Austerity measures have they ever saved an economy?

Wow, Jon.That's surprisingly liberal of you, if you don't mind me saying so. I largely agree, of course.

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

Do I keep mixing you up with someone else? Weird. Ok, I'll try to remember next time (and figure out who the hell I'm thinking of!)

I don't believe such systems are sustainable. I'm willing to listen to arguments that they could be, but I'm quite skeptical.

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

I think the two examples usually cited are Canada and Sweden in the mid 1990s.Canada engaged in quite stringent austerity measures to reduce it's budget deficit but it had booming exports to strongly assist these measures.Sweden, as far as I understand, did something similar but simultaneously underwent a large devaluation which accounted for a lot of it's debt clearance.AbE - With Wiki on strike it is much harder to look these things up.Edited by Straggler, : No reason given.

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.

To understand how to unravel this balled-up knot we need to understand where the money that we propose the government should be spending comes from...here is a quick 101.Companies spend money on people and buy goods which are sold on at a PROFIT!
The money spent on people in the form of salaries is where we people get our income from (real revenue). Companies generate their income from their assets and either draw out there profit or reinvest them in the company (real revenue).So far so good, except then Mr Taxman comes in and says let me have 35% of your income (incorrectly referred to as revenue). The government does not earn this income whether you're in favour of austerity or not it is simply not a real revenue generator, it get's it's income directly from Joe Public and Public Ltd.Now here's the rub, if the government get's $35 from Joe Public it is purely because Joe Public earned $100, leaving Joe with $65. If Mr Taxman then spend $70 it means that Joe Public will have to pay that back over time in increased taxes.
Therefore austerity=sanity. Those who like to pummel the rich do not understand that it is after all the rich that have provided the means for growth in any economy.Also, how does increased government spending help Mr Broke when he is going to end up paying for the spending in the long run. If he doesn't pay by direct taxation (let's remember tax rate in US has been as low as 1% in early 1900's and as high as 70% in 1970's) then he will pay by losing his job because his boss is trying to make a profit and pay Mr Taxman at the same time.Austrian school of economics is the best way to go...let's limit government where possible and get into the habit of spending what taxes have been collected rather than 100% more spending than what we have available. Calling Taxes Revenue is the easiest way to court disaster as taxes are not revenue they are taxes, so increased spending=increased taxes (now or later but inevitable).Von Mises, Hayek & Galambos have the way to go...it's the reason the US is the biggest economy in the world...Laissez-faire economics!

Laissez-faire economics is simply rape made respectable.As productivity increases we need to redistribute the National Gross Domestic Product to all of those living in that Nation whether they work or not.Also, as a Nation, it is in our best interest to make sure that there is no "Monied Class", those who inherit money they did not earn, and so we need a progressive inheritance tax.Finally a major and important function of Government is to be the 900 pound Gorilla that acts as a check against capitalism.

Asshole.

I think the reason is fairly self-evident.

Austrian economics has not only failed in every possible way, it's not only been revealed as a pseudointellectual fraud, but its sole appeal is to people who can't do any math. Certainly it does, in the same way that the man who owns the marketplace earns a portion of the business conducted there. The government makes roads, mints coin, maintains civil order - all necessary preconditions for the transaction of business. Even libertarians have to admit the existence of a government for the purpose of defending property rights, at the very least; to do so requires the monopoly of force so there's your police, your armies, etc. None of that stuff is free. Like I said, Austrian economics is for people who can't do math. $100 - $35 + $70 = $135; the government budgetary policy where the government spends a deficit - let us roughly refer to this as "Keynsian", though it's not, not exactly - actually leaves Joe Public $35 richer. Why? because Joe Public is who provides the goods and services the government buys with the money. Government spending is public income.

Let me guess? Libertarian? Who get services from the government such as road , schools , Military , fire departments , things CONservatives call "entitlements" (which are actually vital pieces), etc Growth is driven by demand and the primary producer of demand are the lower classes. If Johnny Rich gets a tax cut for his company and is making a profit. Why would he expand or hire if there is no increased demand or need? Johnny is going to pocket the money. It's more likely if there is a need for the employee because of demand for a product that Mr. Boss will simply find another way or just be fine. Demand drives hiring not Rich people having extra money hanging around. Perhaps shareholders won't get divdinds that quarter or Mr. Boss just gets a smaller Bonus? Although in the modern landscape caused by insane growth and detachment those are hardly ever considered options like they used to. Because you believe the government takes your money and hides it in cave? Which is proven as flawed as communism. There is no functioning large economy where at least a little Socialism hasn't been integrated inEdited by DC85, : No reason given.

Yes, it is.. to a certain point. However, I think that the balance between debt and revenue has become to great. ... I would like to see the percentage of debt (not deficiet) go down A large part of the money coming in goes to paying off the interest in the debt. Since Regonomics, the very rich percentage of income has been keeping up with the GDP, but the middle class and poor have started eroding. This trend has to reverse itself.. and have the middle class and poor keep up with GDP (and rich erode for a bit). I would like to see the gap between the rich and poor get back to pre-reagan levels.Once you reduce the debt enough, you can use the money that WOULd have been going to paying off interest in infrastructure and new technologies.

The specific things that have to be cut is items like 'The war in afganistain'. Blowing people up doesn't do a lot for public economy over here.Cut the subsidies to farms that are being paid NOT to grow things. Eliminate the loop holes for the rich. Stop paying corporate welfare.On the other hand, building and maintaining bridges, rebuilding the roads, sewer systems, and the infrastructure is a very well worth while investment.