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vox kadavergehorsamkeit
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About that Austerity in Spain: There Isn't Any - Mish - Global Economic Analysis

This would have been a far better article had Mish not displayed his ignorance of Keynesian economics at the end. Keynes advocated for a 3 pronged approach to battling depressions. The first part was to reduce interest rates, for it was felt that doing so would stimulate business investment. The second part was to have government increase its spending, primarily through infrastructure projects. And the third part was to have tax rates lowered.

Yes, interest rates have been cut to the bone. But as Spain does not control its own monetary policy (set by the ECB) they have no ability to create an easy money policy, which would enable them to put the unemployed to work. As for what is still within Spain's power, tax policy runs completely in the opposite direction of Keynes' final plank.

It is disturbing to see how Mish and virtually every other contributor make this same mistake. i suspect not one of them has ever read Keynes. If they had, they would not routinely mistake the Voodoo economics practised today for what Keynes advocated.

Do not get me wrong. My purpose is not to defend Keynes, for his work relies upon several false assumptions. Firstly, he wrongly assumed that government is honest, which it clearly is not. And he also wrongly assumed that government is capable of understanding the economy.

While a rose by any other name is still a rose, economic policies that incorporate but a portion of Keynes' theory are not Keynesian economics. Continuing to besmirch Keynes' reputation as a result of policies carried out by others that he would have disagreed with is intellectually fraudulent.

Commented 3928 days ago

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Beginning of the headline :I have long contended there is little austerity in Spain and there certainly isn't much reform either. I now have some numbers to back that up. Via Mish-modified Google-translation from El Economista, please consider personnel costs rise despite full state salary freeze. Despite the 5% snip in public salaries in 2010, the subsequent wage freeze in 2011, the elimination of extra pay in 2012 and the current freeze in Administration salaries, the overall payroll became cheaper by a only 2.1% yea... Read More

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