A phrase coined by John Redwood which I shall be using more often to describe the deficit loonies, and especially Ed Balls, who has expunged all my recent tweets mentioning him (I spent yesterday during a computer crash of our co's systems trolling his supporters on twitter).
Anyway, Keynes believed that public spending could stimulate an economy, but only if a surplus was run during the boom. Of course that describes neither the USA nor the UK during this recession, so any 'stimulus' from massive deficits is offset by greater costs of borrowing, inflation, and the hoarding of capital against future tax rises. The deficit loonies should not be called 'Keynsians'; to do so is to damage the legacy of a great economist. The money quote from John Redwood:
In the UK Mr Ed Balls has warned that there could be an economic hurricane hitting as a result of the Coalition government’s “cuts” in public spending. In the US Ben Bernanke has pursued low interest rates and quantitative easing as the President has run very large budget deficits. Despite this, the word is that the growth reported for the second quarter of 2010 is about to be revised down substantially.
Ben and Ed have some explaining to do. Why did Germany grow the fastest of the major western economies in the second quarter, when they were running a relatively low budget deficit and announced spending cuts? Why did the Uk record reasonable growth in the second quarter when Labour had already legislated to halve the budget deficit,imposed a range of tax increases and spending cuts to capital spending and the Opposition made clear its intention to press on more rapidly with deficit reduction? Why didn’t the combination of QE and a large deficit with no immediate plan to cut it boost the US economy to the top of the pile?
Ed Balls is an idiot, and a disgrace to parliament. He called deficit spending 'investment' during the boom, and 'stimulus' during the bust when it was what it was: reckless, spendthrift lunacy for short-term party advantage.
If socialists could reconcile themselves with markets, as have the 'left-wing' countries of Scandinavia, and with sound money, without which no German would get elected, then perhaps their redistribution policies might work. But simply shouting Banzai!-like for ever more state control, top down management and ever more deficit spending means that Labour will always, always ruin the country.
Ed Balls is by far the worst of the leadership contenders. The Millibrothers are plausible, if slightly risible. Millibrother Major will probably play best in the county, Minor will better unite the Labour tribe. Balls however represents the worst of the Brown regime: top-down bullying, authoritarian, bureaucratic socialism; unleavend by humanity and compassion and motivated only by Hatred of the Tories. Labour should be ashamed that they're even considering him as an MP, let alone leader.
Ed Balls is Grima Wormtongue to Gordon Brown. If Labour is to survive as a political force, then please let it be under someone less hateful and blinkered than him.