Austerity: Does It Work?

This weekend, an economist with whom I speak regularly so he can enlighten me on a subject I find confounding opaque, said that he thought the U.S. economy would continue to improve provided the European economy did not tank. "It's a mess over there," he said ominously. Then, he said something prescient: "Austerity programs never work."

I say prescient because yesterday morning, on the front page of the Washington Post, I found an article entitled, "In Greece, austerity path cast into doubt."

Yes, a government should not let its public debt becaome as large as Greece let its public debt become. And, yes, the U.S. must address its long-term debt problem, and the sooner it takes its medicine, the less painful will be the changes when implemented. But, as my learned friend explained, there is not a single economy in the history of the world that these budget-cutters-at-all-costs can point to and say, "You see, austerity works." It doesn't. The GOP contenders will need to come up with a better plan to revive the economy than cutting government spending. And, when you look at a country like Brazil, which has a still-booming economy, and one in which the government has ensured that economic growth is broadly shared and income inequality has been lessened, you will see that there are alternatives to the Tea Party approach that Americans would do well to consider.