Republicans Want America To Follow Europe’s “Unethical Human Experiment”

I can’t think of one issue more important for Americans to consider this fall than whether the country will follow Europe by voting for severe and crippling budget austerity—via Mitt Romney and a Republican Congress—and thus retard what economic growth there is.

I find it ironic that Romney and the Republicans, who have falsely accused Obama of wanting to Europeanize America, themselves want to follow the drastic European austerity plan to deal with accumulated debt. It turns out it is the GOP that wants to re-create America in Europe’s image.

On Thursday’s The Ed Show, Paul Krugman answered the following question posed by Ed Schultz:

So, we ought to be very aware and somewhat scared of the austerity measures based on what’s happening across the globe?

KRUGMAN: Oh, gosh! We’ve just done a massive—I would say massive—unethical human experiment in Europe. People said, “Slash government spending, good things will happen, confidence will come, it will grow the economy.” What’s actually happening is what’s happening in Greece and in Spain and in Ireland: Unemployment of more than 20%, unemployment among youth at more than 50%, collapsing political system in Greece, Spain probably next down that road. So, we’ve just seen that the type of policy that the current Republican majority in the House wants, we’ve just seen what they lead to in Europe and the answer is that they lead to catastrophe.

Here is the annualized first quarter grown rate for some notable countries. Japan’s growth rate is significantly attributable to the post-tsunami spending:

Here is the whole segment:

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10 Comments

  1. You know, I had the same thought the other night as we watched the panic spreading in Greece on the evening news. They appear to be entering a predictable fiscal death-spiral as austerity measures further depress their down economy. The need for Keynesian stimulus just seems common sense medicine for a recession, and it was so even for the G. W. Bush administration because they had begun stimulus spending at the end of 2008. I found the Krugman revelation of diminished government spending under Obama shocking, actually. I guess the right had me brainwashed because of the national debt.

    I was listening to a Planet Money pod cast earlier this week and they were talking about a recent explosion in demand for paper money. It turns out that there is only one contract for making the paper U.S. money is printed on, renewed every 4 years, and its long-time holder is a fairly small family-owned company in Massachusetts. It also turns out that they track statistics for the size of the bills the paper is for and where the currency is shipped. The big shift in demand is not in the U.S. – it’s in Europe! I think that many Europeans are doing their banking in their mattresses – it’s Ben Franklins in there, not Euros! The Euro is on life-support and the prognosis ain’t good.

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    • Sedate Me

       /  May 20, 2012

      The US dollar is a “dead man walking” too. It’s just staggering along on its past reputation (ie “the new Gold”). America is in as bad a shape as just about anywhere else.

      The main reason the Sheriff hasn’t evicted it is because of the size of its weapons stockpile.

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      • @ Sedate,

        I beg to differ. Europe is sliding back into recession while the U.S. is maintaining. Of course, if Europe continues to fail, we will be affected. But the point is, our Keynesian stimulus policies have kept us much better off so far than their austerity measures.

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        • Sedate Me

           /  May 20, 2012

          Oh, I wasn’t talking about the immediate/short term. You’re right about that. When done correctly (the hard part), Keynesian economics works. Ask Hoover about well austerity works in a downturn.

          I was talking longer term. That’s where the real problem is. Barring a miracle, America is in a long term downward trajectory and it didn’t even build up a Keynesian surplus in the Good Times.

          Currency value is opinion driven and those opinion makers have the attention span of a gnat on crack. A few good news stories in Europe and a few bad ones here and the currency situation reverses. Europe’s big problem is that a few bad apples are ruining Germany’s barrel. Greece & Italy have been laughable jokes for over a decade. Greece especially deserves to be kicked out of the EU.

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    • ansonburlingame

       /  May 20, 2012

      I was impressed by an AP Story in Sunday’s Globe showing that about $2.4 Billion in private insurance funds are being spent to rebuild Joplin and thus far only some $500 million in government funds for such purposes.

      To me the point is rather clear. If you get into financial difficuluty, particularly no of your own “making”, look who really comes to the rescue, private companies. Those that plan for the worst and act accordingly do OK, by and large. Those that live life on the edge without making future plans, well they better HOPE that government in there.

      Can’t afford insurance, then why buy a house or car? Only rent a place, then how much do you have in your savings account to “live on” if the rental is destroyed thru no fault of your own. And even then you should have renters insurance.

      Now if you want to get out of a recession, go produce more goods and services to generate the funds to grow the economy. If you want 10% growth in GDP, about $1,5 Trillion in a year, then produce that amount in NEW goods and services. Government CANNOT do that, produce goods and services. It simply takes money out of the production process to then pay for private folks to produce the goods and services, plus government overhead!!

      Anson

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  2. ansonburlingame

     /  May 18, 2012

    And thus the Great Divide, following the Great Recession,

    The goal of eveyone, conservative or progressive is to restore economic growth. The great unknow or divide is how to do so. To me it is as simple, yet complex, as that .

    There is a country, Greece, that has for many years provided all sorts of government benefits and services that it could not pay for with its own tax revenues. To keep on keeping on they had to borrow the money to provide those services and benefits demanded by Greeks through popular elections.

    Now look at Greece, or Spain, or Italy, or Ireland, or Portugal or maybe France in the middile terem. Is that the way we want to0 go in the U.S. YES say progressvies, borrown as much as can be borrowed and let government return us to prosperity, not private capital and production by private businesses.

    In general that has been the basis of the entire European Union, combine resources to continue to provide the borrowning power to sustain economies. And now that borrowing power is going away, within Europe, Germany in particular, and elsewhere. Europe in general and Greece, Spain, etc in particular are finding th3e “well” from which to borrow more money is dryig up.

    THERE is the Great Divide in this coming election in America, just like it was in France of late. Do we regain finanical stability by living within our means, or do we continue to live beyond our means and hope that “someone” will lend us the money to do so.

    As long as “someone” is around to lend the money and increase the interest rate to borrow it (for risk mitigation reasons) then maybe borrowing tactics will work in the short term. But voters rarely look at the mid or long term of such tactcs at least in a democracy.

    But I do understand this. If I was struggling to make my mortgage and car payments, I MIGHT be able to get a loan from a bank to “tide me over”. But then I would be making mortgage, car and bank payments. So whom do I go to next when the next bill arrives? A “vulture capitalist”, a “loan shark” a whatever?

    Within ten short years the payments from the Federal Government to support Medicare, SS and Medicade alone will consume our entire federal revenues, ten years from how. Forget defense, and other government functions. And yet we are at a stalemate to avoid that situation, politically.

    Are you kidding me? And YOU think taxing the rich will avoid that pitfall Show me the math!!!

    Anson

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    • Sedate Me

       /  May 20, 2012

      You conveniently excluded a major government expenditure. Military spending.

      I heard last year that, on a per capita basis, the Greek debt and America’s debt were fairly comparable. Greek citizens got a flotilla of social programs & a fairly cushy lifestyle out of their massive, unsustainable, debt. For their massive, unsustainable debt, American citizens got…uh…a kick-ass military that gives every macho pin-dick a Patriot Boner!

      Which is a better value for the dollar? Which better reflects the priorities of the populace (aka what democracy is supposed to be about) ? I subscribe to the theory that what you say you value is meaningless in comparison to how you actually spend your money.

      You want to crunch numbers? We have idiots running around acting like cutting PBS and arts funding will balance the budget. You simply cannot balance the budget without cutting the military AND touching those other 3rd rails.

      For a good 40 years, everywhere they’ve turned in this culture, Americans have been told they can have something for nothing. If you want something, you have to pay for it. Period. This is something both parties have no interest whatsoever in doing. Both sides continually offer their followers something they can’t afford. (spending or tax cuts) The reality is that the biggest difference between the two parties is the benefactors of their unsustainable budget choices.

      The idea that any party is even trying on the debt front is a joke. The only thing they care about is winning the perpetual election game. You don’t win by telling somebody “If you want something, you have to pay for it.” Besides, it took decades to get into this mess and will take just as long to get out of it, assuming it’s not too late. (which it just might be)

      But NO meaningful progress will be made until all Americans realize that they’re not just spending more than what they make, but what they bought decades ago still hasn’t been paid for.

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  3. ansonburlingame

     /  May 21, 2012

    Well Sedate Me,

    You and I have found something to agree upon. “If you want something, you have to pay for it.” We also seem to agree that both political parties have failed, rather miserably to do so, pay for “stuff” when it is purchased (or given away).

    Of course IF our government did exactly that, pay as you go, we would have a balanced budget, including amoritization of all the old debt.

    What Europe and America have been doing for 50 years is accumulating debt with no plan to how to pay off the loans nor placing any rational limit on the amount of debt to “enough” or “too much”. Aug 2011, debt ceiling went up (again) and in Jan 2013 it will have to go up again until…….???

    Failure to raise the debt ceiling is the equivalent of forcing a balance budget upon the federal government. And the American people will NOT allow that to happen. By the President’s own budget submission he is predicting a debt of some $26 Trillion in ten years.

    As for the tired old arguments over military spending versus domestic spending, well obviously we need both. Eliminate the entire DOD along with all the workers in the military industrial complex and you cut the deficit nearly in half, remove some $750 Billion for the economy in one fell swope and have millions unemployed, just as a economic consequence.

    Lord only know the geopolitical consequences of such stupidity with the reality of a defensless America, not a single ship to put to sea or soldier to “mann the beaches” against……!

    The Constitution requires the federal government to defend America as a clear matter of priority. That is why we have a DOD.

    Of course we must lower our cost of defense. But by how much becomes the question. Of course we must lower the cost of domestic programs. But by how much is that question.

    And of course we must raise federal revenues to met ALL legitimate “needs” for America. But by how much is that question as well.

    Screaming at each other does not answer those questions. But until we get the right answers with broad agreement across the American political landscape, we continue down the path of the last 50 years towards……..?

    When I read Reich, Krugman, even Duane Graham ALL I read is a call to spend more and more until…….. And after the until point is actually reached (though none of the above will say when that might happen) we will then……….? Did I ever read “balance the budget and pay down the debt”? as an outyear (or century) solution? Nope.

    Anson

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    • Sedate Me

       /  May 21, 2012

      As for the tired old arguments over military spending versus domestic spending, well obviously we need both. Eliminate the entire DOD along with all the workers in the military industrial complex and you cut the deficit nearly in half, remove some $750 Billion for the economy in one fell swope and have millions unemployed, just as a economic consequence.

      Eisenhower had it right about the military-industrial (and now spy) complex. America should have listened at the time. Military spending does steal food out of the mouths of children, so to speak. And it does so to produce a product with minimal utility. I mean, who really wants to have a bomb in their living room?

      You also bring up a good a point about the impact of eliminating military spending. It saves a lot of taxpayers’ money…but it also punishes the economy. You can make a similar argument about damn near all government spending. It employs people (or gives them money) and those people spend that money in the economy, which generates jobs. Suddenly, you seem to be making an argument in favour of government spending and the stimulus approach.

      At the end of the day, it’s all government spending and, just like a consumer spending money, how the government spends its dollars demonstrates its priorities. For example, we could have millions of social workers struggling to save people (often from themselves) or pay millions of bomb makers making weapons “for peace”. As long as citizens know that’s the choice they’re making, I suppose either choice is valid. But the bills have to paid.

      What few realize is that military spending has become patriotism-approved versions of Workfare for the unemployed, R&D spending and a massive government subsidy to the manufacturing sector. It’s astounding how many companies are involved, if only slightly, in military contracting. If you were to remove auto and military manufacturing from the scene, would there even be a manufacturing sector left? That sector is what made America.

      But the effect of cutting military spending underscores the size of the debt problem. The military is at the high end of the spending spectrum, but you can eliminate the whole thing and it only cuts the DEFICIT in half. Imagine the impact on Americans of making enough cuts to actually balance the budget, never mind tackle the debt. The ONLY way to do that is through VERY painful cuts to damn near everything AND increased taxes AND economic growth. Not only is that a virtually impossible recipe…you’ll have to do it for a longer period of time than all but the 1% can stomach.

      No. America as we know it is fucked, maybe for good. I think the 1% realize it and have cashed out on America. All they want now is to reduce the amount of money they contribute to the sinking ship and get to the lifeboats. http://www.bloomberg.com/news/2012-05-11/facebook-co-founder-saverin-gives-up-u-s-citizenship-before-ipo.html

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  4. ansonburlingame

     /  May 21, 2012

    To all,

    In the next to last paragraph above, Sedate me has stated the case rather clearly. We MUST cut, we MUST raise taxes and the pain in doing so will be intolerable to most Americans. A nip here and a tuck there is not going to hack it, in my view however. We are far to deep into the financial hole to every crawl our way out of it without really serious rethinking of what is possible, not just what is needed.

    To “fix” this problem is financially possible but for now politically impossible. THAT is the real dilemma, in my view.

    For at least a century after we formed our Union, America was financially impotent, geopolitically. But Americans were a busy and industrious group of people for sure, generally a happy people.

    Now try to convince the American people that returning to that “attitude” from long ago, an attitude that as individuals the “sky was the limit” and horizons very broad indeed.

    We had a small and most of the time a very limited federal government, back then. But look what such conditions produced?

    That is the reason that I do NOT believe America is “screwed”. We did it before and can do it again, in my view, but it must be done by Americans, not the federal government.

    Just imagine what America might be today if we reset the last 50 years and tried a different approach, which of course we cannot do.

    But to attempt to keep on the way we have been doing for now 50 years spells disaster, at least to me and the size of that looming disaster is the national debt and continued deficits.

    Anson

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