I was not using using gdp. "GNP strips out the part of GDP that includes factor flows to foreigners, and in particular profit repatriation to foreigners. In other words, GNP gives a measure of the value of goods and services produced in a country that is earned by domestic institutions and individuals". For Ireland, GNP gives a much better picture of domestic production.
No it doesn't. GNP includes what residents produce. That means, if an Irish person creates a job overseas, spend most of his money in UK, then it is included. It is not GDP with profits to foreigners removed.
GDP is much better, because it is what a country produce. There is no debate. If you believe we should use GNP instead of GDP, then convince the governments first.
My point is that is a extremely generalized statement with lots of assumptions.
That Ireland, UK, US and Greece was irresponsible. Are you kidding me? Are you suggesting that they were responsible?
See now, this is where your basic understanding of economics breaks down. Investment doesn't happen without cause, there has to be the primary driver for investment to happen in a market like Europe or the US, and that is demand for whatever you are producing....it is not a "build it and they will come" situation. Businesses right now are NOT investing because.....DEMAND has dropped greatly. This is why this recovery (or any severe recovery) is not going to happen without the govt making up the difference in DEMAND, either by purchases or stimulus directly to consumers or by increased hiring of the jobless. Confidence fairies are not the solution.
That is just a liberal talking point. Why do so many liberals think we haven't heard arguments mentioned a million times before. Maybe I disagree. Have you ever thought about that?
It is true that demand is dropping, but it wasn't dropping in 2010. If demand is the only problem, then you should expect a strong rebound. But there is no recovery. Also, have you noticed that a failure in Greece can bring down the growth of the whole EU. If only demand due to austerity is the problem, then Greece should be a minor actor.
I know you don't like it, because you want to think spending solve all problems, but confidence is part of the problem. What Europe needs is investment, and investment is driven by confidence. Sure, lack of demand reduces confidence, but so do irresponsible actions and lying from the EU. From what we know, we can not trust the growth estimate of the EU at all. We know they have no clue what they are doing and anything can happen. We know there might be a backlash. And we know it will be very difficult to overcome the regulations. Its not a climate people want to invest in, and if companies don't invest, then jobs are not created and people become poorer, hence lower demand.
No, it is not since austerity effects lower income earners to a much greater amount than marginal increases in taxation. As I said, Iceland has kept up social supports, so tax effects on lower income earners is offset.
How is that even relevant? Do you think the economy is driven by poor people? The economy is driven by the working middle class, and they experienced tax increases and spending cuts in Iceland. Iceland proves you wrong, Austrerity can work.
Austerity is not being used in Iceland like Ireland, we already went over this. I have not studied Latvia.
So you are pretty much saying that you are favour of austerity only if it is in form of tax increases?
Also, you probably should study Latvia, because they prove you wrong. Austerity can work. And it seems like fast austerity works much better than slow austerity. That may seem weird for you, but it is because you ignore confidence as a factor. But if you don't then you will see that long austerity, especially combined with lying, means companies are not willing to invest. They never know when you have hit bottom, they have no confidence in the economy. With a fast drop, then after the crisis the economy and the people can recover.
Also, a fast drop gives the economy the opportunity to rebalance.
Many countries on their own currencies have had long periods of high debt to gdp ratios, they survive....but that is not the point, the time to work on cutting your debt is when you can afford to, not when it causes the greatest damage.
But what if that time never comes. Japan tried your tactic, look at what happened to them.
No, you need to solve your problems during the crisis. Let the economy rebalance first. Don't inflate it with more and more debt. Don't let it die either though. So what do we mean by rebalance. Lets take Greece. Greece wages in the Euro is way too high. Having no austerity means the wages will stay high, Greece will remain uncompetitive. Inflating yourself out of your problems, and stating that you are going to solve them afterwards is not going to work.
Again, just look at Japan. They prove you wrong. They went from a debt level of 30% to 220% now. After the crisis in 1990, they decided to spend themselves out of their problems. It just lead to zombie firms who only survived on government stimulus. It also lead to large deficits they were never able to reduce.
Straw, I wasn't talking about "never-ending" anything.
What if the economy never recovers. You keep spending, but growth seems to never be there? The day you will stop spending, the economy will collapse again, and you will be in a much worse situation than if you did nothing.
Well that is funny because the rejection of Sarkozy is widely seen as a rejection of austerity.
That might be in France. I am not French, and I vote for what is best for right wing ideology. Hollande, and her devastating policies (e.g. 75% tax rate) for France is the best for right wing ideology.