Reductio ad absurdum

I was mystified by a recent blog by one of our most highly respected economics commentators. This is a good example of how the incorrect assumption that government deficits are bad and must be eliminated causes even smart economists like Martin Wolf to reach absurd conclusions. He understands sectoral balances and so appreciates that the government budget deficit must equal net private savings. But then he assumes that reducing the government deficit must take priority and so policies need to be introduced to reduce private savings! Surely if there is one thing we can all agree on it is that private debt was too high and needs to be reduced to more sustainable levels. This was the root cause of the financial crisis, for heavens sake! So net private saving is a GOOD thing and exactly what is needed to get to more sustainable levels of leverage. The problem he has is that accepting this means accepting that the government budget deficit must be a good thing as well, and we know that can't be the case, don't we! This a beautiful example of the failure of orthodox economic thinking.