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This is incorrect. Austerity can involve tax increases, spending cuts, or combinations of the two. It’s not limited simply to spending cuts. That said, it ver

This is incorrect. Austerity can involve tax increases, spending cuts, or combinations of the two. It’s not limited simply to spending cuts. That said, it very much matters what “kind” of austerity one engages in, as research indicates that tax increases and spending cuts have different respective effects on an economy.

TheOtherHobbes 8y ago
Like most economic principles, there’s a big gap between theory and practice. In reality Austerity is defined by tax breaks for the very rich, combined with spending cuts and privatisation - i.e. economic enclosure, debt peonage, and asset sweating - for everyone else. Sometimes that includes tax increases, but if som it usually means indirect taxation. Austerity is purely ideological. Even the IMF acknowledges that recent Austerity regimes have underperformed expectations while examples of stimulus spending have had the opposite effect.
- zozbot123 8y ago
  What do you mean by "the very rich"? Rich by income, assets or consumption? Currently, lots of governments overtax income and sometimes assets, while undertaxing consumption. They tax the likes of Bill Gates and Warren Buffett a lot (right up until the point when they-- or perhaps their descendents-- actively donate their assets to some charitable trust or another) while leaving the crazy luxury spending of Larry Ellison and others like him largely untaxed! This is crazy, and is what a move to consumption taxes (what you call "indirect taxes" in your parent comment) helps fix.
- geezerjay 8y ago
  > In reality Austerity is defined by tax breaks for the very rich, combined with spending cuts and privatisation This is objectively false, and a poor atempt at forcing a particular spin on a very objective definition. Looking at Portugal, the bailout program enforced tax increases exclusively on the middle and upper class, along with publix sector workers who are by far more priviledged than private sector workers. For example, the bailout program saw the introduction of a new tax bracket for the richest taxpayers which forced a 53% income tax rate. And also privatizations are implemented to avoid additional austerity pushes by providing the government with one-off sources of free cash thus avoiding further spending cuts or tax increases. Therefore, they are in fact an alternative to austerity, not a consequence. > Austerity is purely ideological. This statement is so mind-numbingly wrong that it boggles the mind how anyone in this point in time could be so disingenuous or clueless to keep parroting this silliness. Let's look at Portugal, who doubled its sovereign debt fron 60% of the nation's GDP to over 120% in about 5 years prior to any mention of austerity, and did so by piling a string of yearly deficits of over 10% including a structural deficit of around 3%. If your state is so dependent on overspending that it needs loans after loans to keep working and pay up salaries, who in their right mind will argue that they don't desperately need to cut spending and/or raise taxes to avoid going bankrupt or even to keep functioning? If austerity was actually "purely ideological", how exactly would it be possible for Portugal to keep their 10% spending deficits?

TheOtherHobbes 8y ago

Like most economic principles, there’s a big gap between theory and practice. In reality Austerity is defined by tax breaks for the very rich, combined with spending cuts and privatisation - i.e. economic enclosure, debt peonage, and asset sweating - for everyone else. Sometimes that includes tax increases, but if som it usually means indirect taxation. Austerity is purely ideological. Even the IMF acknowledges that recent Austerity regimes have underperformed expectations while examples of stimulus spending have had the opposite effect.

zozbot123 8y ago
What do you mean by "the very rich"? Rich by income, assets or consumption? Currently, lots of governments overtax income and sometimes assets, while undertaxing consumption. They tax the likes of Bill Gates and Warren Buffett a lot (right up until the point when they-- or perhaps their descendents-- actively donate their assets to some charitable trust or another) while leaving the crazy luxury spending of Larry Ellison and others like him largely untaxed! This is crazy, and is what a move to consumption taxes (what you call "indirect taxes" in your parent comment) helps fix.
geezerjay 8y ago
> In reality Austerity is defined by tax breaks for the very rich, combined with spending cuts and privatisation This is objectively false, and a poor atempt at forcing a particular spin on a very objective definition. Looking at Portugal, the bailout program enforced tax increases exclusively on the middle and upper class, along with publix sector workers who are by far more priviledged than private sector workers. For example, the bailout program saw the introduction of a new tax bracket for the richest taxpayers which forced a 53% income tax rate. And also privatizations are implemented to avoid additional austerity pushes by providing the government with one-off sources of free cash thus avoiding further spending cuts or tax increases. Therefore, they are in fact an alternative to austerity, not a consequence. > Austerity is purely ideological. This statement is so mind-numbingly wrong that it boggles the mind how anyone in this point in time could be so disingenuous or clueless to keep parroting this silliness. Let's look at Portugal, who doubled its sovereign debt fron 60% of the nation's GDP to over 120% in about 5 years prior to any mention of austerity, and did so by piling a string of yearly deficits of over 10% including a structural deficit of around 3%. If your state is so dependent on overspending that it needs loans after loans to keep working and pay up salaries, who in their right mind will argue that they don't desperately need to cut spending and/or raise taxes to avoid going bankrupt or even to keep functioning? If austerity was actually "purely ideological", how exactly would it be possible for Portugal to keep their 10% spending deficits?