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November 19, 2009


David Heigham

If a governemnt (or any large organisation) has not prepared in advance to raise (or lower) expenditure, a considerable part of any efforts it makes to change the volume of spending will have less effect than intended, and later effects than intended. That was the experience in all of our past fiscal stimuli and cuts rounds since 1945. However, it has never persuaded successive governements that it would be prudent to be prepared for being "blown off course."


Is the government spending too little? I know it sounds a silly question, but it’s the one raised by today’s public finance numbers.

It's a very silly question.


"This means the government is practising a form of anti-Keynesianism."

Like when it ran a deficit during the boom years?


The government's error was to believe that tax revenues buoyed by a housing/banking/consumer boom would last forever and to plan spending on that basis. The government is spending too much given current trends in revenue. So it must tax more and spend less.

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