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May 18, 2013
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 Robert Reich Explains the ‘Austerity Trap’Posted on May 8, 2012
“When you have high unemployment and a lot of underutilized capacity, the idea is you cut public budgets? That’s insane. Because that leads to a shrinking of the entire economy, when the real problem is … the ratio of debt to the size of the economy overall,” the former secretary of Labor in the Clinton administration says about the backwardness of the budget cuts being imposed by leaders on both sides of the Atlantic. “If you shrink the economy, that ratio becomes worse and worse. That’s an austerity trap. That’s what happened to Spain. It’s what’s happening even to Britain. It’s what’s happening to Europe as a whole. Angela Merkel is absolutely wrong. You need jobs and growth first, before you embrace austerity. “Now we’re gonna come to exactly the same decision point in January, because we’ve got these sequestration cuts coming up. If nothing is done between now and then, we are going to be forced to embrace our own version of austerity economics at a time when there is still going to be high unemployment and still a lot of underutilized capacity in the United States. We have got to understand ... that jobs and growth have to come first before so-called fiscal austerity discipline.” Reich continues on “Democracy Now!,” where he touches on Occupy Wall Street’s role in an economic revival. —ARK Democracy Now!: Advertisement TAGS:
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By brix, May 11, 2012 at 10:47 am Link to this comment
(Unregistered commenter)
well that certainly does make sense it is un realistic tio impose austerity cuts which will shrink the overall economy when thr problem is the debt ratio one of the main reasonswe have this problem is yes most nations have been overspending for years ans accuring a build up of debt, couple that with the need for bank bailouts due to thier poor investment chioces leaves us in a pickle. Here in europe the main reason for the contiued support of the banks is to perseve the euro which germany feels it has too much invested in at the nmoment. Another factor of the austerity cuts is to dismantle the social welfare state that exists in europe through stealth methods, it matters not if one agrees with a social welfare system or not rather the point is if it is necessary or benrfical to remove it should be done honestly and upfront
Report thisBy blogdog, May 9, 2012 at 9:10 pm Link to this comment
RE: ...Nobody in public service will survive unscathed if
their career has been active and effective..
OK - how has Reich been scathed?
Report thisBy THX 1133 is not in the movie..., May 9, 2012 at 8:04 pm Link to this comment
Morpheus, May 9 at 12:32 pm Link to this comment
Report thisThis is old hat. Austerity fooled no one. If they tried
such non sense in the U.S. there would be riots like
Europe.
~~~~~~~~~~~~~
Erm, just what do you think is going on in the U.S.?
Are you saying austerity isn’t being applied in the
U.S.?
And why aren’t there riots in the states “like Europe”?
That’s a relevant question…
By THX 1133 is not in the movie..., May 9, 2012 at 8:00 pm Link to this comment
blogdog, May 9 at 2:28 pm
Ironically he calls for ‘major ideas’ that reverse
Report thissignificant Neo-Liberal
deregulation executed by the Clinton admin., while he
was part of it - where was
his voice when he had the ear of the POTUS? - sucking
up to cabinet colleague
Robert Rubin, one can easily imagine, prepping for
his future…
~~~~~~~~~~~~~~~
Mayhaps you should do more research and less
hyperbole regarding Reich. He’s been and had an
impressive public career.
Nobody in public service will survive unscathed if
their career has been active and effective.
By C. Terry, May 9, 2012 at 7:15 pm Link to this comment
(Unregistered commenter)
I agree with Prof. Reich and follow his articles. Also like and follow Paul Krugeman. My question is: Why do we let bankers rule over economists? That’s like letting technicians rule over engineers, right? Or nurses rule over doctors?
Is there or is there not a working theory/hypothesis of economics? Is the answer that “might makes right”?
Report thisBy blogdog, May 9, 2012 at 3:28 pm Link to this comment
from the article: ...one of the 10 most effective cabinet secretaries… (?!?!?)
Ironically he calls for ‘major ideas’ that reverse significant Neo-Liberal
deregulation executed by the Clinton admin., while he was part of it - where was
his voice when he had the ear of the POTUS? - sucking up to cabinet colleague
Robert Rubin, one can easily imagine, prepping for his future…
Educating the DN audience about basic austerity economic history is, one
supposes, necessary - problem with the DN audience is that they’ve all listened to
too much and still do listen to too much Pop ‘n Rock n’ mo-fokin’ Roll - they need
the ‘Mozart Effect’ cerebral therapy… so does Amy
go here for mature analysis: http://tarpley.net/
Report thisBy Morpheus, May 9, 2012 at 1:32 pm Link to this comment
This is old hat. Austerity fooled no one. If they tried such non sense in the U.S. there would be riots like Europe. Wake up people. We don’t have to live like this.
Read “Common Sense 3.1” at (http://www.revolution2.osixs.org )
Report thisFIGHT THE CAUSE - NOT THE SYMPTOM
By THX 1133 is not in the movie..., May 9, 2012 at 3:53 am Link to this comment
Lots of good “stuff” here; Reich is the man who knows.
Report thisCut through the propaganda to the facts of economic
austerity and when and how to apply said tool.
Austerity is a tool; abuse it or use it responsibly.