The Daily Wire: Austerity - The Daily Wire

Jump to content

Page 1 of 1

Austerity

#1 User is offline   HDMC 

  • Advanced Member
  • PipPipPip
  • Group: Members
  • Posts: 1616
  • Joined: 14-January 11
  • LocationNQ

Posted 23 April 2013 - 06:03 AM

Meet the 28-Year-Old Grad Student Who Just Shook the Global Austerity Movement
Register so you can post replies with ease and remove this message.
Already registered? Please login now to make this message go away.
Log in with Facebook Log in with Twitter

0

#2 User is offline   Trogdor 

  • Advanced Member
  • PipPipPip
  • Group: Members
  • Posts: 111
  • Joined: 17-January 11

Posted 23 April 2013 - 12:35 PM

It seems to make a great deal of sense even at a basic level.

You’re in government, times are good and the economy is booming. That generally means that labour is expensive and limited (due to higher employment) and commodity prices are high (more competition on the world market for resources). The obvious solution is to cut back on spending and save for the future. People, businesses and the economy won’t miss the funds too much, because there’s plenty of other income sources.

When times go back, people get laid off, manufacturing goes down, commodity prices drop. That’s when you should spend up. Not only do you help stimulate the economy, but you get better bang for your buck as well.

That high speed rail or road tunnel with the “take it or leave it” price tag because the contractor has ten other tenders to deliver – I bet they’re willing to discount now. Neep some more planes for the RAAF – buy them when no-one else wants them and Boeing is desperate to keep their line open. Need a bunch of public servants for a project – wages are lower and there’s more candidates now – so go hire them.

Even going into debt isn’t such an issue when your buying power is greater, and when the plan is to pay off more debt when times are good. It’s pretty obvious stuff really.
Register so you can post replies with ease and remove this message.
Already registered? Please login now to make this message go away.
Log in with Facebook Log in with Twitter

0

#3 User is offline   scotto 

  • Advanced Member
  • PipPipPip
  • View blog
  • Group: Members
  • Posts: 4300
  • Joined: 14-January 11
  • LocationNewcastle, NSW

Posted 23 April 2013 - 04:57 PM

There is no evidence that austerity campaigns around the world have worked at any level.
Register so you can post replies with ease and remove this message.
Already registered? Please login now to make this message go away.
Log in with Facebook Log in with Twitter

0

#4 User is offline   Bam 

  • Advanced Member
  • View blog
  • Group: Moderators
  • Posts: 3205
  • Joined: 13-January 11
  • LocationMelbourne

Posted 23 April 2013 - 09:18 PM

View PostTrogdor, on 23 April 2013 - 12:35 PM, said:

It seems to make a great deal of sense even at a basic level.

You’re in government, times are good and the economy is booming. That generally means that labour is expensive and limited (due to higher employment) and commodity prices are high (more competition on the world market for resources). The obvious solution is to cut back on spending and save for the future. People, businesses and the economy won’t miss the funds too much, because there’s plenty of other income sources.

When times go back, people get laid off, manufacturing goes down, commodity prices drop. That’s when you should spend up. Not only do you help stimulate the economy, but you get better bang for your buck as well.

That high speed rail or road tunnel with the “take it or leave it” price tag because the contractor has ten other tenders to deliver – I bet they’re willing to discount now. Neep some more planes for the RAAF – buy them when no-one else wants them and Boeing is desperate to keep their line open. Need a bunch of public servants for a project – wages are lower and there’s more candidates now – so go hire them.

Even going into debt isn’t such an issue when your buying power is greater, and when the plan is to pay off more debt when times are good. It’s pretty obvious stuff really.

Good post and I agree with the points raised.

One thing you've omitted is that the price of borrowing is also lower when the economy is weak. At these times, central banks cut interest rates to stimulate spending. The lower interest rates apply to governments as well. Debt is cheap and if the borrowing is invested wisely the returns from that investment are worth more than the cost of servicing that debt.

When the economy strengthens, the economy has ample capacity to generate taxation revenue that allows governments to service the debt and pay it down.

Keynesian economics also supports the points raised. Here, it points out that government spending during times of weak demand can raise demand and so help the economy.
Register so you can post replies with ease and remove this message.
Already registered? Please login now to make this message go away.
Log in with Facebook Log in with Twitter

0

Share this topic:


Page 1 of 1


Fast Reply