John Kay

If I represented the Scottish government in the extensive negotiations required by the creation of an independent state, I would try to secure a monetary union with England, and expect to fail.

For a time, the coalition government seemed willing to let figures tell their own story rather than one written by their political advisers; but that time seems to have passed.

The objective of monetisation has not been to put money in the hands of consumers and businesses but to put money in the vaults of banks.

Social policy would, in the long run, owe far more to Eleanor Roosevelt’s claim that “everyone has the right to a standard of living” than to Beveridge’s assertion that “management of one’s income is an essential element of a citizen’s freedom”.

Young people might reasonably ask their parents or grandparents why a much richer society cannot now provide the benefits it provided for an earlier generation. I am not sure I have a good answer.

Keynes famously advocated reducing unemployment by employing people to dig holes and fill them in again: today it would be enough to employ them to fill the potholes that are already there.

This month’s budget in Britain will provoke yet another round of debate on austerity versus stimulus. But the issue of how we spend what we have is more important than the issue of what we spend.

Governments will in the end always put voters ahead of prior commitments or external obligations. That democratic imperative has costs and benefits – but, overall, the benefits of popular accountability far exceed the cost.

Financial markets are an effective discipline on profligate individuals and states because markets cannot easily be bullied or lobbied, and their threat to make the cost of funds prohibitive is effective.

From the start, PFI conflated the desirable aim of exploiting private sector management skills in project supervision with the undesirable aim of obscuring public finances with complex funding structures. It created an industry of advisers with a vested interest in its own expansion.