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A bad example

Published April 27, 2012 1:01 am

Evidence against austerity
This is an archived article that was published on sltrib.com in 2012, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

One of the favorite lines Republican candidates for president have used in attacking President Obama is that it is the incumbent's dark purpose to somehow turn us into Europe.

Recent economic data, however, suggest that it is Republican fiscal policy that would set us on a path to emulate the economic stagnation of Great Britain and the nations of the euro zone.

Preliminary numbers released Wednesday from Whitehall show that, for the first time since the 1970s, Britain is suffering through a double-dip recession. The figures strongly suggest that the British government's embrace of fiscal austerity as a cure for its economic woes has not worked.

The American economy, meanwhile, is on a slow but steady rise. Whether that is because, or in spite, of Obama's stimulus package and the Federal Reserve's various money-printing activities, the Western economy that is making up the most ground after the global meltdown of 2008 is the one that has shunned the siren song of cutting its way to prosperity and instead stuck to the 20th century wisdom of using government policy to prime the economic pumps.

Things are, of course, more complicated than that. The declaration of recession in Britain is based on snapshot figures that could yet be revised upward. The U.K. economy is more tightly tied to the suffering of nations such as Spain and Greece, which were top importers of British goods, when they had enough money to import anything.

But the graphs drawn by economy watchers show a clear correlation — if not causation — between the installation of Prime Minister David Cameron's austerity programs, which slashed public sector spending in an attempt to completely erase that government's deficit in just seven years, and the second decline in the nation's economic growth.

In this, Britain's example more clearly illustrates the fate of nations that follow what is now, in America, the Republican line, as laid out by House budget maven Rep. Paul Ryan and endorsed by apparent presidential nominee Mitt Romney: Slash spending and watch as the economy regenerates.

It is still not clear, as the British experience shows, how either a nation's economy or its government's long-range fiscal health are aided by cutting off the flow of money, causing unemployment, reduced consumer spending, anemic tax bases and all the other things that drag down anyone's economy.

National economies are too complicated to draw a simple conclusion from one set of figures. But data available so far suggests that austerity is not the way to growth, or to long-term debt reduction.




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