Archives for posts with tag: Austerity

Not quite a century ago, America had the Great Depression. The government at first tried to let the free market fix everything, used a tiny amount of stimulus, imposed austerity measures, and made things even worse.  A subsequent administration used huge amounts of stimulus, which helped the economy to recover and made it possible for the United States to avoid being taken over by the German Empire later on. Only a few fringe theorists think that we should have stuck with austerity in that case.

A decade or so ago, Japan had a pretty severe recession. The government decided to impose strict financial discipline and imposed drastic austerity measures. Japan’s economy has not yet gotten back to where it was before the recession, even after all these years, and independent economists have pretty much reached a consensus that austerity didn’t work in that case.

A while back, China had no particular economic issues but DID have huge honkin’ political issues. The government used unnecessary stimulus to distract the populace and is now realizing that they are about to have a recession. Neither austerity nor stimulus should have been used in that case.

A year or four ago, America and Europe got whacked with the Great Recession. America hedged its bets and went with a small dose of government stimulus, and the EU went with drastic austerity measures. Today, America’s economy is slowly (very slowly) recovering while Europe’s is circling the drain. Once again, independent economists are saying that the Yanks’ stimulus approach helped to stop the bleeding, and  the Europeans’ austerity measures have made a bad situation even worse.

So why, despite its lousy track record, do so many of us still think that austerity is a good tool to use in fixing our current financial mess?

Mr. B & C

When Mr. Blunt and Cranky was Young Blunt (and not quite as cranky), he wasn’t making much money and had trouble coughing up the security deposit on an apartment. After crunching the numbers, a solution was arrived at – he would eat almost nothing for a couple of weeks. After that, he’d be able to afford groceries and the apartment.

Man, those were tough days to get through: one week, the entirety of each day’s calories came from 1” thick, 4” x 4” slices of old (and nasty) fruitcake from the previous year’s holidays. Two of those slices per day.  Your humble correspondent lost a bit of weight and felt pretty crap the while, but since it was temporary and he was young and healthy, he got through it. No way he would have done it if he had had to do it for a longer period of time: he could have gotten really sick or even starved to death.

As a short-term fix, cuts can be effective, if properly used. In the long term, cuts by themselves only work if you have lots of stuff to cut out, and it is a mistake to assume that there’s always lots to cut.  We have been busily cutting away for several decades, like hyperactive beavers in a forest of balsa wood, and there aren’t many easy things remaining to cut out of the governmental  budget. So when politicians start talking about cutting even more and foregoing revenue, one would be well advised to ask some more questions about those cuts, such as why, what, for how long, and so forth.

The “what” depends on party ideology, pretty much, so there’s not a lot of new data to be gotten within that question.  The “why” and “for how long” are where we find what will be done unto us by our “representatives”.

Dems want to cut handouts to certain types of industries and rich folks, and use the savings to finance other governmental activities that they like. They don’t want to starve the government to death, they want it healthy over the long haul; so they’ll cut in one place and add to another place as they deem fit.

Repubs actually want to get rid of government (Post-1976 Rs, anyway), so they have no objection to starving it to death (unlike this blogger’s younger self): in fact, one of the leaders of the Republican party has said he wants to starve the gummint until it is so weak that he can “drown it in a bathtub”. 

This writer doesn’t like everything that is done by the Feds, Staties or Local Yokels; but he likes the idea of police, firefighters, running water, freedom from being invaded by foreign powers, paved roads and other governmentally-derived goodies. Indeed, he likes them so much that, like most valuable commodities, he is willing to pay for them. So, he favors a balanced approach to taxing/spending.

As with our own bodies, we can only cut so many “calories” from the government for so long before we wind up starving it to death.

Mr.  & C