As the Guardian notes:
The European Union's focus on austerity has hit the limits of public acceptance, according to the head of the EU's executive arm, as Brussels joined the International Monetary Fund in raising concerns over the impact of public spending cuts.
José Manuel Barroso, president of the European commission, also signalled that governments would be given more leeway if they were struggling to get their budget deficits within the required ceiling of 3% of GDP.
He said the argument raging over the merits of austerity versus more public spending was a false debate — the answer was to combine the two, although public spending cuts alone would not provide the solution.
Why has it taken so long for this to be realised when it was obvious before the current economic crisis developed? There is only one explanation, and it is the failed logic of the economics profession that requires, as a pre-condition of working in most university economics departments, a belief that markets solve all problems, governments solve none, and which rigs (I use the word wisely and advisedly) its theory and research to support this view.
The result has been a raft of bankrupt ideas. That austerity works is just one of them.
We now know that economic data to support this argument was simply wrong.
More importantly though, we now realise that this data merely supported the mantra and was not the cause of the belief.
The trouble is, we have all paid the price.
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Here’s Paul Krugman attacking the “austerians”, yes that bizarre quasi-druid cult that aspire to wearing elaborate steeple hennins, but instead end up wearing small conical white hats bearing the letter “D”
http://krugman.blogs.nytimes.com/2013/04/21/destructive-creativity-2/
http://krugman.blogs.nytimes.com/2013/04/22/very-sensitive-people/
http://krugman.blogs.nytimes.com/2013/04/22/building-a-mystery/
Unfortunately a large percentage (probably c.35% of voters -the lot that kept Thatcher in)still believe in this free market utilitarianism illusion, that if you work hard and follow your ‘dream’ you’ll make it and if we got rid of those ‘benefit scroungers’ and they all got low paid jobs and starved because of rent/heating we’ll be ok. The system is the psychology of self-harm writ large. I can’t see this changing until the economics text books change. I read on the positive money site that an A level economics teacher new nothing of how banks create money out of thin air. If the teachers don’t know this……
I’m betting we’ll be the last country in the world to drop it. We’ll still be practicing austerity no matter who gets in at the next election. Perhaps people will start to realise then this country isn’t run for the benefit of the electorate but for the banks and in tandem with them the great landowners. Perhaps when this becomes obvious even to Sun, Espress and Daily Mail readers something will finally be done about it. Till then, though, it looks like an increasingly good idea to live somewhere else.