Quote:
|
Originally Posted by evollove
How does this happen?
I'm not saying it doesn't. I'm just asking.
I'm one of the few people who will fess up and admit I don't understand how complex economic systems work.
So how do austerity measures hurt the overall economy?
Look, I'm not saying they don't. Chill. Hey, it's just a question. Fuck you, I'm just trying to figure it out. No need to call me that. Oh, bite me.
|
After the past 30 years it is perfectly safe to say that Trickle Down economics does not work. That is to say, the lowered tax rates for businesses and the wealthy "job creators" as well as deregulating the market do NOT increase government revenue streams, do not increase real wages, do not increase the overall productivity of the economy. All they have done is go on to to create record setting profits for corporations. So Europe shouldn't be interested in these trickle-down models which are disguised as austerity measures. This is particularly damaging to countries like Greece where such high proportions of people work for the government and state-own businesses. Austerity means to cut government jobs and contracts with private businesses, this is an automatic decline in real wages and investment in the market. Further, you can't readily replace teachers and public workers in the private market, so you inevitably have a net hole in the economy. While it seems counter-intuitive that when the government pays people and for services that the government makes money, but this is an investment. These workers pay taxes so a share of the money goes directly back into the system, and further these workers own houses, cars, pay their bills, buy all kinds of consumer goods, and pay for all kinds of services. In this process, the keep the economy flowing and growing, the government spending works out to be an investment. When you cut this spending, you cut the investment and immediately lose in the short run. Trickle-down theory suggests that in the long arc, economic growth under lowered taxes will generate more income and a larger market, however in the real world this HAS NEVER HAPPENED. In fact, there almost seems to be an inverse relationship because the largest period of job growth in US history was between 1991-1999, second largest was post-WWII, both periods when we also had much higher taxes
