As I’ve been watching the TV news the last couple of nights, troubling images of the rioting in Greece and Spain make it clear to me that “austerity” just isn’t working.
Evidence is piling up that austerity budgets and public spending cuts meant for reducing deficits are an experiment that’s gone terribly wrong at the expense of the citizens of Europe and around the globe.
Europe has been thrust back into a recession led by those countries where spending cuts have been most severe, including Ireland, Portugal, Spain, Italy and Greece, among others. Instead of rapidly reducing deficits, the spending cuts around the world have slowed the economy, increased unemployment, reduced revenues and even prolonged deficits.
The United Kingdom’s deficit, for example, is actually higher this year than last because their revenues have declined as a result of austerity measures.
In fact, the British Chamber of Commerce who publicly supported austerity measures are now calling for the government to stimulate the economy.
And I can’t help but notice that the people leading the charge for austerity and government belt-tightening (CBC TV's Kevin O’Leary comes immediately to mind) are themselves leading very affluent lives.
Back here in North America, the U.S. is facing its own austerity crisis with temporary stimulus measures set to expire soon and Republicans preaching — what else — deep spending cuts. This would plunge their country back into recession, taking Canada with them.
According to federal Finance Minister Jim Flaherty in this week’s Telegram, “Canada's bottom line is worse than many expected, with the deficit at $26 billion, up $5 billion from the March budget forecast.” With these menacing clouds on the horizon and the undeniable evidence that austerity policies aren’t working, doesn’t it make more sense for governments to stimulate their economies, especially with today’s record low interest rates?
Even many fiscally conservative economists and bankers have urged this approach. Investing more in infrastructure, social programs and allowing wages to rise will lead to stronger economic growth and lower deficits in the future.
president, CUPE NL