Stitched up on cuts
• For some weeks Hamish McRae of the London 'Independent' has been nudging readers towards the idea that cuts in national expenditure to reduce economic deficits may not harm the economy. On Sunday ('Tackling deficits could cripple growth') he wrote: "We know that high deficits of up to 10pc of GDP have not done much to boost the economy. So might the correction of those deficits not do as much damage to growth as many fear?"
It's a question, and a loose one at that, so he doesn't know the answer. Yet the implication is: let's try it anyway. If it turns out that a policy of maintaining cuts does harm growth and extends the depression then the losers will be those who are trying to get back into work and maintain household expenses -- mostly the poor but also a lot in the 'squeezed middle'.
Perhaps economists are not obliged to factor social considerations into their economic models, but aren't McRae's policy nudges rather irresponsible in the circumstances, even amounting to immoral economics?