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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsIt’s Official: Austerity Economics Doesn’t Work
http://www.newyorker.com/online/blogs/comment/2012/12/austerity-economics-doesnt-work.html?mbid=gnep&google_editors_picks=trueWith all the theatrics going on in Washington, you might well have missed the most important political and economic news of the week: an official confirmation from the United Kingdom that austerity policies dont work.
In making his annual Autumn Statement to the House of Commons on Wednesday, George Osborne, the Chancellor of the Exchequer, was forced to admit that his government has failed to meet a series of targets it set for itself back in June of 2010, when it slashed the budgets of various government departments by up to thirty per cent. Back then, Osborne said that his austerity policies would cut his countrys budget deficit to zero within four years, enable Britain to begin relieving itself of its public debt, and generate healthy economic growth. None of these things have happened. Britains deficit remains stubbornly high, its people have been suffering through a double-dip recession, and many observers now expect the country to lose its AAA credit rating.
One of the frustrations of economics is that it is hard to carry out scientific experiments and prove things beyond reasonable doubt. But not in this case. Thanks to Osbornes stubborn refusal to change courseTurning back would be a disaster, he told Parliamentwhat has been happening in Britain amounts to a natural experiment to test the efficacy of austerity economics. For the sixty-odd million inhabitants of the U.K., living through it hasnt been a pleasant experienceno university institutional-review board would have allowed this kind of brutal human experimentation. But from a historical and scientific perspective, it is an invaluable case study.
At every stage of the experiment, critics (myself included) have warned that Osbornes austerity policies would prove self-defeating. Any decent economics textbook will tell you that, other things being equal, cutting government spending causes the economys overall output to fall, tax revenues to decrease, and spending on benefits to increase. Almost invariably, the end result is slower growth (or a recession) and high budget deficits. Osborne, relying on arguments about restoring the confidence of investors and businessmen that his forebears at the U.K. Treasury used during the early nineteen-thirties against Keynes, insisted (and continues to insist) otherwise, but he has been proven wrong.
Read more: http://www.newyorker.com/online/blogs/comment/2012/12/austerity-economics-doesnt-work.html#ixzz2ETov1tj5
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It’s Official: Austerity Economics Doesn’t Work (Original Post)
underpants
Dec 2012
OP
underpants
(182,885 posts)1. + Let’s go over that one more time.
Lets go over that one more time. Having adopted the policies of Keynes in response to a calamitous recession, the United States has grown more than twice as fast during the past three years as Britain, which adopted the economics of Hoover (and Paul Ryan). Meanwhile, the gaping hole in the two countries budgets has declined at roughly the same rate, and next year the U.S. will be in better fiscal shape than its old ally.
Read more: http://www.newyorker.com/online/blogs/comment/2012/12/austerity-economics-doesnt-work.html#ixzz2ETp8wO6v
leftstreet
(36,116 posts)2. DURec
Thanks for posting this
An interesting read
jody
(26,624 posts)3. Or perhaps UK was not austere enough? nt