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Other people have said it better but the basic gist seems to be that austerity is wealth transfer from the poor and medium class to the wealthy. "The result is

Other people have said it better but the basic gist seems to be that austerity is wealth transfer from the poor and medium class to the wealthy. "The result is ever greater levels of social inequality, as wealth is funnelled from the bottom to the top. Big business, the banks and the super rich are being increasingly relieved of paying taxes. The resulting deficits in state budgets, exacerbated by the hundreds of billions awarded to the banks in government rescue packages, are now being addressed through a combination of increased consumption taxes, which fall most heavily on the working class, and savage cuts in social programs and public sector jobs and wages."

lyudmil 14y ago
That is part of it, but I think there's another piece to the puzzle. The private sector in general is in crisis because the banks won't lend. They won't do that because of the problems on their financial sheets - they know they hold toxic assets and they know everyone else does, so they cannot trust anyone to pay off their debt, including other banks. This means that private investment has decreased severely, which puts enormous downward pressure on the economy. Since the private sector won't invest, the only source of investment big enough to fill the hole (which might be as big as $8 trillion), is government. Austerity is a problem because it limits the governments ability to invest, which means that you have a shrinking economy trying to make up ground, which is a losing battle, especially for the poor as you point out, since they do not have the assets to absorb the economic hit. I should say none of this is my opinion, I'm merely summarizing Krugman, Stiglitz, and Baker, who are the three economists whose work I've followed on the matter.
orangecat 14y ago
savage cuts in social programs and public sector jobs and wages Yet somehow per-capita government spending keeps going up: http://www.usgovernmentspending.com/spending_chart_1990_2017USd_13s1li111mcn_F0t http://www.usgovernmentspending.com/spending_chart_1990_2017....

lyudmil 14y ago

That is part of it, but I think there's another piece to the puzzle. The private sector in general is in crisis because the banks won't lend. They won't do that because of the problems on their financial sheets - they know they hold toxic assets and they know everyone else does, so they cannot trust anyone to pay off their debt, including other banks. This means that private investment has decreased severely, which puts enormous downward pressure on the economy. Since the private sector won't invest, the only source of investment big enough to fill the hole (which might be as big as $8 trillion), is government. Austerity is a problem because it limits the governments ability to invest, which means that you have a shrinking economy trying to make up ground, which is a losing battle, especially for the poor as you point out, since they do not have the assets to absorb the economic hit. I should say none of this is my opinion, I'm merely summarizing Krugman, Stiglitz, and Baker, who are the three economists whose work I've followed on the matter.

orangecat 14y ago

savage cuts in social programs and public sector jobs and wages Yet somehow per-capita government spending keeps going up: http://www.usgovernmentspending.com/spending_chart_1990_2017USd_13s1li111mcn_F0t http://www.usgovernmentspending.com/spending_chart_1990_2017....