Austerity Myth
” Europe’s struggles prove that “austerity” fails!
With a condescending sigh, they explain that Europe made deep cuts in government spending, and the result was today’s high unemployment. “With erstwhile middle-class workers reduced to picking through garbage in search of food, austerity has already gone too far,” writes Paul Krugman in The New York Times.
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.
Some European countries tried to reduce deficits by raising taxes. England slapped a 25 percent tax increase on the wealthy, but it didn’t bring in the revenues hoped for. Rich people move their assets elsewhere, or just stop working as much.
Iceland was hit by bank collapses — but government ignored street protests and cut real spending. Iceland’s budget deficit fell from 13 percent of gross domestic product to 3. Iceland’s economy’s is now growing.
Canada slashed spending 20 years ago and now outranks the U.S. on many economic indicators.
Around the same time, Japan went the other way, investing heavily in the public sector in an attempt to jump-start its economy, much as the U.S. did with “stimulus” under President Obama. The result? Japan’s economy stagnated.”
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