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You are here: Home / Analysis / Austerity definition of economic irresponsiblity

Austerity definition of economic irresponsiblity

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If there is one lesson to be learned after the mess of the 2007 economic crisis and market crash is that economic austerity policies is the definition of economic insanity.

Self inflicted wound

Under the guise of a potential debt crisis of its own making. Economic policy makers across the major economies like the European Union, United Kingdom and United States implemented a number of austerity packaged with a clear aim of getting debt under control. Instead the weak growth as result of government cut which were primarily ideologically driven made the economy worse off.

By doing so the turn of events showed that all these economies basically kicked its own economy when its down and ensured the recovery took longer, if ever materializes. Aside from the economic cost of these policies it creates social damage across society. See the effective breakdown of the Greek civil society.

Austerity meaning does not mean what you think it means

Definition of Austerity is the government implements a package of economic policies with the explicit aim of reducing government spending. We have no issue with government cutting spending if the current level is wasteful. However it should be recognized that government cutting spending at the same time where the private sector is also reducing spending provides a double hit across the economy.

Austerity measures effectively becomes a pro cyclical policy where it makes a weak economy even worse. It increases unemployment at the worst possible moment where growth is required.

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