Wednesday, 20 March 2013
The Labour Party will “lead the fiscal policy debate”? I doubt it.
Bill Mitchell (Australian economics Prof.) has pointed out ad nausiam that the political left worldwide cannot do much more than ape the economic illiteracy of the political right.
I was therefor very sceptical on first seeing an article in the FT this morning by Nick Pearce of the IPPR (a left of centre think tank) entitled “Labour’s chance to lead the fiscal policy debate”.
The scepticism was entirely justified. The article advocates that Labour should get the Office of Budgetary Responsibility to judge whether Labour’s tax and spending plans would meet some sort of pre-determined national debt reduction target.
Pre-determined debt reduction targets are a nonsense. As to the reasons why, see here.
Or put another way, if Labour wants to “lead the fiscal policy debate” it needs to get to grips with Modern Monetary Theory.