Austerity? What austerity?

[Wiseacre]

Lots of talk about the European countries moving away from austerity and instead stressing economic growth and more jobs. Well hooray for that, but raising taxes and spending more money growing the public sector ain't going to further those ends. I believe most of the austerity measures thus far have been much more along the lines of tax increases anyway, with not much in the way of spending cuts. Which is mostly limiting the amount of additional spending in the future rather than actually spending less money.

So, a french guy has to retire at 62 instead of 60? Geez, life's a bitch. Don't get a 35 hour work week and 8 weeks of paid vacation? What inhumanity. Some call that austerity, but I call it reality. I call it living within your means. Don't know what they're going to do over there in Europe, or what we'll do here for states like California. We still got some road left to kick the proverbial can down. But I'm not seeing much change in attitudes, just more spending and more debt. But sooner or later reality will hit, and hit hard.

 

[starcraftzzz]

Um so how is my taxes being raised this year mean I have the same amount of money to spend this year? Every country that tries/has tried austerity has seen it fail. But fuck history.

 

[Wiseacre]

" When Jean Chretien became prime minister in 1993, Canada faced a fiscal and economic breakdown. The government’s share of the economy had climbed to 53% in 1992, from 28% in 1960. Deficits had tripled as a percentage of gross domestic product over the prior two decades. Government debt was nearly 70% of GDP and growing rapidly. Interest payments on the debt took up 35 cents of every tax dollar.
Mr. Chretien and his finance minister, Paul Martin, took decisive action. “Canadians have told us that they want the deficit brought down by reducing government spending, not by raising taxes, and we agree,” Mr. Martin said. The new administration slashed spending. Unemployment benefits were cut by nearly 40%. The ratio of spending cuts to tax increases was nearly 7-to-1. Federal employment was reduced by 14%. Canada’s national railway and air-traffic-control system were privatized.
The economy rebounded. Between 1995 and 1998, a $36.6 billion deficit turned into a $3 billion surplus. Canada’s debt-to-GDP ratio was cut in half in a decade. Canada now has faster economic growth than America (3.3% in 2010, compared to 2.9% in the U.S.), a lower jobless rate (7.2% in June, when the U.S. rate was 9.2%), a deficit-to-GDP ratio that’s a quarter of ours, and a stronger dollar.
What’s most remarkable about the Canadian turnaround: It was led by liberals. Mr. Chretien and Mr. Martin were leaders of the Liberal Party. Yet they responded to the clear wishes of Canadians and, to the surprise of the political class, shifted to the right. Or to the center, the two leaders would say. "

Fred Barnes: How Spending Cuts—Not Higher Taxes—Saved Canada - WSJ.com

 

[The Infidel]

Um so how is my taxes being raised this year mean I have the same amount of money to spend this year? Every country that tries/has tried austerity has seen it fail. But fuck history.

You need to read up and return when ya have a clue

 

[Wiseacre]

" The Germans enacted a relatively large stimulus program (the proportion of tax cuts was twice as large as for the U.S.), but were extremely sensitive about not reaching the inflection point where a marginal dollar of stimulus would decline in effectiveness (or turn negative). The focus since the early part of the year has been on reversing stimulus, enacting credible government spending cuts, and encouraging the rest of the developed world to do the same. The result (coincidental or not), has been a return to pre-recession levels of business confidence, a 2.4% annualized increase in households consumption expenditures in the second quarter, and more than a 20% annualized increase in business investment. Although growth in net exports did boost GDP in the quarter, it accounted for only 36% of German second quarter GDP growth, less than the 50% contribution from private sector consumption and investment growth (excluding inventories). Were this simply about trade flows and demand for manufactured goods, the German economy would probably resemble that of Japan, where exports were up by more than 25% (annualized) in the second quarter, but the economy remained stagnant due to contractions in consumer spending and private sector investment. "

Round 2 on Lessons from Germany | e21 - Economic Policies for the 21st Century

 

[Wiseacre]

" First and foremost, France has yet to cut spending. In fact, to the extent that the French are frustrated by so-called budget cuts, their only real complaint is that future increases in spending will not be as large as planned. (The same can be said about the U.S. budget.)
By contrast, Sweden has significantly cut government spending without equivalent increases in taxes. Sweden’s finance minister, Anders Borg, successfully reduced welfare spending and pursued economic stimulus through a permanent reduction in the country’s taxes, including a 20-point reduction in the top marginal income tax rate. As a result, Sweden’s economic growth has, of late, trumped every other European country’s.
Sweden’s commitment to reform has paid off in economic growth. While the “balanced approach” may give the appearance of pursuing fiscal solvency, in practice it stagnates the possibility of growth. Real fiscal reform comes from a commitment to cut spending and from structural changes to taxation and the regulatory environment. "

GDP Growth Rates: The Swedish Approach | Mercatus

 

[Wiseacre]

My post above on Sweden is referring to a chart depicting the growth rates for Sweden compared to France and the US. It's from the same link to the Mercatus Center.

 

[DSGE]

Sweden also engaged in extremely aggressive monetary stimulus.

 

[Wiseacre]

Do I need to do more? Look at what the Swiss did with their debt brake, they limited their spending to their revenue growth, what a concept. Or the Baltic States. You show me a country that raised taxes and spent more money and I'll show you a failed economy.

 

[Wiseacre]

Sweden also engaged in extremely aggressive monetary stimulus.

When was this?

 

[DSGE]

Sweden also engaged in extremely aggressive monetary stimulus.

When was this?

Back in mid 09, i think. The Riksbank expanded its balance sheet to 25% of GDP and charged negative 0.25% interest on reserves. They exited the zero lower bound by 2010 and shrunk their balance sheet back to a more normal size (though they're tightening excessively now).

The point being, the central bank drives aggregate demand. If government expenditures fall, as they did in Sweden, then the central bank will offset the affects on demand with more aggressive monetary stimulus. If governments expand spending unnecessarily, the central bank will simply tighten or not pursue further expansionary policy. Since demand is driven entirely by the central bank, the federal government is wasting time and money with fiscal stimulus. The only government stimulus that may actually work is policies which affect the supply capacity of the economy; employer side payroll tax cuts, etc. But most people who aren't polarized by their politics seem to agree that we have a demand problem mostly.

 

[EdwardBaiamonte]

Every country that tries/has tried austerity has seen it fail. But fuck history.

Why not name one of these countries and describe the austerity. Then you will realize you have no idea whatsoever what you are talking about. Since liberalism is based on ignorance it is not surprising that you have no idea what you are talking about.

 

[starcraftzzz]

" First and foremost, France has yet to cut spending. In fact, to the extent that the French are frustrated by so-called budget cuts, their only real complaint is that future increases in spending will not be as large as planned.

By contrast, Sweden has significantly cut government spending without equivalent increases in taxes. Sweden’s finance minister, Anders Borg, successfully reduced welfare spending and pursued economic stimulus through a permanent reduction in the country’s taxes, including a 20-point reduction in the top marginal income tax rate. As a result, Sweden’s economic growth has, of late, trumped every other European country’s.
Sweden’s commitment to reform has paid off in economic growth. While the “balanced approach” may give the appearance of pursuing fiscal solvency, in practice it stagnates the possibility of growth. Real fiscal reform comes from a commitment to cut spending and from structural changes to taxation and the regulatory environment. "

GDP Growth Rates: The Swedish Approach | Mercatus

Um Sweden has so far increased spending, and cut taxes
Sweden -- Sweden!!! -- as Conservative Icon - NYTimes.com
Sweden Slashes Income Taxes to Promote Job Growth | Power Line
So Sweden did the opposite of austerity.
So perhaps look at the actual data instead of an editorial.

 

[starcraftzzz]

" The Germans enacted a relatively large stimulus program (the proportion of tax cuts was twice as large as for the U.S.), but were extremely sensitive about not reaching the inflection point where a marginal dollar of stimulus would decline in effectiveness (or turn negative). The focus since the early part of the year has been on reversing stimulus, enacting credible government spending cuts, and encouraging the rest of the developed world to do the same. The result (coincidental or not), has been a return to pre-recession levels of business confidence, a 2.4% annualized increase in households consumption expenditures in the second quarter, and more than a 20% annualized increase in business investment. Although growth in net exports did boost GDP in the quarter, it accounted for only 36% of German second quarter GDP growth, less than the 50% contribution from private sector consumption and investment growth (excluding inventories). Were this simply about trade flows and demand for manufactured goods, the German economy would probably resemble that of Japan, where exports were up by more than 25% (annualized) in the second quarter, but the economy remained stagnant due to contractions in consumer spending and private sector investment. "

Round 2 on Lessons from Germany | e21 - Economic Policies for the 21st Century

Do you not know what austerity is?

 

[starcraftzzz]

" When Jean Chretien became prime minister in 1993, Canada faced a fiscal and economic breakdown. The government’s share of the economy had climbed to 53% in 1992, from 28% in 1960. Deficits had tripled as a percentage of gross domestic product over the prior two decades. Government debt was nearly 70% of GDP and growing rapidly. Interest payments on the debt took up 35 cents of every tax dollar.
Mr. Chretien and his finance minister, Paul Martin, took decisive action. “Canadians have told us that they want the deficit brought down by reducing government spending, not by raising taxes, and we agree,” Mr. Martin said. The new administration slashed spending. Unemployment benefits were cut by nearly 40%. The ratio of spending cuts to tax increases was nearly 7-to-1. Federal employment was reduced by 14%. Canada’s national railway and air-traffic-control system were privatized.
The economy rebounded. Between 1995 and 1998, a $36.6 billion deficit turned into a $3 billion surplus. Canada’s debt-to-GDP ratio was cut in half in a decade. Canada now has faster economic growth than America (3.3% in 2010, compared to 2.9% in the U.S.), a lower jobless rate (7.2% in June, when the U.S. rate was 9.2%), a deficit-to-GDP ratio that’s a quarter of ours, and a stronger dollar.
What’s most remarkable about the Canadian turnaround: It was led by liberals. Mr. Chretien and Mr. Martin were leaders of the Liberal Party. Yet they responded to the clear wishes of Canadians and, to the surprise of the political class, shifted to the right. Or to the center, the two leaders would say. "

Fred Barnes: How Spending Cuts—Not Higher Taxes—Saved Canada - WSJ.com

Who would of thought that 1993 equaled 2010. Come up with some examples where you don't need a time machine to make them work

 

[starcraftzzz]

Every country that tries/has tried austerity has seen it fail. But fuck history.

Why not name one of these countries and describe the austerity. Then you will realize you have no idea whatsoever what you are talking about. Since liberalism is based on ignorance it is not surprising that you have no idea what you are talking about.

Lets see Argentina (late 90's early 00's), Latvia, Ireland, Spain, Greece, Italy, Peurto Rico, UK, Portgual, Estonia, Slovakia, the Eurozone as a whole.
Basic fact austerity never works but i guess we can try it for the 20th time and it will final work.

 

[EdwardBaiamonte]

Every country that tries/has tried austerity has seen it fail. But fuck history.

Why not name one of these countries and describe the austerity. Then you will realize you have no idea whatsoever what you are talking about. Since liberalism is based on ignorance it is not surprising that you have no idea what you are talking about.

Lets see Argentina (late 90's early 00's), Latvia, Ireland, Spain, Greece, Italy, Peurto Rico, UK, Portgual, Estonia, Slovakia, the Eurozone as a whole.
Basic fact austerity never works but i guess we can try it for the 20th time and it will final work.

I asked for your single best example of austerity and a description of the austerity?? What are you so afraid of??? What does your fear tell you, liberal?

 

[Wiseacre]

Sweden also engaged in extremely aggressive monetary stimulus.

When was this?

Back in mid 09, i think. The Riksbank expanded its balance sheet to 25% of GDP and charged negative 0.25% interest on reserves. They exited the zero lower bound by 2010 and shrunk their balance sheet back to a more normal size (though they're tightening excessively now).

The point being, the central bank drives aggregate demand. If government expenditures fall, as they did in Sweden, then the central bank will offset the affects on demand with more aggressive monetary stimulus. If governments expand spending unnecessarily, the central bank will simply tighten or not pursue further expansionary policy. Since demand is driven entirely by the central bank, the federal government is wasting time and money with fiscal stimulus. The only government stimulus that may actually work is policies which affect the supply capacity of the economy; employer side payroll tax cuts, etc. But most people who aren't polarized by their politics seem to agree that we have a demand problem mostly.

I think that Sweden's monetary policy had something to do with their success in improving their economic growth, but we might disagree with how much influence it had. I suspect their fiscal policies of reduced spending and lower taxes had more to do with it, but I don't see any way to prove it one way or the other.

I will say that our monetary policy of QE here in the US has not been wildly sucessful. Maybe we would have done better coming out of the recession if we had adopted fiscal policies similar to what Sweden did, guess we'll never know. You could say that things might have been a lot worse without the QE, but that's hard to quantify.

" Since demand is driven entirely by the central bank ". You really think so? I couldn't disagree more.

 

[EdwardBaiamonte]

Since demand is driven entirely by the central bank,

of course thats perfectly idiotic. If true we'd always have perfect demand and full employment!

Could a central bank in the stone age have driven demand at 21st century levels?? A central bank should stay out of the way so as not to interfere with the natural evolution of an economy. It obviously cant direct it in a meaningful way unless it starts inventing new products.

 

[starcraftzzz]

Why not name one of these countries and describe the austerity. Then you will realize you have no idea whatsoever what you are talking about. Since liberalism is based on ignorance it is not surprising that you have no idea what you are talking about.

Lets see Argentina (late 90's early 00's), Latvia, Ireland, Spain, Greece, Italy, Peurto Rico, UK, Portgual, Estonia, Slovakia, the Eurozone as a whole.
Basic fact austerity never works but i guess we can try it for the 20th time and it will final work.

I asked for your single best example of austerity and a description of the austerity?? What are you so afraid of??? What does your fear tell you, liberal?

Well lets see what is the best example. Greece whit unemployment at 20% and GDP 20% below peak, how bout Argentina with unemployment at 20% and GDP down like 40%.. Its hard to provide the best example because there are so many.
Austerity is the absurd conservative notion that in a depressed economy making it shittier will some how make it better; one you clearly hold because you are a retard