The Fools Gold of "Austerity"

The political right has been selling a morality play. That tough times require people to "man up" and shoulder the hard times, showing virtue, and toughness, because that will be quickly rewarded with a better economy. They blame the economic collapse not on manipulation of power and the corruption of laws and regulation by money & power. No. They blame the wide public for being too eager to take on debt and for a weakness that gets exposed when times turn tough. So they proscribe "austerity" as the castor oil whose bitterness will "heal" the nation. But this is nonsense.

Here is a bit from a NY Times op-ed by Paul Krugman discussion two of the modern economies who have bought this right wing "morality play" theory and have imposed austerity:

The Austerity Delusion

Portugal’s government has just fallen in a dispute over austerity proposals. Irish bond yields have topped 10 percent for the first time. And the British government has just marked its economic forecast down and its deficit forecast up.

What do these events have in common? They’re all evidence that slashing spending in the face of high unemployment is a mistake. Austerity advocates predicted that spending cuts would bring quick dividends in the form of rising confidence, and that there would be few, if any, adverse effects on growth and jobs; but they were wrong.

It’s too bad, then, that these days you’re not considered serious in Washington unless you profess allegiance to the same doctrine that’s failing so dismally in Europe.

Here's what taking the "bitter medicine" prescribed by right wing fanatics will get you:

Just ask the Irish, whose government — having taken on an unsustainable debt burden by trying to bail out runaway banks — tried to reassure markets by imposing savage austerity measures on ordinary citizens. The same people urging spending cuts on America cheered. “Ireland offers an admirable lesson in fiscal responsibility,” declared Alan Reynolds of the Cato Institute, who said that the spending cuts had removed fears over Irish solvency and predicted rapid economic recovery.

That was in June 2009. Since then, the interest rate on Irish debt has doubled; Ireland’s unemployment rate now stands at 13.5 percent.

Krugman points out that the Republicans are deeply unserious about the economy. They simply refuse to face the fiscal facts and support the real policies needed:

... the official G.O.P. position — barely challenged by Democrats — appears to be that nobody should ever pay higher taxes. Instead, all the talk is about short-run spending cuts.

In short, we have a political climate in which self-styled deficit hawks want to punish the unemployed even as they oppose any action that would address our long-run budget problems. And here’s what we know from experience abroad: The confidence fairy won’t save us from the consequences of our folly.

It is tragic because those who are paying the price of this folly are not the ultra-rich. It is the bottom 90% of the American public.