I could be wrong

It’s one thing to invest money in public services, it’s another thing entirely to invest it well. Unfortunately, Brown has seen fit to piss up the wall an innordinate amount of his kitty…

Couldn’t find anything suggesting Brown should have been paying down the debt, but found this gem: Tighter credit conditions are just what the markets need Aug 2007

Re. 2 – if the government had not increased public spending so much and generated a surplus, would The Economist have said
a) very wise, now put all that money in the bank for a rainy day, or
b) why does the government keep taxing us at an unnecessarily high rate? give that surplus back to the people who earned it!

The UK has a public debt, right? “Fattening public finances” amounts to paying down that debt. Which Brown, presumably, didn’t do when he had the opportunity.

This, btw, could logically have been done in the form of raising taxes as well as cutting public expeniture.

It’s a standard Keynesian view that budgets should not be balanced every year but over the business cycle; you run deficits during recessions and surpluses during expansions. As far as I can see the point made in the quote is that Brown failed to do the latter.

You can argue, as you do, that Brown’s fiscal policies during the expansion wasn’t imprudent because they went towards investing.

The Economist people, obviously, argue many things which are not always consistent, but they’re no stranger to the idea that public investment is different from current expenditure. Indeed, I have seen them argue that there ought to be a public sector balance sheet keeping accounts of public sector assets (like buildings, infrastructure etc.) as well as liabilities.

One advantage would be better management of these assets, i.e. an explicit accounting of depreciation of public capital stock which would — ideally — induce policy makers to set aside means for maintenance on a current basis.

This is a different argument from the “balance the budget over the business cycle” argument, but it pertains to how a budget deficit might be defined.

The UK has a public debt, right? “Fattening public finances” amounts to paying down that debt. Which Brown, presumably, didn’t do when he had the opportunity.

When Brown became chancellor the UK national debt was around 43% of GDP, he got it down to just around 31% of GDP by 2002 and it has risen back about halfway since then (to around 37%).

source

Sssh, Stuart – don’t complicate matters with facts.

We *know* from the media [*] that ZaNu Liebour has destroyed the public finances; mentioning the fact that they’re actually in pretty good shape is simply beyond the pale.

(the same rules also apply to crime; the wider economy; education; and healthcare)

[*] yes, the left-biased media [fx: dies laughing]

the sentence I drew attention to claims that Brown should have run a substantial budget surplus (which is not a balanced budget).

Now this is just silly. Nobody thinks that budgets should balance in a single year. Gordon Brown’s own “golden rule” is to balance the budget over the cycle[1]. This means running surpluses in good years to pay for deficits in bad years. The comment you’ve excerpted from is a jab at Brown for bending and breaking his own rules, overspending in good years so that there now is little room left over to stimulate the economy when it needs it in bad years. I’m sorry, but you just haven’t found the inconsistency that you thought you had.

And, on taxes, here’s from the Economist in January:

If the fiscal rules mean anything, Mr Darling should swallow the bitter pill prescribed by the IFS and announce tax rises worth £8 billion a year in his first budget, on March 12th, to take effect in 2009-10.

Hardly a recommendation from the Economist on higher taxes, but it does nothing to support your “inconsistent Economist” line.

[1] Specifically, to borrow only to invest, over the course of the economic cycle. “Invest” in the true sense, that is, not as in “all public spending is investment”.

Did you miss the debt-funded tax cut they introduced the other month?

Which of course was all part of a long-planned strategy to loosen fiscal policy when times got rough :-)

“It’s a standard Keynesian view that budgets should not be balanced every year but over the business cycle; you run deficits during recessions and surpluses during expansions. As far as I can see the point made in the quote is that Brown failed to do the latter.”

Who ever has? Keynsian theory is like Marxism: fine in theory, just doesn’t work in practice. There are *never* surpluses, just the political desire to have an excuse to spend more money in the bad times.

“Keynsian theory is like Marxism: fine in theory, just doesn’t work in practice.”

That’s just rubbish. The claimed focus of Keynes’s General Theory was this:

“In particular, it is an outstanding characteristic of the economic system in which we live that, whilst it is subject to severe fluctuations in respect of output and employment, it is not violently unstable. Indeed it seems capable of remaining in a chronic condition of sub-normal activity for a considerable period without any marked tendency either towards recovery or towards complete collapse.” [p.249]
http://ebooks.adelaide.edu.au/k/keynes/john_maynard/k44g/chapter18.html

The stagnation of Japan’s economy after 1992 and the perennial price deflation there shows that the contingency Keynes was focused on hasn’t gone away. His attempt at diagnosing the causes of such situations may or may not have been successful but it stimulated a debate that has continued since.