Fiscal austerity, the Great Recession and the rise of new dictatorships

Abstract

Austerity measures have been tested in developing countries for several decades under the pseudo name of 'structural adjustment programmes' following the recommendations and under the supervision of the World Bank (WB) and the International Monetary Fund (IMF). Evidence indicates that the economic and social consequences of these policies have been so disastrous that there is now more poverty and more inequality than a generation ago. The same scenario is being proposed as the alternative to what has hitherto been labeled a social-democratic economic system in industrialized nations. The economically dominant minority has largely succeeded in imposing its neoliberal agenda by convincing the general public, through various means, of the need for austerity. The paper challenges the erroneous theories on which austerity is based and proposes an alternative explanation to what is the 'best practice' in public finance. It argues that deficit spending by the government is an important policy tool that can be successfully used to guarantee full employment and create wealth and prosperity for the whole society.

Redistribution in the Age of Austerity: Evidence from Europe, 2006-13

“…Whatever reasons where given for the adoption of austerity measures in many European countries, their impact was regressive across the board. Surely, this will only embolden the critics of austerity who have long suspected that it really represented policy on behalf of the elites at the cost of workers (Bougrine, 2012;Peet, 2011;Zezza, 2012). In so far as inequality at the top provides an incentive for rent-seeking and other misbehavior, those incentives have been increased in the name of fiscal responsibility.…”

“…We do not want to suggest, however, that rising inequality is the price for the gains from growth or that Ireland could have only achieved those gains by submitting to harsh austerity. Our analysis does not allow us to establish that sort of causality, and most of the literature does not indicate that this proposition holds (Bougrine, 2012;Zezza, 2012;Dollar, Kleineberg, and Kraay, 2015). What we can show is another relevant example: Greece.…”

“…But a close examination of the case for a neoliberal policy agenda or the argument that rising inequality is not a concern quickly reveals problems. Whether one focuses on the implausible assumptions that Robert Solow (in Solow et al, 2014) points out in his response to Mankiw (Mankiw, 2013), the lack of empirical support (summarized by Bougrine, 2012;Peet, 2011), or missing macroeconomic consistency (see Zezza, 2012), neither austerity in the later 2000s nor the broader neoliberal policy agenda appear to perform well by their own defenders' criteria.…”

“…They are, however, consistent with the position that austerity measures redistribute income from the bottom to the top from workers to owners of assets. Bougrine (2012) and Peet (2011) argue that the turn towards austerity as a guiding principle for fiscal policy by governments of all political leanings is part of a general neoliberal policy regime defined by:…”

Austerity Policies: A Way to Escape from the Crisis?

“…Bu bağlamda mali kemer sıkma politikaları, orta ve düşük gelir grubundakilerin sağlık ve eğitim hizmetleri özelleştirildiğinde bu alanlara erişebilmek adına ortaya çıkacak ek maliyetleri üstlenmelerini sağlamak için bir araç olarak kullanılmaktadır. Artan işsizlik, düşen ücretler düşünüldüğünde orta ve düşük gelir grubundakilerin rasyonel tepkileri ödünç almaya yönelmek olmuştur ki; kemer sıkma politikalarının oluşumunun arkasında yer alan kesimin-sermaye sahipleri-beklentilerini karşılayacak şekilde davranmışlardır(Bougrine, 2012). , yatırımı, ihracatı destekleyerek ekonomik büyümeyi canlandırır(King vd., 2012).Son yıllarda gelişmiş ülkelerin içerisinden geçtiği süreç de aslında yıllar öncesinde gelişmekte olan ülkelerin IMF ve DB rehberliğinde izlediği yapısal uyum programları adı altında uyguladıkları kemer sıkma politikalarına benzer şekildedir.…”