Even conservatives are starting to question the austerity push. A piece today in The Huffington Post, quoting The Wall Street Journal, offers the analysis from the conservative American Enterprise Institute that shows that cuts to government spending has been damaging to the economy.
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.
Spain offers another cautionary tale, as reported in Sunday’s New York Times:
As the effects of years of recession pile up here, more and more Spanish families — with unemployment checks running out and stuck with mortgages they cannot pay — are leaning hard on their elderly relatives. And there is little relief in sight.
Spain’s latest round of austerity measures appears to have done little to restore investor confidence. And new employment statistics released Friday showed that the jobless rate had risen to a record 25 percent.
Pensions for the elderly are among the few benefits that have not been slashed, though they have been frozen since last year. The Spanish are known for their strong family networks, and most grandparents are eager to help, unwilling to admit to outsiders what is going on, experts say. But those who work with older people say it has not been easy. Many struggle to feed three generations now, their homes overcrowded and the tensions of the situation sometimes turning their lives to misery.
Spain has tried to cut its way out of its economic troubles, but the cuts have only made things worse. Think there is a lesson in this?
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