The current economic debate in this country is split between those we can call deficit ‘hawks’ versus those we can call deficit ‘doves’.
The hawks are the austerians who argue government deficits are too high, so we must cut expenditure fast. Government should get out of the way and let the private sector do what it does best. George Osborne and chums are definitely in this category.
The doves argue that the private sector is very weak at the moment, unemployment is high and so we must temporarily increase spending to stimulate the economy. They would agree with the hawks however, that generally, large deficits are bad and so we need a medium term strategy to get the deficit down. Paul Krugman is probably the most famous deficit dove, but over here, economists like Jonathan Portes fall into this category, and also maybe Ed Balls (although he often sounds like a hawk).
The problem for the doves is that their argument is easy to tear down with scaremongering about burdening our grandchildren and Greek-style bankruptcy. Because the doves agree these are medium to long term risks, the hawks win the day because they just use the analogy of government being like a household and having to spend within its means. Most people can relate to this, so while people don’t like austerity, many think there is no other way.
There is another type of deficit bird though – the deficit ‘owl’. The owls reject the idea that we need a medium term strategy for getting the deficit down, arguing that there is never a risk of government insolvency and that government is nothing like a household. In this discussion over at Huffington Post Live, Modern Monetary Theorist Stephanie Kelton (who I think coined the term ‘deficit owl’ and uses @deficitowl as her Twitter handle) discusses her frustration with progressives who argue from the deficit dove viewpoint, and why they will always lose the argument with conservatives. She uses the analogy of fiscal policy being like a thermostat. When the economy is too cold, the thermostat should be turned up; when it is too hot, turn it down.
Anyway, I think the Huff Post vid is a really great demonstration of the difference between the deficit dove viewpoint and the deficit owl view. Both are on the same side of the argument at the moment, but to me the owl position is much more convincing and also has the benefit of being true, while the dove position is a bit of a fudge. We need more owls.