It seems that simple, basic economic truth is coming home to roost in the European socialist utopia. It’s already occurred in Canada. Why can’t our own politicians grasp the obvious?
In a study released Friday at the annual conference of the Royal Economics Society, economists Luca Agnello and Vitor Castro of Italy and Ricardo Sousa of Portugal tracked austerity programs from 1978 – 2009. They found that the best programs shoot for the greatest deficit reductions in the 2nd and 3rd years of a program. They also show empirical data that opposition mounts to austerity programs lasting more than nine years.
Yet, here in the United States, our politicians are unwilling to make real cuts to government spending or to reform entitlement spending. Don’t expect too much media coverage of this study; it violates the current political narrative too much to receive serious consideration. Among the common sense findings:
- Reducing public spending lowered deficits more than raising taxes
- Trading nations are usually more successful at restoring their public finances
- Low interest rates and “sound macro-economic” conditions improve the odds of financial consolidations
- Spending cuts are typically deepest in the second and third years of austerity programs before rising again in the final years
IMAGINE – Reducing Spending is MORE EFFECTIVE than Raising Taxes! I wonder what Barack Obama’s reaction would be if he was actually made aware of this study?
Lord Keynes gets a bad rap these days. If he had lived to see the mess that was made from his General Theory he would be ashamed to see what the term “Keynesian economics” has come to mean. Rationalism reigns. Liberal politicians and economists tell us that if you spend X the economy will improve. After spending X, we don’t see the desired result. What is the left’s answer? We didn’t spend enough! (don’t worry, Paul Krugman didn’t receive his Nobel Prize for spouting this macroeconomic drivel)
Common sense has fallen to men and women who fancy themselves gods. While this statement may seem extreme, it is fact. Omniscience and omnipresence are required to “manage” a national economy. That’s either Adam Smith’s “invisible hand” or a god. Since most of these folks don’t believe in either Smith or God …
The Observer appears on weekends in the DelMarVa Observer and provides commentary on a variety of issues.