So has the famously pink FT turned red over the weekend? Not quite. Rather, the editors are worried about an imminent global downturn. They go on to argue that with monetary policy (i.e. interest rates, etc) looser than the morals of an alley cat, it has to be fiscal policy (i.e. borrowing) that now provides the extra boost to faltering growth.

But aren’t governments up to their necks in debt already? Not all of them. Germany has plenty of scope to spend more, but refuses to. Yet with interest rates so low, the FT claims that “governments can borrow for free.”

Yes, they actually wrote that. I’m sure what they meant to say is that borrowing for some governments is effectively interest free at the moment. However, the principal still has to be paid back — or re-financed at a potentially higher interest rate at some point in the future.

The great danger of ostensibly unrestricted borrowing is that it enables governments to engage in careless spending for short-term political gain. Just ask the Greeks how that turned out. In fact, never mind public sector borrowing just look at the private sector, which has enjoyed cheap debt for a decade. With all that money available, have we seen the corporates unleash a productivity revolution? No, they’ve used their easy credit to inflate asset bubbles and buy up the competition.

Perhaps governments can do better. But where is the evidence? Japan, which the FT presents as a case study, has had some success in using monetary and fiscal stimulus to avoid complete stagnation; but only at the cost of massive doses of QE and a government debt-to-GDP ratio of way over 200% — the highest in the G7. Even if it isn’t frittered away on buying votes, pumping a mature economy full of borrowed money won’t catalyse self-sustaining growth if the potential for it isn’t there.

The best hope may be in countries — like the UK — with a long record of under-investment in things like infrastructure, skills and research. With so much latent potential left to unleash — especially in the most neglected regions — a smart public investment strategy might just pay dividends.

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Peter Franklin is Associate Editor of UnHerd. He was previously a policy advisor and speechwriter on environmental and social issues.

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