A tweet from leading progressive blogger David Dayen (a Kossack who recently left his gig at FireDogLake) served as the impetus for a well-read post by Brad Plumer over at the WaPo blog, on Wednesday. In it, Plumer provides us with a quite provocative graphic comparing just-passed U.S. austerity measures with those in a selection of European nations over the past couple of years.
If this doesn’t give readers pause with regard to what’s just happened in D.C. and what lies ahead for our country in 2013—with, almost certainly, more austerity to come in just a few weeks—I don’t know what will.
U.S. now on pace for European levels of austerity in 2013Bold type is diarist’s emphasis.
January 2, 2013 3:09 pm
For years now, economists like Paul Krugman have been criticizing countries in Europe for engaging in too much austerity during the downturn — that is, enacting tax increases and spending cuts while their economies were still weak.
But after this week’s fiscal cliff deal, the United States is now on pace to engage in about as much fiscal consolidation in 2013 as many European nations have been doing in recent years — and more than countries like Britain and Spain…
Plumer cautions us that his effort is just an approximation, and it’s quite difficult to provide true apples to apples comparisons…
…Now, it’s possible to draw very different conclusions from this chart. One could argue that the U.S. is about to repeat Europe’s mistake of premature austerity. Alternatively, one could say that the United States is in a better position to begin trimming its deficits than Europe was, because our economy is healthier. (We also have a central bank that’s providing more aggressive monetary stimulus.)I could continue on here for many pages (i.e.: Nobel Prize-winner Joseph Stiglitz just totally thrashed U.S. and European central banks in public comments he made in India, stating: “The crisis has shown that one of the central principles advocated by Western central bankers--the desirability of central bank independence--was questionable at best… All public institutions are accountable, and the only question is to whom.”), but I don’t want to detract from the basic content of this post.
Instead, I urge you to read Plumer’s piece—while not lengthy, there’s still a hell of a lot more to it than I’ve conveyed herein—and, above all else, checkout his graphic! You may do both by clicking RIGHT HERE. (Sorry, but I don’t have the rights to republish it.)
At the very least, this is food for context and thought, IMHO.
# # #
UPDATE (9:30PM EST, 1/4/13):
There's a post up on "the boards" which attempts to "debate" this post, specifically with regard to what's occurring here, in the U.S., versus the history of austerity measures in Great Britain.
But, as I noted in comment exchanges with the author of that post, there's nothing to debate.
I pretty much covered the reasons for that in my comments there, but specifically in my last comment in that post, after noting that a direct comparison between the austerity measures in the two countries was futile (via anything other than the overly-simplistic manner in which Dayen and Plumer are doing it, above), since Great Britain has been dealing with government-imposed austerity for well over three years, while those that are imposing it in the U.S. are just seeing it come to fruition now.
Additionally, due to the effects of the Citizens United v. FEC SCOTUS decision here in America, there's massive funding of a very large lobbying and media campaign supporting the implementation of austerity measures here, as well (not to mention all of the resources of numerous entities, such as the Peterson Foundation, the Third Way and Fix-the-Debt, to name just a few).
So, with that context, here's my last comment from the other post, reposted here in its entirety...
The real problem, which is one that Stiglitz....So, technically speaking, IMHO, Dayen and Plumer are properly putting forth their case (in terms of it being within a framework acceptable to an economist), but as Kossack Brit notes in the other post, it doesn't even begin to tell the greater truths of the story.
....has been lecturing about for well over a decade (and an issue which Meteor Blades, myself and many others in this community have posted countless diaries about over the years), is the totally absurd dependence that almost the entire economics profession has upon an incredibly flawed single statistic: Gross Domestic Product (GDP). But, since it's used so widely around the world as "the measuring stick," even Dayen and the WaPo writer focused upon that single statistic, to the point where it was the basis for much of their commentary in the WaPo blog post. At the end of the day, however, it belies other, often more important stats, and it doesn't even begin to get into the (again, often more important) qualitative aspects of economic reality, in general (anywhere). But, again, it is the most widely-used and grossly over-simplified metric that is discussed when it comes to a country's health. Even nowadays.
So, from a GDP standpoint, which is where Dayen and Plumer were myopically focused--and this is how many/most economists analyze this issue, even though it's flawed and at a very epic level--it is totally credible; again, even if it doesn't even begin to do anything other than scratch the veneer of the story!
What Brit's getting it, at least from my perspective, is that he's arguing the same thing that folks like Stiglitz and Krugman have been stating for years: GDP is useless [as far as painting an accurate picture of the situation's concerned] without noting many other stats and qualitative issues.
But, even Krugman and Stiglitz have been known to put forth an argument while doing so by citing, almost exclusively, just GDP stats to make their point. And, that's due to the fact that it's easily understood by the "very serious people," and most of the economic community, all of whom have about as much creativity as a head of iceberg lettuce.