Industrialized Cyclist Notepad


Stiglitz: Austerity Will Make Matters Worse

Pretty good little essay here from Joe Stiglitz.

[…]

Europe’s single-minded focus on austerity is a result of a misdiagnosis of its problems. Greece overspent, but Spain and Ireland had fiscal surpluses and low debt-to-GDP ratios before the crisis. Giving lectures about fiscal prudence is beside the point. Taking the lectures seriously – even adopting tight budget frameworks – can be counterproductive. Regardless of whether Europe’s problems are temporary or fundamental – the eurozone, for example, is far from an “optimal” currency area, and tax competition in a free-trade and free-migration area can erode a viable state – austerity will make matters worse.

[…]

http://www.project-syndicate.org/commentary/after-austerity

Just listening to the news you’d think Spain and Ireland were deeply in debt prior to the fraudtastic financial crisis, but no.


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