Austerity economics, American style

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Austerity economics, American style
Austerity economics, American style
Paul Krugman, New York Times

It didn’t generate much attention at the time, but Mitt Romney delivered a speech in Ohio recently in which he condemned the Recovery Act. Among other things, the Republican said it did too much to protect public-sector jobs, “which is probably the sector that should have been shrinking.”

This isn’t just some throwaway line. Romney believes the U.S. economy would be stronger if there were fewer government jobs, not more. In other words, as far as the GOP’s would-be president is concerned, fewer teachers, fewer firefighters, and fewer police officers would mean more economic growth. Public-sector layoffs = lower unemployment.

Remember, this guy considers economics to be his strong suit.

For those inclined to take a more sensible look at recent events, the reality paints a very different picture. The truth is, the public sector has been the part of the economy that has been shrinking. Paul Krugman posted this chart last week:

Krugman explained, “That spike early on is Census hiring; once that was past, the Obama years shaped up as an era of huge cuts in public employment compared with previous experience. If public employment had grown the way it did under Bush, we’d have 1.3 million more government workers, and probably an unemployment rate of 7 percent or less.”

If you take all the job losses that have happened under President Obama, and all the job gains over the same period, the economy is still in the hole – but nearly 100% of the losses are from the loss of government jobs.

This may seem counterintuitive, and the right simply chooses not to even consider the facts on the merits, but the principal difference between our fragile recovery and a more robust recovery is the domestic austerity measures that have been in place – and served as a counter-stimulus for three years.

The facts are plain.

Since the beginning of his term, state and local governments have shed 611,000 employees — including 196,000 educators — according to government statistics. Unlike the recovery in private-sector employment that Obama and his reelection campaign often cite — with businesses adding 4 million jobs since hiring hit its low point in 2010 — the jobs crisis at the state and local level has continued throughout his term. […]

“The job losses at state and local governments is the most serious weight on the job market,” said Mark Zandi, chief economist at Moody’s Analytics, who has advised both parties.

The developments that hurt the most are the same developments Republicans think are the best. The difference is, in 2013, they want to ensure an austerity-only approach, intensifying the policies that have held us back so far.

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Austerity economics, American style

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