If we're going to spend, then let's invest in Britain's futureAndrew Rawnsley: If we're going to spend, then let's invest in Britain's future | Comment is free | The Observer
Rather than encourage people to squitter money on imports, the government should build us an infrastructure fit for this century.
The Observer, Sunday 14 December 2008
This article by Andrew Rawnsley in the Observer today argues for classic Keynesian investment spending, on the grounds that it will benefit the economy in the long term as well as the short term.
A popular way to look at this Keynesian solution is to see an investment gap in a downturn where the private sector is not investing. Government, it is argued, should step in and fill the gap. One issue this raises is what happens in the next period? The investment has raised the productive capacity of the economy - which could mean there is a larger gap! But dedicated Keynesians would probably argue this is in fact not actually a very dynamic way of interpreting the General Theory.
I believe there should be a focus on investment spend - as long as it helps keep unemployment down. The key focus for policy should be employment.