Austerity may be a mistake.
But austerity is only a mistake when it’s too little too late, not because it’s the wrong answer in general. Government spending only stabilizes temporarily and as long as that is stable — the economy becomes dependent on it like we have when the federal budget is such a high percentage of GNP. When a fight over the debt ceiling affects markets, we’re already way far gone.
Stimulus may be an adequate band-aid, but long-term consequences are another thing. Austerity is starving a patient sick from over-eating, terrible short-term but a long-term solution.
Look at Greece. We’re headed there, and it’s because of overspending, not the austerity they are only now attempting and complaining about. In contrast, the stimulus did very little, just barely registered in the positive, and and now that those dollars wore off the economy is starting to stand on its own feet.
I am not suggesting we keep tight with spending on social programs in particular — which we would hardly need so widespread if we were facing the right direction on this in the first place. But I do blame EXTREME pork and military budgets that cannot be justified without fighting off an alien invasion. Lastly, if such huge budgets brought stability, there would have been no recession.
But when confronted as a dissenting opinion, I question if “most economists” disagree with me, siding with Keynes over Milton. Not that either the supply or demand side of the equation should be touted as the “correct” model, but right now we are suffering because of a cure that in fact was the problem itself.
Even if I support a dissenting opinion, the validity of economic wisdom, like many other areas of study, is not dependent on what percentage of experts accept or reject it. In fact, the two main views I speak of have had their own cycles of dominance and minority standing back and forth.
Being strongly political, the Keynsians, notably Krugman, have bent the ear of policy-makers worldwide these days, even indirectly justifying wars as a means of destruction and consumption (vis-a-vis the driving economic principle in the world of Orwell’s 1984). The media just repeats as it’s told from there, fostering a climate of hostility or even mocking derision to dissenters and a legion of armchair yes men. Sadly, this happens in other subjects as well.
We ought to argue economic theories and policies on their own merit. But most people supporting the current popular view I would suggest are unknowingly supporting an agenda which has nothing to do with better economic conditions (except as a means when convenient) and everything to do with long-term control.
Look at the real consequences, however counter-intuitive it may feel. Follow the money and who benefits. And follow the facts. If we don’t recognize cause and effect properly, the “cure” may kill the patient and be revealed too late it was the disease all along.