Joseph E. Stiglitz: "The recent debt deal is a move in the wrong direction"

More Stimulus for US, Less Austerity
by Joseph E. Stiglitz
August 8, 2011

THE Great Recession of 2008 has morphed into the North Atlantic Recession: it is mainly Europe and the US, not the major emerging markets, that have become mired in slow growth and high unemployment. And it is Europe and America that are marching, alone and together, to the denouement of a grand debacle. A busted bubble led to a massive Keynesian stimulus that averted a much deeper recession, but that also fuelled substantial budget deficits. The response - massive spending cuts - ensures that unacceptably high levels of unemployment will continue, possibly for years.

The European Union has finally committed itself to helping its financially distressed members. It had no choice: with financial turmoil threatening to spread from small countries like Greece and Ireland to large ones like Italy and Spain, the euro's very survival was in growing jeopardy. Europe's leaders recognised that distressed countries' debts would become unmanageable unless their economies could grow, and that growth could not be achieved without help.

But, even as Europe's leaders promised that help was on the way, they doubled down on the belief that non-crisis countries must cut spending. The resulting austerity will hinder Europe's growth, and thus that of its most distressed economies: after all, nothing would help Greece more than robust growth in its trading partners. And low growth will hurt tax revenues, undermining the proclaimed goal of fiscal consolidation.

The end of the stimulus itself is contractionary. And, with housing prices continuing to fall, GDP growth faltering, and unemployment remaining stubbornly high (one in six Americans who would like a full-time job still cannot get one), more stimulus, not austerity, is needed - for the sake of balancing the budget as well. The single most important driver of deficit growth is weak tax revenues, owing to poor economic performance; the single best remedy would be to put America back to work. The recent debt deal is a move in the wrong direction.

Read the full article at:

http://www.commondreams.org/view/2011/08/08-6

It's a couple hundred moves in the wrong direction.

it seems.

And for a long, long time to come. Yeah, that would be the smart solution, but our pack of low-grade, lobbyist-sucking morons in Washington, happily coddled by a media which needs to be ripped to shreds and sold into at least 100 companies, will never allow what is smart to happen, because it would take away from the rich overlords. Until Americans fix those facts, high unemployment, civil unrest, high rates of violent crime and social divisions are gonna be the order of the day.

Get used to it, or get out and organize people into huge marches, and make sure that they get noticed.

the wealthy are going to have to be told it's time to cough up the seed money necessary to do it. Since they will never do so voluntarily, they need to be taxed into doing the right thing.

Tax the shit out of the bastards -- and, hey, they're surely full of it.

Our productivity has supposedly risen while wages have remained stagnant. That difference should be taxed as profit. Is it? If not, why not?