May 30, 2012 at 2:03 pm
Based on work I did for this post from yesterday (see especially the figure) and some writing on Europe, I was struck by a seemingly salient difference between our politics and that of Europe right now: the electorate of Europe is waking up to the serious problems caused by austerity measures. The electorate of the US is not.
In Europe, you’ve got national and local elections reflecting frustration with austerity. Yet here in the US, it’s a fair bet that most people are wholly unaware that we’ve been moving pretty aggressively in that direction as well. Here I document recent declining deficit numbers, along with folks losing UI benefits.
And then there’s the MarketWatch (MW) dustup discussed in the first link above. Rex Nutting from MarketWatch posts a few easily available data points showing how slowly government outlays have been growing and conservatives throw a fit because it goes against their key talking points: a) the President is an out-of-control spender, and b) there’s nothing wrong with America that spending cuts can’t solve.
(As noted in yesterday’s post, there are those who object to the MW analysis—but even when they make their own adjustments, they get the same qualitative answer—Obama’s a smaller spender than any president in decades.)
So, why is austerity beginning to be recognized as harmful in Europe but not here? Off top of head:
First, why there?
–some of the economies are much worse there…Euro-area unemployment is closing in on 11%, Ireland: 14.5%; Greece and Spain: >20%. We’re still at 8.1%.
–the UK stands out as a fairly stark natural experiment: they were in recovery; they went austere; they’re back in recession. It’s not that simple, but it’s not a lot more complicated either.
–Hollande’s election was catalytic;
–this isn’t just a street protester thing—Nobel laureate economists and staid institutions like the IMF and the OECD are stressing the policy primacy of growth measures right now;
Why not here?
–people don’t know the actual spending record;
–people don’t do counterfactuals: we did the Recovery Act and the economy’s still slogging along. Ergo, growth measures don’t help. The fact that things would have been worse absent those measures is a political non-starter;
–less faith in gov’t’s ability to get anything right over here, fueled by lots of politicians who work hard to make this a self-fulfilling prophecy;
–deficit hawks outnumber Keynesians in America.
–as austerity-frustration is energizing new electoral fights over there, anti-gov’t, anti-spending Tea Party played that same role here, starting in earnest with the 2010 midterms.
I don’t have poll results to back this up, and I’ll look to see if they’re out there. But my impression is that when it comes to economic austerity measures, we don’t even know we have the problem.
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