Do Austerity Economics Work? | TigerDroppings.com

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Wario Balotelli
Member since Jun 2011
173 posts

Do Austerity Economics Work?


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With 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 don’t 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 country’s 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. Britain’s 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.


Thoughts?







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Tim
LSU Fan
Texas
Member since Jan 2005
6158 posts

re: Do Austerity Economics Work?


Should have said "No" in the beginning. Don't make promises you can't keep. Gov't can be everything to all people.





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gatorsimz
Florida Fan
cafe risque
Member since Feb 2009
5397 posts

re: Do Austerity Economics Work?


Dude says:

quote:

Austerity policies are self-defeating: they cripple growth and reduce tax revenues. The only way to bring down the U.S. government’s deficit in a sustainable manner, and put the nation’s finances on a firmer footing, is to keep the economy growing. Spending cuts and tax increases can also play a role, but they need to be introduced gradually.








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Zach
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Member since May 2005
63899 posts

re: Do Austerity Economics Work?


Japan made a serious economic improvement with austerity measures. But I can't remember the time frame.





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Duke
USA Fan
Gonzales, La
Member since Jan 2008
19062 posts

re: Do Austerity Economics Work?


Not Recently





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90proofprofessional
LSU Fan
Member since Mar 2004
8999 posts
 Online 

re: Do Austerity Economics Work?


quote:

Thoughts?

What should Greece do to get past their credit problems? What should they do after they have gotten past them?

ETA- the phrase "austerity economics" is pretty much meaningless.



This post was edited on 12/7 at 10:49 am


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Zach
LSU Fan
Member since May 2005
63899 posts

re: Do Austerity Economics Work?


No. It was not recently. If it was, I would have remembered.
I want to say 70s.






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kingbob
LSU Fan
St. Amant, LA
Member since Nov 2010
18075 posts

re: Do Austerity Economics Work?


No, if you raise taxes while cutting government spending without significantly curbing entitlements, you are going to strangle what little economic growth you have.

The best way to fix a debt crisis is to grow your tax base while significantly reducing your spending liabilities.

The best way to grow your tax base is to eliminate incentives not to work, eliminate disincentives to work, lower tax rates, simplify tax codes to eliminate loop holes, and create a favorable regulatory climate for businesses. This will allow home grown businesses to better flourish while creating a competitive environment for foreign businesses to relocate.

Reducing spending is just as important. First, you have to reduce the baseline of spending. This can be done by reducing retirement benefits, lowering government employee salaries, reducing entitlements, instituting free market reforms to healthcare to lower costs of Medicare and Medicaid esque entitlements, privatize some government services, institute reforms that discourage laziness from government employees so as to increase efficiency, ect.






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CollegeFBRules
LSU Fan
Member since Oct 2008
19657 posts

re: Do Austerity Economics Work?


So the premise is that if you're mortgaged to the hilt and in debt up to your eyeballs that cutting spending doesn't work?

Oooookkkkaaaaaayyyyyy.






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kingbob
LSU Fan
St. Amant, LA
Member since Nov 2010
18075 posts

re: Do Austerity Economics Work?


quote:

So the premise is that if you're mortgaged to the hilt and in debt up to your eyeballs that cutting spending doesn't work?


That is the OP's premise. The problem is that the OP doesn't realize that it's the tax increases not the spending cuts that tank the austerity measures.






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BugAC
LSU Fan
Baton Rouge
Member since Oct 2007
18579 posts

re: Do Austerity Economics Work?


quote:

Japan made a serious economic improvement with austerity measures. But I can't remember the time frame


I think in the late 70's, early 80's.






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Duke
USA Fan
Gonzales, La
Member since Jan 2008
19062 posts

re: Do Austerity Economics Work?


quote:

What should Greece do to get past their credit problems?


What can they do? There's seems no way out but default or bondholders taking a haircut.






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CollegeFBRules
LSU Fan
Member since Oct 2008
19657 posts

re: Do Austerity Economics Work?


quote:

That is the OP's premise. The problem is that the OP doesn't realize that it's the tax increases not the spending cuts that tank the austerity measures.


No, the immediate spending cuts are what dampen the economy in the short term. My problem with the OP is that it extrapolates the short term pain over the long term, completely ignoring--on purpose or through stupidity--the benefits of a balanced, low debt economy.






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ironsides
LSU Fan
Nashville, TN
Member since May 2006
6066 posts
 Online 

re: Do Austerity Economics Work?


quote:

No, the immediate spending cuts are what dampen the economy in the short term. My problem with the OP is that it extrapolates the short term pain over the long term, completely ignoring--on purpose or through stupidity--the benefits of a balanced, low debt economy.


Definately on purpose. It's retarded to think that you can spend yourself into prosperity. That's what we've done the last 12 years. We lost over 400k jobs last month, Obama's got to man up and do the right thing instead of wanting to be liked. But he won't - he will become the next Burlesconi.






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Duke
USA Fan
Gonzales, La
Member since Jan 2008
19062 posts

re: Do Austerity Economics Work?


quote:

So the premise is that if you're mortgaged to the hilt and in debt up to your eyeballs that cutting spending doesn't work?


When that spending cut will also cut your income, you're just treading water.







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CollegeFBRules
LSU Fan
Member since Oct 2008
19657 posts

re: Do Austerity Economics Work?


quote:

When that spending cut will also cut your income, you're just treading water.


In the short term, yes.

The economy has to grow on its own outside of government spending, which takes time. This "prosperity" from government largesse didn't happen in a few months or years, the weening process won't happen quickly either.






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NC_Tigah
LSU Fan
Member since Sep 2003
51834 posts

re: Do Austerity Economics Work?


quote:

When that spending cut will also cut your income, you're just treading water.
Good God Almighty!






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LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
81313 posts

re: Do Austerity Economics Work?


quote:

When that spending cut will also cut your income, you're just treading water.

Good God Almighty!

You can't cure stupid, NC_.






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TheHiddenFlask
Clemson Fan
The Welsh red light district
Member since Jul 2008
16880 posts

re: Do Austerity Economics Work?


quote:

Thoughts?


Economists are most commonly paid by the government in some form or another. Therefore, they are inherently liberal. I used to work in Economics. Trust me. Even the conservative ones are inherently liberal.

There are great arguments to both sides, FWIW. The problem with modeling stimulus effects is that you can create a very sound model and do great research, but at the end of the day the entire model will be driven by the multiplier effect that any fair and sane person would admit is completely made up.






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Wario Balotelli
Member since Jun 2011
173 posts

re: Do Austerity Economics Work?


quote:

That is the OP's premise. The problem is that the OP doesn't realize that it's the tax increases not the spending cuts that tank the austerity measures.



I'd like to clarify and say I don't have a premise. I simply posted an article.






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