Faced with the financial crisis and a global economic recession, governments have rediscovered the power of public finance. But now there is a conservative backlash demanding that the deficits used to create the stimulus must be cut back by cutting public spending on a grand scale. This report aims to demonstrate that these arguments and policies are wrong, not just in the short term but in the long term. For the past 150 years public spending has been driving economic growth and development, and rising steadily in all countries of the world. Far from being a burden on economies, it is an essential driving force, providing universal services for human development – healthcare, education, social security – and also the essential infrastructure making other economic activity possible, such as water, electricity, roads.
Friday, October 1, 2010