Thursday, October 28, 2010

Attack of the Killer Austerians

The Austerians still continue to insist that the solution to a depression is to cut government spending. If you do that, they say, the magic Free Market Fairy (see left) will wave her (his?) magic wand and make the depression just magically end.

Of course, the question then is, has this ever worked? Has any depression, anywhere, has ever been ended by cutting government spending? And a study of history shows that.... errr. No. None has ever been so ended. Indeed, the solution to the Great Depression was a massive *INCREASE* in government spending — as in, in 1944, government spending consumed over 80% of the U.S. GDP! And total U.S. debt then was *TWICE* what it is today as a percentage of US GDP! Clearly that destroyed the U.S. economy in 1944, which is why, err, the post-war U.S. economy was the strongest that any economy anywhere had ever been, because it had been utterly destroyed by out of control U.S. spending and U.S. debt.

Yet the Austerians still insist that at some point in the future, if we just cut government spending enough, the magical Free Market Fairy will (when? When I’m dead and buried?) wave her magic wand and POOOF! More wealth out of nowhere! Just by magic. In the meantime they continue to insist that the solution to a depression is to literally kill people -- to cut off people's food stamps, unemployment benefits, healthcare benefits, and other such government-provided programs for relieving the misery of the unemployed. Because only once all the unemployed are dead, I suppose, will we have solved the problem of unemployment. That's a rather... final... solution. But I guess that's the new Austerian slogan: "Arbeit Macht Frei durch den Schornstein". Alrighty, then!

- Badtux the Snarky Penguin


  1. There's such an awesome trap in that argument. When a thug tells you we have to cut spending to improve the economy, ask, "So, did Roosevelt's economic programs get us out of the Great Depression?"

    Stand back, because there will be spluttering with the answer. The answer will be, "No, WWII did it!"

    And then you can spring the trap and ask about the austerity of the government during the war.

  2. It doesn't matter what the FACTS are, even when you can cite Roosevelt and WW II. What matters is the BELIEF. For Glibertarians, it's a matter of faith, and there's no more point in trying to argue with them on that than there is trying to argue with a Muslim, Christian or Hindu about the ludicrous fairy stories they believe in.

  3. Nailed it again Badtux. I love the pic of the free market fairy, :)

    Hmmm, they can't look at the war spending that is happening now and see that it's not pulling us out of the depression? Oh, yeah, you think the next argument they would put forward would be for the draft?

  4. OK, you guys confused me. Nangleator says WW2 pulled us out of TGD, while nunya says the currents wars are not pulling us out of the TGD2.

    Alright, I'm not actually confused. But be careful arguing with the numbnuts on that one. They might just pull that "war isn't working this time," argument on you. You'll have to explain the difference between WW2 spending & War on an Emotion spending.

    Their pretzel-shaped brains may not be able to wrap themselves around that one.

  5. Austerians - and Europe is currently rife with them - must be ignoring a basic accounting identity:

    Domestic Private Sector Financial Balance + Fiscal Balance + Foreign Financial Balance = 0

    Note that it is impossible for all three sectors to net save – that is, to run a financial surplus – at the same time. All three sectors could run a financial balance, but they cannot all accomplish a financial surplus and accumulate financial assets at the same time – some sector has to be issuing liabilities [borrowing].

    Everybody can't run an export surplus at the same time, and China seems to have a lock on it.

    BTW, the output gap was completely filled by 1941, so I really don't understand why anyone says it took WWII to end the GD.

    Nangleator - When you spring the trap, they'll just say you're a war monger.



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