Tyler Cowen:
A new report shows that Hollande faces a tougher budget situation than had been expected (by whom? Not me.). Here is one bit:[Emphasis added]
“There will be tax increases; there will be spending cuts,” said the finance minister, Pierre Moscovici, last week. “But I reject any talk of austerity. We must avoid a budget policy that hurts economic activity.”And this:
But it is not clear how the government plans to go about that, since both spending cuts and higher taxes tend to depress already lackluster economic activity even further. Nicholas Spiro, who runs a sovereign risk consulting agency in London, said that the report by the auditors “throws the scale of the fiscal challenge facing Mr. Hollande into sharp relief.”
But thus far the Hollande government has not been specific about any spending cuts, only tax increases. It will not raise the value-added tax on consumption, but says it will repeal an increase in the tax instituted by Mr. Sarkozy. Nor has the government outlined any structural reforms to reduce unemployment, which remains at a record high in the euro zone.At least they are trying to get people away from using the misleading word “austerity.” But it is funny how they too are finding it necessary to engage in some form of fiscal consolidation.
see also
"Austerity" seems like one of those words that:
ReplyDelete1) names some specific things in the world, but also
2) implies that the writer approves or disapproves.
Such a word may bring more heat than light. Assuming that we hope to be enlightening, it should be possible to express both 1&2 above candidly, for instance: "X happened. I do not approve X."
But I admit that I am stumbling in the dark concerning how to present arguments.
I agree that it is a shorthand with the connotation of disapproval. I think that your 'X' example is a construction commonly used by critics of austerity. The goal is light, as you say; Cowen's readers would be well-served if he agreed.
ReplyDeleteI am not a reader of Tyler Cowen. I have not yet suspected that he was saying something novel and worthwhile to me, so I have not been motivated to disentangle his marginal way of saying things.
ReplyDeleteExtending my previous point, I guess that "austerity" could mean "balance the budget". But a writer who calls this situation "austerity" conveys disapproval whereas a writer who calls the same situation "balance the budget" conveys approval.
I can get confused by negations of negative terms. It's not immediately clear to me what "austerity denial" would mean.
Nonetheless I suppose that you would favor stimulus spending by the government, and that you are saying roughly that with this posting. Correct?
To your first bit, I agree wholeheartedly. I find your comment interesting especially because, from my admittedly distant perspective, his views are quite similar to yours. I find his approach entirely distasteful, however, in contrast to yours.
DeleteI'm not sure I'd describe 'balancing the budget' as having a positive connotation. To me, it's neutral. I think that long-run budget balancing is highly desirable, even definitionally necessary, per Stein's Law. I do, however, favor counter-cyclical fiscal policy, which requires short-run deficits and surpluses. 'Austerity' does, indeed, have a negative connotation. I find it interesting that no euphemism has emerged to endow the concept with a positive connotation. I suppose that 'balanced budget' serves that purpose when deployed with the appropriate blinders toward short- and long-run distinctions.
When I refer to 'austerity denial,' I specifically mean that pundits like Cowen are compelled to distract readers from the inalienable fact that government spending and tax rates have an impact on national income, in order to further their commitment to free-market fundamentalism.
As far as fiscal stimulus goes, I'd settle for a reversal of the previous 2-3 years of austerity. Simply reversing the cuts to education budgets would provide a tremendous stimulus, with demand-side and supply-side benefits.