Keynes theory says that deficit spending by governments is crucial to avoiding a long recession but England, his birthplace, is ignoring his teachings.
George Osborne, chancellor of the Exchequer, said Wednesday that the U.K. must raise its retirement age one year, from 65 to 66, and $130 billion in spending cuts. This will eliminate nearly 300,000 jobs and will affect the poor, the military, the old, and middle class the hardest. This is the proposed solution to the country's massive and growing government deficit.
Ireland is also planning to start another round of spending cuts and tax increases, despite their alarming economic troubles earlier this year (their budget deficit reached 32% of its GDP). France too is following this same strategy but is meeting even more opposition from their public - see the article also on nytimes.com.)
Analysts argue that this plan will not help and will lead to slow growth, slow demand, lower tax revenue, a less skilled unemployed population, and an overall increase in the national debt.
Until we are out of this current recession, people will always be critical towards their governments' actions! The US is complaining about too much spending and a high deficit where as the Europeans are complaining about too little government support! What will be the perfect solution to the problem?
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