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Commenting on the Chancellor George Osborne’s Mansion House speech, Director of the Adam Smith Institute Dr Eamonn Butler said:
The rest of us have to live within our means, so why shouldn’t government? Politicians used to have to raise taxes to pay for their expensive schemes. Then they used the inflation tax. Now they have discovered that they can pass their bills on to the next generation, by borrowing. That is not just bad economics. It’s immoral.
A balanced budget rule is the only way to keep politicians’ spending remotely under control. We’ve seen in recent years that politicians will use any opportunity to spend more, and even ‘austerity’ rarely ends up cutting spending in real terms.
Sound monetary policy can stop the economy from falling into depression. Government spending won’t protect us from economic catastrophe, but it will drive up our debt bills and make us all poorer in the long run. Osborne is right to push for surpluses when the economy is healthy – we should all make hay while the sun shines.
Notes to Editors:
The Adam Smith Institute is a free market, libertarian think tank based in London. It advocates classically liberal public policies to create a richer, freer world.