The real choices

Have you ever watched two people argue for a while, trying to make up your mind who you thought was right, only to realise both were arguing around the real issues? That is how I feel, having listened to the Government and Opposition on how to deal with the current crisis. Gordon Brown has made the case for an expansionary fiscal policy – pushing money into the economy -– and paying for it later through taxes. David Cameron, on the other hand, has argued for a more long-term approach, demanding that no stimulus come back to haunt taxpayers.

But both have, in a sense, become Keynesians, believing that some kind of stimulus is required to jump-start the economy or, at the very least, preventing it from tanking further. So I have recently been racking my decidedly non-economic brain with the choices presented by the Government and the Opposition. To push for stimulus, damn the long-term consequences and the risk that borrowing might make it harder for the Bank of England to cut interest rates; or to think long-term, with the risk that any fiscal stimulus -– by the nature of it being costed –- will not have any effect.