During the campaign for the Labour Party leadership Ed Balls contributed an article to the Guardian which aptly summed up the Keynesian position on the economy. He appears to be one of the few politicians in the country willing to spell out the truth about the economic situation, viz:
the public finances are not in crisis. The current deficit is large but not unprecedented
the deficit is largely the result of a fall in tax revenues rather than Labour profligacy
we are not in danger of an attack from the "markets." Our situation is very different form that of Greece et al
our major problem is of unemployment (especially youth unemployment) rather than the deficit
therefore the most urgent problem is to stimulate employment by tax cuts and pump-priming public expenditure. With interest rates at an all time low this is an ideal time to implement this policy
when recovery has been assured measures can be taken to reduce the deficit (which will largely reduce itself as the tax take increases. An article by an economist of the University of Shanghai, John Ross, published in the Guardian of 11th January, claimed that this was already happening when Labour left office.)
So let's hope, for the sake of those who will suffer from the cut-backs in the welfare state and the unnecessary "austerity," that Ed Balls puts the coalition's economics team on the spot and makes it harder for them to pursue the present ideologically driven and mistaken policies.
Another advantage of Ed Ball's return to the forefront of the political fray is that his abrasive , indeed tribal, approach is likely to make Labour less popular, and fuel press speculation about damaging rivalry with Ed Milliband for the Labour leadership. I admit these are ignoble thoughts for one dedicated to a purer form of politics, but this spin-off is not to be ignored.