Last weekend's election results in France and Greece, we're told, show that eurozone voters want "growth, not austerity". In the UK, too, the deficit-cutting coalition Government is being widely castigated for "lacking a growth policy".
Since 2009, Europe’s peripheral economies – Greece, Ireland, Italy, Portugal, and Spain – have tried to dig their way out of a debt crisis by cutting public spending and raising taxes. This year, however, will be different. Fiscal policy in the euro zone is expected to ease for the first time since 2010.
By Joe Firestone, Ph.D., Managing Director, CEO of the Knowledge Management Consortium International (KMCI), and Director of KMCI’s CKIM Certificate program. He has taught political science as the graduate and undergraduate level and blogs regularly at Corrente, Firedoglake and Daily Kos as letsgetitdone.
My friend Bran who lives in Spain writes ...
Here are thoughts from the last couple of days on the strikes, protests, and violence in the wake of more austerity plans by Prime Minister Mariano Rajoy.
Pro-government news played down the strike to a virtual non-event, giving much criticism of the unions methods and exaggerations. Reality however, is that there is enough support by strikers to shape future politics, especially as austerity starts to bite.
One inconvenient truth facing those who still favor the "austerity" approach to our current economic predicament (slow growth, high unemployment) is that the austerity approach makes the problem worse. When we cut government spending, we reduce economic growth and we put more people out of work.
It was inevitable, not the result of some bad policy choice by outsiders, foisted on Greece:
Even before the 2010 program, debt in Greece was 300 billion euros, or 130% of GDP. The deficit was 36 billion euros, or 15½ % of GDP. Debt was increasing at 12% a year, and this was clearly unsustainable.
By Joe Firestone, Ph.D., Managing Director, CEO of the Knowledge Management Consortium International (KMCI), and Director of KMCI’s CKIM Certificate program. He taught political science as the graduate and undergraduate level and blogs regularly at Corrente, Firedoglake and Daily Kos as letsgetitdone.
In recent months, economist Alberto Alesina has become popular among conservatives for research showing that deficit reduction can sometimes be accompanied by economic growth; that spending cuts are better than tax cuts; and for arguing that stimulus is less effective than Keynesians think and thus spending cuts can begin now. Business Week's Peter Coy is skeptical: