"The Great British Austerity Experiment"
Dean Baker says the negative outcome of austerity in England "could provide a useful example for the United States," but it probably won't:
The Great British austerity experiment, by Dean Baker, CIF: Three months ago, I noted that the United States might benefit from the pain being suffered by the citizens of the United Kingdom. The reason was the new coalition government's commitment to prosperity through austerity. As predicted, this looks very much like a path to pain and stagnation, not healthy growth.
That's bad news for the citizens of the United Kingdom. They will be forced to suffer through years of unnecessarily high unemployment. They will also have to endure cutbacks in support for important public services like healthcare and education.
But the pain for the people in England could provide a useful example for the United States..., the austerity crew in the United States has been newly emboldened by the hugely partisan media that desperately want to eviscerate the country's bedrock social programs: social security and Medicare.
The elite media and the politicians whom they promote would love to see the United States follow the austerity path of the UK's new government. However, if this path takes the UK into dangerous economic waters, it could provide a powerful warning to the public in the United States before we make the same mistake.
The British economy looks like it is doing its part..., things are going just as standard economic theory predicts: the economy is slowing and unemployment is likely to rise. ...
The takeaway lesson should be "austerity does not work; don't go there." Unfortunately, in the land of faith-based economics, evidence does not count for much..., the United States may still have to follow the same road anyhow. But we opponents of that course all appreciate the willingness of the UK to demonstrate the foolishness of this action.
Yes -- it's not about evidence, it's about finding an excuse to implement an ideology. The recession got in the way of those efforts until the idea that austerity is stimulative came along. Thus, "austerity is stimulative" is being used very much like "tax cuts increase revenues." It's a means of claiming that ideological goals are good for the economy so that supporters in Congress and elsewhere have a means of rationalizing the policies they want to put in place. It's the idea that matters, and contrary evidence is brushed aside.
Posted by Mark Thoma on Wednesday, February 2, 2011 at 12:16 AM in Budget Deficit, Economics, Fiscal Policy, Politics |
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