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Austerity: Planned Poverty

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The math behind austerity has been debunked. (photo: TPM Muckraker)

This article by Carl Gibson, first appeared in Reader Supported News on 26 April 13

The austerity math textbook used by all of the world’s leaders who swear by the austerity method was debunked by a college student who gave the text its first peer review. As it turns out, firing lots of people doesn’t help the economy grow, since more people with fewer jobs means fewer people buying stuff. Income tax revenues go down because people’s incomes are down, sales tax revenues go down because people aren’t buying stuff, and social safety net spending goes up because fewer people have jobs. It should already be obvious to anyone that austerity doesn’t alleviate economic growth, but rather contributes to further economic malaise.

We’ve seen the consequences of austerity both here and abroad. In Europe, the endless layoffs in the public sector have contributed to record levels of unemployment, levels not seen since the Great Depression, with no relief in sight. Here in America, the recent sequester budget cuts have triggered furloughs in the FAA, making airports a nightmare as thousands of flights are continuously delayed. You can view a map here showing how many jobs the sequester has eliminated so far on a state-by-state basis…(more)

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The 1% Solution

by Paul Krugman, on the Excel error in the New York Times, April 25: “…the studies did not hold up under scrutiny. By late 2010, the International Monetary Fund had reworked Alesina-Ardagna with better data and reversed their findings, while many economists raised fundamental questions about Reinhart-Rogoff long before we knew about the famous Excel error. Meanwhile, real-world events — stagnation in Ireland, the original poster child for austerity, falling interest rates in the United States, which was supposed to be facing an imminent fiscal crisis — quickly made nonsense of austerian predictions…”(more)

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