Quoting p. 183 of his Principles in Economic Theory book, which explains that in times of recession and high unemployment "the budget should be in deficit" and that there should be "greater expenditure by the State through public spending in order to increase income and to avoid as much as possible a recession," the student challenged the eurozone's austerity policies as implemented by Greece:
"What are you doing, Mr. Finance Minister? The exact opposite. You increase taxes on the low-income and impoverished class and incomes are increasingly reduced, without these acts having meaningful results, other than to drag us deeper into the recession. What are the consequences of these actions? They've destroyed the dreams of thousands of young people (like my own at this point) forcing them to migrate abroad for a better future. Unemployment rates are skyrocketing and quality of life for citizens is decreasing even though they have no responsibility for the situation thus formed, for which the political system is solely responsible.The student begs the Finance Minister to stop the austerity policies and ends his letter with this postscript:
P.S. If during my upcoming exams I am asked what policy applies during times of recession, what should I write as the correct answer? That we must have a budget surplus with increased taxes and decreased benefits, as you practice, or a deficit, which is what the book says is needed since we must increase spending and income to get out of the recession?Europe's handling of its economic crisis has been astonishingly inept, with the European Central Bank, the International Monetary Fund, and the European Commission demanding brutal austerity measures that defy both common sense and compassion. You would think that the U.S., looking across the Atlantic to a European wasteland filled with record high employment rates, collapsing middle classes, and massive poverty, would think twice before acting on the same type of austerity here at home.
The debt and deficit fetishists reign supreme in America, however, and unless some courageous folks in Congress hold the line against European-style austerity here in the U.S., things are going to get much worse.
For the grisly details, head below the fold.
Any politician in Congress who believes America will be on stronger footing if we cut benefits provided through social programs like Social Security, Medicare or Medicaid is either ignorant or heartless, or both.
Two weeks ago, a study published in The Lancet found that austerity is literally killing European citizens:
"Greece, Spain, and Portugal adopted strict fiscal austerity; their economies continue to recede and strain on their health-care systems is growing. Suicides and outbreaks of infectious diseases are becoming more common in these countries, and budget cuts have restricted access to health care. By contrast, Iceland rejected austerity through a popular vote, and the financial crisis seems to have had few or no discernible effects on health."Austerity is killing dreams as well.
For the first time since the eurozone was formed, unemployment reached a record high of 12%. Nearly 1 out of every 3 people in Spain and Greece are out of work. The numbers for youths like Alexander Kolakis are even worse. Spain's youth unemployment rate is at 55.7%, while Greece's rose to 58.4 last month.
Rather than look at the results of that austerity with shock and horror, too many politicians here in America shrug off Europe's catastrophe as, well, a European problem.
Europe's experiment though has validated a universal truth often repeated by the world's top economists: you cannot cut your way to growth. Still, Republicans and their Democratic enablers in Congress seek to implement the same type of policy that even the IMF confessed was in error.
Sequestration is America's mini-version of Europe's austerity experiment, and it's producing similar shocking results, from American cancer patients on Medicare being turned away from clinics to clinics, daycares, and other essential services being shut down or cut back in local communities across the country. Yes, Europe's agony can happen here. In fact, it's already starting.
It's always been the conservative's dream to have a government small enough it could be drowned in a bathtub. With sequestration, they've made it small enough to be tied down and waterboarded a bit. The effect of austerity, even on a smaller scale, is still hellish.
Government isn't some abstract, third-party entity that works against us. It is us. It's nurses, educators, firemen, police officers, men and women in uniform, doctors and scientists. Government saves and improves lives every minute of every day. In times of economic crisis, people need that government and the social safety nets it administers to be stronger, not weaker.
That's economics and ethics 101.
Will Congress pay attention to what's happening in Europe and finally change its course?
For the sake of us all, let's hope so.