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Paul Krugman’s right: Austerity kills

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TheDemSocialist

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Government debt isn’t like personal debt. If one of us misses a mortgage payment, we risk damaging our credit rating, and possibly even losing our home. So if we owe money, we need to find a way to pay it back as soon as possible. But government debt does not need to be paid back overnight—in fact, it can be dangerous to do so. In an economy where we’re all in the same boat, one person’s spending is another person’s income. So when the government cuts spending, it reduces people’s income, leading to less business, more unemployment, and a vicious spiral of slowing down the economy.The central goal in debt management is to keep debts sustainable. To be sustainable, government debt repayments should be kept lower than the rate of revenue from economic growth. If that happens, we will grow out of debt, as economic stimulus leads to more income and more tax revenues to reduce the debt. But budget cuts have slowed down growth—and this is precisely why, in spite of all the UK’s radical cuts, the latest data show that British debt continues to rise.
As public health researchers, we were shocked and concerned at the illogic of the austerity advocates, and the hard data on its human and economic costs. We realized the impact of the Great Recession went far beyond people losing their homes and jobs. It was a full-scale assault on people’s health. At the heart of the argument was the question of what it means to be a society, and what the appropriate role of government is in protecting people.
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Read more @: Paul Krugman’s right: Austerity kills - Salon.com

Austerity sucks. Austerity is not the way to go in tough economic times. Hell its not the way to go ever, and as you can see in Europe its not working and is failing.
 
TheDemSocialist said:
Read more @: Paul Krugman’s right: Austerity kills - Salon.com

Austerity sucks. Austerity is not the way to go in tough economic times. Hell its not the way to go ever, and as you can see in Europe its not working and is failing. [/FONT][/COLOR]
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Austerity is an illusive concept on this forum. I have read everything from cutting government as a percent of GDP to cutting the growth of government as austere. Taking the current budget baseline and then claiming anything less is austerity and anything more is stimulas is oversimplification. There seems to be little discussion about how big we want our government. Do we want a government that accounts for more than 40% of GDP like most of Europe or do we want to try and keep government closer to the 20% it has average over the last half century.

Why is Austerity so harmful to our society? Krugman notes that, "when the government cuts spending, it reduces people’s income, leading to less business, more unemployment, and a vicious spiral of slowing down the economy." The larger the public sector the greater this harm is as outlined by Krugman. When the public sector accounts for 40% or 50% of total GDP then austerity will be felt throughout the economy. A smaller government would cause a smaller ripple. The larger we allow our government to become the more painful it is to contain its growth and minimize the pain caused when we attempt to reduce public spending. This is largely why I remain optimistic about the United States outlook. Our government remains relatively smaller then our European counterparts as a percent of GDP. I hope it stays that way.
 
JWhite said:
Austerity is an illusive concept on this forum. I have read everything from cutting government as a percent of GDP to cutting the growth of government as austere. Taking the current budget baseline and then claiming anything less is austerity and anything more is stimulas is oversimplification. There seems to be little discussion about how big we want our government. Do we want a government that accounts for more than 40% of GDP like most of Europe or do we want to try and keep government closer to the 20% it has average over the last half century.

Why is Austerity so harmful to our society? Krugman notes that, "when the government cuts spending, it reduces people’s income, leading to less business, more unemployment, and a vicious spiral of slowing down the economy." The larger the public sector the greater this harm is as outlined by Krugman. When the public sector accounts for 40% or 50% of total GDP then austerity will be felt throughout the economy. A smaller government would cause a smaller ripple. The larger we allow our government to become the more painful it is to contain its growth and minimize the pain caused when we attempt to reduce public spending. This is largely why I remain optimistic about the United States outlook. Our government remains relatively smaller then our European counterparts as a percent of GDP. I hope it stays that way.
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Arguing over the size of government with zero context is incredibly stupid until you put it like that.

Still, it's not a big government that I mind, as long as the government provides truly public services that benefit everyone, and I think there's some services that are more accessible to the public when offered by a public service. So sure, I'd like a "big" government, and I'd also like them to not cut budgets when it's most economically irresponsible to do so. The ability to do so lies in having monetary sovereignty.
 
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TheDemSocialist said:
Austerity sucks. Austerity is not the way to go in tough economic times. Hell its not the way to go ever, and as you can see in Europe its not working and is failing.
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If the democratic socialist really wanted to achieve their goal of reducing the role of money in politics they would stop advocating policies that give politicians more control of the money. It is just upping the ante and the payoff for those who have the most money to spend. :2wave:
 
Fisher said:
If the democratic socialist really wanted to achieve their goal of reducing the role of money in politics
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That's a goal of most conservatives, too. It's the largest dichotomy between what everyone wants and what our representatives aren't fighting for.
 
gavinfielder said:
That's a goal of most conservatives, too. It's the largest dichotomy between what everyone wants and what our representatives aren't fighting for.
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So most conservatives want to expand the government's control of the economy like democratic socialists advocate for? Yeah, not really. At least having a smaller government that is more hands off holds greater promise of taking the money out of politics, than giving the government even more control of our national economy and, to a great extent, our personal economies.
 
Fisher said:
So most conservatives want to expand the government's control of the economy like democratic socialists advocate for? Yeah, not really. At least having a smaller government that is more hands off holds greater promise of taking the money out of politics, than giving the government even more control of our national economy and, to a great extent, our personal economies.
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Actually Conservatives do want bigger government.. just run by their financial backers in the private sector instead of the people.

And that is what it all boils down too. Power.

Since the right wing has been loosing power and a power base for the last 100 years, they have switched to putting as much of that power into the private sector, of which they control a large part. On the flip-side, the whole socialist movement was created to move power away from the few to the many.

Now I am not saying that right wing economic ideology is bad and left wing is good.. there has to be a balance and that balance is being constantly tested with and in some societies it is totally out of wack... namely the US and Cuba (polar opposites).

In Europe, our problems has not come from overspending in most cases, but a balance issue with the private sector who got to greedy and cocky and needed to be bailed out.... namely the banking and financial sectors. Sure there are certain countries that did overspend... countries that had large deficits before the crisis it... Greece and the UK, (and the US) and a realignment of the balance is needed in all those countries... but it is not always "overspending" that is the problem. Take Greece... here it was a lack of tax income due to a piss poor tax system. In the UK it was a combination of overspending by labour and of course a bailout of the private banks. Coupled together with falling tax income during the crisis, and you have a problem.

Now to fix this, the right wing mantra has been to cut cut cut spending and taxes, but you have to look at what they want to cut to realize that it is political rather than economic theory. Time and time again the cuts hit the rights "boogieman" areas of the economy like healthcare, education and welfare, where as military and corporate handouts often get the opposite treatment with increases in spending. This is especially evident on the US right wings wishes.

What the right also often ignores because of the false ideology of government does not give anything to the economy.. is that cutting spending massively in government means that the economy will shrink. Again it comes down to ideology rather than sound economic thinking. If you want to cut in government, then you need the private sector or exports to pick up the slack. Problem is that during a crisis as we are in now, the private sector wont pick up the slack and that ultimately means that the economy shrinks. This is happening in places like Greece, Spain, Italy, France and so on. That is why austerity is wrong at the present time.

And in the end, much of the biggest spending increases in most countries actually happened under right wing governments...and since we have been living under the falsehood of trickle down economics for the last 30 years, then our economies are totally out of wack since trickle down theories do not work and never have.
 
gavinfielder said:
Arguing over the size of government with zero context is incredibly stupid until you put it like that.

Still, it's not a big government that I mind, as long as the government provides truly public services that benefit everyone, and I think there's some services that are more accessible to the public when offered by a public service. So sure, I'd like a "big" government, and I'd also like them to not cut budgets when it's most economically irresponsible to do so. The ability to do so lies in having monetary sovereignty.
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A government that provides truly basic services does not account for 40% of GDP. Just my opinion, but more importantly, this is where the debate should be. If we simply accept what our government does as the norm and then base austerity or other budget decisions on this baseline then we will never end up with the government we want. I acknowledge that some people think that the government should do more. As long as they also acknowledge that there is a price that comes with it. Nothing is free. It is easy to argue that we should not cut budgets in recessions but the better argument is that we shouldn't have had such a large budget to begin with during the boom. Then less people would be so dependent during the bust.

I think Europe illustrates this point well as their public expenditure is so large that the recession has threatened to undermine their economies completely. They can no longer afford their large public sector as private sector revenue has been hammered and yet any cut to the public sector just amplifies the pain felt by their citizens. Seems to me that their public sector, private sector mix was not sustainable. Austerity is simply a symptom of a larger problem.
 
JWhite said:
A government that provides truly basic services does not account for 40% of GDP. Just my opinion, but more importantly, this is where the debate should be. If we simply accept what our government does as the norm and then base austerity or other budget decisions on this baseline then we will never end up with the government we want. I acknowledge that some people think that the government should do more. As long as they also acknowledge that there is a price that comes with it. Nothing is free. It is easy to argue that we should not cut budgets in recessions but the better argument is that we shouldn't have had such a large budget to begin with during the boom. Then less people would be so dependent during the bust.

I think Europe illustrates this point well as their public expenditure is so large that the recession has threatened to undermine their economies completely. They can no longer afford their large public sector as private sector revenue has been hammered and yet any cut to the public sector just amplifies the pain felt by their citizens. Seems to me that their public sector, private sector mix was not sustainable. Austerity is simply a symptom of a larger problem.
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Yeah, that's all true for nations that aren't monetarily sovereign, or don't have a floating currency. Luckily, we don't fit under either of those categories.
 
PeteEU said:
What the right also often ignores because of the false ideology of government does not give anything to the economy.. is that cutting spending massively in government means that the economy will shrink. Again it comes down to ideology rather than sound economic thinking. If you want to cut in government, then you need the private sector or exports to pick up the slack. Problem is that during a crisis as we are in now, the private sector wont pick up the slack and that ultimately means that the economy shrinks. This is happening in places like Greece, Spain, Italy, France and so on. That is why austerity is wrong at the present time.
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Does picking your nose give anything to the economy? Maybe in your dreams? Maybe in your dreams millions and millions of people are willing to pay you exorbitant amounts of money to sit at home and pick your nose? That's a crazy dream. I don't think anybody is willing to pay you to pick your nose. Therefore, it's doubtful that picking your nose gives anything to the economy.

Does the government do anything more valuable than picking its nose? Perhaps? If you want to argue that the government engages in valuable activity...then great! But sound economic thinking means understanding that if you truly value some activity...then you should be willing to pay for it. In fact, it's your willingness to pay/sacrifice/spend/give up/exchange/trade that reveals exactly how much you value any activity.

Honestly I have no idea how much the government gives to the economy. In other words, I have no idea exactly how much you truly value the government's activities. But I know how we could easily find out. If taxpayers could choose where their taxes go, then you would have the opportunity to put your own money where your mouth is. This would reveal exactly which government activities you valued most. Allowing taxpayers to shop for themselves in the public sector would reveal exactly how much society values the government's activities. As a result, we would all know exactly how much the government gives to the economy.

So here's the question. Do you really want to know exactly how much the government gives to the economy? I think it would behoove us to find out. Without this information...how can we possibly know whether austerity is desirable?
 
gavinfielder said:
Arguing over the size of government with zero context is incredibly stupid until you put it like that.

Still, it's not a big government that I mind, as long as the government provides truly public services that benefit everyone, and I think there's some services that are more accessible to the public when offered by a public service. So sure, I'd like a "big" government, and I'd also like them to not cut budgets when it's most economically irresponsible to do so. The ability to do so lies in having monetary sovereignty.
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Ya, I think that the concept of a "big government" varies from person to person.

Mention "we should have had a bigger spendulous bill" and some people imagine paying people to dig holes and fill them back up. Others imagine more rules and regulations. Others envision the gov employing people who would otherwise be getting welfare and unemployment benefits and putting them to work doing valuable things, like educating our children, building that southern border fence, filling in that huge pothole in front of my house.
 
Xerographica said:
Does picking your nose give anything to the economy? Maybe in your dreams? Maybe in your dreams millions and millions of people are willing to pay you exorbitant amounts of money to sit at home and pick your nose? That's a crazy dream. I don't think anybody is willing to pay you to pick your nose. Therefore, it's doubtful that picking your nose gives anything to the economy.

Does the government do anything more valuable than picking its nose? Perhaps? If you want to argue that the government engages in valuable activity...then great! But sound economic thinking means understanding that if you truly value some activity...then you should be willing to pay for it. In fact, it's your willingness to pay/sacrifice/spend/give up/exchange/trade that reveals exactly how much you value any activity.

Honestly I have no idea how much the government gives to the economy. In other words, I have no idea exactly how much you truly value the government's activities. But I know how we could easily find out. If taxpayers could choose where their taxes go, then you would have the opportunity to put your own money where your mouth is. This would reveal exactly which government activities you valued most. Allowing taxpayers to shop for themselves in the public sector would reveal exactly how much society values the government's activities. As a result, we would all know exactly how much the government gives to the economy.

So here's the question. Do you really want to know exactly how much the government gives to the economy? I think it would behoove us to find out. Without this information...how can we possibly know whether austerity is desirable?
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Are you asking "how much actual wealth does our government create"? That's a great question, I want to know that also.

Obviously, some portions of gov spending create nothing, or maybe even destroy wealth. Other portions create a great deal of direct wealth, and also even more indirect wealth (by creating infrastructure which allows our private sector to thrive). What the net total is I have no clue, but I suspect that it creates more than it destroys, if we include the value to our society of being fairly safe from other individuals and from foreign nations who would like to do us harm.

Even when the gov taxes, it generally isn't destroying aggregate wealth, as every penny that it taxes away from the private sector reenters the private sector almost immediately - just in a different place. It's just an issue as to whether or not that new place is as productive (or more) as the old place that they money was.
 
Xerographica said:
Does picking your nose give anything to the economy? Maybe in your dreams? Maybe in your dreams millions and millions of people are willing to pay you exorbitant amounts of money to sit at home and pick your nose? That's a crazy dream. I don't think anybody is willing to pay you to pick your nose. Therefore, it's doubtful that picking your nose gives anything to the economy.

Does the government do anything more valuable than picking its nose? Perhaps? If you want to argue that the government engages in valuable activity...then great! But sound economic thinking means understanding that if you truly value some activity...then you should be willing to pay for it. In fact, it's your willingness to pay/sacrifice/spend/give up/exchange/trade that reveals exactly how much you value any activity.

Honestly I have no idea how much the government gives to the economy. In other words, I have no idea exactly how much you truly value the government's activities. But I know how we could easily find out. If taxpayers could choose where their taxes go, then you would have the opportunity to put your own money where your mouth is. This would reveal exactly which government activities you valued most. Allowing taxpayers to shop for themselves in the public sector would reveal exactly how much society values the government's activities. As a result, we would all know exactly how much the government gives to the economy.

So here's the question. Do you really want to know exactly how much the government gives to the economy? I think it would behoove us to find out. Without this information...how can we possibly know whether austerity is desirable?
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Yeah none of that would change the numbers from what they are now whatever they be. Taxing nobody and spending nothing for a year would be probably the better measure from an analytical standpoint, just not a practical one.
 
gavinfielder said:
Yeah, that's all true for nations that aren't monetarily sovereign, or don't have a floating currency. Luckily, we don't fit under either of those categories.
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Monetary Soveriegnty doesn't effect the consequences of austerity nearly as much as the size of the public pie in relation to the private sector. We are simply duscussing the effects of cutting public spending not the ability of a country to print money. Clearly, the ability to print money can stave off the requirement to cut the public budget but it is not a guarantee that it won't be cut. That is a political decision.
 
JWhite said:
Monetary Soveriegnty doesn't effect the consequences of austerity nearly as much as the size of the public pie in relation to the private sector. We are simply duscussing the effects of cutting public spending not the ability of a country to print money. Clearly, the ability to print money can stave off the requirement to cut the public budget but it is not a guarantee that it won't be cut. That is a political decision.
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Ok then.

Austerity takes a bad story and makes it worse. We don't need to cut budgets during times of crisis, but we do anyway, because that's what we do. #politics
 
gavinfielder said:
Ok then.

Austerity takes a bad story and makes it worse. We don't need to cut budgets during times of crisis, but we do anyway, because that's what we do. #politics
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I am not disagreeing but simply pointing out that austerity is a non-issue if we have a small government.
 
imagep said:
Are you asking "how much actual wealth does our government create"? That's a great question, I want to know that also.
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Rather than "wealth"...I prefer the word "value". "Wealth" implies money while "value" is broader. How much value do you create for your friends and family? Clearly, the more value you create for them...the more time they are willing to spend with you. The more value they create for you...the more time you are willing to spend with them.

How much value does our government create? Clearly, the more value the government creates for its citizens...the more money its citizens will be willing to spend on the government.

imagep said:
Obviously, some portions of gov spending create nothing, or maybe even destroy wealth. Other portions create a great deal of direct wealth, and also even more indirect wealth (by creating infrastructure which allows our private sector to thrive). What the net total is I have no clue, but I suspect that it creates more than it destroys, if we include the value to our society of being fairly safe from other individuals and from foreign nations who would like to do us harm.
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A second point of broad consensus among critics stresses that publicness in consumption must not necessarily mean that all persons value a good’s utility equally, Mendez (1999), for example, illustrates this point by examining peace as a PG. Some policy-makers might opt for increased defense spending in order to safeguard peace. However, this decision could siphon off scarce resources from programmes in the areas of health and education. Other policy-makers might object to such a consequence and prefer to foster peace through just the opposite measure -- improved health and education for all. Especially under conditions of extreme disparity and inequity, the first strategy could indeed provoke even more conflict and unrest, securing national borders by unsettling people’s lives. - Inge Kaul, Public Goods: Taking the Concept to the 21st Century
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imagep said:
Even when the gov taxes, it generally isn't destroying aggregate wealth, as every penny that it taxes away from the private sector reenters the private sector almost immediately - just in a different place. It's just an issue as to whether or not that new place is as productive (or more) as the old place that they money was.
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The money was at a crossroads. Rather than go down the intended private road...it was diverted down the public road. Clearly there is a value disparity between the two destinations. The private destination reflects your actual circumstances while the public destination does not. How could it? Who knows your circumstances better than you do? Surely not a congressperson who you've never met. As a result, value is destroyed. Not a little value...but a lot of value. Immense value. When society's limited resources are not used in ways that reflect society's actual circumstances...value is destroyed.

Go out and spend your time/money on something that does not match your preferences. You won't do it. Why not? Because you know that doing so would destroy value. This is why markets create more value than command economies (aka non sequitur economies).
 
Fisher said:
Yeah none of that would change the numbers from what they are now whatever they be. Taxing nobody and spending nothing for a year would be probably the better measure from an analytical standpoint, just not a practical one.
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Eh? Obviously there would be an allocation disparity between the current system and a pragmatarian system. If there wasn't a disparity...then socialism would be a completely viable concept. Omniscient government planners would be able to reach inside your head and pull out exactly how much you value each and every good. But government planners are not omniscient...they do not know how much you value a jar of peanut butter. Therefore, there is a disparity between the two allocations. The current allocation does not reflect people's true values...while the pragmatarian allocation would.
 
JWhite said:
A government that provides truly basic services does not account for 40% of GDP. Just my opinion, but more importantly, this is where the debate should be. If we simply accept what our government does as the norm and then base austerity or other budget decisions on this baseline then we will never end up with the government we want. I acknowledge that some people think that the government should do more. As long as they also acknowledge that there is a price that comes with it. Nothing is free. It is easy to argue that we should not cut budgets in recessions but the better argument is that we shouldn't have had such a large budget to begin with during the boom. Then less people would be so dependent during the bust.

I think Europe illustrates this point well as their public expenditure is so large that the recession has threatened to undermine their economies completely. They can no longer afford their large public sector as private sector revenue has been hammered and yet any cut to the public sector just amplifies the pain felt by their citizens. Seems to me that their public sector, private sector mix was not sustainable. Austerity is simply a symptom of a larger problem.
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Frankly, since our government is democratic and our economic system isn't, I think the bigger role it plays in the economy the better. It's self-determination of our economic life. Democracy isn't for adolescents. If people want a fair, participatory economy, then government must play a robust role in it (aside from the need to do so merely due to the fact that modern economies require regulation to prevent externalities, if not collapse). Regrettably, the tea party types tend to vote for the interests of the rich and oligarchs, stupidly. But again, democracy isn't for the weak-kneed: we have to take responsibility for voting cretins like Issa and Boehner and Bush into office, and their economic failed policies are the responsibility of all Americans for not being mature enough to reject their stupidity.
 
Xerographica said:
Rather than "wealth"...I prefer the word "value". "Wealth" implies money while "value" is broader. How much value do you create for your friends and family? Clearly, the more value you create for them...the more time they are willing to spend with you. The more value they create for you...the more time you are willing to spend with them.

How much value does our government create? Clearly, the more value the government creates for its citizens...the more money its citizens will be willing to spend on the government.







The money was at a crossroads. Rather than go down the intended private road...it was diverted down the public road. Clearly there is a value disparity between the two destinations. The private destination reflects your actual circumstances while the public destination does not. How could it? Who knows your circumstances better than you do? Surely not a congressperson who you've never met. As a result, value is destroyed. Not a little value...but a lot of value. Immense value. When society's limited resources are not used in ways that reflect society's actual circumstances...value is destroyed.

Go out and spend your time/money on something that does not match your preferences. You won't do it. Why not? Because you know that doing so would destroy value. This is why markets create more value than command economies (aka non sequitur economies).
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A while back there was a thread on this site that asked "What is wealth?". The definition that I liked the best was something to the effect of "anything which reduces discomfort".

You are assuming that most people define wealth in terms of dollar value, and you are probably correct about "most people". "Most people" are also idiots who have never really given any thought to anything beyond what they are going to have for supper.

I have to suggest that if we had two different economies, and if they were identical in terms of the amount of currency and material stuff, but in once economy there was a wide availability of personal services and the citizens of that economy took advantage of these services, that the economy with more services would be a wealthier economy to live in.

Who would you consider wealthier, someone who has a net worth of a million dollars but has to clean his own house and cut his own hair, or someone who has a net worth of a million dollars but who is able to afford a housekeeper and a haircut? Obviously if the latter person hates cleaning house but values a clean house, and enjoys getting his hair cut from time to time, the latter person is wealthier as he has less discomfort in life.
 
imagep said:
A while back there was a thread on this site that asked "What is wealth?". The definition that I liked the best was something to the effect of "anything which reduces discomfort".
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One thing that bugs me about this forum is that it italicizes quotes. For example...

We call contentment or satisfaction that state of a human being which does not and cannot result in any action. Acting man is eager to substitute a more satisfactory state of affairs for a less satisfactory. His mind imagines conditions which suit him better, and his action aims at bringing about this desired state. The incentive that impels a man to act is always some uneasiness. A man perfectly content with the state of his affairs would have no incentive to change things. He would have neither wishes nor desires; he would be perfectly happy. He would not act; he would simply live free from care. - Ludwig von Mises
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This is the only forum I participate on that does this. It bugs me because it makes the quote harder to read and sometimes quotes already have some words in italics. But if this forum stopped italicizing quotes...the word "wealthier" would be a bit awkward to describe the improvement in my circumstances. "I'm wealthier because this forum no longer italicizes quotes." It sounds like I somehow made a lot of money as a result of the change. Instead it would be more effective to say..."I'm better off because this forum no longer italicizes quotes"

[Update] - Posted in feedback/suggestions... ...

imagep said:
You are assuming that most people define wealth in terms of dollar value, and you are probably correct about "most people". "Most people" are also idiots who have never really given any thought to anything beyond what they are going to have for supper.
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Are most people taxpayers?

imagep said:
I have to suggest that if we had two different economies, and if they were identical in terms of the amount of currency and material stuff, but in once economy there was a wide availability of personal services and the citizens of that economy took advantage of these services, that the economy with more services would be a wealthier economy to live in.
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Here are your options...

Option A: The government uses a lot of society's limited resources to provide a service that few people truly value. For example...the US invades Canada. Or it uses barely any of society's limited resources to provide a service that many people truly value. For example...public healthcare.
Option B: The market uses an amount of society's limited resources that reflects exactly how much people value any given service. For example...hair cuts. The quantity of barbers in every neighborhood fairly accurately reflects the demand for hair cuts. Our benefit would be diminished if there were too many, or not enough, barbers.

Option A is socialism (non sequitur economics) while Option B is capitalism. With socialism...supply is not determined by demand. Is that a problem? Of course it is. Rather than use society's limited resources to maximize our benefit, the government wastes those resources on things that truly are not a priority for society.

imagep said:
Who would you consider wealthier, someone who has a net worth of a million dollars but has to clean his own house and cut his own hair, or someone who has a net worth of a million dollars but who is able to afford a housekeeper and a haircut? Obviously if the latter person hates cleaning house but values a clean house, and enjoys getting his hair cut from time to time, the latter person is wealthier as he has less discomfort in life.
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You want to be better off...and so do I. Capitalism works because I will continue to pay you if I'm better off as a result of the hair cut you gave me. If our exchange ceases to be mutually beneficial...if I don't pay you enough or you start giving me lousy haircuts...then we can easily exit from the relationship.

If the government provides lousy public healthcare, then it's not ridiculously easy to just give my tax dollars to public education instead. Is it a problem if there is no ease of exit? Of course, if you have a monopoly on haircuts...then why bother with providing a quality haircut?
 
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Instead of creating money out of thin air for undeserving beneficiaries where it fuels more bubbles, cut taxes and let people keep the money, or really wealth, that they have created.

And let them keep more of their money by letting prices fall. Stop the printing, subsidies, and trade barriers. What about business profits you ask? It's about time we become uber-competitive in terms of tax and regulatory policy.

Then all this fretting over cutting spending wouldn't matter so much. The sooner we return to a sustainable economy the better, and that means we cut spending as well as free up the economy to lessen the burden.
 
I wonder how many countries have experimented in the tax raising/spending cut "austerity" and how many have just been cutting the budget, and the success of each scenario.
 
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