When in a hole: Then and Now


My Right has taken issue with my post yesterday and missed my point. Regardless of whether you agree or disagree with the Government’s tax policies, if you are in a financial hole you

should stop digging.

But nowadays, it’s all the fashion to argue that you should dig and dig and dig. I mean, are there really consequences for deeper holes? Besides, if we stop paying the diggers, they’ll be unemployed and that would be bad.

And this is why the economy is failing and economic statistics continuously fall below Treasury projections: because the government is strangling the economy. Its public justification for doing so – fear of higher interest rates – is a myth; there are no “bond vigilantes” punishing governments who borrow when interest rates are low. But they persist in inflicting their zombie economics on us, because anything else would involve admitting they were wrong.

I myself find the old “when in a hole” prescription from No Right Turn to be the correct one. I also find some issues with the latter.

Problem no. 1: is Idiot seriously suggesting that credit downgrades (bought on by reckless spending) won’t increase the cost of debt? Outside of the credibility issues of his source  we are not the US. People buy our debt if it’s priced right for the risk.

Problem no. 2: the government isn’t strangling the economy through austerity.  Because it’s not doing austerity and the economy isn’t strangled. I remember the 90’s, when National did do austerity  The fact we have the incredibly generous (read: wasteful) Working for Families is proof enough that this government has stayed well away from the sort of cuts that would count as austerity.

Problem no. 3: the US has followed the route that Idiot likes. The result has been an increase in debt that dwarfs anything ever seen in the history of the world. But if this approach works, then why does the US have tent cities, and we don’t? Why has their economy done the exact opposite of what was predicted?

Fact is, we’re in good financial shape. That allows our government to maintain a good level of service while taking on a little debt. The US is not in good shape, but their president doesn’t seem to care.

I don’t care much for our current government but they are running a good compromise between savage cuts and outlandish spending, and it’s working admirably.

%d bloggers like this: