Author Topic: Austerity Vs. "Growth"  (Read 1713 times)

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Online David Rochlin

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Austerity Vs. "Growth"
« on: 07:46 22-May-2012 »
The reversal of some Western European countries, France and Greece, most prominent among them, and perhaps UK soon as well,  brings this discussion to the front burner once again.  The oddest thing about Europe's Austerity program has been that most economists never supported it.  Bankers love Austerity, but should we listen to them.  I don't want to beat them up, but they do seem to have more to do with the problems of the last few years, than with solutions. 
    The Austerity debate is sort of like the "War on Drugs."  Austerity, being thrifty, saving, is a moral virtue.  Germans advocate this, because they know it is right, the right thing to do.  Moreover, they know that people who are not virtuous, must redeem themselves and do pennance.   Economists study the past which reveals that Austerity usually works when an economy is growing, because it throttles back excessive growth or overheating and prevents inflation and speculative bubbles.    When the economy is shrinking, austerity does lasting damage, essentially amounts to kicking business, industry, and the public sectors when they are already down.  In a nutshell, if you can keep a lot of the marginally viable business operations going through a recession, even by printing money to do so,  some of these operations are likely to keep going after the recession.  But, if you make conditions worse, for weak, businesses, through Austerity, in the midst of recession, and all these marginal operations close, well then mediocre businesses are unlikely to be restarted from scratch when the economy finally recovers and so there may be fewer jobs during the recovery, when it happens.
   There is a theory out there, that saving is a genetically linked behavior and that this can explain the radically differences and why the policy can't simply be dictated by experience or economics.  The idea being that people who eat their seed corn get weeded out of agrarian populations, by natural selection,


Carlusha

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Re: Austerity Vs. "Growth"
« Reply #1 on: 08:43 22-May-2012 »

The reversal of some Western European countries, France and Greece, most prominent among them, and perhaps UK soon as well


You're having a laugh, David!  :D

The current global problems stem from that twat Bush and his puppy dog, Blair the BLIAR - a pair of warmongering profiteers.

Online David Rochlin

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Re: Austerity Vs. "Growth"
« Reply #2 on: 18:53 22-May-2012 »
On the contrary, their many wars put millions of people to work and have perhaps mitigated the crisis.  Do you remember the old argument that WWII and not the social programs of FDR was what ended the Great Depression.   It isn't about what money is spent on, so much as it is about that money is spent to stimulate an economy in recession.  Bush has something to do with the economic path of the U.S., which by the way has not changed radically since his retirement, but the day of reconning for his policies won't come until the bill has to be paid.   The wars were probably a bad idea, but to an economist, perhaps this attribution of blame might seem to be yet another way to moralize instead of acting to fix a problem.   The classic way to explain this, is that if the engine of the economy is the engine of an automobile that ran out of petrol on the  highway, should you resovle the problem by blaming the last owner  for  necglecting the car three years ago?  Or  just maybe you should just put fuel in it and drive it?   When national leaders make economic decisions that go contrary to experience, ignoring the lessons about the causes of the Great Depression, for example, usually the motives for this are political and moral.  But, economies are not human beings, they are not political or moral, they are just transactions.

Offline clanholmes

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Re: Austerity Vs. "Growth"
« Reply #3 on: 19:04 22-May-2012 »
On the contrary, their many wars put millions of people to work and have perhaps mitigated the crisis.  Do you remember the old argument that WWII and not the social programs of FDR was what ended the Great Depression.   It isn't about what money is spent on, so much as it is about that money is spent to stimulate an economy in recession.  Bush has something to do with the economic path of the U.S., which by the way has not changed radically since his retirement, but the day of reconning for his policies won't come until the bill has to be paid.   The wars were probably a bad idea, but to an economist, perhaps this attribution of blame might seem to be yet another way to moralize instead of acting to fix a problem.   The classic way to explain this, is that if the engine of the economy is the engine of an automobile that ran out of petrol on the  highway, should you resovle the problem by blaming the last owner  for  necglecting the car three years ago?  Or  just maybe you should just put fuel in it and drive it?   When national leaders make economic decisions that go contrary to experience, ignoring the lessons about the causes of the Great Depression, for example, usually the motives for this are political and moral.  But, economies are not human beings, they are not political or moral, they are just transactions.

Wars created tax system that was supposed to be temporary until the war costs were paid. Simple- building stuff to just destroying and killing the youth of your country is not good economics.

Quote
Income tax
See also: Income tax in the United States#Legal history

The history of income taxation in the United States began in the 19th century with the imposition of income taxes to fund war efforts. However, the constitutionality of income taxation was widely held in doubt until 1913 with the ratification of the 16th Amendment.
« Last Edit: 19:11 22-May-2012 by clanholmes »
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Offline MWDabbs

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Re: Austerity Vs. "Growth"
« Reply #4 on: 21:02 22-May-2012 »
To look at austerity vs. spending as just one or the other is a large part of the problem.   Critical to focus on both in the right areas -- but before you even get to that point, it is necessary to rid the house of crack dealers and crack addicts.   Otherwise, all the money you save... gets spent on crack.  All the extra money you make... gets spent on crack.

Problem is the government is on crack and it needs to go after the crack-dealing criminal corporations, which it is unwilling and/or unable to do by itself - Big Agriculture, Big Pharma, Big Oil, Big Insurance, Big Banks, even Big Media.   All, more or less, are operating at odds with many anti-trust, monopoly, price fixing, collusion, money laundering, public health/security and tax evasion laws while the small - medium sized companies get hammered the second they even look at a glass of unpasteurized milk. 

When the economy is dependent upon too big too fails... you break them up like we did years ago with Bell, not let them get larger. 
Competition should be welcomed and encouraged - not shot down, kicked around, punished and destroyed - which is the mind set of the entire political establishment, too.   No sense of fair play, no sense of proportion, no rule of law.   

Companies that can't compete on their own terms without billions of taxpayer dollars deserve to be put out of business and bought up in due course by companies run by smarter people not on crack, with smarter policies, better products, and trustworthy services.  That's the free market.  Until that is addressed... you have incompetent nazi-buttock d mo-fo's who are capable of only doing exactly what they're told - not a thing more, no initiative, no common sense, no discretion, no capacity to think for themselves.

There is no amount of spending or austerity that can save a nation run by crack dealers and crack addicts. 
We cannot afford governments that cannot afford to take care of our veterans.

Offline clanholmes

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Re: Austerity Vs. "Growth"
« Reply #5 on: 21:26 22-May-2012 »
To look at austerity vs. spending as just one or the other is a large part of the problem.   Critical to focus on both in the right areas -- but before you even get to that point, it is necessary to rid the house of crack dealers and crack addicts.   Otherwise, all the money you save... gets spent on crack.  All the extra money you make... gets spent on crack.

Problem is the government is on crack and it needs to go after the crack-dealing criminal corporations, which it is unwilling and/or unable to do by itself - Big Agriculture, Big Pharma, Big Oil, Big Insurance, Big Banks, even Big Media.   All, more or less, are operating at odds with many anti-trust, monopoly, price fixing, collusion, money laundering, public health/security and tax evasion laws while the small - medium sized companies get hammered the second they even look at a glass of unpasteurized milk. 

When the economy is dependent upon too big too fails... you break them up like we did years ago with Bell, not let them get larger. 
Competition should be welcomed and encouraged - not shot down, kicked around, punished and destroyed - which is the mind set of the entire political establishment, too.   No sense of fair play, no sense of proportion, no rule of law.   

Companies that can't compete on their own terms without billions of taxpayer dollars deserve to be put out of business and bought up in due course by companies run by smarter people not on crack, with smarter policies, better products, and trustworthy services.  That's the free market.  Until that is addressed... you have incompetent nazi-buttock d mo-fo's who are capable of only doing exactly what they're told - not a thing more, no initiative, no common sense, no discretion, no capacity to think for themselves.

There is no amount of spending or austerity that can save a nation run by crack dealers and crack addicts.

Somethings are better as an oligarchy especially ones with high capital costs like utilities and airlines.
Look at the Airlines in the USA, they suck.
Smaller countries, they cannot have huge number of airlines.
I have no issue with regulation, but with interference of the government lobbyists, it has been done half assed.

Back to Ukraine, they are bloated bureaucracy. Austerity would work here, because by cutting government, it will push government to simplify the process. Ukraine has the highest number of different taxes. Capitalism is like fire, controlled it is very useful. Uncontrolled, it can burn your house down and leave you homeless.
I know nothing except the fact of my ignorance.
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Online David Rochlin

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Re: Austerity Vs. "Growth"
« Reply #6 on: 01:37 23-May-2012 »
It is when the economy is overheated and growing rapidly, that corruption and inefficientcy flourishes, and that is when austerity is a wise economic policy. It  forces governments to reduce bloated labor costs, challenges businesses to be competative, and so on.  But, when a recession is already forcing similar changes, exposing Madoff, forcing layoffs of unnecessary employees, reducing platinum benefits plans for union labor,  and reform is already happening and people are already out of work, well, then you are throwing out the baby with the bathwater at some point.   
 
  U.S. Airlines are actually quite good, but I suppose you can always find airlines outside the U.S. that may be better than the average U.S. Airline.  But, U.S. Airline companies have an amazing safety record, given the miles flown.  For sure I would rather fly a domestic flight on the worst airline in the U.S. than take an internal Russian flight, thank you very much!
   

Carlusha

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Re: Austerity Vs. "Growth"
« Reply #7 on: 07:47 23-May-2012 »

  U.S. Airlines are actually quite good, but I suppose you can always find airlines outside the U.S. that may be better than the average U.S. Airline.  But, U.S. Airline companies have an amazing safety record, given the miles flown.  For sure I would rather fly a domestic flight on the worst airline in the U.S. than take an internal Russian flight, thank you very much!
   

I don't think Clan was referring to airline safety records! Poor leg room, poor service and cabin crew, dirty toilets and cabins and knackered seats isn't something you forget.


Online David Rochlin

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Re: Austerity Vs. "Growth"
« Reply #8 on: 19:56 24-May-2012 »
I have to concede that on more than one occasion, I have flown U.S. flights where the toilets are out of order with something amounting to yellow, Hazardous materials tape, strung across the doors. 
  But, generally, people only want to pay for very basic transportation, and just buy the cheapest flight regardless about whether the operator has a reputation for good housekeeping.

Online David Rochlin

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Re: Austerity Vs. "Growth:"Weirdness of Lagarde
« Reply #9 on: 11:52 27-May-2012 »
Here is a story about Christine Legarde, and it is not about her cracking the whip on Greeks, whom she clearly regards as lazy tax evaders, but about how sensual and sexy it is to hear her discuss tedious financial reports.  The lady is not hot, put it that way, but she is sort of French...
http://www.telegraph.co.uk/finance/financialcrisis/9291965/The-disarming-charm-of-Christine-Lagarde.html

Online David Rochlin

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Re: Austerity Vs. "Growth" Spain: Lies and More Lies
« Reply #10 on: 22:55 27-May-2012 »
Spain is still quite deliberately hiding a lot of debt.  The problem is that unlike arrangements in some countries, Spain appears to be responsible for the debt of many local governments and entities.  Many of them have not been paying contractors for services in a year or more, and their financial condition is not transparent.  The principle argument of this piece is that Spain has big of its own.  There is a sort of mythology that Greek default is igniting unjustified fear and that this fear is a contagion that could bring down Spain, through unreasonable interest rates.  But, if huge government debt remains buried in Spain, high interest rates are justifiable even if Greek problems could be resolved:
http://www.forbes.com/sites/timworstall/2012/05/26/now-spain-circles-the-drain/

Online David Rochlin

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Re: Austerity Vs. "Growth"
« Reply #11 on: 06:15 03-Jun-2012 »
I am not a fan of George Soros, but his speech about the Euro zone and perhaps about the EU itself was really quite extraordinary and insightful:

http://www.georgesoros.com/interviews-speeches/entry/remarks_at_the_festival_of_economics_trento_italy/
« Last Edit: 16:46 21-Mar-2013 by David Rochlin »

Offline MWDabbs

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Re: Austerity Vs. "Growth" / IMF / Lagarde & Strass-Kahn
« Reply #12 on: 15:19 21-Mar-2013 »
Reviving this as the OTHER thread regarding Strass-Kahn is not turning up in my searches...

http://www.france24.com/en/20130320-france-police-search-home-imf-boss-lagarde

In short, French police raid IMF boss Christine Lagarde's home in France.  Just a little reminder that a large portion of her previous work was with  Baker & McKenzie an international law firm HQ'd in Chicago.  The raid probably does not amount to much unto itself - but it follows on the heels of http://www.guardian.co.uk/world/2013/mar/19/french-budget-minister-resigns - French Budget Minister resigning over allegedly trying to hide money in Swiss banks.  Could be entirely unrelated or tit for tat. 

We cannot afford governments that cannot afford to take care of our veterans.

Online David Rochlin

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Re: Austerity Vs. "Growth"
« Reply #13 on: 16:48 21-Mar-2013 »
Hollande probably wants a new attitude at IMF...