Why oh why is everybody, who matters where formulating economic policy is concerned that is, so completely in denial???
You don’t have to be an economist, or even particularly bright, to realise that if someone owes you money, the worst thing you can do to him is to deprive him of all means of earning any money, that is the money with which he could pay you back!
Is that really quantum physics or just common sense for Pete’s sake?
Here in Greece we have just been saddled with our New Year’s gift! MORE taxes, More UNFAIR taxes, MORE taxation on the destitute!!! Oh, and taxes not on your real income, but on a nexus of factors, such as the size of the house you live in, the size of your car, whether you sneeze in the morning, if you go swimming or anything absurd they have been able to think of.
Result, people earning a dime over 5,000 Euro (that is around 400 Euro a month, below subsistence level) will be obliged to pay income tax! But no! It isn’t even that! Even if you are not earning more that 400 Euro a month, but happen to be living somewhere, even a tiny pokey flat, you will again be obliged to pay income tax merely because you happen to be living somewhere at all! That amounts to a tax on being alive at all! (I better not give them any more ideas. Next they will be imposing a tax on all dead members of your family too!)
Here in Europe they have completely lost it where economic policy is concerned. The only thing to be applied is AUSTERITY! And when that fails, as it is doing continually, then what do you do? Apply MORE AUSTERITY! In other words the proverbial whipping a dead horse!
But you don’t apply austerity in the middle of a slump! You try to stimulate the economy! How can you gather revenue by increasing the unemployed?
In his article in the New York Times Paul Krugman reminds us once again that Keynes was right! That he has always been Right! And that perhaps it’s about time those who make policy realised as much! And Paul Krugman is right! Quite right!
In fact in this article he points out two cases where this policy has failed abysmally and created Depression conditions. These two countries are Greece and Ireland. That is both the bad student and the star student! It doesn’t make a jot of difference. When policy is bad and destructive, however good a student you may be, you will only get bad results!
Dear Frau Merkel and assorted side kicks. Please, in the New Year, do try reading a simple economics primer! Or perhaps just a little history!!! And, Frau Merkel, there is a lot more to history than Weimar Germany in 1923. And even if you wish to stick to that, try reading the WHOLE story. Why was the Republic plunged into such economic chaos? Inflation… ? Or maybe, just maybe, the root cause was the austere and punishing reparations imposed on the defeated power?
And mind you, the punishing austerity the German people were subjected to, as defeated power, was far less stringent than what is being currently imposed on Greece today.
And we’re not even being punished for losing a war! Only for succumbing to the financial sirens pushing more and more dirty money into our greedy little hands. Which is what everybody else was doing too!