(The next few posts are going to give some views of mine which few other people seem to share. That might make them interesting to think about. They are the reasons why I am a conservative, and they also help explain why I will be voting Conservative in May.)
I. State spending does not need to be more than 35% of our extremely large GDP.
To me this seems obvious. A third of everything this country makes is not enough? Really? Of course, economists have thought of many reasons why state spending should carry on getting higher forever: I think they're bonkers.
For the record, I think that Krugman and the Keynesians have won the economic debate about austerity. I do not think the big cuts in 2010 were a good idea.
However. First, at some point stimulus has to stop being an argument and we have to assume normality is returning. As I understand it, intellectually respectable Keynesian policy works like this: you spend more than you save during recessions caused by inadequate demand, and, to fund this, you save more than you spend in normal times. Western democracies have been failing to do this for some time. Austerity has harmed many in the past few years. Unsustainable public debt, however, has destroyed many regimes. If this happens to us, the harm to us and democracy will last for generations. So, the long run matters more.
Second, politics has its topsy-turvy logic that makes it hardest to cut spending when the economy seems to be going well, to "take the punch-bowl away". If the choice were between cutting during good years or during bad years, I would choose the former like a good Keynesian. But I fear the choice may be cutting during bad years, or not at all. Neither of the Labour and Conservative platforms offers much grounds for optimism about this, since both parties are irresponsibly promising tax cuts to their core supporters.