It is not unusual for the BBC to misrepresent things but Monday’s headline – “David Cameron vows to boost infrastructure projects” – was more misleading than most. His article on Monday was not about government investment but rather applauding the private sector – and so it should be.
The heady times of government ploughing money into public services and infrastructure are, thankfully, largely behind us (with the notable exceptions of the Olympics and High Speed 2 – both projects destined to end in tears). Earlier this year leading economist, Harvard Professor Robert Barro, delivered the Institute of Economic Affairs’ Annual Hayek Memorial Lecture and pointed out that looking across various countries at different times, the one thing we can be sure of is that fiscal stimulus packages do not work in the long-term, and worse, can have negative effects. The myth that governments can spend their way out of recession is fantastical and dangerous.
Although Labour does not seem to have grasped this lesson, at least the Conservatives have.
On Monday, Cameron suggested three things – that the government should confront its debts, strengthen competitiveness and unlock global trade. It must be said that in all three of these areas the government is making progress, but the score card surely cannot be higher than a C+ on any of them.
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