Real austerity vs fake austerity.
Economic prudence vs Keynesian-style stimulus.
BELL vs GIIPS
After the economic collapses in both groups in 2008, GIIPS raised taxes and hardly cut spending (many people were led to believe they have austerity just because the news headlines said so). BELL took drastic austerity measures with govt layoffs and real spending cuts (such as 35% salary cuts for ministers. Now that's austerity!).
Results: GIIPS are still muddling along and more trouble lies ahead. BELL had a longer recession but also a dramatic turnaround and their growths are now the highest in the EU.
Moral of the story: Economic prudence works. Keynesian-style stimulus fails. Keynesianism has a dismal track record over the decades and lack empirical support for its claims, yet it is being taught in schools and followed blindly in the financial world. Let a real recession happen. Cut govt spending with a chainsaw. Take the pain and let the free market work. The economy will restructure and become stronger.
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