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> A balanced budget doesn't seem very 'austere' to me. Except that that's not what it means. Norway has been running a budget surplus for years (because of oil

> A balanced budget doesn't seem very 'austere' to me. Except that that's not what it means. Norway has been running a budget surplus for years (because of oil), but is not engaging in austerity; the UK was running a deficit and engaging in austerity at the same time. Austerity is generally understood to mean a reduction of the structural deficit in a time when the economy is struggling or contracting. It is considered counterproductive because it typically makes the economy even worse by killing domestic demand (directly and through cascading effects). See also the paradox of thrift [1]. [1] https://en.wikipedia.org/wiki/Paradox_of_thrift https://en.wikipedia.org/wiki/Paradox_of_thrift

deleted 11y ago
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Ntrails 11y ago
Except the UK economy has been expanding for a long time now and it's still described as using austerity. Austerity now simply means reduction in spending on "social security" of pretty much any form. Spending your way out of recession [in the midst of large pre-existing debt] has its own supporters and detractors. I've generally come to the conclusion that whatever your budgetary preference you can find an macro-economist to agree with you.
- rbehrends 11y ago
  > Except the UK economy has been expanding for a long time now and it's still described as using austerity. That's why I wrote that the UK was engaging in austerity. Past tense. Osborne abandoned austerity in 2012 (though the Cameron government's economic policymaking still does not show a clear strategy and the UK's economy is still pretty fragile [1]). That the term "austerity" is sometimes used imprecisely (especially in colloquial speech) is not something I disagree with; however, austerity is not synonymous with having a balanced budget, as the OP claimed. > Spending your way out of recession [in the midst of large pre-existing debt] has its own supporters and detractors. I've generally come to the conclusion that whatever your budgetary preference you can find an macro-economist to agree with you. First, these are not the only two alternatives (fallacy of the excluded middle and all that). Second, critics of austerity do not rely on "finding a macro-economist to agree with them" but on the pretty clear evidence that at least for the ongoing crisis, austerity has been unsuccessful (change in government spending has been correlated with change in GDP; i.e., less government spending => less or negative GDP growth). In short, the hypothesis that austerity leads to GDP growth has so far been falsified by the evidence we have. [1] Loss of real GDP and lower real wages compared to pre-crisis levels; a recovery largely fueled by consumption (in part, ironically, because of increased net migration to Britain) and rising housing prices, which is not sustainable in the long term.
- ZeroGravitas 11y ago
  This is partly true but misses the point: if you're slashing social security spending and using the excuse that any government spending will lead to catastrophe, while still spending on whatever your political supporters want then you're lying to people, plain and simple. People have every right to be angry about that.
- TheOtherHobbes 11y ago
  >Except the UK economy has been expanding for a long time now and it's still described as using austerity. That's a slightly optimistic definition of growth: http://www.tradingeconomics.com/united-kingdom/gdp-growth http://www.tradingeconomics.com/united-kingdom/gdp-growth It might more realistically be called "bumping along the bottom." But austerity doesn't just mean cuts in social services. It also means using "austerity" as an excuse to pay workers as little as possible, while making their living and working conditions as insecure as possible. This has the interesting effect that what little growth there is very unevenly distributed, and most of the population doesn't benefit from it at all. You have to think about this for a while to understand what's really happening: the true meaning of austerity is a calculated crippling of real economic expansion in favour of regressive wealth redistribution. This is the one consistent meaning - and it also applies to the use of debt as a weapon against countries and individuals.
mohawk 11y ago
Well, i was curious about the exact meaning of austerity so i looked it up before i wrote the post. The three or four sites that i visited (amongst them Wikipedia) agreed with the meaning i used. Structural deficit is a poorly-defined term, in the sense that there are many reasonable values for it. If you define austerity this way, then we can't even agree if we have austerity or not. It's also not what most creditors care about. What does it matter if you don't get your money back because of cyclical or structural deficits? Perhaps you misunderstood me, i didn't mean to imply that austerity is equivalent to a balanced budget. I used austerity in the sense of "increasing revenues and reducing spending" to balance a budget that is in the red.

deleted 11y ago

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Ntrails 11y ago

Except the UK economy has been expanding for a long time now and it's still described as using austerity. Austerity now simply means reduction in spending on "social security" of pretty much any form. Spending your way out of recession [in the midst of large pre-existing debt] has its own supporters and detractors. I've generally come to the conclusion that whatever your budgetary preference you can find an macro-economist to agree with you.

rbehrends 11y ago
> Except the UK economy has been expanding for a long time now and it's still described as using austerity. That's why I wrote that the UK was engaging in austerity. Past tense. Osborne abandoned austerity in 2012 (though the Cameron government's economic policymaking still does not show a clear strategy and the UK's economy is still pretty fragile [1]). That the term "austerity" is sometimes used imprecisely (especially in colloquial speech) is not something I disagree with; however, austerity is not synonymous with having a balanced budget, as the OP claimed. > Spending your way out of recession [in the midst of large pre-existing debt] has its own supporters and detractors. I've generally come to the conclusion that whatever your budgetary preference you can find an macro-economist to agree with you. First, these are not the only two alternatives (fallacy of the excluded middle and all that). Second, critics of austerity do not rely on "finding a macro-economist to agree with them" but on the pretty clear evidence that at least for the ongoing crisis, austerity has been unsuccessful (change in government spending has been correlated with change in GDP; i.e., less government spending => less or negative GDP growth). In short, the hypothesis that austerity leads to GDP growth has so far been falsified by the evidence we have. [1] Loss of real GDP and lower real wages compared to pre-crisis levels; a recovery largely fueled by consumption (in part, ironically, because of increased net migration to Britain) and rising housing prices, which is not sustainable in the long term.
ZeroGravitas 11y ago
This is partly true but misses the point: if you're slashing social security spending and using the excuse that any government spending will lead to catastrophe, while still spending on whatever your political supporters want then you're lying to people, plain and simple. People have every right to be angry about that.
TheOtherHobbes 11y ago
>Except the UK economy has been expanding for a long time now and it's still described as using austerity. That's a slightly optimistic definition of growth: http://www.tradingeconomics.com/united-kingdom/gdp-growth http://www.tradingeconomics.com/united-kingdom/gdp-growth It might more realistically be called "bumping along the bottom." But austerity doesn't just mean cuts in social services. It also means using "austerity" as an excuse to pay workers as little as possible, while making their living and working conditions as insecure as possible. This has the interesting effect that what little growth there is very unevenly distributed, and most of the population doesn't benefit from it at all. You have to think about this for a while to understand what's really happening: the true meaning of austerity is a calculated crippling of real economic expansion in favour of regressive wealth redistribution. This is the one consistent meaning - and it also applies to the use of debt as a weapon against countries and individuals.

mohawk 11y ago

Well, i was curious about the exact meaning of austerity so i looked it up before i wrote the post. The three or four sites that i visited (amongst them Wikipedia) agreed with the meaning i used. Structural deficit is a poorly-defined term, in the sense that there are many reasonable values for it. If you define austerity this way, then we can't even agree if we have austerity or not. It's also not what most creditors care about. What does it matter if you don't get your money back because of cyclical or structural deficits? Perhaps you misunderstood me, i didn't mean to imply that austerity is equivalent to a balanced budget. I used austerity in the sense of "increasing revenues and reducing spending" to balance a budget that is in the red.