Green Party saw the double dip recession coming

The Green Party was the only one of the main political parties to question the basis of the policy to implement cuts Economic Voice said today. The Green Party's  economic adviser Dr Molly Scott Cato argued that cuts would be counter productive.

Economic Voice writes:

Molly argues that politicians are looking at the ‘economy’ in the wrong way. They see council or government spending as an ‘expense’ that must be minimised. For many politicians who have run businesses cutting back on these expenses would seem to be the logical and understandable thing to do as it is exactly what they would do for their own business.

But the problem, says Molly, is that when making cuts you should understand the ‘boundaries’ of your business. For a small business this is relatively easy to define and understand. But when dealing with local government for example, your business boundary encompasses all the businesses and household etc within the local economy.

Any money that is spent within the local economy should therefore be looked at as an income, rather than as an expense. What politicians should be doing is minimising leakage from the local economy, not strangling spending within it. “To cut your own budgets to the bone, or not to spend money budgeted in this period, is like cutting your own income rather than cutting your own outgoings,” she says.

By cutting back on local and central government spending within the ‘boundaries’ we are adversely affecting the circulation of money she says. This then leads to shrinkage, a lower tax take and a growing deficit (sound familiar?)

Full article HERE