many adults reading this will have racked up massive debts: mortgages. Do they burden their children and future generations? No, not a bit. In fact they leave them a house, a massively valuable asset. Investing in our public services works similarly - the public assets we have today were built up in a similar way.
Governments can borrow very cheaply at the moment, often at under 2%, while individuals face rates of 6% or 7% on their borrowing. Why on earth would we advocate high debts burdens on individuals.
As Richard Murphy pointed out on his blog yesterday, a government surplus (committed to by Osborne and Balls) means a debt for someone else - a fact confirmed by the OBR, which projects personal debt to rise to levels higher than before the crash.
And that's exactly what would happen under the IEA's vision - young people saddled with ever higher student debts (since they'd undoubtedly go up), ever higher mortgages (as they'll have slashed social housing budgets and not allowed councils to build) and more consumer debt (as wages stagnate).
So in the IEA's vision young people would face a lifetime of massive and unsustainable (for most) debt, and none of the public services that this country built when it was less prosperous than it is today.
- Listen to Any Questions? with Mark Littlewood, Eric Pickles, Rachel Reeves, and Mark Serwotka
- Andrew Fisher is the author of The Failed Experiment ... and how to build an economy that works