Included in this is the issue of national debt. As Felix Rohatyn, former US ambassador to France, says in a Newsweek article last week:
"Americans look at debt more as wasteful expenditure, whereas the Europeans look at debt more as an investment."It would seem that the Conservatives have adopted exactly the same approach as their ill-informed neo-liberal cousins on the right of US politics. Deficits and debt are bad, period. Now, don't get me wrong: if you are borrowing to spend rather than invest or if your debt can't be serviced then you are clearly borrowing too much. However, what if you are borrowing to invest in future economic performance, environmental improvement, or social progress, all of which add to national well-being? It is less clear cut that debt is undesirable. In fact, in many cases it is very desirable.
If you build schools, colleges and universities, broadband infrastructure, transport infrastructure, invest in health facilities, reduce carbon emissions, invest in science, or even save the banking system can debt not be of economic, social and environmental benefit? This is one of the issues that the Stiglitz-Sen Commission on the Measurement of Economic Performance and Social Progress is looking at. Its broad outlook is that GDP growth is not the be all and end all. It may be wise to sacrifice some economic growth in GDP terms for a better quality of life and that actually is national growth of a different kind. President Sarkozy has initiated a fascinating process and many eyes will be on its outcome.
But in terms of the domestic debate, there needs to a different dialogue about debt and growth. Clearly, the levels of borrowing that have been reached will have to come down. However, there comes a point where investment is hit and that has to be considered carefully. The Tories are not even in the hare versus tortoise race described in the Newsweek article above. A simple analogy is mortgage finance. Is a mortgage a bad thing? In most circumstances no it's not a bad thing. So it is with national investment. We just need a means of separating the 'good' debt from the 'bad' debt. And maybe once the Commission has finished we can do the same for GDP growth.