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Default The REAL story of the austerity politics in Europe

July 7th, 2013, 13:01
Hello,

sorry, it's only in German language, but PLEASE do yourself a favour and use any better translation program to translate this text for you :

http://www.zeit.de/2013/27/staatsver…omplettansicht

It's the story of a number ( "90%") and a horrible mistake.

Alrik

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July 9th, 2013, 04:46
When great britain formed a union, what happened? Centralizing is bad bad news in general, but especially for people who are relatively poor to the rest of the people. They suddenly become super poor.

It's nothing to do with austerity per se, it's just an economic reality. When there are no borders then it's a race to a few people owning everything and everyone else being dirt poor.
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July 9th, 2013, 19:32
Tried to translate it with google, but the grammer was unreadable.

Care to make a synposis?

————————————————-

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July 9th, 2013, 19:38
Just search for 'Thomas Herndorn'

Story

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July 10th, 2013, 19:00
Thanks. Interesting read. I agree that the initial paper was fundamentally flawed. It's biggest problem is that it focuses primarily on a a one to one relationship between public debt and GDP, when in fact there are a lot of other things at work.

Take the example from the article about Canada 1946-1950. Just looking at debt and GDP growth would lead you to believe there is not a causal relationship between the two, but that ignores that the primary driver of the GDP growth was the end of WWII, thus freeing reasources (both labor and capital) for domestic use. We were no longer destroying trillons of dollars worth of assets year in and year out. That's probably the single biggest driver of that GDP expansion.

So what does that mean for today? Well, despite the amount spent on the War on Terror, we aren't wasting assets like that and we don't have anything like the 'baby boom' on the horizon.

When you have an expanding populace, you tend to have an expanding GDP, regardless of debt levels. Unfortunately for Europe, they don't have an expanding populace, but they do have high debt.

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July 10th, 2013, 20:07
As the article put it : "The number of 90 % left the academic circles". It went round. Among politicians, among the masses, among scientists themselves.

Politicians' decisions were based on that.

But : The correction of the study NEVER left the academic circles.

And, since all of the German austerity politics appears to be based entirely on this number of 90 %, Greece and other EU states are suffering now - and Germany never got the correction. And that's why German politicians still hold fast onto these "90 %".

“ Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius – and a lot of courage – to move in the opposite direction.“ (E.F.Schumacher, Economist, Source)
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July 11th, 2013, 06:13
Economics is about as soft as a science can get. The whole idea of trying to do a study over the course of 200 years strikes me as absurd right on it's face. Never mind the wars (as Blatantninja points out), never mind dropping the backing of cash with gold, never mind all the cultural shifts, never mind corruption… just lump it all together and hope it all averages out. From this you expect to find the ideal debt to GDP ratio!? Maybe if you think you have to keep the same ratio for several decades at a time but no government is that inflexible.

The real truth is that we have no frikkin' clue what it should be. We do know that if it's going up and showing no signs of going back down then you've got serious trouble in your future… sometime in your future. Well, probably - unless you've got enough military muscle to just say "forget about our debt and give us another billion or we'll destroy you." Or you discover a way to make cold fusion work and manage to keep it a national secret for a few decades. Or an asteroid hits the Earth and melts the crust. Or we get a single world government and everyone's debt is forgiven when we go to a single world currency. Or….
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