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the myth of austerity


dancl2000

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there's a good article on mises.org [ austrian economics website ]
The Myth of Austerity - Philipp Bagus - Mises Daily

it's making a point that is often made here, though under-represented given the media attention to anti-austerity policies. Essentially, that austerity is a misnomer for living within one's means, and that gdp and the associated growth calculations are not a good way to judge the success or failure of an adjustment.

it also relates the benefits of bringing govt spending back into line with its means, namely that more capital is available for private enterprise and this is a better basis for full employment than unsustainable govt over spending.

I'm wondering if opinions have changed as we head into the second half of the budget balancing program. Is it better to see it through, with signs that the debt burden will be significantly eased by the expected shift of the bank bailout burden to the ecb, or is it find some other solution at any cost (e.g. default)
 


Howya

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The problem is that while many people face true austerity, those imposing the austerity are not facing any such hardships. If "living within your means" was applied to everyone, then maybe, just maybe, you would see a shift in sentiment.
 

ruserious

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During the good years, the Guv had no problem spending more and more (See: McCreevy). Now that sh1t has hit the fan, the biggest burden is falling on the less well off. They do this because if you tax wealth there will be a flight of capital they say. Whether that is true or not should be how this guv should be assessed.
 
M

MrFunkyBoogaloo

there's a good article on mises.org [ austrian economics website ]
The Myth of Austerity - Philipp Bagus - Mises Daily

it's making a point that is often made here, though under-represented given the media attention to anti-austerity policies. Essentially, that austerity is a misnomer for living within one's means, and that gdp and the associated growth calculations are not a good way to judge the success or failure of an adjustment.

it also relates the benefits of bringing govt spending back into line with its means, namely that more capital is available for private enterprise and this is a better basis for full employment than unsustainable govt over spending.

I'm wondering if opinions have changed as we head into the second half of the budget balancing program. Is it better to see it through, with signs that the debt burden will be significantly eased by the expected shift of the bank bailout burden to the ecb, or is it find some other solution at any cost (e.g. default)
"the expected shift of the bank bailout burden to the ECB" - wherever did you hear that?

Aside from the fact that that is not what is expected it would be against the law.
 

And So I Said

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The problem is that while many people face true austerity, those imposing the austerity are not facing any such hardships. If "living within your means" was applied to everyone, then maybe, just maybe, you would see a shift in sentiment.
haughey springs to mind.
 

Pat Gill

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there's a good article on mises.org [ austrian economics website ]
The Myth of Austerity - Philipp Bagus - Mises Daily

it's making a point that is often made here, though under-represented given the media attention to anti-austerity policies. Essentially, that austerity is a misnomer for living within one's means, and that gdp and the associated growth calculations are not a good way to judge the success or failure of an adjustment.

it also relates the benefits of bringing govt spending back into line with its means, namely that more capital is available for private enterprise and this is a better basis for full employment than unsustainable govt over spending.

I'm wondering if opinions have changed as we head into the second half of the budget balancing program. Is it better to see it through, with signs that the debt burden will be significantly eased by the expected shift of the bank bailout burden to the ecb, or is it find some other solution at any cost (e.g. default)
The wonderful science of economics.

Concerns about the equitable sharing of austerity aside, has the Mises Institute explained how the quite reasonable concept of living within your means can co-exist with a monetary and banking system which is dependent on constant growth and further lending for its sustainability.

This for me is the fundamental problem of economic ideology, prescriptions are written with the intent of curing the symptoms rather than the disease.

This of course means that no problems ever actually get solved.
 

feargach

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Disillusioned democrat

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Let's get real. Living within our means would require the people who decide on policy to be paid less and have less prestige....can you really see that happening?
 

feargach

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The wonderful science of economics.

Concerns about the equitable sharing of austerity aside, has the Mises Institute explained how the quite reasonable concept of living within your means can co-exist with a monetary and banking system which is dependent on constant growth and further lending for its sustainability.

This for me is the fundamental problem of economic ideology, prescriptions are written with the intent of curing the symptoms rather than the disease.

This of course means that no problems ever actually get solved.
Economics is no science, at best it might be called a field of study. But "Austrian" "economics" is simply a faith, with a chemical element, namely gold, as the Higher Power.

I put both words in quotes because, first off, the vast majority of people in Austria who have any opinion on economics very strongly and rightly reject the tenets of the faith in question. And the "economics" element simply has nothing to do with it. Essentially, the faith consists of untestable syllogisms of the True Scotsman Fallacy variety.

If you have read of the True Scotsman Fallacy and thought "Wow! what a fantastic system of analysis to find out who is and isn't a True Scotsman!" then this faith is going to be right up your alley.

If not, why not go along with some other, more entertaining faith (Voodoo was what George Bush the first likened it to) rather than this illogical, untestable babble?
 

EUrJokingMeRight

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Economics is no science, at best it might be called a field of study. But "Austrian" "economics" is simply a faith, with a chemical element, namely gold, as the Higher Power.

I put both words in quotes because, first off, the vast majority of people in Austria who have any opinion on economics very strongly and rightly reject the tenets of the faith in question. And the "economics" element simply has nothing to do with it. Essentially, the faith consists of untestable syllogisms of the True Scotsman Fallacy variety.

If you have read of the True Scotsman Fallacy and thought "Wow! what a fantastic system of analysis to find out who is and isn't a True Scotsman!" then this faith is going to be right up your alley.

If not, why not go along with some other, more entertaining faith (Voodoo was what George Bush the first likened it to) rather than this illogical, untestable babble?
Like the FED?
 

feargach

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Let's get real. Living within our means would require the people who decide on policy to be paid less and have less prestige....can you really see that happening?
Let's assume that literally everyone in Ireland takes a pay cut to bring their living down to their means.

Nobody borrows anything. If anyone takes a loan for anything, they are automatically violating the "within their means" part.

So, how does any economy survive?

Bridges collapse from time to time. There is no way to repair fallen bridges without debt, so a collapsed bridge is gone forever, or at least for several dozen years.

It's a stupid notion, which would immediately wipe out any economy.
 

feargach

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Like the FED?
The Fed isn't an economic theory, it's a central bank.

It's as if I had said "lemons taste nasty" and you responded with "like the Horsehead Nebula?"

Does the phrase "don't compare apples with oranges" ring any bells with you?
 

MichaelR

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Bridges collapse from time to time. There is no way to repair fallen bridges without debt, so a collapsed bridge is gone forever, or at least for several dozen years.
Can you prove there is no way to repair fallen bridges without debt? Has tax take disappeared?
 

Pat Gill

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Economics is no science, at best it might be called a field of study. But "Austrian" "economics" is simply a faith, with a chemical element, namely gold, as the Higher Power.
I agree, I further contend that the version of living within your means which the IMF and ECB wish the Irish people to aim for is.

Take whatever actions are required in order to bring your borrowing costs down and then start borrowing again, in theory this new borrowing should be less than 3% of government income but......
 

pragmaticapproach

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Economics is no science, at best it might be called a field of study. But "Austrian" "economics" is simply a faith, with a chemical element, namely gold, as the Higher Power.

I put both words in quotes because, first off, the vast majority of people in Austria who have any opinion on economics very strongly and rightly reject the tenets of the faith in question. And the "economics" element simply has nothing to do with it. Essentially, the faith consists of untestable syllogisms of the True Scotsman Fallacy variety.

If you have read of the True Scotsman Fallacy and thought "Wow! what a fantastic system of analysis to find out who is and isn't a True Scotsman!" then this faith is going to be right up your alley.

If not, why not go along with some other, more entertaining faith (Voodoo was what George Bush the first likened it to) rather than this illogical, untestable babble?
The core basis of Austrian economics is the subjective theory of value and subjective utility, it is non-normative. I think you are confusing libertarianism with Austrian economics.

Have you ever heard of the likes of Carl Menger or Ludwig Lachmann? It was the later Austrian school economists who began to heavily conflate the economic theory with political ideology. I happen to lean towards the libertarian position, but It is important not to confuse the two.

Some of the early Austrian economists, such as Friedrich Von wieser were actually fabian socialists believe it or not.
 
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owedtojoy

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I agree, I further contend that the version of living within your means which the IMF and ECB wish the Irish people to aim for is.

Take whatever actions are required in order to bring your borrowing costs down and then start borrowing again, in theory this new borrowing should be less than 3% of government income but......
Economics is a long term struggle between creditors and debtors.

The creditors are rich, and the debtors are poor(er).
The creditors love hard money because it means they get paid 100% of what they are owed, debtors love inflation because then they pay less then what they are owe.

Creditors want payment, debtors want to write down debts and start again.

Austerity means that creditors are in control so they can suck 100% of what they are owed from the national economies. They are heedless of the effect on the debtors, which for us are mainly the middle classes.

But debtors, who are the majority in a democracy, often rebel so that creditors know their "remedies" must be applied judiciously lest they poke an angry beast. Well, that used to be the case in the first half of the 20th century, but now seems to be less so.

l have nothing against economy efficiency and parsimonious public spending on essential safety nets and services. However, creditors (usually wealthy bankers, rentiers, corporations and stockholders) are prepared to see those go to the wall.
 

R3volution_R3ady

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Pesky Austrians and their logic.

Here's an idea....instead of listening to them, let's wait until they get something wrong so we can ridicule them!
 

Pat Gill

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Pesky Austrians and their logic.

Here's an idea....instead of listening to them, let's wait until they get something wrong so we can ridicule them!
As I illustrated earlier they can never get anything wrong because they don't deal in reality.

Its all thoretical pretending to be implementable.
 

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