Letter: Debt and economics of the madhouse

WHEN the Great Depression hit America in the late 1920s, it was resorting to public works (such as the Grand Coulee Dam construction) that helped restore some prosperity.

It was expanding, not contracting, the public sector that brought the worst of the economic crisis to a stop.

How can throwing people out of their public-sector jobs possibly contribute to economic revival?

It's like saying every public-sector job is preventing a private sector job being created. Daft.

But the suggestion that the coalition solution to the present alleged economic difficulties is ideologically-driven, is less daft.

It's about the only logical explanation for something that appears economically illogical.

Do some MPs forget they too are public-sector employees and aren't they taking a risk when they make value judgments on other people's jobs that their jobs might be seen as every bit as dispensable?

Ian Johnstone

Forman Drive

Peterhead

Alex Orr (Letters, 25 October), protests against the public-sector cuts, saying it is "delusional" to believe public-sector job losses can be replaced by jobs in the private sector.

It is even more delusional to believe it is up to the council and PAYE taxpayers to provide employment (and hugely subsidised pensions) for the population.

I am sorry for anyone who loses employment but we are not (yet) the Stalinist-type command economy Mr Orr and trades union dinosaurs such as Dave Prentis and Bob Crow seem to want for the UK.

David K Allan

Mainshill

Haddington, East Lothian

I have been having this terrible nightmare, one in which I understand the national debt better than the entire British government.

Prime Minister David Cameron claims national debt is borrowed from foreign governments. Chancellor George Osborne claims he has rescued Britain from bankruptcy. And Nick Clegg claims we need a new kind of government. Are they all mad? Or is it me?

Fact 1: National debt comprises British government stocks issued to buy national assets. More than 80 per cent of the stocks are owned by British savers. We don't borrow from foreigners.

On the contrary, they get sterling by selling us their goods. We'd much rather they bought British goods in return but who are we to argue if they prefer British stocks? We get the goods, they get the debt. It sounds good to me.

Fact 2: National debt buys assets - the usual roads, bridges, hospitals, schools and universities, etc, but also castles, art galleries, opera houses and so on. Thus our debt is actually our national capital. We also need to count our assets where the debt has long since been repaid.

So, as the value of UK assets exceeds UK debt by a country mile, far from being bankrupt, we own the most valuable property on Earth.

Fact 3: The growth of national debt reflects the growth of the UK asset base. Our predecessors provided the assets we have today.

So we must provide the assets for our descendants.But, thankfully, since the population is predicted to grow, national debt must grow too. Growth of debt is entirely healthy and, in fact, highly desirable, and to be expected. Anything else is imprudent and verges on dereliction of duty.

It isn't a new kind of government the British people need. It's one with an old-style grasp of basic economics.

ROBERT VEITCH

Paisley Drive

Edinburgh