Letter: Different tacks to tackling national debt

I'M CONFIDENT that most people would rather have a £100,000 income and debts of £20,000 than an income of £20,000 and debts of £10,000, but judging by Bill Jamieson's "straightforward… contribution to financial education" (Comment, 28 March) he's in the minority.

How else to explain his preoccupation with the "total of public sector net debt", rather than measuring it in relation to GDP, the only way which makes sense? By that index our net debt (the Red Book forecast for 2010/11 is 60.3 per cent) is not especially high - lower than France's and similar to Germany's.

However, unlike those countries, we can finance it entirely in our own currency, whose interest rate we set, and we're doing so with very long-term borrowing, so there's no refinancing risk of the kind that has troubled some other sovereign borrowers. Furthermore, we have the benefit of the highest credit rating possible.

However, there's a bigger issue than this economic illiteracy. Mr Jamieson seems to believe that some political conclusion follows from the fact that the current year's deficit is 9.9 per cent of GDP.

It doesn't; to think otherwise is to be guilty of what David Hume termed the naturalistic fallacy. There are arguments to be had about this - some people who want to cut the deficit think that we should do so by cutting spending, others that higher taxation is the way.

Still others, while agreeing that it would be a good thing to reduce the deficit (even if they're not quite sure why), argue that the consequences of doing so as fast as this government intends are likely to be malign, and that therefore a different approach should be used.

Others again think the problem is exaggerated; they want a much greater focus on the effects on human well-being. Mr Jamieson advances none of these arguments, apparently believing that his (misleading) facts speak for themselves. But both David Hume and Adam Smith knew that that's one thing facts can never do.

Andrew Anderson

Granton Road

Edinburgh

As usual, Bill Jamieson throws some more light on our national debt in his ongoing efforts to educate our university staff, among others.

But it is even worse than he describes.

In 1997 the official figure was 302 billion and in the "boom" pre-crisis years, by early 2008, Gordon Brown had increased this to over 500bn, well on the way to the 759bn bequeathed to the coalition.

The current Office for Budget Responsibility forecast of 1.359 trillion for 2015/16 is little different from Alistair Darling's, and far from there being the necessary cuts ahead, government expenditure is still forecast to rise, so Labour's anger is at best political posturing.

Moreover, the official figures exclude liabilities accrued now for unfunded public sector pensions, all old-age pensions, public/private finance liabilities and Network Rail liabilities, so our true debt is already over 4 trillion (assuming we get all our bank bail-out funds reimbursed).

John Birkett

Horseleys Park

St Andrews