45 online
 
Most Popular Choices
Share on Facebook 8 Printer Friendly Page More Sharing
OpEdNews Op Eds    H3'ed 6/4/12

Austerity in the Midst of a Depression - Mad, Bad and Immoral

By       (Page 1 of 1 pages)   4 comments
Follow Me on Twitter     Message Adnan Al-Daini
Become a Fan
  (9 fans)

Right wing politicians and commentators have always been able to appeal to the lowest instincts of human nature in a way that chimes with the aspirations of the many. Take, for example, the issue of the savage cuts in government spending; they are presented in the guise of a "family finances" argument.   As a family "wouldn't you want to pay your debts and live within your means?" is an appealing argument.  

There is, of course, a crucial difference between running a household budget and running the country's finances.  

If you are lucky enough to be employed, and you discover that your expenditure exceeds your income or you are in debt, the right thing to do is for your family to economize, so that it lives within its means and pays its debts.   

The income of a government, however, comes from the taxes we pay, and that depends on the economic activity in the country and the level of employment. In a recession economic activity is down, unemployment is up, and thus the tax intake goes down.  

Austerity and cuts will depress economic activity even further and unemployment will increase, thus reducing government income.   Moreover, the rise in unemployment has to be paid for by the government to ensure that people do not descend into the sort of poverty that currently exists in some developing countries.   Austerity, therefore, hits the economy with a double whammy, low income for the government and greater expenditure.  

"The doctrines that are animating core economic policies [on] both sides of the Atlantic are in fact absolutely bonkers" , so said Paul Krugman, the Nobel Prize-winning economist. "It is actually deeply destructive policy to pursue austerity in the midst of a depression".   A collective madness seems to have gripped our politicians.

It is clear to anyone with an open mind, willing to be guided by reason, that severe cuts and austerity as a medicine to cure the patient are doing nothing of the sort; actually they are killing it. The evidence is all around us with the blighted lives of tens of millions, particularly the young, in the eurozone.  

Of course, as pointed out by Paul Krugman, the eurozone has the additional problem of having "a single currency without a single government". Many of those governments, Greece, Ireland, Spain etc... are reluctantly being pushed into the economics of austerity and cuts by the German government.

It is galling that the UK government has embarked on this route voluntarily, as if this is some sort of a virility test to show that the "Brits" are more macho than the rest of Europe.   Or could it be that the mantra of "shrinking the state" and "the market knows best" is trumping reason once again.

Running the economy of a country is not the same as running a household budget, Mr. Osborne. Look at the evidence; listen to the experts; perform another U-turn; change course and lay the foundation for a sustainable recovery, and with it improve the lives of millions.

Must Read 2   Valuable 2   Well Said 1  
Rate It | View Ratings

Adnan Al-Daini Social Media Pages: Facebook page url on login Profile not filled in       Twitter page url on login Profile not filled in       Linkedin page url on login Profile not filled in       Instagram page url on login Profile not filled in

Dr Adnan Al-Daini took early retirement in 2005 as a principal lecturer in Mechanical Engineering at a British University. His PhD in Mechanical Engineering is from Birmingham University, UK. He has published numerous applied scientific research (more...)
 
Go To Commenting
The views expressed herein are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.
Follow Me on Twitter     Writers Guidelines

 
Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles
Support OpEdNews

OpEdNews depends upon can't survive without your help.

If you value this article and the work of OpEdNews, please either Donate or Purchase a premium membership.

STAY IN THE KNOW
If you've enjoyed this, sign up for our daily or weekly newsletter to get lots of great progressive content.
Daily Weekly     OpEd News Newsletter
Name
Email
   (Opens new browser window)
 

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

The Libyan revolution

The Power of the Media

The Pursuit of Happiness. America, live up to the ideals of your Declaration of Independence

The Obscenity of War and Military Spending in a World of Need and Suffering

Global Warming: Doing Nothing or Very Little Is Not an Option

Education -- Heading to Mediocrity for the Many

To View Comments or Join the Conversation:

Tell A Friend