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Here is the situation. A man is bleeding to death and an attempt is being made to save his life by the application of at tournequet. The liberal answer is to allow the man to bleed to death, as he may have some pain from the application of the device and surely that is a better end.
Now what is your solution? Keep spending until total anarchy erupts?
That is indeed a flawed analogy. The notion of expansionary austerity has proven to be a failed strategy in Europe. The idea beliefs are purely anti-Keynesian and rests upon the belief that one cutting spending and firing people creates more jobs and expands the economy.
Let it be known that Paul Krugman has been writing about this since the world-wide economic crisis started and has been 100% correct.
The fact is that in a liquidity trap, government can increase fiscal spending and increase the money supply and it will not raise interest rates nor cause inflation. The U.S. is a prime example of this fact, starting in 2009. Europe, especially the UK who did the opposite, are prime examples of failure. Those countries that attempted contractionary austerity neither improve their economies nor make their deficit reduction targets, as a smaller economy further erodes government revenue.
1. spending must be controlled. The only way to do this is a balanced budget amendment, as congress is completely unreliable at controlling spending.
2. Revenues must be increased. A VAT tax is about the only way to do this. "Taxing the rich" would not generate enough revenue and is notoriously useless. With a VAT tax, those who spend more pay more. It is a progressive tax that does not punish hard work and creativity.
3. Excess revenue SHOULD BE USED to pay down debt. Look at what Canada did 15 years ago. The US can do the same, but it needs fiscal discipline. The current administration is the poster child for fiscal irresponsibility and we need an about face ASAP to save the nation from financial disaster.
The only problem with austerity is they always wait until its too late.
They never do any austerity when it's the right time, to avoid problems, just like the USA right now, it's spend, spend, spend, and then when it's too late, austerity comes on it's own.
The only problem with austerity is they always wait until its too late.
They never do any austerity when it's the right time, to avoid problems, just like the USA right now, it's spend, spend, spend, and then when it's too late, austerity comes on it's own.
That reminds me of the saying that "The US government will always do the right thing, but only after it's exhausted all other routes."
There's been alot of debate recently in Europe about whether or not austerity is working. To find out the answer or answers check this out.
Uh, it's been like 3 days.
Austerity programs would fix things in a couple of months, is that what you thought? Austerity programs will need to be in place for several years for them to work.
I guess applying a little common sense is just totally out of the question.
Working...
Mircea
Quote:
Originally Posted by Neuling
The analogy is flawed.
No it isn't. It's a great analogy, on a par with my life-boat analogy.
[quote=Neuling;22908087] While a government can be made more efficient, it will always cost a lot.[/qutoe]
That is not true at all, and "franky" I'm shocked that you would make a comment as silly as that.
Quote:
Originally Posted by Neuling
They should try to increase income, for instance by improving the economy and going after all those rich Greeks who owe billions in taxes.
The Laffer Curve applies to all countries, not just the US.
Greece et al will have to run their programs for several years to get out of debt, and my guess is they made all the wrong budget cuts.
Efficiently...
Mircea
Quote:
Originally Posted by knowledgeiskey
Austerity has never proven to work.
It worked in Romania.
Ooops.
Romania paid off every single loan to foreign countries and banks, to its own banks and eliminated its National Debt.
Romania was 100% debt free with no National Debt of deficit.
Uh, of course, you only had TV 2 hours per day (in Black & White), and the electricity came on at 5:00 AM and went off at 7:00 AM and then came back on at 5:00 PM and went off at 9:00 PM for residential electric customers (commercial and industrial electric customers got electricity 18 hours per day), and there were food lines everywhere, and there was absolutely no point in shopping since none of the stores had anything to buy anyway (damn near everything was exported and sold on the world market for US Dollars to pay debts).
The Breakfast of Champions was usually a glass of warm water with a few teaspoons of sugar in it.
Your average American couldn't have handled that kind of austerity and probably would commit suicide after 3 days.
No it isn't. It's a great analogy, on a par with my life-boat analogy.
That is not true at all, and "franky" I'm shocked that you would make a comment as silly as that.
There is nothing silly about it, the administration of any country with millions of people costs a lot of money, and that is OK. After all, ideally the country gets something in return for those billions spent.
The Laffer Curve applies to all countries, not just the US.
Greece et al will have to run their programs for several years to get out of debt, and my guess is they made all the wrong budget cuts.
Efficiently...
That is the point. I don't think getting out of debt is the number one priority of Greece, creating a solid economy is, and that takes more rather than less investment. Long-term investment in education of the masses, etc. It is like with driving in a curve. When you are about to loose control and take off, you need to accelerate rather than hit the brakes. Anti-cyclical spending on a grand scale so to speak. There is no point in crashing the economy just so the country is debt-free.
Austerity programs would fix things in a couple of months, is that what you thought? Austerity programs will need to be in place for several years for them to work.
I guess applying a little common sense is just totally out of the question.
Working...
Mircea
What are you talking about? It's already been years in the UK:
That is the point. I don't think getting out of debt is the number one priority of Greece, creating a solid economy is, and that takes more rather than less investment.
Then Greece will fail.
Before Greece (or any other country) can do anything, it must first stabilize the existing economy. And as far as investment, that's what this is all about. No one is going to invest money in Greece until a sound repayment plan is developed and the economy is stabilized.
Prioritizing...
Mircea
02-09-2012, 02:46 PM
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n/a posts
A better analogy:
Guy comes into hospital suffering from dehydration. Austerity solution: deny fluids, administer diuretics, and wait for the problem to magically disappear.
Quote:
What are you talking about? It's already been years in the UK
There you go injecting facts into the discussion.
FWIW, Greece has also been on the austerity track for a couple years.
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