Not abolishing boom and bust

The greatest economic mind of the last century ( ..ya Maynard.. ) argued many things, but he is best known for his insight that the capitalist economy is cyclically unstable. Government needs to stabilise economic activity by monetary and fiscal policy. To do that, it should balance the budget over the course of the business cycle. So it should build up surpluses when the economy is expanding in order to run deficits - beyond those that would normally arise from the contraction in output - and boost demand in a recession.

This obviously is not a description of what Gordon Brown did as Chancellor after 2002, because he disastrously believed he had abolished the business cycle. The share of public spending in national income rose from just under 40 per cent when new Labour took office to 48 per cent when the credit crunch arrived. That's an extraordinary figure for an economy that was growing briskly throughout that time.

Taken from Newmania in Lewes

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