The Short History of an Old Idea
If focusing on net worth is such a good idea, why are governments not doing it already? Why do politicians cling to obviously flawed fiscal rules? My answer to a reasonable question from readers
After I published John Crompton’s excellent guest post last week on Rachel Reeves’s Big Opportunity, several readers responded here and elsewhere with a good question. It is blindingly obvious to almost everyone, including much of the economics establishment, that Britain’s current fiscal rules, like those in the rest of Europe are seriously flawed because they fail to distinguish between borrowing to fund current spending and investment, provide little incentive for the state to better manage its assets, and make it easier for politicians to store up liabilities for the future generations. But if focusing on net worth is such a good idea, as John argues, and as I argued here, why is it not being done already? Here’s my attempt at an answer.
The first point to note is that there is nothing new about the idea tha…
