Finally, this line of thinking is picking up more and more advocates. One is Megan Greene, an economist out of London. She says it so far better than I could:
Europe “is not a fiscal or debt crisis, but a growth crisis.” There is a “trade off between austerity and growth….Growth heals all economic wounds, and without it austerity becomes completely self-defeating.” Greene concurs that Europe’s current path is “economic suicide.”
Greene points out that austerity was self-defeating in Ireland—the more austerity enacted, the worse their economic situation became. She currently sees this happening in Spain, where more and more austerity is being pushed, and the situation is becoming worse by the day.
I would also point out the case of the UK. Under Mr. Cameron’s rule, austerity is the watchword of the day. Months ago, economists were pointing out that the US and UK provided a blatant contrast in economic policy. Under Bush/Paulson and Obama/Geithner, the US pumped money into the economy. The UK’s Cameron did the opposite—cutting spending and increasing taxes. Now, years later the UK is in a clear recession. The US is still struggling, but so far is avoiding recession and showing many signs of growth. Indeed, if the US is dragged into another recession it will likely be because of Europe, not because of domestic activities. Also, both our banking and auto industries are functioning and generally healthy, which is no small task indeed.
Pushing austerity is like drinking cool aid. It tastes good and feels refreshing. But it is not. It has unhealthy ingredients and provides no way out of a complicated mess. Recession—thy pseudonym is austerity.
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Ms. Green’s full article is at http://www.independent.ie/opinion/analysis/megan-greene-this-is-not-a-fiscal-or-debt-crisis-but-a-growth-crisis-3088184.html