Reeves must do 'whatever it takes' to heal economy

In his 1958 book The Affluent Society, the great economist J K Galbraith coined the phrase “the conventional wisdom”.

- William Keegan

A key piece of conventional wisdom in the past was Say’s Law — the view that supply creates its own demand. But Galbraith, in his stout defence of Keynes, was critical of the deflationary policies of the 1920s and 1930s, when supply did not create enough demand and factories lay idle.

After the second world war, their view - that the economy should be actively managed, rather than left to markets - prevailed: political and economic consensus was centred on policies to regulate demand in the economy, while simultaneously keeping an eye on inflation and the balance of payments (exports and imports).

So what is the “conventional wisdom” of our time? One can hardly hear a pre-budget interview without being subjected to the assumption that taxes have to be raised. This quickly moves on to a discussion of: which taxes?