LETTER: Money down the drain

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OF course, Frank Neal (Letters, December 21st) is completely correct.

Now that banks are more or less part of the public sector, quantitative easing should be considered as “outgoings” on the fiscal deficit balance sheet. That’s not to say that it’s any more a waste of resources than other fiscal spending.

Prof. Robert Lampman in his 1960s analysis “Social Welfare Spending” looked at the trade-off between US redistribution programmes and economic growth. Lampman found there was a clear correlation between welfare spending and economic growth so much so that later economists, such as Prof. W. Lee Hansen, chose to take spending on education out of the equation as this was clearly “investment” spending rather than “welfare”. A similar case is currently being made by President Obama to take health care spending as “investment”.

The Lib-Dem/Tory Coalition is critical of spending on welfare for unemployed and on their fiscal balance sheet classes this as money “down the drain”.

However, this should surely be looked on as a loan and “investment” too. After all, not only does this social security prevent crime, but also once the welfare to work has found someone a job, they will repay their debt to society by way of their income tax. This money also boosts consumer demand that drives the consumer economy.

The Tories’ unspoken agenda is that they want an exploitable British workforce that will help them to make profits for their upper class chums. When they see poor beggars rummaging through landfill from their hotel balconies in third world countries, they must be thinking “why not in Britain?”.

DAVID FOAT

Varley Street, Colne