Austerity measures have they ever saved an economy?

People who say that are usually talking about the government and try to use it as an excuse to avoid raising taxes on the wealthy and closing corporate tax loopholes.The U.S. government has, primarily, a revenue problem; it is giving up billions of dollars a year in potential revenue by way of taxes that it could easily collect and that those it would collect it from could easily pay. The U.S. government also has a spending problem, known as the Department of Defense. But that is really the only spending problem them U.S. has. The U.S. nation, as a result of the failures of the U.S. government, has a distribution problem.Individuals, on the other hand, do have a spending problem. Folks like Crashfrog will try to tell you that we need to keep people spending money, but without detailing who needs to be spending their money, there can be no real discussion.For example, a good amount of people do not even meet their basic needs in terms of what they have the ability to buy. But that is always the case with the poor; that's why we call them poor. The easiest way to solve their problem is to give them more money, and that is done to some extent (rental assistance, food stamps, etc.). The poor also don't have the luxury of converting any saved money into tangible assets because they simply don't have the cash to purchase such assets that would not appreciate in value enough when they needed the cash back by selling them. In other words, they are forced to save their money for those rainy days.The rich are causing the government revenue problem; they actually need to be keeping less than they are keeping now. The easiest way to solve that problem is to increase taxes in the upper brackets.Then we come to the middle class.

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Wikipedia on Conspicuous Consumption:

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With the significant improvement of living standards and the emergence of the middle class in the 20th century, the term is now broadly applied to individuals and households with expendable incomes whose consumption patterns are driven by the utility of goods to display social status rather than any intrinsic utility of such goods.

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Members of the middle class have enough income to support themselves and save leftover income. By and large, however, thy do not save their leftover income, but pour it into the consumption of unproductive status goods (all classes are guilty of this to some degree):

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Wikipedia on Conspicuous Consumption:

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With the significant improvement of living standards and the emergence of the middle class in the 20th century, the term is now broadly applied to individuals and households with expendable incomes whose consumption patterns are driven by the utility of goods to display social status rather than any intrinsic utility of such goods. In the 1920s, economists such as Paul Nystrom theorized that lifestyle changes brought on by the industrial age were inducing a "philosophy of futility" in the masses, which would increase fashionable consumption. Thus, the concept of conspicuous consumption has been discussed in the context of addictive or narcissistic behaviors induced by consumerism, the desire for immediate gratification, and hedonic expectations.

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This is largely the individual 'spending' problem in the U.S. and other industrialized nations at the moment: large amounts of capital are being directed toward the production and consumption of things that do not provide an adequate return compared to the resources they consume. One way we can see this is by looking at the environmental effects of over consumption:

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Wikipedia on Consumerism:

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According to figures presented by Rees at the annual meeting of the Ecological Society of America, human society is in a "global overshoot", consuming 30% more material than is sustainable from the world's resources. Rees went on to state that at present, 85 countries are exceeding their domestic "bio-capacities", and compensate for their lack of local material by depleting the stocks of other countries, which have a material surplus due to their lower consumption.

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Not all anti-consumerists oppose consumption in itself, but they argue against increasing the consumption of resources beyond what is environmentally sustainable. Jonathan Porritt writes that consumers are often unaware of the negative environmental impacts of producing many modern goods and services, and that the extensive advertising industry only serves to reinforce increasing consumption. Likewise, other ecological economists such as Herman Daly recognize the inherent conflict between consumer-driven consumption and planet-wide ecological degradation.

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We simply aren't getting back what we're taking out with the consumption of status goods. I won't say too much more on this for now, because I feel I have already posted enough to incite a few lengthy posts in which I am called an idiot and belittled for the fact that I have actually taken an economics class or two in my day instead of trying to pull everything from my ass.So let's go back to the issue of revenue vs. spending: in the U.S., our government has a revenue problem; we have a sufficient number of people who are not properly provided for and a sufficient number of people who could provide for them, but the iron fist of the government has failed to ensure the redistribution of this wealth. But that's where the revenue problem stops, really. The system as a whole is sitting pretty good; it's just the distribution of the wealth inside the system that needs work. We really don't need to be spending more as a nation, we just need to be spending smarter.I also have a thread started here on a similar topic: Replacing Consumerism.Jon

I wonder if that takes into account classroom assistants.I don't think we need a low ratio in terms of officially trained teachers, especially at the elementary level, where a single trained teacher with the aid of a couple of assistants can easily and effectively minister to all students' needs.Jon

I think a good question is: Do we need job growth? I don't mean to make a statement here, but I'd like to raise an issue.If the goal of efficiency is to increase output from the same amount of input, and labor hours are input, then as efficiency is increased, hours worked can be decreased while still providing the same outputthat is, while still providing the same standards of living provided under the less efficient higher-hours system.From this, it is not a huge leap to think that a system can actually reach the point where every able-bodied worker simply doesn't have to put in a full-time set of labor hours (40 hours/week) in order for the system to provide the standard of living it provided before. This would suggest that the solution to a high rate of unemployment is to either limit the hours already worked by some and hire the unemployed to fill those open hours, or to leave the unemployed unemployed and simply pay them a salary to maintain a certain standard of living. In either approach, of course, the massive amounts of wealth currently kept by the upper-management class would have to be redistributed to the lower classes of the business in order to ensure that cutting hours doesn't decrease standard of living. In other words, everyone will work fewer hours and still be guaranteed a minimum salary, or the unemployed stay unemployed and only they get the minimum salary (the employed, presumably, already earning past the minimum).Do I think this is a problem with the current system? Not so much; there are plenty of places where work needs to be done, particularly in researching more environmentally-sustainable methods of living (power, waste disposal, etc.), infrastructure repair, education, and so on. But I can see this becoming a problem to some extent in an economy that is accounting for all avenues of potential production, and I can certainly see this becoming a problem within the production spheres of certain products, where increasing production is simply unworkable (for example, the company already produces more than the public will buy).Perhaps I can go investigate some numbers...Jon

I'm not sure why you think I'm a conservative. But since you do, prepare for endless surprises. Jon

I don't see why the theory of it would cause so much trouble.If a fully employed community of fifty people can produce everything it needs for its survival (the community is entirely self-sufficient), then an increase in efficiency of the community's production processes can lead either to increased output (the members are now producing more than they need and have the same amount of free time) or decreased work hours (the members produce the same amount but enjoy more leisure). And, of course, it is entirely possible that the community can increase its efficiency to a point that the increased production allows the support of another individual in the community so that we end up with the situation that I described earlier: mandatory unemployment or mandatory reduced hours. If everyone's satisfactions are being met, there seems to be no reason to work the extra hours/employ the extra people in the production of unwanted goods.Jon

Wiki's on strike?ABE: Ahhh... I see now. I usually surf with my java script disabled on most sites, including Wiki, so I have no problem searching. Disable your java and you should be fine... though the EvC pages might not like you for it Edited by Jon, : No reason given.

Asshole.

Because first and foremost are people. An economy is all about people; people working together in various ways to satisfy their needs and, if resources permit, their wants.It is not about the market or GDP or what's written in some textbook. It's about people, just people, and only people.All the rest are extras and worth nothing if they don't benefit the people.Jon

I don't see why that would be the case, and even if it were, I don't see why that would be a problem.First, people don't just laze about in their leisure time; they exercise, play games, go out with friends, and so on. It's not just about more time for sitting on the couch; it's about more time for being a community.Second, if everyone could produce the requisite number of goods and services by spending five seconds each day pushing a big red button, why should they do any more work than that?Once everyone's satisfactions are fulfilled, what reason is there to invest more resources into producing more?Jon

Then what is wrong with lazing? This was a hypothetical scenario to illustrate my point that once a society has reached a satisfactory level of production, where everyone's needs and wants are satisfied, then there is really no reason to invest further resources into the production of unconsumed goods and services.And, of course, business owners the world over agree with me: when people stop buying their products, they've got the good sense to stop making them.Jon

The desire for education and technological advancement represents a consumable want/need andall needs and wants being satisfied under the hypothetical scenario I providedwould already be accounted for.I can't think of a single business that will tell you its goal is to produce things that people don't buy. Why not? How many clay jars do you have in your kitchen for cooking and storing leftovers? How big is the fire pit in your living room?Or was there, perhaps, a point in time when people stopped making clay jars and started making steel pots and plastic storage containers? Or stopped designing homes around a central heating source and started installing furnaces with ductwork to carry heat to the whole house? Very true. But how does a system that chooses to consume leftover labor hours as leisure instead of turning them into more labor hours not allow the dynamic nature of the world to be taken into consideration?There is nothing in what I proposed that prevents people from putting in a few extra hours of work to, say, sandbag a flooding river, or produce more bottles and cribs for a rising population.The only point I am making is that at some point, somewhere in the equation, it is entirely conceivable (and, indeed, possible and often necessary) to reach a maximum in terms of demand, and which point, increased efficiency can either be used to produce more goods and services or be consumed in the form of extra leisure hours. No sane business owner would ever choose the former in light of stagnate demand.That's why when people stop buying super-sized Ford trucks, the factories that make those super-sized Ford trucks get shutdown and the employees laid off. In the ideal systemwhich is what my hypothetical representsthey wouldn't be laid off, but would be put to work producing other goods or services, presumably the goods or services that people are now choosing in favor of super-sized Ford trucks. I've never seen the Jetsons, so I really cannot be sure what you are talking about with your repeated references to this show.Jon

Of course it is. It is a society that values community, family, and social interactions over the endless production and acquisition of stuff.The U.S., and a lot of the developed world, is an example of just the kind of sickness that results from unrestrained capitalism: the putting of things before people, GDP over quality of life and happiness.There's a reason Coca Cola advertises its products. The advertising convinces people to consume beyond what they need or would otherwise want of Coca Cola products. Long ago, demand for Coca Cola reached a peak, and the company had a choice to continue production at the then current level and return increased efficiency back to its employees in the form of increased leisure or to increase production and spend increased efficiency by using it to produce even more. The company chose the latter option, because more units sold means more profit; and then they set about finding a way to convince people they actually wanted something that, according to a market not tainted with advertising, they didn't really want.This, is, of course one way to run an economy; continuous increases in demand and production viewed as 'economic growth'. But this way, as I've argued here already, is not sustainable as we live on a planet of finite size capable of supporting a finite level of production.Continuing on the current path gets us here.What I've proposed gets us here.Which world do you like?Jon

Why?Jon

Ahh... I got it now; you want to create artificial barriers to survival that only the people who create the barriers can overcome leaving the other 99% to eat dirt... literally.Good plan. It's neither sustainable nor moral... but it's got all the hallmarks of Coyote politics, so that's gotta count for something.Jon

No need to explain further; I get it completely. You think a small number of people should be able to prosper unimaginably while the rest toil for peanuts and the occasional plague.Anyone who thinks that the concepts of biological evolution should be even remotely applicable in determining best practice political and economic strategies is just an idiot at best and a monster at worst.So here's me giving you the benefit of the doubt. Is there anything else to do besides laugh at someone who attempts to draw a connection between dinosaurs and space exploration?Jon