Thursday, August 2, 2012

Austerity Works

Despite what the Bearded Crapweasel is preaching, Austerity works, and more government spending just corkscrews a country into deeper trouble
The countries with the largest stimulus programs suffered the most during the recessions.
[...]
Governments weren't able to spend their way out of their problems. "If you look at the experiences of OECD countries over the past five years there's no evidence that countries that reduced government spending relative to GDP had slower economic growth," said Steve Bronars, an adjunct professor in economics at Georgetown University. "If anything, countries that showed greater fiscal restraint had faster growth in GDP and employment over the past few years." (Austerity Works)
This chart proves it. The left side is GDP Growth. Higher is better. Across the bottom is Change in Government Spending. Left is less, right is more. The chart shows a strong correlation between less government spending and an increase in GDP.


 The charts in the linked article tell the story, and damn to hell Paul Krugman’s absurdly suicidal prescriptions. Go read the whole thing and see for yourself: Austerity Works: Time to Give it a Try.

52 comments:

viburnum said...

Simple logic that somehow went out of fashion.

"Can a people tax themselves into prosperity? Can a man stand in a bucket and lift himself up by the handle?" Winston Churchill

jez said...

from the linked article:
"The results are not dependent on Ireland and Iceland being included"

but it sure does look like they help. Look at your graph with Iceland & Ireland covered up. Still see that strong correlation?

Is there a link to the values plotted on this graph somewhere?

Silverfiddle said...

http://www.oecd-ilibrary.org/economics/oecd-factbook-2011-2012_factbook-2011-en;jsessionid=1ooxd9bb77ech.epsilon

Finntann said...

Sorry V, but you need to immediately return that quote to the nearest 'English' Embassy or Consulate.

-The Management

conservativesonfire said...

Like the Laffer curve, economist Richard Rahn has a curve that shows government spending is a plus up to about 15% of GDP and beyond that it hurts the economy.

Ducky's here said...

I think we should give all the money to mortgage brokers to spend.

FreeThinke said...

No WONDER Barack "Wonder Boy" Obama sent that bust of Sir Winston back to Mother England!

It made poor Baby Back Barack and the mental midgets who support him look so SMALL and FEEBLE-MINDED in comparison.

Winnie was half-man and half-American savage. It's a wonder the British ever accepted him as one of their own -- or DID they?

The UK today more closely resembles a croaking toad than it does the proud lion of Sir Winston's day.

What a pity!

~ FreeThinke

Ducky's here said...

Yes sir, frame three arbitrary years and that "proves" a complicated theory.

Really, stop now.

Bunkerville said...

I recall my parents taling about the sacrifices made during WW II, including rationing. I cannot imagine many these days willing to make any sacrifices.That is what is now required. How we got to this is for another day.

Silverfiddle said...

Ducky probably also believe in "Eat yourself thin" diets...

Ducky's here said...

True, bunkerville. However, the argument is over who sacrifices, arms manufacturers, venture capitalists, single mothers who can barely put food on the table?

At least the argument should include that issue. What it will come down to is true believers trying their damnedest to hold on to a little while they screw the ones with nothing.

Then they'll bring out their social Darwinism and Calvinism unless they go under the bus also.

Louis H. said...

"...single mothers who can barely put food on the table?"

You mean there really are consequences?

Grung_e_Gene said...

Silverfiddle, The comments from your linked article disagree with the writers.

But, hey statistics never lie. We need to cut spedning on the poor, increase taxes on the poor and allow the Rich Job Creators to send more money to off-shore dummy coprorations so they can create jobs here. It'll work.

Austerity Now!!!

Silverfiddle said...

But, hey statistics never lie

You're right, they don't lie. They numerically represent things.

In this case, as in most cases, it is debatable, depending on what data points you use and the time period.

One could argue that Austerity does not work, but one could equally argue that ramping up spending doesn't either.

And it's not conservatives' fault that liberal democrats have enslaved millions in inner city prison camps.

We're the ones for economic liberty that would let that mother take care of herself by watching other kids without having to jump through 50 fiery government hoops.

Z said...

even charts don't work with those who don't want to believe the truth, do they.
"let's keep spending and borrowing and taxing our people...that's the ticket!" what?

Finntann...you made my day :-) "Return the.." !!

Steve said...

According to Republiscum leaders, following the path of Europe is a move to socialist ruin, which is why Republiscums criticize Obama for embracing policies similar to Europe, such as government health care.
Of course the ACA is not a universal health care program like England has, but Republiscums don't let the truth get in the way of a good false argument.
Rather pessimistic to chose austerity when growth will do the job and leave all economic levels of society better off. Of course growth depends on investment, which Republiscums are unwilling to do.
American economic history proves raising taxes does not inhibit growth, so why chose a path of greater suffering just because Republiscums are afraid to invest in America?
It's the same old Republiscum ideology. Cutting taxes alone will produce jobs and growth, which has been proven wrong. And cutting spending alone will solve our debt problems, which has also been proven wrong.
To bad your thinking does not promote the best America can do, instead of tearing down policies that have served America well for almost 100 years.
Austerity has caused riots and strikes all over Europe. It's amazing you think that is another level of problems we should add to the problems we already have.

Mark Adams said...

"Cutting taxes alone will produce jobs and growth, which has been proven wrong. And cutting spending alone will solve our debt problems, which has also been proven wrong."
Someones been dipping in to the coolaid a little early, today. LOL

Steve said...

Why don't you explain where I'm wrong?
No just insults

Silverfiddle said...

From Greece

The finance ministry said the central government deficit grew by 15 percent in the first nine months of the year compared with the same period last year. It rose to 19.16 billion euros.

That was despite tax increases that were supposed to bring in more money – tax receipts actually fell.


Fish in a barrel...

Mark Adams said...

Your cutting taxes claim is far from 'steler'

Example
The last of the Bush tax cut rates signed in to law May 28, 2003. Nearly all of the cuts went to individual rates, capital gains, dividends, estate tax.

Economic grow afterword’s:
Shot up to 6.7% and hovered between 2.5% and 5% for each quarter (except for 2) of the next 4 years, until the start of 2007 when the economy began to slowly tanking.

Unemployment:
June 03 6.3% and retreated to a low of 4.4% over 5 year where is average 5.4% or less before the economic meltdown of 2008.

Silverfiddle said...

Here's a study by Christina Romer and her husband:

The Macroeconomic Effects of Tax Changes

The conclusion?

In short, tax increases appear to have a very large, sustained, and highly significant negative impact on output. Since most of our exogenous tax changes are in fact reductions, the more intuitive way to express this result is that tax cuts have very large and persistent positive output effects.

Yeah, that Christina Romer, Distinguished Berkley professor and former Chair of the Council of Economic Advisers in the Obama administration.

skudrunner said...

Steve,

I am amazed how much of what you wrote I agree with.

Agree that ACA is not like Europe healthcare. ACA is a tax on small business and the middle class to provide healthcare for 10% who won't pay for it themselves. It has nothing to do with producing quality healthcare for all.

Agree that growth will do the job and leave all economic levels of society better off.
So why doesn't the senate bring to the floor some republican jobs bills? Because they would rather blame than fix.

Agree Cutting taxes alone will produce jobs and growth, which has been proven wrong.
We also need to cut spending which the democrats won't do.

Agree Austerity has caused riots and strikes all over Europe.
It is difficult to take away the free stuff.

See, no argument with your ideas I think they are sound.

jez said...

Well, just spend 5 minutes playing around with some of the OECD's figures and while I haven't exactly reproduced realclearmarket's graph (I know it's different because I can't plot a point for Iceland because the table I downloaded doesn't have a figure for Iceland's per capita GDP in 2010), I did make a graph that looks a bit like there's. R^2 with and without Ireland is approximately 0.3 and 0.03 respectively. Neither correlation is particularly strong.

Even if there were a correlation, the usual warning about correlation and causation applies.

Liberalmann said...

The Obama/Romney Tax Calculator:

http://www.barackobama.com/tax...

Mustang said...

Oh good ... more information we can use from obama dot com.

skudrunner said...

"This is from the Obama website
The President is taking aggressive steps to put Americans back to work and create an economy where hard work pays and responsibility is rewarded."

They have to be kidding, right? when he makes that statement followed by
"If you’ve got a business, you didn’t build that. Somebody else made that happen.”
He couldn't care less about creating an economy where hard work pays.
Maybe I was hasty in saying that because if hard work pays he can tax it, great thinking Barry.

Finntann said...

A lesson in progressive logic:

"I think we should give all the money to mortgage brokers to spend."

If your not going to spend it on one program, spend it on another.

However, the argument is over who sacrifices, arms manufacturers, venture capitalists, single mothers who can barely put food on the table?

More progressive logic... we have to pick who sacrifices.

What it will come down to is true believers trying their damnedest to hold on to a little while they screw the ones with nothing.

It can't be us, it has to be us vs. them. So do you suppose during the war, they sat around trying to decide who needed to sacrifice?

And as far as "single mothers who can barely put food on the table?"

I only have one question... is it mine?

Finntann said...

@"American economic history proves raising taxes does not inhibit growth,"

let me correctly finish that sentence for you:

American economic history proves raising taxes does not inhibit growth, when all your competitors have been bombed into smoking ruins and you're the only game in town.

@"just because Republiscums are afraid to invest in America"

No, no, you've got it all wrong. We're not afraid to invest in America, we're afraid to invest in the likes of you.

Let me see if I got this:

The man who uses the term "Republiscums" six times in two paragraphs is the same man who just said "Why don't you explain where I'm wrong? No just insults"

That in a nutshell perfectly captures what is wrong with the progressive left.

Sam Huntington said...

Austerity forces us to presume that sober people are necessarily niggardly. They do not wish to spend any money at all, unless, or until, it becomes unavoidable. Then we should assume a society or government that will establish a process by which all proposed spending undergoes a vetting process. Finally, we should think this society or government would come to an agreement about how to prioritize spending. Under these circumstances, we should assume diminished spending and low taxes.

This has not been an American tradition since government relegated spending to the whim of elected officials with the tacit approval of the general populace.

Margaret Thatcher was right.

Steve said...

That's right more insults and disinformation, and you wonder why no one takes you seriously.

Always On Watch said...

Mustang,
Liberalmann has been dropping that link all over the place today. **sigh**

A few minutes ago, he left another dropping at Sam's post today.

Silverfiddle said...

"Liberal droppings..." I like that!

Steve, we take one another quite seriously here. We even take our liberal interlocutors seriously.

You and Liberalmann are the only ones we don't take seriously. Every court needs a jester...

Teresa said...

The libs are the masters of disinformation. Conservatives/libertarians rely on facts and reality.

Government interventionism is what got us into this financial fiasco.

Ducky's here said...

@Powderedwig - Finally, we should think this society or government would come to an agreement about how to prioritize spending. Under these circumstances, we should assume diminished spending and low taxes.

---------

Why would prioritizing spending necessarily have anything to do with low taxes?

Explain the vetting process and who participates? I can't wait.

Z said...

Oh, brother...Steve's another one who still thinks "health care in Germany's FREE!" Yes, it is if you're derelict. If you're not, it's about $1000 a MONTH. and the derelict health care stinks, by the way. But, believe what you're told by the lefties who want you to think WE CAN DO IT HERE, TOO (except it isn't WORKING there...even Gerhard Schroeder, 10 YEARS ago (I was there, don't deny this, please...it's an insult to your intelligence) begged Germans to buy private health insurance because GERMANY CAN'T AFFORD THIS ANYMORE. GET IT, LIBS?
Ya, we're following a failing continent. GOOD JOB, OBAMA!
My German husband used to say "what's with AMerica? I came here to get away from socialism and this country's following one EUropean mistake after the other".

Ducky, just MAYBE we need to stop funding the arts for a while? Or is that a VITAL priority? I"m ALL for more funding of the arts, by the way, but in times like these?
How about prioritizing WASTE like GSA CONVENTIONS?
Or the IRS losing millions because of stupidity?
we could all add to the list,...at least thinking people would.

Finntann said...

Why would prioritizing spending necessarily have anything to do with low taxes?

Because the government spends a shitload of money on things it isn't constitutionally authorized to do?

Sam Huntington said...

Are you kidding with me again, Ducky … or are you actually that obtuse? Here’s an idea: come back and engage in conversation when your brain is fully developed.

viburnum said...

Ducky: " Explain the vetting process and who participates? "

It's already been done. http://www.archives.gov/exhibits/charters/constitution_transcript.html

q.v. Article 1 Section 8

Ducky's here said...

Ducky, just MAYBE we need to stop funding the arts for a while? Or is that a VITAL priority? I"m ALL for more funding of the arts, by the way, but in times like these

---------

It wouldn't have any significant effect on our indebtedness (not one bit) and a lot of local arts councils who count on funding would cut back.

A local arts company received some Federal money for a Shakespeare program. So you employ tailors, carpenters, electricians, actors, caterers and others.
Matinees were held for local schools and I doubt even the right objects to Shakespeare in the curriculum.

Now they take that money and put it back into the economy. It's called a multiplier and the multiplier for programs like food stamps is pretty large.

So there's your lesson for the day. All government speding isn't equal.

Ducky's here said...

Huntington, answer the fucking question for once you ignorant stooge or go powder your wig.

Sam Huntington said...

See what I mean?

Finntann said...

Now they take that money and put it back into the economy. It's called a multiplier and the multiplier for programs like food stamps is pretty large.


Uhhh... the money for these programs is taken out of the economy before it is put back into the economy. You presuppose that the money collected in taxes would not have been otherwise spent. These programs might move it a round a bit but the net effect is neutral, in reality slightly negative because the government spends money it doesn't have by printing more, with the net effect being devaluation.

Your logic is like trying to fill a half empty bucket by scooping out the water and pouring it back in.

Cheers!

Z said...

Ducky, my my my...just how ugly CAN you get? Doin' a little pearl clutching of your own these days?

Steve said...

Serious is name calling?
Right
Shithead

viburnum said...

Steve: "Serious is name calling? "

No. Serious is staying on point, and treating differing opinions, and their authors, with respect. Not agreement, mind you, but respect. Failing which is why you have pretty much forfeited any reasonable expectation of being taken seriously. You seem incapable of responding to any opposition to your position with anything other than derision and insult. You should seriously consider either attending a Dale Carnegie course, or a visit to the orthopedic surgeon to have that chip removed from your shoulder.

dmarks said...

Yes, we need to zero out forced taxpayer arts funding. Independent (non-government approved) art flourishes in the US. There's no need to waste one cent of government money on it.

dmarks said...

Steve said: "Republiscums are afraid to invest in America?"

The problem for you is that Republicans DO favor investing in America. And strongly. The Democrats? They like to funnel money into destructive and illegitimate special interest groups (like the Obama stimulus, which was a handout to underworked and overpaid union thugs, and ended up causing a large unemployment increase).

---------

Steve said: "Of course the [Obamacare] is not a [government-controlled] health care program like England has, but Republiscums don't let the truth get in the way of a good false argument."

The truth is that Obama announced that he wanted a government-controlled unaccountable health care monopoly, but he realized that the people would not stand for it. So he tried to do the next "best" thing. As a means toward that goal.

"It's the same old Republiscum ideology. Cutting taxes alone will produce jobs and growth, which has been proven wrong."

It WILL produce jobs and growth. It has been proven time and again.

"And cutting spending alone will solve our debt problems"

Yes, it will. As we are massively overspending. And the money being spent is being robbed from productive people and is clobbering the economy. Reduce both, and it's a win win situation.

"To bad your thinking does not promote the best America can do, instead of tearing down policies that have served America well for almost 100 years."

The policies you favor have caused the problems to begin with.


"Austerity has caused riots and strikes all over Europe."

So? A lot of people who have lived their lives without doing anything productive while getting rich from the government for it are turning into violent thugs now the handouts are being cut off.

Steve said...

" Serious is staying on point, and treating differing opinions, and their authors, with respect"

Doesn't happen on this site, and not by you
Follow your own advice.
If I hadn't been called ignorant and sworn at the very first comment I left on this blog maybe things would be different; but that was your choice and SF's choice.
Showing again just how intolerant you wackos are, treating a new visitor like that.
I ain't crying, I'm no prude, I can follow your shit with shit of my own.

Dmarks,
Typical for one of the few conspiracy nuts who still believe Iraq had WMD's
Your opinions are lies and you didn't give any facts to back them up, because you cannot.

viburnum said...

Steve: "If I hadn't been called ignorant and sworn at the very first comment I left on this blog maybe things would be different; but that was your choice and SF's choice."

Having done some research, you seem to be referring to the discussion following your comment stamped 7/6/12 10:36 AM on SF's Fourth of July post, which by the way was not your first post on Western Hero.

I'll defend Silver with his own words:

"Steve: You made this statement: 'Of course they created rights.'

That led me to believe you to be ignorant of Natural Rights theory as espoused by Locke.

Saying someone is ignorant of something is not hateful or insulting. I am pretty ignorant of Marxist theory, so what? "

SF did not call YOU ignorant, rather he pointed out that you seemed to be 'in ignorance' of the theory of Natural Rights. That is not insult, it's information. Billions of people on the planet are happily ignorant of the Heisenberg Principle, which carries no other implication than they are not particle physicists.

At no point in the rest of the thread, did any one swear at you, least of all me who did not participate in that particular discussion at all. I was on vacation for much of the time and while I did read the blog, and noted your increasing frustration with your inability to engage at this level of discussion, I commented very little. In fact I did not address any comment to you until July 25th, when I took exception to your use of the pejorative 'scum' at those who disagreed with you. My intention at that time was to point out to you that personal invective is not generally characteristic of this venue. Your manners degenerating even further after that led to my later comments, and those of others who were merely responding to you in kind. Any fair reading of the evidence will show that you have brought your problems on yourself.

Any one of us will support your right to your opinions, but expressing them comes with a concomitant obligation to defend them. If you can't do so in a civilized fashion, without resorting to despicably ad hominem attacks, you may wish to consider restricting your comments to those left wing echo chambers where no one will question your positions.

FreeThinke said...

How is it possible that someone of Paul Krugman's utterly irrational approach to fiscal policy could ever rise to such great heights?

His prominence -- and apparent eminence -- make a mockery of the field of economics.

Isn't it supposed to be a SCIENCE?

Krugman's ideas are about as valid as a persistent, aggressive claim that two plus two really equals FIVE.

GAWD!

~ FreeThinke

jez said...

Oh, macro-economics is clearly not a science.

Silverfiddle said...

Very true!