In addition, with growth slowing, the goals of austerity -- that is, the reason why we're engaging in this policy -- are being pushed out:
Mr Osborne said Britain would miss its target to have debt falling by 2015-16 as a percentage of national income by a year. He also said he would need to extend austerity by another year to 2018 to close the budget deficit.
Let's think this one through. The UK has been implementing an austerity budget since roughly mid-2010. Here are the results:
Just to review:
1.) England is implementing austerity
2.) They are doing this to "clean up their government finances" in the hopes that this "cleaning up" would restore confidence in the UK economy.
3.) The "cleaning up" is leading to contracting growth, which is lowering confidence in the UK economy -- the exact opposite of what was intended from the first place
4.) So, the best plan forward is ... more austerity.
Now, I'm still in a pretty heavily medicated, post surgery situation. In my condition, the above makes no sense.
Also -- for a really good history of the UK austerity program, read this from Wikipedia.
3 comments:
I think this is a slightly unfair judgement.
Yes - austerity will hurt an economy that has become completely dependent on government spending. If you don't get that, you are stupid.
HOWEVER - the trick is weaning the economy of the government for private sector investment instead. This takes some time and in the end will likely be far healthier and sustainable.
Being a new deal democrat, I know you like big government spending on big fancy projects but the music will stop sooner or later whether you print more money or not. Best not get there. Take the pain now.
Any proof that what you say is true, Mr. Anonymous?
Besides this was Bonddad not New Deal Democrat that wrote this post.
"the trick is weaning the economy of the government for private sector investment instead. This takes some time and in the end will likely be far healthier and sustainable."
It wasn't very sustainable at all in the 1920s under Warren G. Harding, Calvin Coolidge and Herbert Hoover. Without government to smooth the rough edges of the economy, too much wealth becomes concentrated in the hands of the 1% until eventually there's a crash.
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