More Public Spending, Not Tax Cuts, for Sustainable, Inclusive Growth

Tax cuts do not magically improve economic growth. Instead, the government should focus on building more economic capacity with new investments in infrastructure, research and development (R&D), education, and anti-poverty programs. Credit: Amantha Perera/IPSBy Anis Chowdhury and Jomo Kwame SundaramSYDNEY and KUALA LUMPUR, Sep 26 2017 (IPS)The Trump administration’s promise to increase infrastructure spending should break the straightjacket the Republicans imposed on the Obama administration after capturing the US Congress in 2010. However, in proportionate terms, it falls far short of Roosevelt’s New Deal effort to revive the US economy in the 1930s. To make matters worse, reducing budget deficits remains the main economic policy goal of all too many OECD governments. Governments tend to cut social spending if they can get away with it without paying too high a political price.But OECD governments’ belief that social spending — on health, education, childcare, etc. — is growth inhibiting is sorely mistaken. There is, in fact, overwhelming evidence of a positive relationship between public social spending and growth.Return of supply-side economics The cornerstone of all too many OECD government policies is tax cuts, especially for business corporations, ostensibly so that they will invest more with their higher retained earnings. This policy is premised on the long-discredited ‘supply-side economics’ promoted by conservative economists led by Arthur Laff...
Source: IPS Inter Press Service - Health - Category: International Medicine & Public Health Authors: Tags: Development & Aid Economy & Trade Education Energy Featured Financial Crisis Global Global Governance Headlines Health Labour Poverty & SDGs TerraViva United Nations Trade & Investment Source Type: news