According to Sophie Elmhirst austerity is a policy of
deficit-cutting by lowering spending via a reduction in the amount of benefits
and public services provided. This measure is often used by governments to reduce their deficit spending and is often
coupled with increases in tax[i].
The opinions about austerity are controversial, indeed
more economists condemn this decision because in a period of recession and high
unemployment these restrictive measures
are counterproductive and, what is
worse, the austerity
policies are applied indiscriminately in different situations-states, each of
which represents a sui generis case, to be considered separately.
The
economist Paul Krugman, Nobel Prize in 2008 and reporter for the New York Times,
believes that public spending cuts inevitably lead to a reduction in the
economic growth of a state. According to him reducing public spending to reduce the deficit, in a crisis
time, is not the best way, not only because aggravates the crisis, but does
nothing to reduce the deficit. At the same time Krugman underlines that a weak
economy reduces tax revenues and If everyone is trying to reduce their spending
the economy can be trapped in what economists call the paradox of thrift,
worsening the recession and the GDP fall[ii].
On the other hand we have the supporters of austerity
policy who say that this is the way to realize a positive future expectations
based on increased private consumption and a global economic recovery. These
optimistic expectations have been denied by the International Monetary Fund, in
fact in October 2012 announced that the implementation of austerity programs
have been consistently overoptimistic, suggesting that tax raise and spending
cuts have been doing more damage than expected[iii].
The European situation shows an increase of protest
movements and other initiatives that ask a radical change of policies and the
current orientation of many European governments in the economic and social
issues. We are also seeing an European mobilization: workers and students against austerity policies as pensions cuts,
public services reduction and education spending decrease, mobilization that give a continental dimension to the all
forms of struggle that have taken place in Greece, Spain and Portugal.
In conclusion we can report what John Maynard Keynes said
in 1937: “ The boom, not the slumps, is the right time for austerity at the
Treasury”[iv].
[i] Elmhirst,
Sophie (24 September 2010). "Word Games: Austerity". New
Statesman. Archived from the
original on 29 September 2010. Retrieved 29 September 2010.
[iii] Brad
Plumer (October 12, 2012) "IMF: Austerity is much worse
for the economy than we thought" Washington Post
I don't know the solution of Euro Crisis obviously and I’m not an economic expert. I just want say that it's simple to cut our service, to cut some measure to the people (pensions, assistance, …). I hope a utopian idea, also demagogic way to resolve some problems: to cut the political costs. There is not austerity when you talk about politician retributions, not austerity for “auto blu”.
RispondiEliminaI know that it is easy to say... but I would like that people try to focus the attention of governments on problems of real life, as how people can pay everything for their family in the end of month.
If you stimulate demand, you make production increases and the economy will growth. I think Keynes’s reasoning still works. But government leaders in Europe think in a opposite way. Austerity is supposed to be the only solution to our economic problems. And naturally sacrifices are carried by underprivileged.
RispondiEliminaI’m convinced that it is not a coincident. Banking groups and financial companies want to preserve their profit margins through political executors, that play the role of destroy welfare states and make the inequality increases. Mario Monti, for instance, is linked to all the major international lobbies of the high finance and capitalism: he was one of the presidents of the Trilateral Commission, a member of the Bildemberg group’s executive committee, a consultant at Goldman Sachs.
Argentina faced an heavy economic crisis in 2001, which finished with the bankruptcy of the country. There were violent protests and the president was compelled to resign. Subsequently Argentina refused the IMF’s recommendations of cutting public salaries and pensions. Instead, evictions was stopped. The main idea of the argentine politicians was that the only way to help the country was to re-establish buying power of people. Nowadays Argentina has an healthy economy. Could we learn the lesson?
I advice you to read this article:
http://www.spiegel.de/international/world/the-crash-specialists-argentina-s-lessons-for-a-crisis-ridden-europe-a-804856.html
Angela Pulliero