Originally published at: https://boingboing.net/2018/08/17/austerity-kills-2.html
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Good for Portugal. Economics is more ideology than science.
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I’m expecting the soap bubble to pop here in the States soon. The ultra rich have done almost everything shady they can to make it look like there is growth without actually doing anything that would be helpful (like increase wages).
The short term effects are rosy numbers - but the reality (wage growth negative) will catch up - there are an awful lot of people who are patting themselves on the back right now trying to pretend everything is awesome.
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Even without Portugal’s example, I’m pretty sure that every country that’s tried austerity proves that austerity doesn’t work.
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Portugal proves that austerity doesn’t work
And…? That’s happened literally every time fiscal “austerity” of this type was attempted, in the past. It’s time to get over the shock, people; “austerity” NEVER HAS worked. Not once.
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Another data set: those US states with the highest tax rates are almost always the richest and best educated. Whereas Kansas…
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Poor Greece. The EU needs to double down on the debt there and get the economy humming, which would quickly pay-off the investment.
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Who’d’ve thought that giving people who fell a hand to help them onto their feet instead of kicking them while they were down would lead to an actual recovery?
Not the kind of people who talk about the “undeserving” poor, that’s for sure.
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There are examples all around the world.
The United States federal system is great for testing economic theories, with adjacent comparable states trying different strategies.
Of course these tests only are useful if people care about real life results.
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Well, arguably that depends on the definition of “worked”, which in turn depends on the actual (rather than publicly professed) goals of its architects.
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At the core, the reason we keep doing this is that people are easily misled into thinking a national economy is basically business or household finance writ large. They look similar to the untrained eye, and all too often by trained eyes clouded by ideology, but a state economy is different in kind, not degree, from the individual actors operating within that economy. Folksy analogies to household finances always grind my gears because they drive bad policy.
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Hey, how many Chicago school economists are needed to change a light bulb? Why, none, of course! Had the light bulb needed changing, the Invisible Hand would have already seen to it.
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Another contrary view:
https://marginalrevolution.com/marginalrevolution/2018/07/portugal-anti-austerity-story.html
Its worth asking yourself “what do I think is meant by austerity”? If you dont answer that question, nothing will prove or disprove that ‘austerity’ worked or didnt work.
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The drivers behind it at least in EU are the central bank, which has a mandate to fight inflation, and bondholders, who want to get paid. But long term that may not be an option. Greece for example probably just can’t ultimately pay what it owes. You can delay the day of reckoning, and turn the screws on the populace harder, but in the end you can make 2+2=5.
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I’m sure it’s just a fluke. Things will go to hell any… day… nowwwww… /s
Austerity seems to be the EU version of trickle-down economics. Neither do what they were purported to do.
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They don’t even make sense in a household budget context. Households regularly take on debt far outweighing the levels that cause panic reactions in the deficit hawks. I have student loans for grad school and a mortgage. My personal debt to GDP far outstrips 1:1.
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…again.
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