The Student Room Group

Is Austerity Self-Defeating?

At a time of record low interest rates, is austerity not a self-defeating policy? The neo-liberal model of economic growth has proven its failures time and time again, and is simply not realistic. At a time when borrowing will never be cheaper, would it not be sensible for the government to use all that extra money to invest in our public services like the NHS, instead of this monstrous policy of extreme belt-tightening which does little to improve the economy and simply hits consumer confidence? Would it not be advisable to grow our way out of our predicament, rather than simply try and cut our way out, like a man trying to dig himself out of a hole?
The tories believe in a smaller state. So not if you think of it like that. It's a means to an end.

Of course spending to grow the economy is the same. The country gets more and more in debt and no matter how big the economy grows it will still have debt that's proportional.

Overall it really does just come down to what ideology people think is right - state investment or private. Both have proven they aren't anywhere near a perfect answer to the problems we face.
Reply 2
Except of course for the obvious point that reducing the deficit has ended up a very slow process with very gradual and low-level cuts to public spending. You simply cannot call continuing to borrow at a gradually lowering level some sort of extreme fiscal policy. Indeed, tackling the debt will be very much a matter of growth rather than spending cuts: but to do that, the deficit has to be at a far more sustainable level than it was immediately after the economic downturn.
Original post by L i b
Except of course for the obvious point that reducing the deficit has ended up a very slow process with very gradual and low-level cuts to public spending.


Are you sh1tting me? My local primary school will be £400,000 down next year. That is over £1k per pupil. My local council has had to make savings of well over £100 million in the last few years. £100 million!!! That is thousands of people who are no longer providing public services.

What the government doesn't seem to have grasp is that cutting services isn't cheap. Paying people off in redundancy is hugely expensive which is why the we are not seeing the deficit shrink by that much and since councils are duty bound to provide some services, they either have to outsource those services at additional costs, or eat into their reserves which have now been depleted.
The tories are incapable and inept. Austerity is failed policy and its a reminder of how poor growth has been since zionists crashed the world economy
The reduction of the state is justified ideologically, irrespective of the economic consequences. The failing of austerity is the Conservatives have not cut quickly or deep enough so we still have far too many individuals dependent on the taxes of those of us who work hard fora living.
Reply 6
Original post by L i b
Except of course for the obvious point that reducing the deficit has ended up a very slow process with very gradual and low-level cuts to public spending. You simply cannot call continuing to borrow at a gradually lowering level some sort of extreme fiscal policy.


So is it even worth it given the grievous hardship it has caused?

Original post by L i b
Indeed, tackling the debt will be very much a matter of growth rather than spending cuts: but to do that, the deficit has to be at a far more sustainable level than it was immediately after the economic downturn.


You could argue that the size of the deficit is ultimately irrelevant - that if we had been spending rather than cutting back as we are doing now, thereby boosting consumer confidence and purchasing power, we would have grown the economy to such an extent that the deficit would take care of itself. Having a large deficit is ultimately only a massive problem if the economy isn't growing fast enough to make up for it.
Reply 7
Original post by Whiskey&Freedom
The reduction of the state is justified ideologically, irrespective of the economic consequences. The failing of austerity is the Conservatives have not cut quickly or deep enough so we still have far too many individuals dependent on the taxes of those of us who work hard fora living.


Thanks for admitting that these cuts are based on a blind adherence to dogma and ideology rather than empirical evidence and scientific studies.
Original post by Juan Perón
Thanks for admitting that these cuts are based on a blind adherence to dogma and ideology rather than empirical evidence and scientific studies.


Empirical evidence and scientific studies are produced in academic environments which are left wing, therefore are always biased. Just look at the great climate change hoax.
Reply 9
Original post by Whiskey&Freedom
Empirical evidence and scientific studies are produced in academic environments which are left wing, therefore are always biased. Just look at the great climate change hoax.


Troll confirmed.
Since he talked about scientific evidence and statistics, I hope the OP can give us statistics showing that a bigger state is better for an economy.

It is so easy for people like him to ponder about a 'best' solution so let's give him a chance to prove that he is correct.
Reply 11
Original post by Juan Perón
At a time of record low interest rates, is austerity not a self-defeating policy? The neo-liberal model of economic growth has proven its failures time and time again, and is simply not realistic. At a time when borrowing will never be cheaper, would it not be sensible for the government to use all that extra money to invest in our public services like the NHS, instead of this monstrous policy of extreme belt-tightening which does little to improve the economy and simply hits consumer confidence? Would it not be advisable to grow our way out of our predicament, rather than simply try and cut our way out, like a man trying to dig himself out of a hole?


The debt will still need repaying or refinancing down the line.
Original post by Quady
The debt will still need repaying or refinancing down the line.


Debt which can easily be repaid thanks to the economic growth that will be created from a fiscal stimulus policy.
Reply 13
Original post by Juan Perón
Debt which can easily be repaid thanks to the economic growth that will be created from a fiscal stimulus policy.


Cool so borrow £3tn+ a year.

Everyone a winner.

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