You’ve probably read it, heard it and seen this lie dozens of times over the past year. The lie: that Europeans are undergoing the hardship of austerity.
I realize that it might seem like nitpicking – but let’s go back to what austerity is supposed to mean.
Please bear with me – because if we lose control over the definition of words and principles, then we don’t stand a chance of accurately understanding the current situation.
Austerity, in this case, is supposed to mean living within your means so that you can pay down debt.
But amazingly, all of Euro-zone’s problem countries are STILL racking up debt.
Have they cut spending? Yes- but they’re still running deficits.
It’s not austerity. It’s the continuation of massive debt policy that Western governments (including America’s) have willfully and gleefully pursued for 40+ years.
So all of the problems in Europe aren’t the result of austerity – they’re the continued result of failed Keynesian policy.
Yes, I’m aware that debt apologists like Paul Krugman and Kai Ryssdal will point out that the debts aren’t big enough to continue to spur growth. By the way – that’s the official doctrine and solution of all Keynesians: spend more, print money, go into enough debt until you start to see results.
But we’ve seen the result of high debt. In Japan, high debt has led to 20 years of near zero growth.
In the United States, high debt has led to the severe erosion of the American standard of living. Don’t believe me?
Well, in just the past 22 years, the average American salary has only doubled from just under $20,000 a year to just over $40,000.
But the price of oil has gone up 5 times since 1990. The price of corn has tripled. The price of most goods, services, commodities has more than doubled.
In Europe though, the wages of debt policy have been much more serious. We’ve all seen the riots and protests. When Europeans are truly forced to reverse course – and to find their way towards real austerity to pay back their massive debts, we’ll see even more problems arise. We’ll see the destruction of the Euro, that’s a given – and with it, we’ll see lots of angry people who trusted their lives and livelihoods to a botched currency and a flawed economic system.
Keynesianism has failed spectacularly – and though it’s STILL in effect, you hear time and time again that Europe suffers from austerity.
It’s a lie. Don’t believe it.