‘Austerity’ versus ‘Growth’

[Geee]

National Review:

Who would not prefer “growth” to “austerity”? That is the false dichotomy that insolvent Western governments, both here and abroad, are now constructing. After all, everyone prefers growing things to starving them. Yet in truth, there is no such clear-cut choice.

In other words, “austerity” is a lie. For all the talk of terrible hardship and suffering, most of insolvent southern Europe still enjoys entitlements undreamed of by prior generations. When the French lamented that they were being squeezed to death by postponing retirement, they meant to age 62 rather than 60 — a futile reform soon to be rescinded by new French president François Hollande.

In the case of the United States, “austerity” does not mean significant cuts in food stamps, reductions in unemployment eligibility, or a raised retirement age, but simply not adding new entitlements to those that recently were vastly expanded. It is a trademark of human nature that people resent any reduction of a benefit, or even only a moderate expansion of it, far more than not having it offered at all. Talk today of cutting the Medicare Prescription Drug Benefit or No Child Left Behind, and hysteria follows — without recognition that neither program even existed before the presidency of the unpopular George W. Bush.

But there is an even worse fraud in the new notion of “austerity”: It now commonly refers only to the level of government spending versus revenue, not to fundamental changes in the nature of regulated and closed economies. “Austerity” — the pruning back of government support — is supposed to lead to all sorts of social tensions and civic unrest. By contrast, “growth” — even more government spending — restores calm. But if labor markets are highly regulated and inflexible, if the tax structure is byzantine and punishes entrepreneurs while promoting the black market and cheating, and if government regulations crush new businesses, then the problem goes well beyond a question of expanding or cutting government benefits.