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Why the young should welcome austerity

bbc.co.uk

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Re: Why the young should welcome austerity

#11

Post by gruseom »

protomyth wrote: post #5
lkrubner wrote: post #2

An extended counter-argument emerges from these blog posts: http://krugman.blogs.nytimes.com/2012/06/06/think-of-the-chi... http://krugman.blogs.nytimes.com/2012/06/06/doing-their-best... http://krugman.blogs.nytimes.com/2012/04/15/insane-in-spain/

Given Krugman's little rant on Sweden http://krugman.blogs.nytimes.com/2012/05/16/sweden-sweden-as... which spawned responses like http://www.tomwoods.com/blog/sweden-no-longer-the-free-marke... and his attitude towards Estonia and the US stimuli, I think there is some doubt as to his work.

Whose work, especially in economics, isn't in "some doubt"? A one paragraph blog post hardly discredits Krugman in general.

I am of no fixed opinion when it comes to economic theory, but Krugman's and Dean Baker's writings on the economy of the last ten years (i.e. housing bubble onwards) are some of the few things I've found that are intended for a general audience, are (at least partly) based on data rather than ideology alone, and seem coherent to me. That doesn't mean they're right, of course. If there's a critique of their view that meets the same criteria – generally accessible, based on evidence, not entirely ideological, and coherent – I'd like to see it. Most of what I've run across in that department is either incomprehensible to me, obviously ideological, or both.

The people who seem lacking in credibility right now are the ones recommending plunging ahead with full-bore austerity when there are both obvious reasons to think it will make matters worse (because it will reduce demand and slow growth) and obvious evidence that it is doing so right now, e.g. in the UK, which has been running this experiment for the last few years. Perhaps this is just my ignorance speaking, but what I noticed is: (1) those austerity measures were greeted by loud cheers by the same people who still think that way today; (2) the Krugman and Baker types predicted that it would make things worse; (3) the UK has gone back into recession.

Re: Why the young should welcome austerity

#13

Post by protomyth »

gruseom wrote: post #11
protomyth wrote: post #5

Earlier quoted context omitted.

Given Krugman's little rant on Sweden http://krugman.blogs.nytimes.com/2012/05/16/sweden-sweden-as... which spawned responses like http://www.tomwoods.com/blog/sweden-no-longer-the-free-marke... and his attitude towards Estonia and the US stimuli, I think there is some doubt as to his work.

Whose work, especially in economics, isn't in "some doubt"? A one paragraph blog post hardly discredits Krugman in general. I am of no fixed opinion when it comes to economic theory, but Krugman's and Dean Baker's writings on the economy of the last ten years (i.e. housing bubble onwards) are some of the few things I've found that are intended for a general audience, are (at least partly) based on data rather than id…

Interesting, I find Krugman to be more ideological than reasoned, but I that could be from working on government stuff in the 90s. I would recommend reading about spending changes in 1946, it is quite an interesting era to compare to 1920, 1929, and today.

Re: Why the young should welcome austerity

#14

Post by mkramlich »

It's possible both to be against the government debts & deficit spending, and to be against an austerity agenda. For example, one way to reduce the deficit and debt with minimal pain and austerity is to reduce discretionary military spending (which, for the US, is arguably what most of it is, in the form of overseas adventures and bases, and astronomically expensive weapon systems), and to increase taxes and/or otherwise close loopholes & exemptions for the rich and large corporations. Niall has argued for gutting and privatizing social safety net programs, and for abolishing income tax, inheritance taxes and gift taxes, and replacing them with a national sales tax. Any objective economist will tell you that over time that will lead to a society where there is an even larger plutocratic aristocracy -- which, coupled with "one dollar, one vote" mechanisms (like the Citizens United decision) that have been getting stronger in the US recently -- would further distort democracy away from the best interests of the young or poor working class and the 99%, and toward the best interests of the wealthiest 1%.

Re: Why the young should welcome austerity

#15

Post by gruseom »

protomyth wrote: post #13
gruseom wrote: post #11

Earlier quoted context omitted.

Whose work, especially in economics, isn't in "some doubt"? A one paragraph blog post hardly discredits Krugman in general. I am of no fixed opinion when it comes to economic theory, but Krugman's and Dean Baker's writings on the economy of the last ten years (i.e. housing bubble onwards) are some of the few things I've found that are intended for a general audience, are (at least partly) based on data rather than id…

Interesting, I find Krugman to be more ideological than reasoned, but I that could be from working on government stuff in the 90s. I would recommend reading about spending changes in 1946, it is quite an interesting era to compare to 1920, 1929, and today.

Do you have the same opinion about Baker? I find him to be less political than Krugman (which doesn't necessarily mean less ideological). His posts are almost always based on data and seem to make a pretty strong case. Plus he called the housing bubble really early (2002 or so), again just by looking at data.

Probably the most interesting point that Baker makes (makes ad nauseum, in fact) is that the US's fiscal dilemma is almost entirely a matter of health care costs.

Re: Why the young should welcome austerity

#16

Post by OpieCunningham »

The most obvious symptom of the malaise is the huge debts we have managed to accumulate in recent decades, which - unlike in the past - cannot largely be blamed on wars.

U.S. Defense spending is around $900 B/yr (including veterans health, etc). That is the post-Iraq War cost. Social Security is net $0 (what comes in, goes out, either today or tomorrow, and with relatively minor adjustments and the elimination of gov't "borrowing" from SS funds, it can stay that way forever). Medicare is perhaps 1/4 the cost of defense spending.

I fail to see how debt can be attributed to social services simply because you might decide to stop calling things "war".

"Young" people might consider austerity if, firstly, defense budgets were cut down by orders of magnitude. Let's see how much debt is accumulated when we're not throwing away (bombing away) nearly 50% of revenue.

The heart of the matter is the way public debt allows the current generation of voters to live at the expense of those as yet too young to vote or as yet unborn.

No. The heart of the matter is the way public debt allows relatively few to massively and outrageously profit via post-9/11 escalation of defense spending.

If young Americans knew what was good for them, they would all be in the Tea Party.

Even excluding the complete failure to acknowledge out of control defense spending as the #1 cause of economic issues, there are many, many aspects of the Tea Party that simply have nothing to do with economics, and are in themselves completely out of sync with large swathes of people (perhaps most particularly young people). And now, with consideration that defense spending is the #1 issue, the attraction of youth to Occupy makes a lot of sense.

If older American's knew what was good for their children, they'd run as fast as they could from the Tea Party, and perhaps Occupy would be less viewed (inaccurately) as naive.

And all that's leaving aside the fact that a significant portion of the economic downturn was due to the machinations of the financial market leaders. Yet these leaders are the least affected by austerity measures. Perhaps some minor tangible steps should be taken to address those leaders before asking the rest of the world to pick up the slack.

Re: Why the young should welcome austerity

#17

Post by Joakal »

Austerity is a great tool to starve the beast [1].

I think the three biggest issues are some spending, taxes and regulation that's spiralling out of control. However, RARELY do authoritative spending is cut, leading to broken fallacy issues [2].

Secondly, taxes kept being cut so money has to be found somewhere. What better way to take advantage of those without much of a political voice? Youth, disabled, unemployment, etc. Those services are being cut. While some taxes are randomly raised on others, leading to schizophrenic implementations (A tax on corn because it causes fat, but wait, it has a subsidy? I heard).

Thirdly, the parties have socially authoritative and fiscally libertarian attitudes. This means cracking down on general freedom in life (conservative/traditional) while giving more freedom to those with money.

It's almost as if the parties in power are forming a feudal-style police state. Literally.

What I found that's very sad is that most of the politicians in Western countries benefited from cheap or FREE university education and are now demanding the youth to accept those cuts. Fucking hypocrites.

[1] https://en.wikipedia.org/wiki/Starve_the_beast

[2] https://en.wikipedia.org/wiki/Parable_of_the_broken_window

Re: Why the young should welcome austerity

#18

Post by easp »

46Bit wrote: post #4

I'd say this is spot on, but the question is that of whether paying off the vast majority of the debt is even possible. In the USA especially, I've long since concluded it simply cannot happen. Look at how much bickering the Republicans and Democrats have over even relatively minor issues. $10^9 is one 15-thousandth of the national debt and there's fights about such amounts.

Maybe you are too young to remember, but once upon a time, there was this thing called economic growth...

Re: Why the young should welcome austerity

#19

Post by easp »

dsr_ wrote: post #3

Austerity doesn't seem to be solving the problem. Stimulus sort of helped, but was applied at the top. Trickle-down is known to not work very well... Major governments will either find something that works, or we are likely to see repeats of the French Revolution translated to modern times and idioms.

I wouldn't call the stimulus a top-down approach, and I thin it's greatest "failing" was that there wasn't enough of it, first because no one really appreciated how bad things were, and then because one party decided to put party before country...

Re: Why the young should welcome austerity

#20

Post by MaysonL »

protomyth wrote: post #13
gruseom wrote: post #11

Earlier quoted context omitted.

Whose work, especially in economics, isn't in "some doubt"? A one paragraph blog post hardly discredits Krugman in general. I am of no fixed opinion when it comes to economic theory, but Krugman's and Dean Baker's writings on the economy of the last ten years (i.e. housing bubble onwards) are some of the few things I've found that are intended for a general audience, are (at least partly) based on data rather than id…

Interesting, I find Krugman to be more ideological than reasoned, but I that could be from working on government stuff in the 90s. I would recommend reading about spending changes in 1946, it is quite an interesting era to compare to 1920, 1929, and today.

I'm curious: do you have any examples where Krugman is flat-out wrong? There are many cases where the people whom he criticizes are. His predictions have been more right than wrong, imho.
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