You Know It’s Bad

(2 pm. – promoted by ek hornbeck)

Cross posted from The Stars Hollow Gazette

You know it’s bad when even the neo-conservatives admit it.

American Enterprise Institute: U.S. Austerity Measures Hurting Broader Economy

Austerity lovers of the world take note: Cutting government spending hurts the economy and it’s not just the Paul Krugmans of the world that say so.

The American Enterprise Institute, a conservative-leaning think tank, has some data out indicating that cutting government spending may be off-setting private sector growth. That’s notable, especially when coming from an organization with the motto “Freedom. Opportunity. Enterprise.”

Public sector GDP — a measure of the goods and services produced by the government — has shrunk for eight consecutive quarters, according to AEI. At the same time, private sector growth has increased for 12 quarters in a row, indicating that America’s slow overall GDP growth may mostly be a result of a drop in government spending.

In just the last year, federal spending has fallen more than 3 percent, and the cuts may be countering private-sector growth, the Wall Street Journal reports.

The findings show that slashing government spending may not exactly be the best way to boost the economy, even though that’s exactly what lawmakers around the world are considering. That some of the data comes from conservative-leaning AEI adds fuel to the arguments of progressive economists, who argue that painful austerity measures don’t help economies in trouble; they hurt them.

Would somebody please wake up and smell the coffee?  

3 comments

    • TMC on August 4, 2012 at 7:16 am
      Author
    • banger on August 5, 2012 at 3:12 pm

    I think it’s always been obvious that if you shrink gov’t spending it will have an effect of dampening economic growth. The question is why do most of the world’s oligarchs seem to want to shrink the world economy? Even more important (in a way) is why that question is not being asked and answered more often particularly by what is left of the left.

    Usually people think it’s because the oligarchs are just “stupid” but that’s not the case–they didn’t get where they got by not understanding reality. Let’s be clear here–they want the economy to shrink, they want more not less poverty because prosperous people, particularly and empowered middle-class always put pressure on governments to allow for more social and economic mobility, competency-based advancement, democracy, civil rights, rule-or-law and so on. All oligarchs want to preserve and enhance their own positions and that of their family and friends. This pressure is relieved by increasing poverty and desperation so that we will have no choice but to spend our lives pleasing our masters–this is a good situation for the oligarchs–that is what they always want. The American middle-class seems quite happy with endangering itself since the ambiguities of too much undigested information that torments a population that is becoming more illiterate with each passing day (and therefore lack any means to put anything in perspective) needs simple answers and the stability that comes from everyone knowing their “place” in society.

    Economic deprivation is unlikely to lead to major unrest that would challenge the emergent neo-feudal regime that we are witnessing evolve every day particularly in the U.S. which also now has in place a very robust security state and ready-made “opposition” whose object is to just increase oligarchical rule by creating some fictional left-wing conspiracy to institute Sharia law and make our sons and daughters homosexuals. There’s no escape from this, btw. There is no movement to counter this trend other than a few small subcultures here and there.

    It won’t be so bad–most of us in the U.S. will survive–new  amusing toys will be created for the majority who will still have jobs serving the Empire and their feudal lords and ladies–restaurants and beaches will be filled and all will be well. Well, that’s the optimistic side of the coin–I won’t mention the other.  

    • RUKind on August 7, 2012 at 12:53 am

    We’d be well on our way to recovery if we hadn’t gutted the government workers. The USPS is next on the  block. That should have a significant effect. Plus, they’re union workers. For the AEI that’s a two-fer.

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