I’ve recently taken up scuba diving (pursuing the PADI qualification) in my spare time (not that there’s much of it!). One of the key skills for a novice scuba diver (like me) is to achieve equilibrium, often referred to as neutral buoyancy. This is an underwater state of suspended animation – neither floating nor sinking and the ideal position for the scuba diver. As I occupied a state of watery suspended animation five metres below it made me reflect on other events this week…as I sought to master the ‘fin-pivot’ manoeuvre and the ‘hover’.
“So what the heck has scuba diving got to do with anything else?” I can hear you say.
Well…as I bobbed along in the deep I thought about this week’s Emergency Budget – 22 June. It seems to me that there has been considerable emphasis placed on cutting the deficit by cutting public service expenditure. Not that I have any issue with this and it creates necessary conditions for re-thinking our whole approach to the provision of public services (see ‘Necessity the Mother of Invention’ blog post). However, I’m not convinced the equilibrium is yet right.
All the balance seems to be tilted towards cutting cost as we sink ever downwards. However, what about growth? Another way to reduce the fiscal deficit is to energise growth. I just hope the VAT increase to 20% doesn’t dent consumer confidence and inhibit much-needed spending so that the economy is kick-started with robust economic growth following.
The idea of using expansionary fiscal policy to combat recessions was introduced by John Maynard Keynes in the 1930s, partly as a response to the Great Depression. Keynes understood the perfect equilibrium between economic cuts and growth.
I’m now off to practice the CESA – Controlled Emergency Safety Ascent. Let’s just hope we come out of the Challenging Economy Safely Affluent (CESA).