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Paul Krugman on Austerity and Its Consequences

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LongTomH Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-06-11 05:45 PM
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Paul Krugman on Austerity and Its Consequences
Prof. Paul Krugman has some very interesting posts in his NY Times blog on the austerity policies the world's elites are bound and determined to force upon us, despite whatever we want or say. His most recent post: The Peasants are Revolting makes the case that: a) people don't want this austerity, and b) the elites are going to force it on them anyway:

I see that Atrios has spotted another piece claiming that were having all this trouble because those pesky voters wont support what the wise men know is good for them. Ive written about this before, with comparable disgust.

Look, I dont want to wax all sentimental about the genius of the common man. But the fact is that both the origins of this crisis and its perpetuation overwhelmingly reflect the errors of the very people now lamenting the annoyances of democracy that keep them from imposing their preferred policies.

As Atrios says, the euro was very much a top-down, elite-imposed project; and its the ECB and the German finance ministry, not the unwashed masses, that have pushed for the austerity-for-all agenda that is pushing the euro system to the edge as we speak.

Meanwhile, in the United States it was the Very Serious People the WaPo editorial page, the Bowleses and Simpsons and those who extolled them, who declared that our top priority must be deficit reduction now now now, and have left us slashing spending to fend off imaginary bond vigilantes at a time of mass unemployment and record low interest rates.

The earlier article he referenced: The Unwisdom of Elites is worth a read also; the theme is the same:

The fact is that what were experiencing right now is a top-down disaster. The policies that got us into this mess werent responses to public demand. They were, with few exceptions, policies championed by small groups of influential people in many cases, the same people now lecturing the rest of us on the need to get serious. And by trying to shift the blame to the general populace, elites are ducking some much-needed reflection on their own catastrophic mistakes.

Another recent Krugman post: The Austerity Economy deals with the already disastrous consequences of austerity in the US:

Do the dismal economic numbers really reflect the turn to fiscal austerity? I keep hearing people say no, because austerity hasnt actually happened yet in America. But theyre wrong.

The fact is that the fading out of the stimulus, and in particular of aid to state and local governments, is already and noticeably leading to substantial withdrawal of government demand. Look, in particular, at actual government purchases of goods and services governments at all levels buying stuff which is what standard macroeconomics says should have the highest multiplier, since unlike transfers and tax cuts it is by definition spent rather than saved. Heres the picture, showing changes in real spending over the previous year:



When the recession officially ended, spending was rising at an annual rate of around $60 billion; now its declining at an annual rate of $60 billion. That difference is around 1 percent of GDP, and maybe 1.5 percent once you take the multiplier into account. That makes the turn toward austerity a major factor in our growth slowdown.

Still, I guess the beatings will continue until morale improves.


OK, I've gone beyond four paragraphs; but, they were from multiple articles. I've got Prof. Krugman's blog along with Robert Reich's bookmarked for frequent reads; both are a good source of common sense and a breath of fresh air after the smoke blown by media pundits.
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ixion Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-06-11 05:52 PM
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1. not only a 'top-down' disaster, but disaster by design
in my opinion.
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Hydra Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-07-11 04:02 PM
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7. Disaster by design indeed
I refer to it as "The Culling." It's going to be ugly when it's all played out, not unlike the Irish potato famine that didn't have to be.
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Jefferson23 Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-06-11 05:57 PM
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2. K&R n/t
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katty Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-06-11 06:09 PM
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3. Austerity for 'the masses'-even more prosperity for the elite
o gee, this game sounds just so familiar...
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TacticalPeek Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-06-11 06:59 PM
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4. Eggsellent post.


:toast:


Aside from the meaning.


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mother earth Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-06-11 07:05 PM
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5. Austerity here, while they set up shop to plunder and pillage
other countries, or at least the ones they can still squeeze. They have forgotten the French Revolution, but to everything there is a season.
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izquierdista Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-06-11 07:13 PM
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6. My austerity plan
(1) No more limousines. Put them up on blocks and use them for homeless shelters. Sell the tires at second hand stores.
(2) No sales of jet fuel to private, non-commercial aircraft. The fuel saved will be diverted to LIHEAP.
(3) No more golf courses. Plow them up and convert them to Community Supported Agriculture.
(4) All hotels to cut back to 2 star amenities. Five star hotels will still charge the same price, but the difference will be paid into a fund to provide health care to hospitality workers.
(5) No more "all-you-can-eat" buffets. You get one plate, one trip. You will, however, get to have company, because the kids in the local school lunch program will be in line with you.
(6) No more gates on communities. They will be replaced with toll booths, $50 for each vehicle, each pass.
(7) No more millionaires to watch playing baseball, football, basketball, acting in movies, hosting TV shows, or blabbing on talk radio. The top tax rate goes back up to 91% until the debt the Republicans are worried about is paid off.
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