No more austerity! Judging from recent European election
results, that's the message presently being shouted at European
politicians all over the old continent. It's a mantra echoed across
the Atlantic by Americans such as
Paul Krugman. Austerity, they argue, isn't just ineffective as
a solution to Europe's economic woes. It's also providing, so they
say, conservatives with the cover they need to do what they're
always wanted to do: dismantle by stealth that most sacred of
social democratic cows -- the welfare state.
Much depends, of course, on what's meant by "austerity." Strictly speaking, the type of austerity being pursued in most European countries is primarily focused on long-term government debt-reduction. This translates into tax increases and spending cuts. Part of the object of the exercise is to convey to creditors a serious intent on the part of governments to meet their present financial obligations, thereby allaying concerns they might default on their existing -- and extensive -- liabilities.
Here, however, it's useful to put European expectations of what constitutes austerity into perspective. Does France's raising of the official retirement age from 60 to 62 really constitute "hardship"? Does Greece's effort to reduce its public sector payroll expenses from a 2009 high of 55 percent of state revenues to something close to the 40 percent figure recorded in 2000 represent "privation"? Does the British government's 2010 plan to return public spending to 2006 levels of a mere 41 percent of GDP suggest that David Cameron is "gutting" the welfare state? Please.
Read more: http://spectator.org/archives/2012/06/08/why-austerity-isnt-enough
Much depends, of course, on what's meant by "austerity." Strictly speaking, the type of austerity being pursued in most European countries is primarily focused on long-term government debt-reduction. This translates into tax increases and spending cuts. Part of the object of the exercise is to convey to creditors a serious intent on the part of governments to meet their present financial obligations, thereby allaying concerns they might default on their existing -- and extensive -- liabilities.
Here, however, it's useful to put European expectations of what constitutes austerity into perspective. Does France's raising of the official retirement age from 60 to 62 really constitute "hardship"? Does Greece's effort to reduce its public sector payroll expenses from a 2009 high of 55 percent of state revenues to something close to the 40 percent figure recorded in 2000 represent "privation"? Does the British government's 2010 plan to return public spending to 2006 levels of a mere 41 percent of GDP suggest that David Cameron is "gutting" the welfare state? Please.
Read more: http://spectator.org/archives/2012/06/08/why-austerity-isnt-enough
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