Sunday, August 18, 2013

Visions of sugar-plum austerity economics

As Paul Krugman has frequently noted - and mocked - advocates of austericide economics keep pointing to Latvia and Ireland as austerity success stories. In Ireland Is The Success Story Of The Future, And Always Will Be 08/16/2013, he notes dryly of Ireland's experience, "This is not exactly a policy triumph."

In a similar spirit, this post by Ronald Janssen Can Spain Achieve What Ireland And Latvia Did? Social Europe Journal 15.08.2013 writes:

Jobs destruction over this period [since 2007] has been similar, if not higher, in Latvia and Ireland compared to Greece, Spain or Portugal. ...

There is nothing in these pictures to suggest that [EU] Commissioner's [Olli] Rehn assertion that those economies which embraced the agenda of structural reform and wage devaluation have done really better in terms of jobs performance. What Latvia and Ireland 'managed to achieve' was to destroy around one fifth of jobs. Spain would do well to stay clear from the type of reform measures the Commission and the IMF are trying to sell to economies in distress. In the best case, the reforms suggested are irrelevant and do not make any difference. In the worst case, these reforms may even push the economy and job performance further down.
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