I didn't think austerity was ever credited as a path to prosperity to begin with. I mean, you take money out of the economy, the GDP of that economy will go down...it's kind of common sense. Unless a country's deficit is at a point where it's on the verge of going bankrupt, all austerity will do is hurt a country's economy, as has been proven in both the US and Europe.
Moderate austerity is a fine thing to do in the middle of a healthy economy when tax revenue is up and people will be less reliant on government services. But severely cutting government spending or raising taxes in the middle of a weak economy is incredibly stupid, and anyone with half a brain should have realized that. Heck, the unemployment rate would be a whole percentage point lower (not taking into account factors like increased labor participating in a healthier economy of course) if government employment had just remained the same as it had been in 2008.
http://blogs.wsj.com/economics/2012/05/08/unemployment-rate-without-government-cuts-7-1/
Hopefully, sanity will eventually return to Washington. We need government spending and lower taxes NOW, lowered spending and higher taxes once we're back to full employment.
Mr Khan said:
Organic growth is actually very limited in nature (mostly to time-saving innovations and things that enable more people to live longer and live better). Most growth is bubble growth, whether backed by government spending or not. |
Exactly. Pretty much every instance of economic prosperity has been a "bubble" of some sort, backed by both private and government spending.
