COVID-19 and the Return of a Dangerous Idea, Austerity

Mark Blyth and Jeffrey Sommers in CounterPunch:

The past decade delivered powerful lessons of what not to do in an economic crisis. Many countries pursued, or had imposed on them, austerity policies. That is, cutting government spending when the economy tanks in order to balance the books. The idea is that with less spending now, taxes will be lower later on, which will make people feel more confident now, thereby shortening the recession. It’s a nice idea. But it actually makes things worse.

Take Greece, the austerity poster child of the Eurocrisis. With a GDP of over $350 billion in 2008, its projected GDP 12 years later was a paltry $225 billion, with unemployment sitting at 16.1%. This should not a surprise when one considers that countries pursuing austerity end up with less money to pay off their debts rather than more because their economies shrink under the budget cuts, but their debts stay the same. One would think that these Darwin Awards for economic policy would never again be tried. Exasperatingly, however, it looks like politicians never tire of repeating them.  For the past decade Wisconsin has been the economic policy incubator many Republican controlled states sought to emulate, along with developing the democracy restricting tactics to achieve it.

Once proud progressive Wisconsin, the incubator of many New Deal programs such as Social Security, in their April 7th election delivered scenes that could be featured in a novelized version of the Book of Revelations. As the election neared, it became clear that a public health disaster was in the making.

More here.