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U.S. | Labor & Workers

Austerity has never worked
by Ha-Joon Chang
Wednesday Jun 6th, 2012 6:38 AM
It’s not just about the current economic environment. History shows that slashing budgets always leads to recession [...]
"As for the need to cut social spending to revive growth, there is no historical evidence to support it either. From 1945 to 1990, per capita income in Europe grew considerably faster than in the US, despite its countries having welfare states on average a third larger than that of the US. Even after 1990, when European growth slowed down, countries like Sweden and Finland, with much larger welfare spending, grew faster than the US.
As for the belief that making life easier for the rich through tax cuts and deregulation is good for investment and growth, we need to remind ourselves that this was tried in many countries after 1980, with very poor results. Compared to the previous three decades of higher taxes and stronger regulation, investment (as a proportion of GDP) and economic growth fell in those countries. Also, the world economy in the 19th century grew much more slowly than in the high-tax, high-regulation era of 1945-80, despite the fact that taxes were much lower (most countries didn’t even have income tax) and regulation thinner on the ground.
The argument on hiring and firing is also not grounded in historical evidence. Unemployment rates in the major capitalist economies were between 0% (some years in Switzerland) and 4% from 1945-80, despite increasing labour market regulation. There were more jobless people during the 19th century, when there was effectively no regulation on hiring and firing."

to read the article by Ha-Joon Chang published in: The Guardian, June 4, 2012, click on

http://www.guardian.co.uk/commentisfree/2012/jun/04/austerity-policy-eurozone-crisis/print
by THE TRUTH
Wednesday Jun 6th, 2012 12:15 PM
Google Estonia and what austerity did for them. Now the fastest growing economy in the eurozone.
by NYT
Wednesday Jun 6th, 2012 5:41 PM
060612krugman2-blog480.jpg
060612krugman2-blog480.jpg

He's won a nobel for economics...


June 6, 2012, 11:19 am
Estonian Rhapsody

Since Estonia has suddenly become the poster child for austerity defenders — they’re on the euro and they’re booming! — I thought it might be useful to have a picture of what we’re talking about. Here’s real GDP, from Eurostat:

So, a terrible — Depression-level — slump, followed by a significant but still incomplete recovery. Better than no recovery at all, obviously — but this is what passes for economic triumph?

by check it
Wednesday Jun 6th, 2012 5:52 PM
okay, so I've googled Estonia for you

the country also has a population of less than 1.5 million, about the same as the U.S. state of Hawaii

quite a stretch to call Estonia out as an example of any sort of guidepost for the rest of the world

but the right-wing blogs are probably blowing up now with the great news about austerity in Estonia -- SEE, it PROVES that austerity works!!! and you just couldn't help yourself from sharing the good news in a comment here

thanks for nothing