2. The best way to shrink a deficit is to have people in work paying taxes.
I found this gem in an article by Jonathan Freedland in this morning's Grauniad.
It sounds plausible until you think about it. If Freedland is right and HMG spends a million on wages, the taxes it recovers and the benefits it saves will come to more than a million. So the Government should be increasing public spending rather than cutting it.
According to Freedland's logic, the more people the Government employs, the less money it will need to spend.
If only Governments the world over could grasp this simple principle, no economy need fall into recession ever again, and no Government would ever have to run a deficit.
A poster on CiF destroyed Freedland's position more pithily than I could. He wrote, "Not if their salaries are being paid from money the government has borrowed".
