I’m practically giddy with amusement over the fact that I predicted austerity cuts would fail: and as history would have it, it’s proving to be an absolute disaster in Europe.
Especially hilarious is Ireland. Their descent toward insolvency is especially telling considering that they actually did what Capitalist apologists suggested: lower corporate taxes and become a corporate tax headquarters haven. Ireland was the one of the first countries, or the first, to engage in slam-the-brakes austerity.
Now I’m sure that someone can find liberal programs to blame on the failure of austerity cuts, but there’s another problem that comes up, too: austerity cuts are failing EVERYWHERE but, perhaps, Germany. Austerity measures have a long history of failure, too - such as in the U.S. under Hoover in 1929 and Roosevelt in 1937 (and this one precipitated the death of a roaring recovery) and (depending on who you ask) Japan at the outset of their Lost Decade. You gotta go back to Calvin Coolidge to find a (debatable) version of austerity that worked. Oh no, wait… his austerity moves was part of his overall Conservatism… which was what helped drive us into the whole Crash of 1929. (This guy was a big fan of laissez-faire economics, remember?)
Just like when people get sick after a Typhoid Mary comes into town, austerity almost always seems to precede very bad tidings. Why is that?
I mean no offense, but as a European myself it doesn’t strike me as being in the best of taste to express such glee at economic failures and problems. “Hilarious” is probably not the best word to use in such an occasion, as vindicated in your ideals as you may be, given that it’s not exactly leading to a picnic for all concerned.
It’s not glee at your misfortune. It’s the fact that the Keynes haters who know so much more than bumfuck ignoramii(sp?) like me have pooched the screw so epically with their intellectual greatness that I cannot help but laugh at their sheer genius.
I sure as hell feel sorry for you guys in Europe, make no mistake about that.
“Austerity measures” as we’re seeing in Ireland and Portugal are hopelessly late, pointless, and because of their obviously panicked nature simply convince everyone the economy’s doomed and drive away investment. Neither country has the ability to fix its debt problem on its own; their “austerity measures” are merely preconditions for getting gigantic foreign bailouts.
Fiscal insanity can’t be reversed in a week. If you rack up $25,000 in credit card debt from Nov 1 to Nov 29, eating ramen noodles on the 30th is not going to solve your problems.
While I don’t want to create bad karma here I cannot help but notice that Canada seems to be spared all this austerity-panic-crash-austerity nonsense. That’s because Canada didn’t expose itself to the insanity of the real estaste bubble (to the same extent) and had a solid banking industry and many years of fiscal restraint.
Keynes preached BOTH sides of the economic cycle - saving money and staying out of deficit in the good times.
What choice exactly does Ireland or Greece have other than austerity measures? Spend more money? These countries are at a point where they have to do the best they can, when you are at the point of financial collapse options become limited. It is better of course to never get to that point.
Stop right there. Austerity measures from Ireland are hopelessly late? Care to revisit that statement?
FYI Ireland did decline to lower its corporate tax rate; specifically to avoid frightening away corporations that have come there to roost.
Part of Ireland’s problem… well, a big part… was their low corporate tax rate.
And this part of Keynes is often ignored by people on both sides of the aisle.
Didn’t I pretty much make that clear from the outset?
What’s causing austerity moves to fail? Aside from austerity itself, that is.
Austerity sucks and has failed on so many occasions that it defies attempts to defend it.
Bail out main street. Bring in jobs. At all costs. Trickle-up economics. Bolster the working class, let their economic activity GROW the country out of a recession; by grow, I mean force economic growth to favor a bottom-up distribution.
Options include defaulting on its debt, leaving the Euro, imposing capital controls or some combination of the three. There are several examples of countries growing out of a crisis quite quickly with one or more of these measures: Argentina after the 2002 crisis, Britain after the ERM crisis, Malaysia during the East Asian crisis.
There is a marvelous little murder mystery called *The Shorter Way to Hades *that has a gem in it something like “Books on sailing, when giving advice about what to do in an unpowered sailing vessel in a storm with a coast under the lee, recommend: do not find yourself in this situation.”
Austerity measures are bad medicine, but when your outgo exceeds your income *and you can no longer borrow *you have little chance except to cut expenses dramatically. What else can anyone do? Bring in jobs? Got any concrete suggestions for the President of Ireland on how to do that?
All the countries implementing austerity measures that you mentioned only implemented them when it became clear they were on the verge of financial collapse. Ireland for instance implemented their cuts in order to try to calm the bond markets. Greece implemented their cuts because, to put it bluntly, they’re bankrupt.
I can’t help notice you didn’t mention the UK, which is also make large cuts, and whose economy grew more last quarter than any time in the last decade.
Third-world countries have long complained that IMF loans coupled to IMF-imposed mandates (austerity plus skewing the loanee’s economy away from self-sufficiency and towards being import-export driven) exacerbate their poverty. Guess we get to see how European nations fare under the same program.
Incidentally while some right-wing types have claimed vindication from Germany that is highly dubious. Until very recently Germany has followed broadly Keynesian policies and which have been successful. Here is an articlein Der Spiegel from July 2010 which is subtitles “A Keynesian success story”:
It’s true that Merkel announced an austerity plan this summer but it will take time for it to to kick in. The same goes for the British austerity plan. We will have to wait at least a year to see how these plans impact the economy but until now both these countries have been following broadly Keynesian policies with some success
(Shrug) Too late. Corporations pay tax on profits. They’re not going to be much impressed by a lower corporate tax rate in a country in economic meltdown. If nobody’s making money, nobody’s making money. Any percentage of zero is zero.
Would YOU invest in Ireland? I wouldn’t. What does the tax rate on profits matter to anyone at this point?
Ireland and Greece are not making some sort of conservative policy change towards smarter spending. They’re fucking broke, and they’re appealing to the EU for bailouts and are planning on NOT looking like Richard “Give GM Billions So I Can Keep Flying My Private Jet” Wagoner when they do it. “Austerity” is just today’s government weasel word for “we’re fucking broke.”
To see an example of a government engaging in actual spending discipline to rein in debt, look at Canada in the 1990s. Were it not for those real austerity measures (brought in by a moderate government, and not the conservative wing, I might add) Canada would be bankrupt too. Between 1993 and 2001 the federal government cut spending from 23% of GDP to under 16%. Every budget introduced from 1993 to 2001 spent less money than the 1992-1993 budget; the 2001-2002 budget, in inflation-adjusted dollars, was still 18% less than the 1992-3 budget, and that’s on top of a population growth of 9.4% over the same period. Canada’s spending cuts during those years EXCEED any austerity program you’re hearing about today - but the government did it before crisis hit, so that the cuts could be spaced out a little and the economy given time to admjust. ** That’s why we’re solvent.**
Ireland’s woes are caused by the fiscal crisis. Ireland was heavily exposed to the banking crisis. A higher corporate tax rate would not really have made much impact on their current state.
They’re failing (so far) for essentially the same reason that if I fall off the Sears Tower, flapping my arms like a bird will “fail” to prevent me from splattering all over South Wacker Drive.
You’re complaining about governments flapping their arms when you should have been complaining ten years ago when they were playing on the ledge.
I find the tone of the OP distasteful but also I realise that the OP is largely ignorant of the Irish economic situation, and wishes to hijack the Irish crisis (and others) for their own ideological purposes.
Ireland has actually been something of a hobby horse for US right-wingers for quite a long time. Jonathan Chait has an amusing piecewith quotes of righ-wingers hailing Ireland over the years as shining exemplar of free-market orthodoxy only to turn around in recent weeks and denounce it as a cautionary tale of big government run amok.
My favorite one from as late as June 2010 by Alan Reynolds of Cato:
You claimed that they were late but Ireland was one of the first, if not the first country to resort to austerity cuts. They’re the earliest of the early birds to drink the kool-aid.
You don’t get it. Ireland has had these ultra low corporate taxes for years in advance of this mess.
Exactly why tax cuts for corporations does zilch for increasing employment during a downturn. (And very little outside of it.)
Sure I would. How, is the question. There are always people who make money when shit falls apart.
The point is that they’ve had these tax rates for years. Fat lot of good it did them.
Canada is not known for being stupid, of course.
The problem with Ireland, you say, is they let the bankers fuck them?
But it seems that Germany and Britain alike both started out with Keynesian solutions and then started going down the austerity path.
Which actually sounds quite Keynesian overall, since Keynes IIRC was about spending your way through a downturn and cutting back when you’re racing back out of it.