I remember 1945 – when Britain was proportionately more in debt then than today. Despite this, the post-war Labour government nationalised basic industries, created the NHS, expanded secondary and higher education (all free) and invested. No one talked then about Britain being unable to afford to invest.
These measures laid the foundation for the “never had it so good” years of the 1950s and 1960s. What a contrast with today! The Conservative/LibDem coalition has increased student fees, has cherry-picked parts of the NHS and has targetted the less well off, by cutting benefits, instituting the bedroom tax, etc. And we’re promised more to come …..
In practice, austerity cuts real incomes and so reduces taxation revenue – causing government debt to increase! So, austerity make no sense as a financial policy. The coalition has unlearnt the lessons of the 1930s when similar cuts to welfare and benefits reduced personal incomes and prolonged the depression.
I believe the real aim of current government policies is to rob poorer people to pay for tax breaks for the better off (Just 1% now own over 50% of Britain’s wealth and they could pay off our national debt while still remaining richer than the rest of us).
It is tragic that today’s Labour Party has accepted these policies and has pledged to continue Tory austerity measures.
Dr John Cox blogs 
John, on this topic you might be interested in “Austerity, The History of a Dangerous Idea” by Mark Blyth. Basically, he demonstrates that it has never worked.
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