austerity

Spectacular failure of NC's austerity experiment attracts more national attention

And it ain't pretty.

If there were anything to the theory that cutting unemployment benefits encourages job search and somehow translates into higher employment even in a slump, harsh policies should work better at the state than at the national level. But there is no sign at all that North Carolina’s harshness has done anything except make the lives of the unemployed even more miserable.

I'm sure Mike Walden, Art Pope's pocket economist, will look at the data and feed McCrory's comeback fantasies with a bunch of happy talk. Real people know better.

Austerity For Thee But Not For Me, Inc.

Austerity. Just what you wanted for Christmas. From McClatchy:

CHARLOTTE, N.C. — A group co-founded by Charlottean Erskine Bowles brings its campaign to reduce the federal debt to North Carolina next week, making the state the latest front in the battle to avert the “fiscal cliff.”

Two former governors – Democrat Jim Hunt and Republican Jim Holshouser – will launch Fix the Debt’s N.C. chapter at a news conference Tuesday in Raleigh.

[...]

Fix the Debt was founded by Bowles and Alan Simpson, a former U.S. senator from Wyoming. They chaired the so-called Bowles-Simpson commission that two years ago proposed a package of spending cuts and tax hikes to begin reducing the federal debt, now estimated at over $16 trillion.

Prosperity, not Austerity

"...the economy is running on the fumes of the investments we made in public goods decades ago." -- Prosperity Economics: Building an Economy for All

As the Mongol army swept across the Asian steppes in the 13th century, psychological warfare was one of their most powerful weapons. Looking much like their victims, Mongol spies easily infiltrated towns in the army's path to foment panic. "The Mongols are coming! The Mongols are coming! They kill the women and rape the men! The Mongols are coming!" Just as the Mongols hoped, many towns surrendered without a fight.

Come to think of it, the relentless psychological messaging from Washington sounds a lot like that. Austerity. Fiscal cliff. Debt crisis. America could go the way of Greece. America is broke. Grand Bargain. Surrender Dorothy.

The toilet bowl effect

Back when I ran a business, I marveled at the short-sightedness of competitors who used cost-cutting as their primary lever to drive profitability. In the face of threats or risk, their first move was to slash costs, usually by laying off people. It is a loser's strategy.

That's not to say a business should never cut costs. Sometimes you simply have to in order to survive. But once you begin down that road, once you adopt an austerity mindset, the game is over. In the long haul, you cannot cut your way to sustainable profitability.

Austerity in the land of plenty

The most searched word on miriam-webster.com for the year 2010 - austerity. You do not have to look very far to see that folks are resigned to a future not as bright as the past. It's the new normal - shrinking expectations, stagnating income, long-term unemployment, a smaller government, more work in our later years, a growing permanent underclass, and a select few that are super wealthy paying a smaller percent of taxes than most workers. All this can be ignored because enough of us are doing well even in these conditions. We are a nation of plenty. The national debt soars, while state and local governments are forced to cut budgets in ways that reinforce the expectation. The consequences of the national debt are not as immediate. The increasing percentage of the federal budget that goes to pay down the debt will prompt calls for even more austerity on a national scale. Our future as a people joined together is at stake. Do not forget we are a nation of plenty.

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