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One definition of insanity is doing the same thing over and over again and expecting a different result. Britain elected a conservative government that immediately adopted an austerity policy. They are now entering their 3rd recession since the economic crisis, a triple dip.

Spain attempted austerity and as reported in the Bloomeberg’s piece “Adios Austerity, But Debt Will Still Limit Spain’s Growth Measures”. It has been such a dismal failure that they are now realizing the wisdom of economists like Nobel Prize winning Paul Krugman.


Spain’s 32-month experiment with austerity-at-all-costs, as devised by Angela Merkel’s budget ultras, is drawing to a close.

Prime Minister Mariano Rajoy oversaw 62 billion euros of tax hikes and spending cuts, 851,000 job losses and three different deficit targets, all in his first year in office. Now European Union budget enforcer Olli Rehn is ready to ease up on the beleaguered premier.


Thirty-eight hours later the National Statistics Institute duly confirmed that Spain was indeed suffering a serious deterioration in the economy. The pace of economic contraction more than doubled in the fourth quarter, when the tax hikes Rajoy had delayed to try and win power in the south region of Andalucia finally kicked in. Unemployment hit a record 26 percent.

The shift reflects a changing consensus among policy makers, which has seen the IMF join economists including Nobel laureate Paul Krugman in arguing that too much austerity is self-defeating. It damages economic activity, reduces tax revenues and tips economies into the vicious cycle of deeper spending cuts and falling output that the Greeks have been suffering since 2010.

Every country that has attempted this path has suffered the same outcome. Yet the GOP continues to hold the American economy and with that the middle class hostage to austerity type policies by refusing to enact the president’s stimulative policies that would not only increase employment but lay the ground work for increased tax receipts and economic activity. With interests rates at record lows (near zero), this is the most appropriate time to rebuild our failing infrastructure that will be much more expensive to rebuild in later years even as it negatively affects our economics.

The unemployment report released today should give every American pause. It shows a trend that has been evident throughout this recovery. Private jobs in retail, construction and healthcare are up. Public sector jobs, government jobs, in both the state and federal government are down. What is ironic is as the country’s population grows and needs more services as a society from government, they are being laid off. Many will complain about slow government service as an indication that government services are inherently poor without realizing that that is the exact outcome Republicans are hoping for in order to move the privatization ideology forward, profit for a few from taxes paid by the many.

Private sector jobs are growing as both state and federal government are laying workers off. This means just maintaining government levels of employment would have provided a much better employment picture, likely at least 2% lower since the maintenance of those jobs would have ensured increased spending by these employees who would have kept your local sandwich shop, your local theater, your grocery store employing more folk. Additionally the tax base would be less deteriorated.

It is the failure of government policy that has exacerbated this downturn. Republicans not allowing the institution of job creating policies is not simply a display of intransigence. It is a penalization of the American middle class to force an ideology they do not want. It is a systematic destruction of government and faith in government to enhance a private sector so out of balance with government, “we the people”, that it would ultimately overwhelm democracy.

Republicans often use Greece as a scare tactic to make Americans believe the current deficit is a bigger problem than it is. The social austerity even as they continue to build an outdated 20th century military would in fact put American in a worst position than Greece. Greece is selling off public assets, the assets of “we the people” to a wealthy few. This was attempted in Panama and as they should, the population revolted to stop the continued middle class pilfer. One can only hope the American middle class will open their eyes before it is too late. Too late is a path to depression where the wealthy buys up the public assets on the cheap.

The January jobs report while positive yet average has many red flags that do not get coverage. It shows little to know wage growth when adjusted for inflation and a deteriorating public sector. This poor recovery is political. Until the American middle class engages and demands the terms, the status quo will prevail. Whenever the status quo prevails, the middle class loses.

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Originally posted to ProgressiveLiberal on Fri Feb 01, 2013 at 09:37 AM PST.

Also republished by In Support of Labor and Unions.

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Comment Preferences

  •  Let me know when the revolution starts nt (1+ / 0-)
    Recommended by:
  •  Unfortunately.... (0+ / 0-)

    I'm noticing less and less coverage and less and less reaction to ANYTHING about employment or unemployment.  

    Back in September and October, before the election, the unemployment rate and the jobs reports were top news, with people digging to find any info and make any sense of the unemployment rate.  

    After the November election, the interest in the employment/unemployment numbers has fallen off of a cliff.

    That's unfortunate, because any recovery is still fragile, as shown by the recent GDP report, and because the GOP is still pushing for austerity.  

    Many people do not know about the Recession of 1937.  After the start of a decent recovery in the 1933-1936 time period, the feeling of FDR and most of his advisors was that belt-tightening was necessary.  That resulted in a precipitous increase in the unemployment rate in 1937... Things really didn't turn around until the next year when war in Europe was starting to look inevitable and, then in 1941 when we started to equip the UK.  

    Of course, the economic event that really kicked the Depression to the curb was the big huge stimulus that was named World War II.

    We need a War on bad roads, bad schools, and a renewed War on poverty.  We won't get it.

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