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Yes, Austerity has Actually Happened, and Still Is!

by on June 4, 2013

There seems to be another myth running around right wing blogs that austerity has not actually happened even though millions of people have become unemployed because of spending cuts throughout the world. The classic example of this is John Stossel:

“One problem with this conclusion: European governments didn’t cut! If workers pick through garbage, cuts can’t be a reason, since they didn’t happen.”

Except that cuts have happened, in almost every country in Europe, and it has shown in a reduction the rate of deficit growth:

 photo EUBudgetdeficits_zps97a2ba3a.jpg

The graph clearly indicates that the sharp spending cuts have lead to a decline in budget deficits. But what those on the right want you to believe is that it doesn’t matter because “total debt” is rising. Well when you have a deficit year after year, your total debt will rise, but that doesn’t mean that austerity hasn’t happened or that real people didn’t lose jobs from government spending cuts.

There are numerous sources that show these cuts in spending that occurred:

Businessweek
“Let’s go over to Rome to hear the vote of the Italian jury. “€26bn in cuts over two years, including savage reductions in health spending and road building.”

And now it is over to Spain. “Good evening, Madrid. €15bn in spending cuts over two years? Thank you Madrid.”

Paris? “€5bn in cuts over two years.” Does that really complete the voting of the French jury? Oui (although no one much in France believes the figures).

Athens? A punishing €30bn over three years, on top of previous cuts.

Good evening to London, where a new coalition jury has just gathered. “£6.2bn of cuts in the present tax year with much, much more to come.”

And it is still going on in several places:

“Prime minister announces plans to make $6.3bn in budget cuts by raising retirement age and laying off 30,000 workers.”

What we see happening here is a classic case of denial by many in the right wing media. Instead of admitting that austerity has failed and continues to fail, they have instead resorted to pretending that austerity has never actually happened.

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From → Economics 101

5 Comments
  1. Dr. Boris Bakunas permalink

    The Europeans have tried austerity, and it has failed. On May 29, 2013, the EU admitted this in deed, if not in word, by extending the deficit deadlines for the following countries.

    EU EXTENDS DEFICIT DEADLINE FOR POLAND TO 2014
    EU EXTENDS DEFICIT DEADLINE FOR SLOVENIA TO 2015
    EU EXTENDS DEFICIT DEADLINE FOR PORTUGAL TO 2015
    EU EXTENDS DEFICIT DEADLINE FOR NETHERLANDS TO 2014
    EU EXTENDS DEFICIT DEADLINE FOR SPAIN UNTIL 2016
    EU RECOMMENDS LIFTING DEFICIT REGIME FOR ROMANIA, LITHUANIA
    EU RECOMMENDS LIFTING EXCESSIVE-DEFICIT REGIME FOR ITALY
    EU SAYS 20 STATES CURRENTLY UNDER EXCESSIVE-DEFICIT PROCEDURES

    Congratulations on a superb article, Mr. Hochbaum. Unfortunately, trying to reason with ideologues is like talking to a doorknob.

  2. Alfonse Bartlette permalink

    Their gdp collapsed. Try using nominal spending YoY.

    France has continued increasing nominal spending.

    So now we define Austerity as “consistent increase in government spending”?

    GDP doesn’t measure the strength of an economy.

    • Government spending increases because of austerity.

      When they cut wages or cut jobs it creates an equal increase in unemployment and welfare expenditures AND it decreases tax revenues as well.

      This is one reason why austerity is silly in a recession, it actually increases deficits.

      • Your nifty little graph is a measure of deficits, not spending. Also GDP is total measure of spending which includes government spending. Print some extra euros and your GDP just went up a few extra euros, not because more wealth was created. Deficits in Europe went down because taxes were increased not because spending was cut.

        When the government spends less, that leaves more money in the people’s pockets to spend how they see fit, not how government sees fit. Governments don’t make economic decisions, they make political ones.

        Tax increases + purely symbolic cuts in spending =/= austerity

      • My graph measures deficits as a percentage of GDP, so yes it does measure parts of spending decreases and tax increases.

        Tax increases are a part of austerity as is generally defined.

        Structural spending has definitely happened in Europe, from cuts in government jobs to decreases in wages, etc…

        These things actually happened. But if you measure things on just deficits alone you won’t see how much government actually cut because of automatic stabalizers taking effect.

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