Harmful Austerity

[Trent Rock]

My observation is that a lot of people (mostly those on the right===>deficit hawks) think that cutting costs/defict is A #1 priority
At all costs...

This is the flip side of the coin
Govt spending is helpful during sluggish times..imho

Harmful Austerity

Destructive Austerity, USA


Word of the Year 2010


Btw.....Like BRL always says, "don't be afraid to know what you don't know"
I had never heard the term austerity until the last few months....
******************************************
aus·ter·i·ty


noun
\ȯ-ˈster-ə-tē, -ˈste-rə- also -ˈstir-ə-\
plural aus·ter·i·ties


Definition of AUSTERITY

1
: the quality or state of being austere

2
a : an austere act, manner, or attitude b : an ascetic practice

3
: enforced or extreme economy


See austerity defined for English-language learners »

See austerity defined for kids »

Examples of AUSTERITY

• the austerity of the design
• The austerity of their lifestyle was surprising.
• They lived through years of austerity after the war.
• the austerities practiced by monks

First Known Use of AUSTERITY

14th century

[eyeeatingfish]

it depends if the country has an actual surplus of funds to pump into the economy. In our case we don't, we don't, we are borrowing money to spend to pump up the economy.

[Preacher Man]

History shows that part of what deepened the effect and length of the Great Depression was that people were hording money, afraid to spend it. If money is not moving into the economy, the economy will not improve. It makes sense that until the private sector can or is willing to invest into the economy creating jobs, it is up to the government to do it.

[lepto]

From what I understand, Britain's austerity measures have been a failure and have resulted in slower growth in their GDP than they experienced coming out of the Great Depression. Likewise for several European countries such as Italy and Spain. Still, I suppose that's no guarantee the austerity measures advocated by our own pro-recession party will have similar results.

[quietmike]

History shows that part of what deepened the effect and length of the Great Depression was that people were hording money, afraid to spend it. If money is not moving into the economy, the economy will not improve. It makes sense that until the private sector can or is willing to invest into the economy creating jobs, it is up to the government to do it.

If people are unwilling to invest in the economy, one should ask why that is the case instead of making an end run around their decision. Over and over people have said overburdensome regulations and taxes are why they are taking a wait and see attitude.

[powernoodle]

The primary, if not sole progenitor of economic growth is optimism. It is a self-fulfilling prophesy. If the American consumer believes the economy will get better or is getting better, he spends and invests, and the economy magically improves.

Reagan convinced America that tomorrow would be better than today, and the economy magically rebounded from the Carter debacle.

Obama does just the opposite. He grows the national debt to exceed GDP, and advocates "shared sacrifice", perpetual bureaucratic micromanagement of every aspect of one's life, grotesque overspending, the decline of America's producers and the growth of the welfare class.

When we have a President who has done, and continues to do, everything he can to destroy the economy, it naturally and predictably thwarts optimism. Grotesque overspending, which the links in the first post advocate, predictably destroys optimism and therefore prevent economic recovery.

And this does not speak the point of why anyone would care what a New York Times liberal has to say on the issue of economic recovery. When has grotesque, out of control debt ever resulted in economic recovery? If your personal budget is in dire straights, can you borrow your way to prosperity? Of course not. But this economic model is consistently advocated by the left, and it is consistently a failure.

[Codger_64]

Problem being that the majority of consumers, during the depression as now, had neither money to spend nor to invest. Brother can you spare a dime? The people that did hold the money and continued their lifestyles, did not use that money to create optimism among the consumers much less to give them the ability to consume. People whose income has/is declining make for poor consumers of goods. It is, however, good to be king in such times.

[lepto]

The primary, if not sole progenitor of economic growth is optimism. It is a self-fulfilling prophesy. If the American consumer believes the economy will get better or is getting better, he spends and invests, and the economy magically improves.

Reagan convinced America that tomorrow would be better than today, and the economy magically rebounded from the Carter debacle.

Aaah, the old Confidence Fairy enters the scene once more. Were you clicking your heels together when you were writing your post?

Obama does just the opposite. He grows the national debt to exceed GDP, and advocates "shared sacrifice", perpetual bureaucratic micromanagement of every aspect of one's life, grotesque overspending, the decline of America's producers and the growth of the welfare class.

When we have a President who has done, and continues to do, everything he can to destroy the economy, it naturally and predictably thwarts optimism. Grotesque overspending, which the links in the first post advocate, predictably destroys optimism and therefore prevent economic recovery.

And this does not speak the point of why anyone would care what a New York Times liberal has to say on the issue of economic recovery. When has grotesque, out of control debt ever resulted in economic recovery? If your personal budget is in dire straights, can you borrow your way to prosperity? Of course not. But this economic model is consistently advocated by the left, and it is consistently a failure.

Ideology and magical thinking--that trumps a New York Times liberal with facts on his side every time. How else does one explain the miraculous turnaround in all of those EU countries or, for that matter, the candidacy of Rick Santorum?

[quietmike]

Ideology and magical thinking--that trumps a New York Times liberal with facts on his side every time. How else does one explain the miraculous turnaround in all of those EU countries or, for that matter, the candidacy of Rick Santorum?

Simple.....Obama ISN'T their president.

[jdm61]

Except for the wartime spending, Britain didn't really grow until the 60's or 70's. They lost their empire during and after the war, so they shrunk big time. When my father was over in Europe in the army in 1959, they were still experiencing shortages of some basic consumer goods like men's dress shirts. He brought a duffle bag full of them and sold them on the stopover on the way to Paris.

From what I understand, Britain's austerity measures have been a failure and have resulted in slower growth in their GDP than they experienced coming out of the Great Depression. Likewise for several European countries such as Italy and Spain. Still, I suppose that's no guarantee the austerity measures advocated by our own pro-recession party will have similar results.

[Preacher Man]

If people are unwilling to invest in the economy, one should ask why that is the case instead of making an end run around their decision. Over and over people have said overburdensome regulations and taxes are why they are taking a wait and see attitude.

I don't doubt that is part of the equation, but if corporations can actually dodge a large percentage of corporate taxes (and they do, some not paying taxes at all), and individuals can use loopholes in the law to lower their tax burden (a la Warren Buffet), then taxes is not the main reason. Over-burdensome regulations can be a factor, but some call any regulation over-burdensome in the believe that there should be no regulations. The truth of the matter is that regulations exist in part to protect consumers from the unscrupulous. We may point at these two factor all day, but there is more here than just taxes and regulations. Some of those with the capital to create jobs are just waiting for things to improve in order to make investing in jobs profitable, but that will not happen until the economy improves, but the economy will not improve until there is job creation. It is vicious cycle, a catch 22 if you will. We saw this already in the Great Depression. We know the drill, we know how it plays out. Some vilify Keynesian economics, but looking at the Great Depression in hindsight shows some of its ideas work. If individuals and corporations do not step in, then it is a mistake for government not to do something to create jobs and promote job creation, and that means pumping money into the economy.

[OliverH]

If people are unwilling to invest in the economy, one should ask why that is the case instead of making an end run around their decision. Over and over people have said overburdensome regulations and taxes are why they are taking a wait and see attitude.

These are right-wing cliches, and mostly without substance. The more obvious (and economically sound) answer is that economic players are caught in a Mexican standoff: It isn't regulation and taxes (which are at historic lows) that prevent businesses from investing and hiring. It's the fact that there is no point increasing capacity without consumers. At the other end, consumers (who are also workers) are not buying because they're worried about their own economic prospects because jobs aren't available and/or wages are stagnant or on the decline. Once it gets beyond a certain point, it's a classic deflationary cycle.

[OliverH]

The primary, if not sole progenitor of economic growth is optimism. It is a self-fulfilling prophesy. If the American consumer believes the economy will get better or is getting better, he spends and invests, and the economy magically improves.

Reagan convinced America that tomorrow would be better than today, and the economy magically rebounded from the Carter debacle.

Your entire post is a triumph of ideological certainty over historical fact.

The reason the economy rebounded in the 1980s wasn't "magic" at all. The Fed had increased interest rates to incredible levels to kill inflation (the prime rate was over 20% for a brief period), and this naturally resulted in a big recession. Once the Fed took its foot off the throat of the economy by reducing interest rates, economic activity rebounded. But of course, even then the speed of the recovery was aided by huge deficit spending on the part of the feds. You ask "When has grotesque out-of-control debt ever resulted in economic recovery?" Try the 1980s, under Saint Ronald. Don't take my word for it--check the deficit/debt figures yourself.

[jdm61]

And yet now we have even MORE deficit spending and a Fed discount rate approaching zero that has been in effect for a fair amount of time, yet no real recovery to speak of. Tell me once again how this "confidence" thing is a myth? ;-)

Your entire post is a triumph of ideological certainty over historical fact.

The reason the economy rebounded in the 1980s wasn't "magic" at all. The Fed had increased interest rates to incredible levels to kill inflation (the prime rate was over 20% for a brief period), and this naturally resulted in a big recession. Once the Fed took its foot off the throat of the economy by reducing interest rates, economic activity rebounded. But of course, even then the speed of the recovery was aided by huge deficit spending on the part of the feds. You ask "When has grotesque out-of-control debt ever resulted in economic recovery?" Try the 1980s, under Saint Ronald. Don't take my word for it--check the deficit/debt figures yourself.

[quietmike]

I don't doubt that is part of the equation, but if corporations can actually dodge a large percentage of corporate taxes (and they do, some not paying taxes at all), and individuals can use loopholes in the law to lower their tax burden (a la Warren Buffet), then taxes is not the main reason.

Warren Buffett owes nearly a billion in back taxes. Is that the "loophole" to which you were referring?
http://www.huffingtonpost.com/2011/0..._n_941099.html

Over-burdensome regulations can be a factor, but some call any regulation over-burdensome in the believe that there should be no regulations. The truth of the matter is that regulations exist in part to protect consumers from the unscrupulous. We may point at these two factor all day, but there is more here than just taxes and regulations. Some of those with the capital to create jobs are just waiting for things to improve in order to make investing in jobs profitable, but that will not happen until the economy improves, but the economy will not improve until there is job creation. It is vicious cycle, a catch 22 if you will. We saw this already in the Great Depression. We know the drill, we know how it plays out. Some vilify Keynesian economics, but looking at the Great Depression in hindsight shows some of its ideas work. If individuals and corporations do not step in, then it is a mistake for government not to do something to create jobs and promote job creation, and that means pumping money into the economy.

http://newsroom.ucla.edu/portal/ucla...sion-5409.aspx

http://money.usnews.com/money/busine...-new-deal-work

http://online.wsj.com/article/SB123353276749137485.html

[OliverH]

And yet now we have even MORE deficit spending and a Fed discount rate approaching zero that has been in effect for a fair amount of time, yet no real recovery to speak of. Tell me once again how this "confidence" thing is a myth? ;-)

I didn't say it was a myth. I said that other objective factors were at the core of the recovery. I would point out that the actuating cause of the current recession (the seizing up and near collapse of the entire financial system) is totally different from the immediate cause of the recession in the 1980s (the Fed jacking up interest rates to deliberately reduce business activity in response to an overheated economy). These result in different kinds of recessions and different kinds of recoveries. The sad fact is that there are well-known and proven monetary policies available to kill inflation due to overheating--namely, you create unemployment by raising interest rates and thereby knocking down business activity, a la Volcker in the early 1980s--but so far no similar monetary policy means have been discovered to kill deflation. With both kinds of recession, however, the general economic wisdom is that the appropriate government fiscal response is to support demand with deficit spending.

[quietmike]

These are right-wing cliches, and mostly without substance. The more obvious (and economically sound) answer is that economic players are caught in a Mexican standoff: It isn't regulation and taxes (which are at historic lows) that prevent businesses from investing and hiring. It's the fact that there is no point increasing capacity without consumers. At the other end, consumers (who are also workers) are not buying because they're worried about their own economic prospects because jobs aren't available and/or wages are stagnant or on the decline. Once it gets beyond a certain point, it's a classic deflationary cycle.

This attitude is exactly why people aren't investing. The people, who have already shown the drive and sound business sense to have the money to invest, should have their experience ignored because government knows better than them.
14 trillion in debt says that attitude is wrong.

[OliverH]

This attitude is exactly why people aren't investing. The people, who have already shown the drive and sound business sense to have the money to invest, should have their experience ignored because government knows better than them.
14 trillion in debt says that attitude is wrong.

I see no tangency between what I wrote and what you said in reply.

[quietmike]

I see no tangency between what I wrote and what you said in reply.

Business owners and investors have said taxes and regualtions are why they aren't investing. You said that was right wing clap trap.
So if the people who have successfully ran business and invested up to now (the ones who currently have money to invest), are to be ignored, it must mean government has the better answer.
Compare governments books with the investors and business owners...$14T in debt vs. having money to invest....who has had the best answers?

[Codger_64]

Warren's taxes are in order. It is those of the corporation of which he is CEO that are being ammended. If I am not mistaken, a CEO does not do the corporate taxes, but is responsible for his own. I would guess the corporation has a bevy of beancounters and tax attorneys who are responsible for doing the corporate taxes.

Oh.. and at the bottom of your link is this snippet:

It's not only rich corporations that are legally able to avoid paying taxes either. Some 1,400 millionaires paid no income taxes whatsoever in 2009, according to tax data from the Internal Revenue Service.

Dayum lazy moochers!