Austerity is not the answer

Citizen_Cutback

Brian Lenihan has played the virtuous "Austerity" game with us for the last two years. Mark Blyth is a professor of International Political Economy at Brown University and is writing Austerity: The History of a Dangerous Idea, forthcoming with Oxford University Press in 2011.

http://vimeo.com/15061570

Brian Lenihan has a first-class masters in law from Cambridge University. Enough said!

dvpower

That video is in High Definition. I can't afford that shít.

RATM

Citizen_Cutback wrote: »

Austerity is not the answer

lol

dvpower

Watched the video. I was struck by a couple of points.
1. Austerity hits the poor more than the rich.
2. If everyone does austerity at the same time it sucks money out of the economy and hits growth.

I think that these points are already well understood; it's unfair and it may be counter productive.
What the video doesn't provide is an alternative. In Ireland where we have a mountain of debt and a massive deficit, I can't see any other credible option but austerity.
I know that a couple of years back some people were calling for a stimulation package, but it looks like thats not feasable in any substantial way. Higher taxes may be part of the answer, but only part.

Austerity

Citizen_Cutback wrote: »

Brian Lenihan has played the virtuous "Austerity" game with us for the last two years. Mark Blyth is a professor of International Political Economy at Brown University and is writing Austerity: The History of a Dangerous Idea, forthcoming with Oxford University Press in 2011.

http://vimeo.com/15061570

Brian Lenihan has a first-class masters in law from Cambridge University. Enough said!

What is the answer then? Just spend like a drunken sailor and hope everything sorts itself out in the end?

ei.sdraob

spend what exactly?

you swear there are pallets of gold underneath the Dail :rolleyes: and the state is not bankrupt (no pun intended)

Nody

Austerity wrote: »

What is the answer then? Just spend like a drunken sailor and hope everything sorts itself out in the end?

"We did not cause it so we should not pay" or "Make them bankers pay it" appears to be the most common answer...

johnnyskeleton

Citizen_Cutback wrote: »

Brian Lenihan has a first-class masters in law from Cambridge University. Enough said!

If there was unanimity in the economics that austerity was always wrong then it would be a fair comment, but there are great divisions between economists as to whether austerity or government spending is the best way out of a recession.

As already said, we don't have any money to do anything other than austerity. We have an overinflated economy so austerity and deflation are probably good.

But aside from all of that, not even the most ardent supporter of stimulus over austerity advocates that the stimulus should be through public sector wages, social welfare and bank bailouts. They say that the extra spending should be in the form of investment in infrastructure and business.

Don't forget as well that we are running a deficit of 12% or more in the budget and above 30% if the bank bailouts are included. So we are already running a massive stimulus plan and the austerity measures are simply reducing the level of stimulus.

So the current government are doubly wrong. First, they are not being austere enough in that no stimulus should last more than a year or two so now they should be cutting it back completely. Second, they are misspending the stimulus on PS wages, SW and, most of all, the bailouts and NAMA. This money should be used instead for investment/infrastructural projects and indeed it would have been better to let the banks fail and set up a new bank with government money than the current stimulus plan.

thebman

The alternative is to tell them we won't pay ... then ask for some more to cover next years costs.

I'll let you work out how well that plan goes.

Justin Collery

Lets be clear about what we have to do:

Noun 1. austerity - the trait of great self-denial (especially refraining from worldly pleasures)

Paying the interest on the bank bailout will result in austerity. In real numbers, somewhere between €2bn and €5bn each and every year. As a result of this we will have to do without some worldly pleasures.

Then there is the living within your means. This year we are living €18bn beyond our means. Getting this number as close to 0 as your chosen dogma deems appropriate is not austerity. It's reality.

amacachi

LOL at the idea of a stimulus from the government, sure they were trying that since the late 90s, look where it led.

imitation

At the end of the day, the markets will be austere, the government can choose to follow if it likes or not. If they dont they have to deal with reduced tax intakes, public sector wages that are out of sync with private wages. I dont think the irish government could pump enough money into the market compared to the amount that has been pumped in by foreign investments in the past and kick start it.