II

INFLATION AND DEFLATION

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cannot meet this loss without reducing theirown expenditure or discharging some of theirmen, or both; i.e. they will have to follow theexample of the Government, and this will againset moving the same series of consequences, andso on.

The net result would necessarily be a sub-stantial increase in the number of unemployeddrawing the dole and a decrease in the receipts oftaxation as a result of the diminished incomesand profits. Indeed the immediate consequencesof the Government’s reducing its deficit are theexact inverse of the consequences of its financingadditional capital works out of loans. Onecannot predict with accuracy the exact quantita-tive consequences of either, but they are broadlythe same. Several of the Committee’s recom-mendations, e.g. those relating to Roads, toHousing, and to Afforestation, do indeed ex-pressly imply that the whole theory underlyingthe principle of Public Works as a remedy forunemployment is mistaken, and they ask, ineffect, for a reversal of the policies based on thisprinciple, Yet they do not trouble to argue thecase. I suppose that they are such very plainmen that the advantages of not spending moneyseem obvious to them. They may even be soplain as to be unaware of the existence of theproblem which I am now discussing. But theyare flying in the face of a considerable weight ofopinion. For the main opposition to the PublicWorks remedy is based on the practical diffi-culties of devising a reasonable programme, not