Joseph E. Stiglitz, a Nobel
laureate in economics and University Professor at Columbia University, was
Chairman of President Bill Clinton’s Council of Economic Advisers and served as
Senior Vice President and Chief Economist of the World Bank. […]
https://www.project-syndicate.org/commentary/joseph-e--stiglitz-wonders-why-eu-leaders-are-nursing-a-dead-theory
[…]
Austerity has failed. But its
defenders are willing to claim victory on the basis of the weakest possible
evidence: the economy is no longer collapsing, so austerity must be working!
But if that is the benchmark, we could say that jumping off a cliff is the best
way to get down from a mountain; after all, the descent has been stopped.
But every downturn comes to an
end. Success should not be measured by the fact that recovery eventually
occurs, but by how quickly it takes hold and how extensive the damage caused by
the slump.
Viewed in these terms,
austerity has been an utter and unmitigated disaster, which has become
increasingly apparent as European Union economies once again face stagnation,
if not a triple-dip recession, with unemployment persisting at record highs and per capita real (inflation-adjusted) GDP in many countries
remaining below pre-recession levels. In even the best-performing economies,
such as Germany, growth since the 2008 crisis has been so slow that, in any
other circumstance, it would be rated as dismal.
The most afflicted countries
are in a depression. There is no other word to describe an economy like that of
Spain or Greece, where nearly one in four people – and more than 50% of young
people – cannot find work. To say that the medicine is working because the
unemployment rate has decreased by a couple of percentage points, or because
one can see a glimmer of meager growth, is akin to a medieval barber saying
that a bloodletting is working, because the patient has not died yet.
Extrapolating Europe’s modest
growth from 1980 onwards, my calculations show that output in the eurozone
today is more than 15% below where it would have been had the 2008 financial
crisis not occurred, implying a loss of some $1.6 trillion this year alone, and
a cumulative loss of more than $6.5 trillion.
Even more disturbing, the gap is
widening, not closing (as one would expect following a downturn, when growth is
typically faster than normal as the economy makes up lost ground).
Simply put, the long recession
is lowering Europe’s potential growth. Young people who should be accumulating
skills are not. There is overwhelming evidence that they face the prospect of
significantly lower lifetime income than if they had come of age in a period of
full employment.
Meanwhile, Germany is forcing
other countries to follow policies that are weakening their economies – and
their democracies. When citizens repeatedly vote for a change of policy – and
few policies matter more to citizens than those that affect their standard of
living – but are told that these matters are determined elsewhere or that they
have no choice, both democracy and faith in the European project suffer.
[…]
Read more at
http://www.project-syndicate.org/commentary/joseph-e--stiglitz-wonders-why-eu-leaders-are-nursing-a-dead-theory#bMxeCfxW86QceqG2.99
