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Well, 3 things. First, to define austerity, you need to use ratios, absolute values make comparisons impossible and 49.3% of public spending on GDP is not auste

by kfk 11y ago

Well, 3 things. First, to define austerity, you need to use ratios, absolute values make comparisons impossible and 49.3% of public spending on GDP is not austerity, by any means. Second, the graph you linked shows similar level of spending as 2001 and I am not aware of any austerity claims during that year in Greece. Third, how much public spending do you want? 60/70% of GDP? Because that's what it takes to keep the same level of spending as 2007/8. Do you think that's reasonable? More than half of the economy managed by a (very corrupted) State?

dpark 11y ago
> First, to define austerity, you need to use ratios, absolute values make comparisons impossible In what way do actual Euro amounts make comparisons impossible? I'd say Euro amounts are much clearer, because they tell you about government spending without conflating the economic state. GDP vs spending implies that spending hasn't dropped, when in fact it's actually dropped by something like 30% since 2008. The fact that the economy has also contracted drastically in that time doesn't mean spending wasn't cut. > Second, the graph you linked shows similar level of spending as 2001 and I am not aware of any austerity claims during that year in Greece. I'm at a loss for words here. This just makes no sense. By this logic, Greece can never implement austerity. No matter how deeply they cut, they'll never reach a level lower than the lowest point in history. Further, assuming just 1% inflation per year, spending the same in 2015 as 2001 means an effective spending cut of 15%. > Third, how much public spending do you want? What I want isn't really relevant. The question was whether the Greek government has implemented the austerity measures they agreed to. Given the 30% contraction in spending, it seems like they certainly implemented some measures.
AnimalMuppet 11y ago
The generally accepted theory of economics these days is that, as a nation's economy hits a downturn, the government should spend more, not less. Not "more as a higher percentage of GDP" - GDP is shrinking. No, the theory is, the government should spend more in absolute terms. That's the theory. The theory could be stupid if too much government debt is what caused the downturn in the first place. And the theory usually breaks in this way: There is a downturn. The government spends more. The economy picks back up eventually. The government continues to spend more. That means, to have any effect, at the next downturn, the government has to spend even more. And that eventually gets you to the situation stated in the previous paragraph.
- kfk 11y ago
  I think you guys should read Schumpeter. There is no economist sane (or honest) in his mind proposing to do more random public spending when things go south. Think of it this way - if an economic downturn hits US, would you rather leave more money to ycombinator to invest in promising startups, or tax them more and use that money to "grow" the economy through public spending? And let's be realistic, Greece is like Italy. An enormous proportion of the public spending goes to pay privileges (pensions that are too high, useless public jobs, useless buildings, etc.), do you really think that money will grow the economy? Don't you think it creates much more value if left to the private sector? Of course, you need a real private sector, with clear rules for everybody, and that's exactly what they don't want to do! You see the problem here?

by kfk 11y ago

dpark 11y ago

> First, to define austerity, you need to use ratios, absolute values make comparisons impossible In what way do actual Euro amounts make comparisons impossible? I'd say Euro amounts are much clearer, because they tell you about government spending without conflating the economic state. GDP vs spending implies that spending hasn't dropped, when in fact it's actually dropped by something like 30% since 2008. The fact that the economy has also contracted drastically in that time doesn't mean spending wasn't cut. > Second, the graph you linked shows similar level of spending as 2001 and I am not aware of any austerity claims during that year in Greece. I'm at a loss for words here. This just makes no sense. By this logic, Greece can never implement austerity. No matter how deeply they cut, they'll never reach a level lower than the lowest point in history. Further, assuming just 1% inflation per year, spending the same in 2015 as 2001 means an effective spending cut of 15%. > Third, how much public spending do you want? What I want isn't really relevant. The question was whether the Greek government has implemented the austerity measures they agreed to. Given the 30% contraction in spending, it seems like they certainly implemented some measures.

AnimalMuppet 11y ago

The generally accepted theory of economics these days is that, as a nation's economy hits a downturn, the government should spend more, not less. Not "more as a higher percentage of GDP" - GDP is shrinking. No, the theory is, the government should spend more in absolute terms. That's the theory. The theory could be stupid if too much government debt is what caused the downturn in the first place. And the theory usually breaks in this way: There is a downturn. The government spends more. The economy picks back up eventually. The government continues to spend more. That means, to have any effect, at the next downturn, the government has to spend even more. And that eventually gets you to the situation stated in the previous paragraph.

kfk 11y ago
I think you guys should read Schumpeter. There is no economist sane (or honest) in his mind proposing to do more random public spending when things go south. Think of it this way - if an economic downturn hits US, would you rather leave more money to ycombinator to invest in promising startups, or tax them more and use that money to "grow" the economy through public spending? And let's be realistic, Greece is like Italy. An enormous proportion of the public spending goes to pay privileges (pensions that are too high, useless public jobs, useless buildings, etc.), do you really think that money will grow the economy? Don't you think it creates much more value if left to the private sector? Of course, you need a real private sector, with clear rules for everybody, and that's exactly what they don't want to do! You see the problem here?