The end of austerity
European voters revolt against failed policies
As weak as America’s economy is right now, it’s a pillar of strength compared to Europe’s, where two years of austerity measures have pushed many countries to the brink of depression. This week voters in France, Greece and even Germany revolted, telling their leaders that right now economic growth is more important than cutting government spending.
The lesson is obvious: Recovery from recession begins with getting the economy moving again, and that requires a solid measure of government spending. Yes, deficit spending is an ongoing problem, but it’s best solved when the economy is growing, not when it’s in the pits.
The Europeans tried austerity, and it didn’t work. The theory that cutting government spending would foster confidence in the private sector and encourage consumers and businesses to spend more turned out to be a fantasy. Instead, the spending cuts just made the recession worse.
Here in California, more than 126,000 government jobs have disappeared since the recession began. That’s a huge loss of personal income, and with it demand for goods and services (not to mention a loss of investment in education and other public services). And California is far from alone. Many states have similarly decimated their work forces.
The ideal solution would have been for the federal government, which can borrow money at extremely low rates, to come to the states’ aid far more than it did. But Republican congressional intransigence made that impossible.
The alternative in California would be to find other sources of revenue, but again Republicans in the Legislature have blocked every effort to do so. The only recourse for those who understand the importance of generating new revenues for investment has been the initiative process. That’s why there could be as many as three tax measures on the November ballot.