The Magic Word

"Austerity" is the word most thrown around by conservative politicians all over the world. They seem to be under the impression that by making life harder for those people already struggling to make ends meet, the economy will miraculously heal itself. The thought process behind this illogic, is that by cutting spending on programs like social security and medicare, as well as reducing funding for non essential programs like public education, fire and police departments and public hospitals, the government will have more money to use toward paying down the country's overall debt.
   While this makes sense, in that our credit payments will be reduced, it causes more economic problems by stifling consumer spending and preventing the economy from growing. Austerity measures that are being called for by the GOP in this country  are very much like those that went into effect in Britain after the last election there put the conservative party in control.
   As a result of these measures, the British economy, which has been struggling to recover from a double dip recession received another blow when the latest economic numbers were released.  The austerity measures that were supposed to buoy the economy, are instead, leading it to the edge of a triple dip recession. According to Reuters in London, the gross domestic product of Britain fell 0.3 percent in the fourth quarter. This is even worse than analysts were projecting. Britain's economy is now 3.3 percent smaller than it was in Q1 of 2008, which is a worse performance than most other major economies in the world. The latest numbers show output in the service sector, which comprises more than 3/4 of the GDP, was flat while industrial  output was 1.8% lower. This means that businesses aren't hiring, consumers aren't spending, and the country isn't manufacturing goods.
   Cutting government spending on public services means that jobs are cut and people are unemployed. This means that people have less money to buy goods and services which causes businesses to cut labor, causing more unemployment and even less spending which perpetuates the cycle. The British example of use of " Austerity measures", should send all governments running in the opposite direction. The truth is that people have to have money to spend in order to keep an economy from collapsing. Governments should be creating jobs to put people back to work, not reducing jobs and causing unemployment. Government investment in infrastructure projects is the best and surest way to put people back to work and grow the economy. Middle income people spend money, and this spending supports the economy. Government spending has to expand, not contract during a recession. Work projects started by President Roosevelt during the Great Depression helped jump start the economy and move us toward a period of prosperity. Roosevelt exhibited the kind of forward thinking that we need in our government if we are going to avoid the kind of economic catastrophe facing Britain right now. "Austerity" is not the way to battle a recession and is not the Magic Word.