We are told that austerity in Europe has failed. The elections in France and Greece, for instance, are supposedly evidence of people's opposition to severe cuts in spending. However, the growing anti-austerity backlash against Europe ignores one fundamental point: If there is austerity in Europe, in most cases it hasn't taken the form of massive spending cuts.
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| Fiscal austerity in Europe doesn't mean large spending cuts. | |
| By Veronique de Régie. | |
| We are told that austerity in Europe has failed. | |
| The elections in France and Greece, for instance, are supposedly evidence of people's opposition to severe cuts in spending. | |
| However, the growing anti-austerity backlash against Europe ignores one fundamental point. | |
| If there is austerity in Europe, in most cases it hasn't taken the form of massive spending cuts. | |
| Following years of large spending expansion, Spain, the United Kingdom, France and Greece, countries widely cited for adopting austerity measures, haven't significantly reduced spending since austerity supposedly started in 2008. | |
| First, France and the UK have not cut spending. | |
| Second, when spending was actually reduced between 2009 and 2011 in Greece, Italy and Spain, the cuts were relatively small compared to the size of their bloated European budgets. | |
| When Italy reduced spending between 2009 and 2010, it also increased spending in the following year by an amount larger than the previous reduction. | |
| Most importantly, meaningful structural reforms were seldom implemented. | |
| Whenever cuts took place, they were always overwhelmed with large counterproductive tax increases. | |
| This so-called balanced approach, some spending cuts for large tax increases, has been proven to be a recipe for disaster by economists. | |
| It fails to stabilize the debt, and it is more likely to cause economic contractions. | |
| So here are some charts. | |
| As you can see from 2002 to 2011, there really haven't been any spending cuts. | |
| A little bit of flattening off during the economic recession that started in 2008, but not much. | |
| At all. | |
| And remember, these European budgets are vastly increased because you get spendthrift countries like Greece hooking into the credit rating and low interest rates available to more responsible countries like Germany. | |
| So these are already bloated budgets and they're not being cut. | |
| Let's look at the UK. Total government expenditures. | |
| Nominal versus real, as you can see. | |
| Escalating increases. | |
| Never ending. | |
| The chart below. | |
| This is the next one. | |
| This is Ireland spending in comparison with other selected EU zone countries. | |
| And it's really just returned back from a significant spike, but it is really not any kind of austerity. | |
| Just think of this As calories. | |
| If you are a 350-pound guy and you're being asked to reduce your calories back down to, say, 7000 from 7500, that's really not a starvation diet. | |
| Here we can see France, Greece, Italy, Spain and the UK. How are they doing? | |
| Well, it's mad. | |
| It's completely mad. | |
| And this is total government expenditures adjusted for inflation. | |
| It still continues to go up and up. | |
| So don't believe this austerity nonsense. | |
| It really is quite astounding. | |
| Now, if you'd like to get in touch with the author of this, Veronique de Régis, you can contact media at mercatus.org. | |
| She's great. | |
| This is Stefan Molyneux from Free Domain Radio. |