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The Austerity Agenda
Key Excerpts from Article on Website of New York Times
Posted: June 5th, 2012
http://www.nytimes.com/2012/06/01/opinion/krugman-the-auster...
Slashing spending while the economy is deeply depressed is a self-defeating strategy, because it just deepens the depression. So why is Britain doing exactly what it shouldnt? Unlike the governments of, say, Spain or California, the British government can borrow freely, at historically low interest rates. So why is that government sharply reducing investment and eliminating hundreds of thousands of public-sector jobs, rather than waiting until the economy is stronger? The great American economist Irving Fisher explained it all the way back in 1933, summarizing what he called debt deflation with the pithy slogan the more the debtors pay, the more they owe. Recent events, above all the austerity death spiral in Europe, have dramatically illustrated the truth of Fishers insight. So why have so many politicians insisted on pursuing austerity in [the] slump? And why wont they change course even as experience confirms the lessons of theory and history? When you push austerians ... they almost always retreat to assertions along the lines of: But its essential that we shrink the size of the state. These assertions often go along with claims that the economic crisis itself demonstrates the need to shrink government. So the austerity drive in Britain isnt really about debt and deficits at all; its about using deficit panic as an excuse to dismantle social programs. And this is, of course, exactly the same thing that has been happening in America.
Note: For lots more on the devastating impacts created by the corruption of governments and financial corporations, click here.
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