Simon Wren-Lewis · The Austerity Con · LRB 19 February 2015

This is an excellent essay from leading Oxford economist, Simon Wren-Lewis and published by LRB. Check it out!

via Simon Wren-Lewis · The Austerity Con · LRB 19 February 2015.

Let me give you a flavor:

It will be some time before economists settle on a number for the total cost of the austerity mistake, but a conservative estimate would be that, in total, resources worth around 5 per cent of GDP will have been lost for ever by delaying the recovery. That’s about £100 billion, or £1500 for each adult and child in the country.

The above costing applies to the UK, but the sums are similar for all the European countries that have been savaged by austerity, most notably Greece, Spain, Portugal, Italy, Ireland and Cyprus.

I would encourage you to read this full-length, easy-to-read, non-technical article. It provides a comprehensive history and analysis of ‘the austerity con’ that arose from the 2008 financial crisis. Critically, pivotal players, like the IMF, have changed positions several times. Most importantly the essay challenges UK Chancellor George Osborne and the conservative mainstream media.

Regular readers of this blog will be familiar with my political views – I’m basically a conservative, believing in small government and low taxes. However, it’s interesting that over the last four years, I’ve been passionately anti-austerity.

Where do you stand? Let me know your thoughts?

Opinion – White House warns Europe on Greek showdown – Ambrose Evans-Pritchard – Telegraph – John Gelmini

Dr Alf is correct, Germany as Angela Merkel has already said will try and negotiate a compromise. This will result in a deal and the Greeks, based on earlier behavior will perhaps default within a year or so and we will be back where we are now.

President Obama and his White House are always making pronouncements and frequently getting things wrong. Soon President Obama, who is a ‘lame-duck’ and ineffective President, will be gone from office and Europe will have to deal with his successor. We should listen politely to President Obama in this instance and then studiously ignore him until he has something useful to say.

Europe needs to reform and transform itself economically but I fear that Greece is not yet capable of effecting such reforms and as a potentially corrosive contagion, she needs to be told that it’s ‘sink or swim’ time for staying in the Euro and possibly the EU.

Whilst I am moved by the plight of Greek children going to school hungry (based on another of Dr Alf’s posts), I am not moved to the point where I want to see more money wasted on Greece as a whole, since there is a risk that she will still default.

John Gelmini