[Irviding]

What do the Europeans think of this? I just read this article about British police sacrificing their careers to protest the Cameron government's austerity.

http://www.dailystar.com.lb/Business/Inter...r-pensions.ashx

^Article for reference.

Do any of you actually support these measures, and believe that austerity is the solution in bad economic times?(Cameron's austerity put Britain nto a double-dip recession might I add)

We can even bring it to the American side too, and talk about what the Tea-Party is advocating, i.e. rip down the entire government and rebuild it from the ground up to quote them almost directly.

[sivispacem]

Rather unhelpfully, my response to this is "yes and no".

I've made my views on cuts to certain parts of the public sector- most notably defence- rather clear. However, in the context of what has been going on over the last 24 hours, I have little sympathy for most of those protesting. My first point of contention is that those protesting have, over the last few years, had things rather too easy. It used to be the case that the public sector had to make do with lower wages and smaller bonuses than the private actor but this hasn't been the case for the last few years.The quality of pensions that most public sector workers can retire with is on the verge of being downright offensive to many private sector workers- it's a sick joke that government employees can retire on pay packets based on their final salary and an affront to the sector that actually provides economic well-being that they have the audacity to strike when the government tries to level the playing field. Even more troubling is the resistance amongst some tio the very principle of performance related pay. Unless large numbers of sector employees are routinely and intentionally being disruptive, slow or unproductive in their working habits then surely performance related pay is an entirely good thing?

The public sector has been hugely over-subsidised and is almost solely responsible for the fiscal mess we are in. However- and it is a big however- the cutting of expenditure in areas which drive growth is a spectacular own-goal. I'm all for re-jigging the public sector to provide better value for money, more competition and less monolithic and unresponsive services, but as you quite rightly identify you need growth to keep it all afloat and in my view they should be investing a portion of what they are saving by cutting public sector expenditure to promote science, technology, innovation and our big economy-driving industries. That's the only way we're going to find our way out of this mess.

[Leftcoast]

My post is rather unhelpful as well.

sivi-

Without understanding the details of English policy, it sounds really complicated and sticky. I hope the best for you guys. For one thing, we all seem to be in this together with the global economy what it is and I'm pretty tired of watching my 401K sit there idol.

QUOTE

The public sector has been hugely over-subsidised and is almost solely responsible for the fiscal mess we are in. However- and it is a big however- the cutting of expenditure in areas which drive growth is a spectacular own-goal. I'm all for re-jigging the public sector to provide better value for money, more competition and less monolithic and unresponsive services, but as you quite rightly identify you need growth to keep it all afloat and in my view they should be investing a portion of what they are saving by cutting public sector expenditure to promote science, technology, innovation and our big economy-driving industries. That's the only way we're going to find our way out of this mess.

Your absolutely right!!! I push technical education and research hard. The only reason I didn't get laid off in 2008 is the fact that I work as an engineer for a good healthy company that engineers and manufactures products. There are only 3 ways to generate wealth: Grow it, dig it out of the ground or manufacture it. Without these, we stagnate and technology is key in the last one.

[Antinark]

I read an article the other day that stated that if Corporate tax rates had been kept at their pre-1980's levels than all this austerity wouldn't be necessary.

Austerity is a scam. In Canada's case the government preaches austerity while they beef up the military and spend more on crime and order. They're actually spending MORE than previous centrist and left-leaning governments.

Here's the article for reference: link

This post has been edited by Antinark on Sunday, May 13 2012, 03:39

[Leftcoast]

Antinark

I noticed the article you posted had mentioned what we, at least in the USA, call "trickle down economics". I don't disagree with your statement, mostly I want to bash "trickle down economics".

While I can't say that in the USA that trickle down economics should take all the blame for the economy, I do want to say that they are total BS. The whole idea is smoke and mirrors by the rich to give themselves an undue tax break and make the rest of the population pay for everything. They certainly are not helping to right the situation, that much is for sure.

[nic_23]

Public sector workers and teachers here have had it good for a while so I dont care about there cuts. they are the only people that really have unions too so they will strike. But I agree with there cuts.

[Irviding]

QUOTE (nic_23 @ Saturday, May 12 2012, 23:46)

Public sector workers and teachers here have had it good for a while so I dont care about there cuts. they are the only people that really have unions too so they will strike. But I agree with there cuts.

But don't you also agree that cutting anything in a time of economic recession is a bad idea? It's simple macroeconomics. Don't cut spending in times of recession. I don't know why all of Europe is doing that. It's absolute stupidity to try to cut your way to prosperity.

[nic_23]

QUOTE (Irviding @ Sunday, May 13 2012, 06:04)

QUOTE (nic_23 @ Saturday, May 12 2012, 23:46) Public sector workers and teachers here have had it good for a while so I dont care about there cuts. they are the only people that really have unions too so they will strike. But I agree with there cuts. But don't you also agree that cutting anything in a time of economic recession is a bad idea? It's simple macroeconomics. Don't cut spending in times of recession. I don't know why all of Europe is doing that. It's absolute stupidity to try to cut your way to prosperity.

were cutting there pensions lol they aint gonna be spending that money now are they? and i think there pay cuts are a fraction.

they get far too much anyway.

[Chunkyman]

You can't endlessly raise taxes to finance a massive, growing government because you will eventually raise them to the point that your economy will stagnate. You also can't ignore the unsustainable debts, because it will lead to the collapse of the economy (as has already been seen in Greece). The only viable solution is to reduce spending.

[Irviding]

QUOTE (Chunkyman @ Sunday, May 13 2012, 18:40)

You can't endlessly raise taxes to finance a massive, growing government because you will eventually raise them to the point that your economy will stagnate. You also can't ignore the unsustainable debts, because it will lead to the collapse of the economy (as has already been seen in Greece). The only viable solution is to reduce spending.

Yes you can. If we in the US raised spending by about 1-2 trillion dollars, in the long run it wouldn't make much of a difference on the debt because that spending will increase the size of the economy, cause growth to come back in greater numbers, resulting in more confidence and at the end of the day more taxes (without having to raise marginal rates).

Greece's problems are not all to do with reckless spending as you've been lead to believe. If you refer to the below charts, you'll see that other countries in Europe were spending more than Greece and had higher deficits than Greece, and at this point today, they are exemplars of modern, western economies (Germany, Austria)





On the second chart, you can see Greece at the top, but other European countries facing massive economic turmoil right now like Spain, Portugal, and Ireland are way down there - models for the rest of the EU. Ireland was running a surplus for Christ's sake.

This post has been edited by Irviding on Monday, May 14 2012, 03:44

[Chunkyman]

QUOTE (Irviding @ Monday, May 14 2012, 00:03)

Yes you can. If we in the US raised spending by about 1-2 trillion dollars, in the long run it wouldn't make much of a difference on the debt because that spending will increase the size of the economy, cause growth to come back in greater numbers, resulting in more confidence and at the end of the day more taxes (without having to raise marginal rates).

Growth and consumer confidence are important, but Keynesian stimulus isn't the correct approach. While I'm no expert on all the laws and regulations of the various European countries, I can imagine they have many useless laws that inhibit growth like America does. Legalizing drugs, gambling, prostitution; ending any protectionist trade policies that inhibit growth; removing occupational licensing laws; lowering inflation to restore consumer confidence, and other such acts would be significantly more likely to achieve success than stimulus spending would (and it wouldn't cost huge amounts of money).

I'm curious. In your opinion, what was the cause of the Greece economic woes?

[Irviding]

QUOTE (Chunkyman @ Sunday, May 13 2012, 19:29)

QUOTE (Irviding @ Monday, May 14 2012, 00:03) Yes you can. If we in the US raised spending by about 1-2 trillion dollars, in the long run it wouldn't make much of a difference on the debt because that spending will increase the size of the economy, cause growth to come back in greater numbers, resulting in more confidence and at the end of the day more taxes (without having to raise marginal rates). Growth and consumer confidence are important, but Keynesian stimulus isn't the correct approach. While I'm no expert on all the laws and regulations of the various European countries, I can imagine they have many useless laws that inhibit growth like America does. Legalizing drugs, gambling, prostitution; ending any protectionist trade policies that inhibit growth; removing occupational licensing laws; lowering inflation to restore consumer confidence, and other such acts would be significantly more likely to achieve success than stimulus spending would (and it wouldn't cost huge amounts of money). I'm curious. In your opinion, what was the cause of the Greece economic woes?

Can you point to some of those regulations that inhibit business, considering the fact that we have the highest ease of doing business rank in the world, apart from Singapore and Hong Kong?

Keynesian stimulus is the correct approach. It works every single time. It has never failed. Ever.

They can't lower inflation in Greece. That's part of the major problem with Spain, Greece, etc. because they can't control their own currencies i.e. devalue them.

Greece ran massive deficits when they didn't need to. They had massive corruption resulting in tremendous tax fraud. You name it. The Greek economy actually fared worse than it did after the initial crash due to all of the austerity. You also had a massive overvaluation of currency in Southern Europe, due to the capital that poured into there after the Euro was created. If Greece left the Euro and devalued its currencies to nothing, they'd rise out of this mess pretty quickly. Coupled with some fiscal stimulus after that, they'd be in good territory.

[Leftcoast]

QUOTE

Growth and consumer confidence are important, but Keynesian stimulus isn't the correct approach. While I'm no expert on all the laws and regulations of the various European countries, I can imagine they have many useless laws that inhibit growth like America does. Legalizing drugs, gambling, prostitution; ending any protectionist trade policies that inhibit growth; removing occupational licensing laws; lowering inflation to restore consumer confidence, and other such acts would be significantly more likely to achieve success than stimulus spending would (and it wouldn't cost huge amounts of money).

How is removing occupational licensing laws going to help anything? As a blanket statement like you made, this doesn't work. Seriously, we don't need any one and every one to practice medicine or be allowed to sign off on engineering plans with no clue what they are doing. Make the laws more practical, sure, I'm all for that but we cannot simply do away away with them.

[Chunkyman]

QUOTE (Leftcoast @ Monday, May 14 2012, 01:57)

How is removing occupational licensing laws going to help anything?  As a blanket statement like you made, this doesn't work.  Seriously, we don't need any one and every one to practice medicine or be allowed to sign off on engineering plans with no clue what they are doing.  Make the laws more practical, sure, I'm all for that but we cannot simply do away away with them.

Here is a good explanation by economist Milton Friedman as to why occupational licensing is economically undesirable. I'm aware it's an older work of his, but the ideas remain true. It's a bit long, but well worth the time.



This post has been edited by Chunkyman on Monday, May 14 2012, 03:26

[Leftcoast]

Chunkyman-

Milton uses a lot of examples that I agree with, I don't see much reason to require a license for. Here is what I don't like; the way he talks in this article seems like it's aimed at making the licensing bodies look like old guilds and or part of the Indian cast system.

I will counter this with something I am familiar with, engineering licensing. First off, getting licensed as an engineer isn't about controlling how many people can work as a licensed engineer and it's not about controlling wages, it's about public safety. Any one can take the steps to get licensed if they want. It is very important to require certain engineers to have a license. Example: If the government contracts out the design and construction of a major bridge to Company A, Company A will do it's best to build the bridge as cheaply as possible. Company A decides not to use licensed engineers since (in this fictional example) it's not required by law and licensed engineers are more expensive. 1 year into service the bridge collapses due to faulty design sending 25 people falling to their death. There are plenty of examples similar to this that led to professionally licensed engineers. I chose a fake example avoid getting too far off topic with some of the more note worthy engineering disasters. The bottom line, there are a few professions that should still require a license, in the example of engineering, not all jobs even require a license. I can elaborate on that if you would like.


Last Paragraph in Milton Friedman's article.

QUOTE

I would not even want to maintain that the medical teams would dominate the field. My aim is only to show by example that there are many alternatives to the present organization of practice. The impossibility of any individual or small group conceiving of all the possibilities, let alone evaluating their merits, is the great argument against central governmental planning and against arrangements such as professional monopolies that limit the possibilities of experimentation. On the other side, the great argument for the market is its tolerance of diversity; its ability to utilize a wide range of special knowledge and capacity. It renders special groups impotent to prevent experimentation and permits the customers and not the producers to decide what will serve the customers best.

Milton Friedman, Capitalism and Freedom, 1962
Chapter IX, Occupational Licensure
http://books.cat-v.org/economics/capitalis...edom/chapter_09


I wanted to end by looking at Friedman's last paragraph, it seems to me like he isn't exactly for abolishing licensing, rather he is trying to think outside the box and come up with a better method. He certainly does point out a lot of professions that shouldn't need any license, I agree with you there. And I'm all for making improvements to the system, I can't in good conscience agree that we need to abolish licensing all together unless a better system is set to replace it.

[Irviding]

I think his argument for ending occupational licensing laws is frankly ridiculous. What the hell is the point to it? Encourage greater competition in the marketplace because the people who use an unlicensed Podiatrist won't have feet anymore and therefore over time that unlicensed podiatrist will be taken off the market due to his failures? I mean come on.

[Leftcoast]

QUOTE

I think his argument for ending occupational licensing laws is frankly ridiculous. What the hell is the point to it? Encourage greater competition in the marketplace because the people who use an unlicensed Podiatrist won't have feet anymore and therefore over time that unlicensed podiatrist will be taken off the market due to his failures? I mean come on.

I got the feeling Milton's over all thought is that the market would some how self regulate. Sometimes it sounds ok in theory, but in reality never seems to work out. We need laws to maintain order and in this case restrict certain professions by requiring a license. Referencing medieval guilds and crazy state laws requiring a license to shovel dirt or some other menial task is not a basis to say that Engineers and Medical Professionals should be allowed to practice unlicensed.

[gtaivpc]

I hope that all europeans will finally realize that this austerity is anything but a solution to the crisis, before it's too late. Let me tell you, it's ugly. Many people are searching for food in the trash bins. Many people are commiting suicide. It's becoming less and less safer to move at night. Of course that's more prominent in big cities like Athens, but it's getting progressively worse everywhere. A Neonazi party is on the rise. If this continues I am willing to bet that most of the eurozone countries are going to become like that (except the ones that benefit from it, like germany). My country today is like germany in 1930. Humiliated, made an example of, looked down upon. No good is going to come out of this. And the worse of it is that the rest of europe has a completely distorted view of the situation here. Lazy greeks has become a slogan but that is totally untrue, for many reasons I am willing to go through if someone really wants me to. I don't know if it's worth staying in eurozone anymore after the massive cuts and the huge drop on the quality of life. Austerity cannot continue, is this really europe?

I think there is hope though. Sarkozy lost the elections in france, and the polls are showing a left wing party, syriza, as the most likely one to win the elections in June 17. The outlook on Merkel is not really good either. Thousands protest in Spain. Let this continue.

In my opinion, in the long run, the only solution for the crisis, the poverty, and the inequalities, is a different system than this hardcore corporatism, which is essentially a market dictatorship. Is it social democracy? Is it democratic socialism? I don't know. What I do know, is that capitalism has failed as much as communism. It's time to change it. (and that's what the neonazis are taking advantage of)

[Irviding]

QUOTE (gtaivpc @ Wednesday, May 16 2012, 13:44)

I hope that all europeans will finally realize that this austerity is anything but a solution to the crisis, before it's too late. Let me tell you, it's ugly. Many people are searching for food in the trash bins. Many people are commiting suicide. It's becoming less and less safer to move at night. Of course that's more prominent in big cities like Athens, but it's getting progressively worse everywhere. A Neonazi party is on the rise. If this continues I am willing to bet that most of the eurozone countries are going to become like that (except the ones that benefit from it, like germany). My country today is like germany in 1930. Humiliated, made an example of, looked down upon. No good is going to come out of this. And the worse of it is that the rest of europe has a completely distorted view of the situation here. Lazy greeks has become a slogan but that is totally untrue, for many reasons I am willing to go through if someone really wants me to. I don't know if it's worth staying in eurozone anymore after the massive cuts and the huge drop on the quality of life. Austerity cannot continue, is this really europe? I think there is hope though. Sarkozy lost the elections in france, and the polls are showing a left wing party, syriza, as the most likely one to win the elections in June 17. The outlook on Merkel is not really good either. Thousands protest in Spain. Let this continue. In my opinion, in the long run, the only solution for the crisis, the poverty, and the inequalities, is a different system than this hardcore corporatism, which is essentially a market dictatorship. Is it social democracy? Is it democratic socialism? I don't know. What I do know, is that capitalism has failed as much as communism. It's time to change it. (and that's what the neonazis are taking advantage of)

Truly moving post. What do you believe the best solution is? I'm in the camp of your country exiting the Euro and devaluing your old currency. I certainly sees the troubled with that method though, namely its impacts on the rest of thr EU.

[gtaivpc]

I'm no expert in economics. However, I am sure that we are in the wrong path. My opinion is that the terms of the bailout package have to be renegotiated. If we manage to adopt a less murderous approach that actually encourages growth, then I am willing to put up with the austerity a bit more and stay in the eurozone. If this fails, I say let's go back to a national currency, even though the first months will probably be worse than being in hell... I think that in the long run we'll be better off. There's an article in the financial times that points it out, here.


If the current austerity policy continues to be applied, I can only fear what will come next. It will either be a violent revolution, with riots and hunders of casualaties, or a totalitarian regime which is even worse. That's why nobody that supports this austerity has a grasp of the situation. The greek society is on the verge of madness (even Sparta, which I live extremely close to ). How can it not be, when the official figures of unemployment are up to 21%? In the ages up to 25, it's over 50%. And we're not talking about uneducated youth. We're talking about doctors, engineers, lawyers, with postgraduate studies and PhDs. All those years of hard work, so that we have a mild chance of getting a sh*tty part time job (cashiers, waiters, etc.) that pays 300 euros a month, of course not with insurance. Why would someone defend this policy?

This post has been edited by gtaivpc on Wednesday, May 16 2012, 19:19