How does austerity work

The Something Awful Forums > Discussion > Debate & Discussion > How does austerity work

demonicon: Mar 29, 2011

ponfed posted:

Stop it. As other people said, Germany hasn't had any significant austerity at all.

Plus their economy is export base and the reason these southern countries took on so many debts is because Germany (and others) boosted the economy , so that people in the eurozone could buy German exports getting the cash back in their economy. Result: Germany has a huge trade surplus when the crisis hit.

Greece in particular has major problems of corruption and clientelism, but it was all good with Germany when the times where good. (Plus it helped Germany by lowering the value of the Euro and giving them an edge export wise.)

So stop it with the "Southern retards, lazy swarthy bums" vs the "industrious Germans and their protestant work ethic".

If everyone behaves like Germany, nobody imports anything, and Germany can't export. My debts are your assets and vice-vers. My expenditures are your income and vice-versa.

Edit:
(In the same vein, see Veskit's response above and below).

Within the Eu Germany isn't a net exporter. The trade is pretty balanced.

# ¿ Jul 16, 2015 04:39

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# ¿ May 8, 2024 11:55

demonicon: Mar 29, 2011

Abner Cadaver II posted:

But outside of the EU they are, so...???

So that means that Germany actually exports most of its stuff to the US and Asia. That means that the argument, that within the Eu some nations have to import everything germany produces is bullshit.

# ¿ Jul 16, 2015 04:53

demonicon: Mar 29, 2011

Veskit posted:

Ohhh please.

PIIGS is like what, 11% of the economy and they have barely any ability to import so yeah the trade will be balanced because Germany lost a huge market to export to within the EU. They can't afford to import anymore.

So if Germany lost a huge market, why did its exports actually increase?

# ¿ Jul 16, 2015 05:00

demonicon: Mar 29, 2011

Veskit posted:

Okay so Germany increased its exports to markets outside the Eu? So you agree that eu countries don't have to be net importers for Germany to be a net exporter?

# ¿ Jul 16, 2015 05:44

demonicon: Mar 29, 2011

ToxicSlurpee posted:

1 - Government spending is inherently wasteful and free market solutions are always more efficient. Reducing it reduces waste.
2 - Reducing taxes puts more money in your pocket because you're paying less.
3 - Reducing taxes puts more money in the pockets of the rich and they'll spend that creating businesses.
4 - More freedom. Removing the government from more things means more freedom. Smaller government = freedom.
5 - Laffer Curve. Reducing taxes actually increases government revenue.

Yes the arguments in favor of austerity are stupid.

Since this thread already mentioned Germany a few times, It might be worth mentioning that this is a very American / UK view. The german word for austerity actually doesn't mean all these things and no german, when hearing the word "Sparsamkeit" would connect it with reducing taxes and government spending. Austerity for Germans just means being financially responsible with your budget.

In fact most Germans would say that "Sparsamkeit" is a good thing while at the same time being in favor of a strong government and high taxes to pay for government and social services. Most would also be in favor of strong worker rights and active participation of employees in company politics and decisions while still being in favor of "austerity" overall. For a german, these things aren't mutually exclusive because the nation is able to stay competitive economically even with a strong government and thus is able to afford all this.

In the case of Greece most Germans just don't see an alternative to "balancing your budget" because if you don't have money coming in from outside sources anymore and no money saved up, what really is the alternative to balance the budget?

# ¿ Jul 16, 2015 05:54

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