> Austerity will only further cripple the economies of the GIPS countries as we've seen during the Great Depression in the 30s.
The US at least, didn't do austerity during the GD or even the run-up to the GD. No, Hoover didn't do austerity. He increased govt spending significantly and Roosevelt actually campaigned against that.
The US did try to decrease production, believing that "excess supply" was the problem. Both Hoover (a "progressive Republican") and Roosevelt agreed on that. Roosevelt didn't change that policy until he figured out that an "arsenal of democracy" had to actually produce lots of stuff.
And that's pretty much when the Great Depression ended.
> Austerity doesn't work: it leads to criminal levels of capital waste: high unemployment, low standards of living, poor liquidity, and so on.
Surely you're not arguing that modern govts make efficient capital spending decisions. In the US, govt spending goes to cronies.
Right, the GD was not caused by US fiscal policy. The US govt could have prevented the GD though, by spending aggressively (increase demand) and by increasing the money supply.
> Surely you're not arguing that modern govts make efficient capital spending decisions. In the US, govt spending goes to cronies.
I'm not arguing that the government is a paradigm of efficiency but cronyism is a huge problem in the public sector as well. So government programs can certainly be less inefficient than the private sector. Recessions and depressions destroy value, destroy capital. If interference by the government can reduce or prevent this, I'm all for it.
> I'm not arguing that the government is a paradigm of efficiency but cronyism is a huge problem in the public sector as well.
It's not nearly as large a factor, and they're spending their own money, so there's a natural limit.
> If interference by the government can reduce or prevent this, I'm all for it.
The question is not "can reduce" because it's easy to argue that the "correct" govt action could help. The relevant question is whether the govt actions that are likely to happen will be helpful or harmful.
Do you believe that govt actions in the recent past have helped more than they've hurt? If not, why do you think that the next actions will do better?
The US at least, didn't do austerity during the GD or even the run-up to the GD. No, Hoover didn't do austerity. He increased govt spending significantly and Roosevelt actually campaigned against that.
The US did try to decrease production, believing that "excess supply" was the problem. Both Hoover (a "progressive Republican") and Roosevelt agreed on that. Roosevelt didn't change that policy until he figured out that an "arsenal of democracy" had to actually produce lots of stuff.
And that's pretty much when the Great Depression ended.
> Austerity doesn't work: it leads to criminal levels of capital waste: high unemployment, low standards of living, poor liquidity, and so on.
Surely you're not arguing that modern govts make efficient capital spending decisions. In the US, govt spending goes to cronies.