Austerity Vs. Prosperity

by Stuart Shapiro

Republicans continue to insist on broad spending cuts.  In doing so, they are echoing the policies Germany is imposing on failing economies in southern Europe.  Japan, which has been struggling for decades recently switched from austerity to stimulus.  Nicholas Kulish compares the results in Japan and Europe:

Even as Europe fell deeper into what just became its longest recession since World War II, Japan posted an unexpectedly robust growth rate of 3.5 percent under the bold new stimulus measures championed by Prime Minister Shinzo Abe — precisely the medicine many have urged European leaders to take.

When your people are struggling to find job, the top priority must be economic growth.  And the best way to get growth is to spend.  The data is relatively clear, but if you don’t care about data then I guess it doesn’t make a difference.

By: Stuart Shapiro

Stuart is a professor and the Director of the Public Policy
program at the Bloustein School of Planning and Public Policy at Rutgers
University. He teaches economics and cost-benefit analysis and studies
regulation in the United States at both the federal and state levels.
Prior to coming to Rutgers, Stuart worked for five years at the Office
of Management and Budget in Washington under Presidents Clinton and
George W. Bush.