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Merriam-Webster's word of the year for 2010 was "austerity." It's the relatively new definition of the word that earned it the top place for 2010: "enforced or extreme economy."[1] Although the definition may be new, the concept surely is not.
You can easily find examples of government imposed austerity in economic history, including is the U.S. in the late 1930s. It always fails, and it always makes the economy worse.
But the consequences of austerity are not limited to the economy. It also engenders social unrest. Several weeks ago, Paul Krugman pointed to this article about the social consequences of austerity in Greece:
<< The move comes amid spiraling social unrest that has unleashed waves of rioting and vigilante thuggery on the streets of Athens. The U.N.'s refugee agency warns that some Athens neighborhoods have become zones where "fascist groups have established an odd lawless regime." >>[2]
Look what's happening in Britain, which has imposed its own austerity program.
Economic inequality in the U.S. is already at dangerous levels.[3] An austerity program would (a) harm the economy, and (b) exacerbate the inequality problem.
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[1] http://www.merriam-webster.com/info/10words.htm
[2] http://krugman.blogs.nytimes.com/2011/08/02/macroeconomic-folly/
[3] http://forums.play.net/forums/GemStone%20IV/Socializing/Politics%20and%20Religion/view/1710
I meant to work this article ("The Business of Austerity") somewhere into my post, but it slipped my mind.
http://www.newyorker.com/talk/financial/2011/08/15/110815ta_talk_surowiecki
The author wonders when the business community that put the Republican into power will start reigning them in, now that their policies are proving very harmful to business. Or has the business community lost control of Republicans?
An excerpt:
<< There are those, on both the left and the right, who would argue that Republicans are pushing for austerity because, whatever its consequences for workers and borrowers, it serves the interests of business and the wealthy. But it doesn't serve those interests at all. Decades ago, America's rich were a true rentier class. They got most of their income from bonds and lived off their investments, and their main priority was keeping inflation low, regardless of anything else that happened. So austerity suited them nicely. The rich of today, by contrast, get much more of their income from their jobs and from the stock market, which means that they do better when growth is strong. >>
BTW, I think the word "rentier" is coming into vogue. Just be sure you know how to pronounce it. It's one of those words that should be saved for writing, not conversation.
http://www.newyorker.com/talk/financial/2011/08/15/110815ta_talk_surowiecki
The author wonders when the business community that put the Republican into power will start reigning them in, now that their policies are proving very harmful to business. Or has the business community lost control of Republicans?
An excerpt:
<< There are those, on both the left and the right, who would argue that Republicans are pushing for austerity because, whatever its consequences for workers and borrowers, it serves the interests of business and the wealthy. But it doesn't serve those interests at all. Decades ago, America's rich were a true rentier class. They got most of their income from bonds and lived off their investments, and their main priority was keeping inflation low, regardless of anything else that happened. So austerity suited them nicely. The rich of today, by contrast, get much more of their income from their jobs and from the stock market, which means that they do better when growth is strong. >>
BTW, I think the word "rentier" is coming into vogue. Just be sure you know how to pronounce it. It's one of those words that should be saved for writing, not conversation.
