

Why the young should welcome austerity - earnubs
http://www.bbc.co.uk/news/world-18456131

======
OpieCunningham
_The most obvious symptom of the malaise is the huge debts we have managed to
accumulate in recent decades, which - unlike in the past - cannot largely be
blamed on wars._

U.S. Defense spending is around $900 B/yr (including veterans health, etc).
That is the post-Iraq War cost. Social Security is net $0 (what comes in, goes
out, either today or tomorrow, and with relatively minor adjustments and the
elimination of gov't "borrowing" from SS funds, it can stay that way forever).
Medicare is perhaps 1/4 the cost of defense spending.

I fail to see how debt can be attributed to social services simply because you
might decide to stop calling things "war".

"Young" people might consider austerity if, firstly, defense budgets were cut
down by orders of magnitude. Let's see how much debt is accumulated when we're
not throwing away (bombing away) nearly 50% of revenue.

 _The heart of the matter is the way public debt allows the current generation
of voters to live at the expense of those as yet too young to vote or as yet
unborn._

No. The heart of the matter is the way public debt allows relatively few to
massively and outrageously profit via post-9/11 escalation of defense
spending.

 _If young Americans knew what was good for them, they would all be in the Tea
Party._

Even excluding the complete failure to acknowledge out of control defense
spending as the #1 cause of economic issues, there are many, many aspects of
the Tea Party that simply have nothing to do with economics, and are in
themselves completely out of sync with large swathes of people (perhaps most
particularly young people). And now, with consideration that defense spending
is the #1 issue, the attraction of youth to Occupy makes a lot of sense.

If older American's knew what was good for their children, they'd run as fast
as they could from the Tea Party, and perhaps Occupy would be less viewed
(inaccurately) as naive.

And all that's leaving aside the fact that a significant portion of the
economic downturn was due to the machinations of the financial market leaders.
Yet these leaders are the least affected by austerity measures. Perhaps some
minor tangible steps should be taken to address those leaders before asking
the rest of the world to pick up the slack.

------
lkrubner
An extended counter-argument emerges from these blog posts:

[http://krugman.blogs.nytimes.com/2012/06/06/think-of-the-
chi...](http://krugman.blogs.nytimes.com/2012/06/06/think-of-the-children-2/)

[http://krugman.blogs.nytimes.com/2012/06/06/doing-their-
best...](http://krugman.blogs.nytimes.com/2012/06/06/doing-their-best-to-
destroy-europe/)

<http://krugman.blogs.nytimes.com/2012/04/15/insane-in-spain/>

~~~
protomyth
Given Krugman's little rant on Sweden
[http://krugman.blogs.nytimes.com/2012/05/16/sweden-sweden-
as...](http://krugman.blogs.nytimes.com/2012/05/16/sweden-sweden-as-
conservative-icon/) which spawned responses like
[http://www.tomwoods.com/blog/sweden-no-longer-the-free-
marke...](http://www.tomwoods.com/blog/sweden-no-longer-the-free-market-
conversation-stopper/) and his attitude towards Estonia and the US stimuli, I
think there is some doubt as to his work.

~~~
gruseom
Whose work, especially in economics, isn't in "some doubt"? A one paragraph
blog post hardly discredits Krugman in general.

I am of no fixed opinion when it comes to economic theory, but Krugman's and
Dean Baker's writings on the economy of the last ten years (i.e. housing
bubble onwards) are some of the few things I've found that are intended for a
general audience, are (at least partly) based on data rather than ideology
alone, and seem coherent to me. That doesn't mean they're right, of course. If
there's a critique of their view that meets the same criteria – generally
accessible, based on evidence, not entirely ideological, and coherent – I'd
like to see it. Most of what I've run across in that department is either
incomprehensible to me, obviously ideological, or both.

The people who seem lacking in credibility right now are the ones recommending
plunging ahead with full-bore austerity when there are both obvious reasons to
think it will make matters worse (because it will reduce demand and slow
growth) and obvious evidence that it is doing so right now, e.g. in the UK,
which has been running this experiment for the last few years. Perhaps this is
just my ignorance speaking, but what I noticed is: (1) those austerity
measures were greeted by loud cheers by the same people who still think that
way today; (2) the Krugman and Baker types predicted that it would make things
worse; (3) the UK has gone back into recession.

~~~
protomyth
Interesting, I find Krugman to be more ideological than reasoned, but I that
could be from working on government stuff in the 90s. I would recommend
reading about spending changes in 1946, it is quite an interesting era to
compare to 1920, 1929, and today.

~~~
gruseom
Do you have the same opinion about Baker? I find him to be less political than
Krugman (which doesn't necessarily mean less ideological). His posts are
almost always based on data and seem to make a pretty strong case. Plus he
called the housing bubble really early (2002 or so), again just by looking at
data.

Probably the most interesting point that Baker makes (makes ad nauseum, in
fact) is that the US's fiscal dilemma is almost entirely a matter of health
care costs.

~~~
protomyth
I've only read a little bit of Baker from his stuff on housing, and I tend to
agree with him. He does a decent job of actually backing up his point without
the slight-of-hand graphs Krugman uses. I am not fond of his headline writings
to attract attention. His criticism of the regulators is detailed and backed
up well.

I really, really wish we had gone another way on health care. Moving health
care away from company to individual purchases, health savings accounts,
government health disaster insurance (everything over a certain $ amount),
massive changes to IHS. Phasing in items and protecting from day one our most
vulnerable populations (fix the leaks instead of buying a new boat).

------
46Bit
I'd say this is spot on, but the question is that of whether paying off the
vast majority of the debt is even possible. In the USA especially, I've long
since concluded it simply cannot happen.

Look at how much bickering the Republicans and Democrats have over even
relatively minor issues. $10^9 is one 15-thousandth of the national debt and
there's fights about such amounts.

~~~
Avshalom
Well it's entirely possible for a sufficiently reckless administration to pay
off the debt tomorrow if they felt like it. The mint is allowed to make
arbitrary denomination currency, they could mint a X-trillion dollar coin and
pay off the debt with it if they felt like it.

But they'd probably get shot for doing it.

That said no, the article is not spot on. In any state where the government is
a significant part of the employment/economy the government cutting spending
is just going to keep money and jobs out of the economy.

------
mkramlich
It's possible both to be against the government debts & deficit spending, and
to be against an austerity agenda. For example, one way to reduce the deficit
and debt with minimal pain and austerity is to reduce discretionary military
spending (which, for the US, is arguably what most of it is, in the form of
overseas adventures and bases, and astronomically expensive weapon systems),
and to increase taxes and/or otherwise close loopholes & exemptions for the
rich and large corporations. Niall has argued for gutting and privatizing
social safety net programs, and for abolishing income tax, inheritance taxes
and gift taxes, and replacing them with a national sales tax. Any objective
economist will tell you that over time that will lead to a society where there
is an even larger plutocratic aristocracy -- which, coupled with "one dollar,
one vote" mechanisms (like the Citizens United decision) that have been
getting stronger in the US recently -- would further distort democracy away
from the best interests of the young or poor working class and the 99%, and
toward the best interests of the wealthiest 1%.

~~~
ars
> reduce discretionary military spending

Make sure to think about what happens next after you do that. The money spent
on military spending is huge part of the economy. Stop that and you'll have
massive layoffs.

If this stuff was so simple it would be solved already.

------
twelvechairs
Is it just me, or does he not actually make a case for austerity here? He
makes a case for the government balancing its books, but there are other ways
(such as higher taxes and defaults) which are hardly touched on here.

I've seen Niall Ferguson's TV series (the ascent of money etc.) which are
quite good, but this article seems dangerously ideological to me.

------
Clotho
Why should anyone welcome a system - be it austerity or extend and pretend
where they or their children pay to line the pockets of the 1%?

I understand that the BBC is the voice of the state, but OP, how could you
consider anything other than the Iceland solution to be the correct course?

~~~
earnubs
I don't really know enough about the subject to agree or disagree, I just
thought the points the author made were interesting.

However, to try and answer your question, I don't think that it can be as
simple as taking one country's solution and applying it to another, it seems
to be that economics at this scale is maybe close to the complexity of weather
systems, and therefore each situation is unique.

------
Joakal
Austerity is a great tool to starve the beast [1].

I think the three biggest issues are some spending, taxes and regulation
that's spiralling out of control. However, RARELY do authoritative spending is
cut, leading to broken fallacy issues [2].

Secondly, taxes kept being cut so money has to be found somewhere. What better
way to take advantage of those without much of a political voice? Youth,
disabled, unemployment, etc. Those services are being cut. While some taxes
are randomly raised on others, leading to schizophrenic implementations (A tax
on corn because it causes fat, but wait, it has a subsidy? I heard).

Thirdly, the parties have socially authoritative and fiscally libertarian
attitudes. This means cracking down on general freedom in life
(conservative/traditional) while giving more freedom to those with money.

It's almost as if the parties in power are forming a feudal-style police
state. Literally.

What I found that's very sad is that most of the politicians in Western
countries benefited from cheap or FREE university education and are now
demanding the youth to accept those cuts. Fucking hypocrites.

[1] <https://en.wikipedia.org/wiki/Starve_the_beast>

[2] <https://en.wikipedia.org/wiki/Parable_of_the_broken_window>

------
kupongtillikea
If a company/startup/government could loan money at a very low rate to invest
in profitable and/or useful projects for which there is known demand and they
refused, what would you say?

------
dsr_
Austerity doesn't seem to be solving the problem. Stimulus sort of helped, but
was applied at the top. Trickle-down is known to not work very well...

Major governments will either find something that works, or we are likely to
see repeats of the French Revolution translated to modern times and idioms.

~~~
easp
I wouldn't call the stimulus a top-down approach, and I thin it's greatest
"failing" was that there wasn't enough of it, first because no one really
appreciated how bad things were, and then because one party decided to put
party before country...

------
jellicle
For perspective: the author of this piece is a right-wing ideologue who has
called for eliminating Social Security, Medicare and Medicaid and all income
taxes on the rich.

Not sure what this piece has to do with Hacker News either.

~~~
earnubs
Hi, from the HN Guidelines:

"On-Topic: Anything that good hackers would find interesting. That includes
more than hacking and startups. If you had to reduce it to a sentence, the
answer might be: anything that gratifies one's intellectual curiosity."

Also, your comment doesn't engage with any of the issues of the article.

------
joejohnson
>>If young Americans knew what was good for them, they would all be in the Tea
Party.

Hahaha.

