May 15, 2013
Steven Pearlstein is upset that the austerity pushers, like the Post’s editors, are looking rather foolish these days. After all, it seems they not only have problems with basic economic logic, they also have trouble with Excel spreadsheets. He notes the serious structural problems in Greece and some of the other crisis countries, then tells readers:
“Unfortunately, this is not how the anti-austerity crusaders talk about Greece or Italy or Portugal. They offer no reasonable alternative other than the rest of the world should line up to pour more money into a uncompetitive economies and profligate governments, under the theory that they can grow their way out of the hole they’ve dug. They can’t.”
Hmmm, I wish I knew some of the “anti-austerity crusaders” that Pearlstein is talking about. Folks I know have been talking about the need for adjustments in relative wages that can best be brought about by having wages in Germany and other surplus countries rise more rapidly so that the southern countries can regain competitiveness.
There are of course other problems in the crisis countries, in Greece most importantly the problem that people don’t like to pay taxes. This anti-austerity crusader has recommended a tax amnesty which would be coupled with serious penalties for people who don’t comply. (How do you spell “life in prison.”) My guess is that if millionaire and billionaire tax evaders got the impression that they would never get to see their families or money, they might be a bit more conscientious about adhering to the tax codes.
I have also suggested a vacant property tax to lower both residential and commercial rents, thereby raising real wages and providing a boost to business. I’d be happy to see many other reforms that would eliminate corruption that has developed over the years in these countries, as I suspect is the case with most anti-austerity crusaders. My argument, and I suspect that of my fellow crusaders, is that we have to keep our eyes on the ball.
These countries are suffering today from the fallout from collapsed asset bubbles, not their internal structural problems. The fault for these bubbles sits squarely with all the wise people at the ECB and EU who are now pushing austerity. Somehow they thought everything was fine in the years of the “Great Moderation” even though all the danger signs were flashing bright red.
Making the people in these countries suffer does not in any obvious way fix their structural problems. It just ruins lives. Yeah, me and my fellow crusaders don’t think that’s cute. Better to ruin the lives of the elites who caused this crisis.
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