Britains Self-Inflicted Misery(2 Posts)
Think austerity is a necessary tool to the recovery of our faltering economy? Think again, even the New York Times disagrees, this editorial is from the 14th October.
"Britains Self-Inflicted Misery
Published: October 14, 2011
For a year now, Britains economy has been stuck in a vicious cycle of low growth, high unemployment and fiscal austerity. But unlike Greece, which has been forced into induced recession by misguided European Union creditors, Britain has inflicted this harmful quack cure on itself.
Austerity was a deliberate ideological choice by Prime Minister David Camerons ruling coalition of Conservatives and Liberal Democrats, elected 17 months ago. It has failed and can be expected to keep failing. But neither party is yet prepared to acknowledge that reality and change course.
Britains economy has barely grown since the budget cuts began taking effect late last year. The most recent quarterly figures showed the economy flat-lining, with growth at 0.1 percent.
New figures released this week reported Britains highest jobless numbers in more than 15 years. Independent analysts expect unemployment now 8.1 percent to keep rising in the months ahead. The government has kept its promise to slash public-sector jobs more than 100,000 have been lost in recent months. But its deficit-reduction policies have failed to revive the business confidence that was supposed to spur private-sector hiring.
Drastic public spending cuts were the wrong deficit-reduction strategy for the weakened British economy a year ago. And they are the wrong strategy for the faltering American economy today. Britains unhappy experience is further evidence that radical reductions in federal spending will do little but stifle economic recovery.
A few years of robust growth would go far toward making swollen federal deficits more manageable. But slashing government spending in an already stalled economy weakens anemic demand, leading to lost output and lost tax revenues. As revenues fall, deficit reduction requires longer, deeper spending cuts. Cut too far, too fast, and the result is not a balanced budget but a lost decade of no growth. That could now happen in Britain. And if the Republicans have their way, it could also happen here.
Austerity is a political ideology masquerading as an economic policy. It rests on a myth, impervious to facts, that portrays all government spending as wasteful and harmful, and unnecessary to the recovery. The real world is a lot more complicated. America has no need to repeat Mr. Camerons failed experiment."
There's a thread on that already. What the NYT forgets is that the Democratic spending programme designed to stimulate growth is not working either.
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