Cuts. Or the C-word of politics. For some unbeknown reason, the mention of the word sends shivers down the media and the publics backs.But is the reason due to scaremongering and an emphasis on now and not tomorrow.

Labour have lived up to their reputation as staunch Keynsianists. Repeatedly spurting out the dogma of continual investment causes economic grow especially in the public sector. The idea is as follows:

1. Invest more money, especially in the public sector, during a slump or depression
2. This causes higher employment
3. Therefore more people have a higher proportion of their income as expendable
4. People therefore will spend this extra money they are now receiving
5. This causes a spiral effect leading to economic growth, with higher employment than before and more sustainable economic growth.

Now lets be honest, this has its benefits after all employment in a slump is great and so is sustainable economic growth. But (and this is a big but) it has gaping flaws. For example the last time we put this into practice was during WWII. We loaned money due to liquidity problems concerning the UK treasury, we finished paying this loan back to the US in 2006, that’s roughly 63 years! Also lets not forget the dire state we are currently in, the euro is collapsing around us ( I won’t be surprised if the euro falls apart before 10 years pass) and we have a deficit larger than Greece. Moreover thanks to “Our Great Leader” we have no gold reserves, and the IMF is warning us that our status as AAA maybe downgraded to AA if we don’t cut back. This is what happens if we do a Keynes right now:

1. We loan even more money
2. We then have to pay a higher percentage of money brought in on paying off these loans.
3. We will eventually become more risky to invest in due to the high proportion of income relying on loans
4. Our rating is downgraded from a AAA rating to a AA rating
5. Interest rates on our loans saw
6. We have to make gigantic cuts to fund the repayments and the electorate n is neglected just to stay afloat
7. Due to no money in circulation we hit a slump at least on parallel of the 1930’s

(By The Way, just in case you don’t understand that is the worst possible result)

So the opposite, or maybe more logical thing to do would be a more Friedman-esque approach. This means, unfortunately we cut. By doing this we survive. See below:

1. The government cut, and lower taxes
2. Due to the Laffer curve, government income increases naturally
3. The Government invests the money made by cuts and lowering of taxes to pay off debts and reduce the deficit
4. This then gives the private sector a boost as the markets gain confidence increasing liquidity and the availability of loans
5. This allows a boom, leading out of recession and back to a level of prosperity previously seen pre-crash in a sustainable fashion.

Therefore we see that this double dip or feared W recession is only available under a keynsianist way of management. Yes, cuts are harsh and preferably avoidable, but lets look at history. Thatcher did it,and yes it hurt, but 1997 we had the largest growth ever. It hurts but not as much us the opposite option, its like losing a gangrene infested foot so you don’t loose your life. 

In conclusion, we all don’t want cuts, but cutting the public sector is not, as some would make you believe, taking money out of the economy. Moreover, in the end its better we take the brunt of it now, then postpone it for my generation or generations after me. So, stop moaning, grit your teeth and man up! We won’t die if we cut, we just take the hard choice now to have easy choices later.