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by Retric
4805 days ago
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The real problem is by the time a county has big debts there so used to deficit spending defaulting = austerity. The US borrowed enough money to avoid a significant economic melt down. Long term avoiding pain from borrowing is not sustainable be cause you always want lower taxes and faster growth. For austerity to work before your forced into it you need a multi decade commitment to gradual spending reductions or significant external stimuli. The US could for example cut military spending by 75% today and still be just as safe. The problem is simply flooding the job market with such people. However cut 3% a year and you have few short or long term problems as people naturally leave jobs and you just avoid highering. Increase the retirement age slowly and the personal impact is minor, cut benefits directly and you destroy lives. PS: Also slowly cutting back government like that withought reducing taxes reduces short term economic growth. The advantage is keeping a good credit raiting and avoiding default but it's still painful. |
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It only really takes a few years. We went through "painful" austerity in Canada. Both at the federal level and provincial level. This left everyone hating the federal finance minister and the premier of the province. In the end, the environment was cleaner, the debt problem was tackled, and everyone had a job. (when you compare the late 90's to the early 90's)
Here's another story about austerity: http://articles.washingtonpost.com/2012-01-20/opinions/35438...
(but yes, it's after a war, so that somehow makes it inexplicably different? People still debate this)