Popular Conservative Austerity argument Debunked?

[Badassbab]

Kasz216 said:

Tigerlure said:

thranx said:
Things in the US still have not recovered. High unemployment. High underemployment. Beginning a new housing bubble. The education bubble will have to burst sometime. Dont see how you can say we have spent ourselves into the good times when we haven't, and we still have to pay it all back. Also dont know how you can say that austerity has failed when we aren't through the mess yet. I say its too early to call right now. Why dont we wait until we are actually paying of our debt, have a good unemployment % and underemployment is a thing of the past before we declare a winner.

They've been trying that in Europe for a few years. Where has it gotten them? Some of the countries are almost entering a recession again. Maybe a few years isn't enough time, but it certainly hasn't convinced me that austerity is helpful when you're already in a weak economy.

How about 20 years?  That's about how long Japan has been trying stimulus mesures in an attempt to kickstart GDP.  

http://seekingalpha.com/article/220703-japan-s-economy-shows-limits-of-keynesian-policies

Japan's been trying to spend there way out of trouble forever now.  Once their population gets a little older and there aren't enough conservative minded investors to buy government bonds... Japan will be facing a nigh inevitable crash of gigantic proportions.

 

The truth is... when your in a bad situation.  You CAN't get out of it.  Either by Spending or Austerity.

The biggest arrogance we have is that we can fix EVERYTHING.

We really can't.

The main difference is... spending can hide the numbers on the fundamentals.  Though the poor are still going to feel the burn.  Ask any of my customers where I work where the US Recovery is... they'll say it's nowhere

Despite the stagflation of the Japanese econmy for the past 20+ years, there are a few key differences between Japan and say the US and UK which in some ways cushions them or at least it has so far. The following 'pros' could become 'cons' in the near future though-

Pros- Japanese people save loads (like a lot of other Asian countries) and look after their parents in old age. Their state welfare state isn't anywhere near as big.

Cons- Japanese buisness could really do with that money being spent.

Pros- They are still a net exporter and export tons of goods to the rapidly growing East Asian market as well to Western Europe and the US.

Cons-  Being over releiant on exports means if the countries they export to suddeny can't afford to buy as much (i.e recession hit Europe) it could badly damage the economy.

Pros- Japanese society is largely homogenous. They have a large population and don't want nor feel the need to allow in immigrants which in the Western world businesses have used to stall inflation adjusted wage increases for the past few decades.

Cons- It's only a matter of time before Japan needs to open up it's borders unless Japanese people suddenly start having loads of babies.

Pros- Japanese productivity is legendary. Despite it's shringking working age population and negative demographic trends compared to practically every other developed country out there it still managed to grow it's economy with low unemployment.

Cons- Some of the so called employed are actually working for just a few hours a week so the modest unemployment statistics is quite misleading.