The economic stimulus, which under the previous Labour government had stayed and reversed the recession, was withdrawn. And the policy course that Republicans insist is the single route to prosperity in the U.S. — massive public spending cuts — was afforded a proof of theory across the Atlantic. Conservatives there enacted exactly what Republicans propose here.
How'd that work for y'all? Erm, well, uh, under the Liberal Democrats, growth had been 1.1% in their last quarter. The Conservatives
promptly set about chopping budgets and government at a fragile point in the recovery. Growth fell to .7 percent — and then in the last quarter of 2010, the economy went negative, shrinking by .5 percent.
and
Britain now faces the threat of stagflation as prices rise along with unemployment — which Labour's stimulus kept at or below 8 percent even in the depths of the downturn.
So, the answer is "very, very poorly." Not only did growth fall and unemployment increase, but inflation went up!
Yeah, I remember "stagflation," that was a 1970s problem that Paul Volcker solved by raising interest rates so high they choked off growth for awhile. It was a high price to pay, but it worked and essentially, inflation hasn't been a problem since. For Republicans to try the "Volcker cure" now would be a complete waste as the "cure" certainly wouldn't have any psotitive effect on inflation, nor is it clear what other positive effects might be achieved.
No comments:
Post a Comment