As #OWS turns one month old and continues to spread all over this country and around the globe, just wanted to pass on a quick note about austerity’s crushing effects in Britain. Remember, just couple of months ago London was burning as a result of “toxic mix” of social deprivation, unemployment and austerity.
New figures released this week reported Britain’s highest jobless numbers in more than 15 years. Independent analysts expect unemployment — now 8.1 percent — to keep rising in the months ahead. The government has kept its promise to slash public-sector jobs — more than 100,000 have been lost in recent months. But its deficit-reduction policies have failed to revive the business confidence that was supposed to spur private-sector hiring.
Drastic public spending cuts were the wrong deficit-reduction strategy for the weakened British economy a year ago. And they are the wrong strategy for the faltering American economy today. Britain’s unhappy experience is further evidence that radical reductions in federal spending will do little but stifle economic recovery.
A few years of robust growth would go far toward making swollen federal deficits more manageable. But slashing government spending in an already stalled economy weakens anemic demand, leading to lost output and lost tax revenues. As revenues fall, deficit reduction requires longer, deeper spending cuts. Cut too far, too fast, and the result is not a balanced budget but a lost decade of no growth. That could now happen in Britain. And if the Republicans have their way, it could also happen here.
Well, it’s not the just the Republicans standing in the way. The question is whether the Democrats will mount a credible counter policy offensive, ripping apart Washington’s bipartisan fetish with austerity,? As the NYT rightly points out, austerity is nothing more than “a political ideology masquerading as an economic policy.”
If politicians on this side of the Atlantic make the same mistakes as the government of David Cameron, we could also experience the kind of “great splintering" Britain has experienced due to ill-advised economic policies ripping apart its social fabric. Hopefully those in charge are paying close attention to what is happening out there and will move towards crafting economic policies catered towards the 99 percent, instead of getting hoodwinked by nonsense such as austerity.