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Is Austerity self-defeating?

Prominent economists in the UK declare that 10 years of financial hardship should have been avoided with fiscal stimulation. Are they correct?
Burnley123 · 41-45, M
Yes Government should act in a counter cyclical way.

The problem is the Tory success in getting people to accept the household debt analogy. "We've spent too much and now we need to tighten." Yes if you are a household but if every household does that then nobody is spending, staff get laid off and the depression cycle gets worse. I don't get a pay cut if I cut my spending but that is precisely what happens if things are done by aggregate.

Greece has worse austerity than us and has increased its debt because it's economy contracted by a quarter. This is before we even get to the human cost or the morality issue of ordinary people losing livelihoods because of a banking crisis.
Valentine · M
@GunSmoke9
"When companies cheat they lose business, money. Why would they do that?"
Because they think they can 'get away with it'. Their profit motive is innately designed so that they take commercial decisions to press so hard up to the contractually designed and agreed quality requirement, and usually below it. I see this [i]daily[/i] in PFI contracts where the Builder was required to build to a specification and they prove adept in concealing their profit driven 'shortcuts' until the wall eventually walls down nearly killing children, or the hospital/school building is an undeniable fire hazard because of shoddy and concealed workmanship (fire compartmentation etc being the unfortunate recent example). Commercial operations are just as subject to mistakes, poor workmanship, and costly weather delays as public organisations - they will take a poor quality, cheaper route to compensate and protect their 'bottom line'. They know and work on the basis that they can get these shortcomings past building inspectors and project managers etc until it becomes too much of a hassle to attempt to put it right - the only way being to engage costly legal dispute. The usual winner is of course the eventual fat-cat lawyer.

"There is oversight, regulations on businesses. There are legal options that are available to those that need them."
True. But expensive. And the legal system can be an expensive lottery - and not just in terms of £/$ but H/M/S - the commercial operation will factor in that the Client will not have the resource or appetite to pursue a just claim. There will inevitably be staff turnover, poor handovers, new politically driven objectives which pressure older unresolved issues to be backburnered. And therefore quality and unfortunately sometimes safety is designed to suffer, often compromised to an unacceptable degree.

"What goods have the government come up with?"
A good example would be the vast number of Private Finance Initiatives (PFIs) - projects where a significant publicly required utility (eg. schools, hospitals, leisure centres) cannot be financed upfront by the public purse, so, similar to the would-be home owner, they take out an FBM (f***ing big mortgage) on the asset funded by Senior Lender banks. Ok, this is 'local' government, but they work as part of the overall government function.
Valentine · M
@therighttothink50
"The government pays for nothing, it is a huge monstrosity which taxes people and uses their money to pay for things."
True - governments do 'tax'. But society has chosen this path - to pool resources on as fair a basis as it can for the collective good of the community it represents. It then places responsibility for this into the hands of public bodies which are tasked to provide the required goods/services. Public accountability is clearly a requisite here to ensure diligence and productivity. Doesn't always happen, I concede - they are as much a part of the real world as commercial organisations and f*** up big-time too. But, if we left infrastructure decisions to commercial businesses, they would 'follow the money', and we would have just a wonderful world of lush green exclusive golf clubs and even bigger-fancy yachts.
"The government abuses its power on a daily basis." Who can argue with this - after all government is run by politicians! There is no easy answer here.
GunSmoke9 · 56-60, M
@Valentine Fine you came up with some examples. I can find plenty of examples of when government is too involved, things get worst. I'll stick to my beliefs that competition is good for the economy. It lowers cost, creates jobs. How long do you think Ford, Chrysler, Apple, ect. would stay in business if they put out a lousy product to save money? Cutting corners will cost them money.
Cierzo · M
Fiscal stimulation? That sounds like stupid keynesianism. When national debt is high, both state expenses and taxes must be cut. Tax cuts will make it easier to create new business and increase consumption, therefore although tax rates are lower, state revenue will not.
Cierzo · M
@Burnley123 There is the middle class, the engine that keeps economy going, who has been too heavily taxed in the last decades.
Burnley123 · 41-45, M
@Cierzo Not heavily taxed by historic standards but yes, the tax burden does fall on them. We need to find a way of taxing billionaire tax avoiders.
Cierzo · M
@Burnley123 I think corporations should not be taxed, but their owners. And the bulk of taxation should be on tariffs and VAT on luxury goods
SW-User
Yes, in a recession spend spend spend in nvestment
..counter intuitive I know...go UK!
SW-User
[image deleted]@Valentine
SW-User
@SW-User since when in the last recess has the UK government been doing that -spend? If I gathered anything over the last 10 years they have been reliving Thatcher's austerity just with a softer message.
SW-User
@SW-User no idea tbh
We are all in together-unless you are a rich Tory.This country badly needs a Labour Government that won't put the rich first.Corbyn will be happy to follow your suggestion.Great bloke.Unlike any Tory P.M.
CaptainCanadia · 41-45, M
Austerity is based on the idea that the wealthy alone can keep the economy healthy. Clearly doesn't work.
katielass · F
It didn't work here in 2009 but then the stimulus money went to near bankrupt dem donors who went bankrupt anyway and then absconded with the money.
SW-User
should have been or could have been? might seem immaterial in question
Valentine · M
@SW-User I initially put 'could' but then changed it to 'should' - to stimulate response (thank you) and because those suffering hardship deserve to know the truth. Some politicians would recommend abandoning austerity now, so it could (should?) impact on the future too.

 
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