imc indymedia

Los Angeles Indymedia : Activist News

white themeblack themered themetheme help
About Us Contact Us Subscribe Calendar Publish RSS
Features
latest news
best of news
syndication
commentary


KILLRADIO

VozMob

CopWatch LA

ABCF LA

A-Infos Radio

Indymedia On Air

Dope-X-Resistance-LA List

LAAMN List





IMC Network: www.indymedia.org africa: ambazonia canarias estrecho / madiaq kenya nigeria south africa canada: hamilton london, ontario maritimes montreal ontario ottawa quebec thunder bay vancouver victoria windsor winnipeg east asia: burma jakarta japan korea manila qc europe: abruzzo alacant andorra antwerpen armenia athens austria barcelona belarus belgium belgrade bristol brussels bulgaria calabria croatia cyprus emilia-romagna estrecho / madiaq euskal herria galiza germany grenoble hungary ireland istanbul italy la plana liege liguria lille linksunten lombardia london madrid malta marseille nantes napoli netherlands nice northern england norway oost-vlaanderen paris/Île-de-france patras piemonte poland portugal roma romania russia saint-petersburg scotland sverige switzerland thessaloniki torun toscana toulouse ukraine united kingdom valencia latin america: argentina bolivia chiapas chile chile sur cmi brasil colombia ecuador mexico peru puerto rico qollasuyu rosario santiago tijuana uruguay valparaiso venezuela venezuela oceania: adelaide aotearoa brisbane burma darwin jakarta manila melbourne perth qc sydney south asia: india mumbai united states: arizona arkansas asheville atlanta austin baltimore big muddy binghamton boston buffalo charlottesville chicago cleveland colorado columbus dc hawaii houston hudson mohawk kansas city la madison maine miami michigan milwaukee minneapolis/st. paul new hampshire new jersey new mexico new orleans north carolina north texas nyc oklahoma philadelphia pittsburgh portland richmond rochester rogue valley saint louis san diego san francisco san francisco bay area santa barbara santa cruz, ca sarasota seattle tampa bay tennessee urbana-champaign vermont western mass worcester west asia: armenia beirut israel palestine process: fbi/legal updates mailing lists process & imc docs tech volunteer projects: print radio satellite tv video regions: oceania united states topics: biotech
printable version - js reader version - email this article - view hidden posts - tags and related articles


View article without comments

Neoliberal Austerity Leads to Deeper Crisis

by Atila Kilic Monday, May. 22, 2017 at 6:14 AM
marc1seed@yahoo.com

A high state share in the economy, developed social states and readiness to intervene actively and anti-cyclically prevent falling into a depression. Trump's demonizing regulation, Medicaid, public schools, Head Start, Meals on Wheels, taxation and democracy must be resisted

NEOLIBERAL AUSTERITY DOCTRINE LEADS TO DEEPER CRISIS


By Atila Kilic


[This article published on 11/8/2013 is translated from the German on the Internet, http://blog.arbeit-wirtschaft.at.]


This is the fifth year after the outbreak of the financial crisis. With the collapse of the mammoth US bank Lehman Brothers in September 2008, the underrated weaknesses and dangers of unregulated financial markets came to light. Financial institutes worldwide were in dire straits. The crisis consequences for the real economy were misjudged. Loud voices warned a Great Depression like that of the 1930s threatened.


The banking crisis soon spilled over on the real economy. Businesses were alarmed and banks limited their awarding of credits. However, the horror scenarios of mass unemployment, social unrest and a destructive recession as in the 1930s did not occur in wide parts of the western world. This favorable course of the crisis can be referred back to the stabilizing function of the state that was hardly developed in the 1930s. Unlike that time, a broad consensus exists today on the positive effects of state interventions to stabilize the economic cycle – based on the discoveries from John Maynard Keynes' work "General Theory" (1936) and can finally be read in many economics textbooks like Bofinger (2011) or Zimmermann, Henke and Broer (2009).


A high state share in the economy, developed social states, and readiness to intervene actively and anti-cyclically [1] could prevent falling into a depression. The Institute for Economic Research (WIFO) (2011) emphasized unemployment-, health- and pension-insurance and other social transfers make essential contributions to the success of the so-called automatic stabilizers. The range of state revenue or expenditures opposite to the economic course is varied. In this way, they increase private income in crisis times and effectively stabilize the economic course through the demand-side.


Scandinavian social states like Sweden and Denmark are marked out in crisis conditions compared to southern European and Anglo-Saxon states. Social state benefits go far beyond protecting the socially weak. A high-quality array of public services like kindergartens, all-day schools, nursing homes and home help and services on the communal plane create optimal conditions for economic actors in both crisis- and non-crisis times.


BRIEF CHANGE OF HEART


Finally, the political-economic rethinking that strong demand interventions by the social state have positive effects on the whole economy in crisis times did not last long. Opponents of the social state model seized the chance of the rapidly growing state indebtedness – that was actually caused by enormous capital injections for banks – and accused the expensive social state for the predicament of many European countries. These warnings were accompanied by Reinhart and Rogoff (2010) who saw the reason for the trifling economic growth in high public indebtedness. The threats by rating agencies to downgrade the credit-ratings for government bonds (where gaining money through the financial markets became more expensive) are used to convert a multitude to austerity packages in the eurozone. The implicit assumption that the savings efforts in the public sector would stimulate the private sector to spend more so economic growth would increase was premature.


Several economists admitted the momentous errors of their analysis after the data applied by Reinhart and Rohoff (2010) was made available to the public. [2] The core statement of the two authors Reinhart and Rohoff (2010) – "a high state indebtedness was responsible for the trifling economic growth" – was declared null and void. According to Andrew Watt (2013), the real causality goes in the opposite direction. A trifling economic growth causes a high public indebtedness. In addition, Romer (2011) identified a negative GDP effect of public savings efforts. Higher taxes and lower state spending have a negative effect on total economic production.


Conversely, state spending in crisis times amounting to 1% of the GDP of a country have a positive effect in the short- and medium-terms on economic output far above 1% of the GDP, according to the International Monetary Fund (IMF) (2013), Blanchard and Leigh (2013) and Nakamura and Steinsson (2011). This positive multiplier effect of state spending outweighs the negative multiplier effects of tax increases stressed by conventional wisdom in the economic discussion. In this way, additional state spending in crisis times can be covered by tax hikes without straining the public debt situation and improves the economic outlook. Eggertsson and Krugman (2012) show that anti-cyclical economic policy in crisis times in financing through credits (and a simultaneous growth of state debts) is necessary to avert recessions and stabilize the economic situation.


Enemies of the social state like Agenda Austria insist the state must save more and withdraw from the economy despite the vast number of academic articles on the positive and stabilizing effects of state interventions in crisis times and the negative consequences of an early public austerity policy for market actors.


GREECE IS A GRAPHIC EXAMPLE


The crisis course in Greece (as in Spain, Portugal, Ireland and others) is an illustrative example of the possible consequences of premature savings in the public sector. Austerity in the public sector did not stimulate the economy as assumed but aggravated the already unstable economic reality. The unemployment rate rose within three years from 10% in 2010 to over 25% (and over 55% for persons under 25) (cf. Eurostat). Extensive savings in the social state and in public services like higher mass taxes reduce the available income of private households. Therefore consumer spending, production, and employment fall. At the same time, this leads to a decline in state revenues. Uncertainties spread in the whole population while social unrest in the form of demonstrations and riots has become the daily reality in Greece.


CONCLUSION


The social state impressively proves its important role in the continuing crisis. Alongside the automatic stabilizers, the welfare state ensures stable conditions in crisis times with economic packages that are effective for demand. During crises, the positive effects of anti-cyclical social- and economic policy predominate even when the public indebtedness is high. Nevertheless, the financial crisis has also shown there is still much to do in Austria. The total economic demand must be permanently strengthened particularly in crisis times. Household incomes and the total economic consumption will constantly increase through investments in public housing and development in the range of public services like all-day schools or nursing homes.


Reorganizing the tax structure would bring positive effects for long-term economic growth. Unlike property taxes, taxes on earned income have a much greater negative effect on economic development. Reorganizing the Austrian tax structure is essential since earned income in Austria is taxed more than the European average and property is hardly encumbered, according to the findings of the IMF (in the US, Warren Buffet's secretary pays more taxes than the billionaire!). The high taxation of earned income should be lessened to safeguard long-term economic growth. On the other hand, lowering expenditures does not seem necessary. Whoever wants a well-constructed social state with its stabilizing social and economic effects should be ready to finance this through taxes and fees.
NOTES
1. In this context, anti-cyclical means setting financial- and political-economic measures to counteract the economic course. So the state can stabilize the economy in downturns and curb the economy in times of economic boom. In this way, the economic fluctuations can be smoothed and severe crisis consequences like high unemployment can be prevented.

2. Jeremie Cohen-Setton (2013) offers a clear summary of the economic discussion on the errors in the analysis of Reinhart and Rogoff (2010) in the European blog Bruegel.
Report this post as:
Share on: Twitter, Facebook, Google+

add your comments


Punishing the Poor. The Neoliberal Government of Social Insecurity

by Loic Wacquant Wednesday, May. 24, 2017 at 6:43 AM
marc1seed@yahoo.com

“Punishing the Poor. The Neoliberal Government of Social Insecurity” by Loic Wacquant, 2009,
211 pages, a John Hope Franklin book

https://libcom.org/files/Lo%C3%AFc%20Wacquant%20-%20Punishing%20the%20Poor.pdf

Public goods and social capital are missing in some American ghettos so “public institutions act as negative social capital and ensure that ghetto-persons cannot escape their dependent and marginalized situation.”

Public goods and services are necessary so everyone feels included in the modern project and the poor do not only see the public authority as negative, violent and oppressive.

Head Start, Meals on Wheels, WIC food assistance, the National Institute for Health, Legal Aid and PBS should be strengthened and not cut to the bone. Public spirit does not come from nowhere.
Report this post as:
Share on: Twitter, Facebook, Google+

add your comments


Trump's Budget is Immoral

by Bernie Sanders Wednesday, May. 24, 2017 at 5:41 PM

https://www.commondreams.org/views/2017/05/24/trumps-budget-immoral
Report this post as:
Share on: Twitter, Facebook, Google+

add your comments


Local News

Segregation in the City of Angels: A 1939 Map of Housing Inequality in L.A. A15 7:44PM

Justice Dept. seeking info, IDs on 1.3M visitors to protest website DisruptJ20.org A15 1:04PM

San Francisco Rally Protests Hate Crimes in Charlottesville A14 5:38PM

New Google algorithm restricts access to left-wing, progressive web sites A02 1:52PM

Tracking Twenty Years of Stockton Killings by Law Enforcement A02 1:27PM

Garcetti Cronyism - Why and How to Ignore Your LA Dog License A01 5:05PM

Nation's Worst Meltdown Was In LA J31 4:54PM

As RV towing resumes in LA, officials say program won't 'target homeless' J31 1:15PM

Class War on the Waterfront: Longshore Workers Under Attack J21 10:18AM

Limits to Growth Published Forty Years Ago J18 5:15AM

KPFK's Indy Media on Air Now on Wednesdays J25 9:13AM

More Local News...

Other/Breaking News

Stand Against Reem's. Stand Against hate. Stand Against Violence N22 11:10AM

Anarchie ou barbarie N22 2:07AM

The Driving Force of Global Inequality N21 6:27AM

Jewish Voice for Peace's Shocking attack on Latina activist N20 10:50PM

Fbi's dangerous threats N20 11:28AM

Report Back on November 18th Counter Demonstration Against Anti-Muslim March N20 10:57AM

Report Back on November 18th Counter Demonstration Against Anti-Muslim March N19 7:12PM

Ni patrie, ni frontière, ni nation, ni région N19 7:17AM

Statement on the Trump Visit to the Philippines N18 7:45PM

Capitalisation de l'egogestion egogérée N18 5:30AM

Three reading samples on George Orwell's "1984" N17 3:55AM

Syllogomanie N17 12:28AM

The Shortwave Report 11/17/17 Listen Globally! N16 5:05PM

Paraphysique de la collaboration N15 10:11PM

October 2017 Honduras Coup Update N15 9:23PM

National US Gov as wellas EPA slow to act on Abandoned uranium Mines Cleanup in Southwest N15 10:50AM

OUR HOUSE Grief Support Center Hosts 9th Annual Comedy Fundraiser N14 10:47AM

Republicans against the Poor and the Sick N14 4:16AM

Paraphysique du conformisme N13 11:25PM

Global Warming / Climate Change has Become a New Religion - What's it all About? N13 11:20AM

Crétinisme et jobarderie psychophysiologiques N13 8:21AM

Crétinisme et jobarderie psychophysiologiques N12 10:08PM

"The Public Trust Doctrine," Wealth Inequality, and Iraq N11 12:08PM

Anthologie de la subversion carabinée N11 1:20AM

US Executions Violate The 14th, 8th, and 1st Amendments To The Constitution N10 10:51PM

BUSTED: Watch LAPD cops plant drugs in black suspect’s wallet – unaware body cams were on N10 5:32PM

FBI suppressed exculpatory evidence in Leonard Peltier's trial N09 5:16PM

The Shortwave Report 11/10/17 Listen Globally! N09 4:19PM

More Breaking News...
© 2000-2003 Los Angeles Independent Media Center. Unless otherwise stated by the author, all content is free for non-commercial reuse, reprint, and rebroadcast, on the net and elsewhere. Opinions are those of the contributors and are not necessarily endorsed by the Los Angeles Independent Media Center. Running sf-active v0.9.4 Disclaimer | Privacy