- Apr 13, 2011
- Reaction score
- Political Leaning
Some debt scolds, including the government of U.K. Chancellor of the Exchequer George Osborne, might argue that a little bit of economic pain now is worth it if you can avoid a government-debt blowup in the future. That was the gist of Harvard economists Carmen Reinhart and Kenneth Rogoff's oft-cited paper, "Growth In A Time Of Debt," which argued that government debt above 90 percent of GDP led to sharply lower economic growth. Reinhart and Rogoff followed up their paper with a series of op-ed pieces and talks to Congress to help convince governments here and in Europe to hurry up and cut government debt sooner rather than later.
The trouble is, austerity has not worked to lower government debt burdens. It has only made them worse.
Surprise, surprise: it turns out that slashing government spending and raising taxes in the midst of a recession/depression actually lowers tax revenue and raises the cost of government services for the poor and unemployed, which makes government finances even worse.
Read more @: The Complete Failure Of Austerity, In 1 Chart
What a tick! I thought if we did all these things which austerity calls for that the government debt will go down :doh
Austerity doesnt work. It wont work, and it will only make things worse for the rest of us and the vast majority of the population. Another way is possible.