Bloomberg - US austerity eliminated 2.4 million jobs. It's nice that the lamestream media are starting to talk about this:
Bernanke, then the Fed’s chairman, said early last year that “with fiscal and monetary policy working in opposite directions, the recovery is weaker than it otherwise would be.”
The contractionary nature of the fiscal policy has been partially obscured because it’s an amalgam of government tax and spending actions at all levels -- federal, state and local -- rather than a single set of decisions.
Recent Obama administration comments about the fiscal policies of other major economies have also helped conceal the reality.
The administration has repeatedly criticized the big European nations, especially Germany, for running austerity programs of deep spending cuts and tax increases that the administration says slow their own growth and undermine the global recovery. Treasury Secretary Jacob Lew last fall urged Germany and others to “pursue more fiscal policies to boost demand.”
But figures from the Organization for Economic Cooperation and Development show that since the 2009 start of the recovery, the administration has allowed U.S. policy to tighten by more than twice as much on average as Germany, France, Italy and the U.K.
And this is where you get the tongue-in-cheek argument that, with real rates being negative, utterly every single capital investment project that the government can think of will have a positive payback: They could flatten the Appalachian mountains to reduce fuel costs in the economy FFS.
The problem is, you have to know how to do a Net Present Value calculation for capital investments: but that's something you only learn in the real world of engineering, not in the criminal underworld of politics. So the various levels of government in the US refuse to spend on positive-payback investments such as:
1. increasing human capital through increased spending on education;
2. increasing intellectual capital through increased spending on research;
3. compensating for capital depreciation by rebuilding existing transportation infrastructure;
4. generating increased future growth by spending on new transportation infrastructure.
Every single one of those components of government spending has a positive payback. The spending can be financed at (checking Bloomie) 2.85% over 30 years. (Basic demographics alone suggests interest rates will move up over the next 30 years, so a 2.85% locked-in rate will be an even better deal in real terms.) This is a gimmie, this is a fat pitch, and Republicans resisting spending on positive-payback items is utterly criminal.
And, critically, it seems business has taken the Republican philosophy so deep up their butts that now even businesses refuse to spend their net earnings on new investments with positive payback, instead either stashing it in zero-yielding overseas accounts or handing it back to capital in the form of share buybacks.
That's why this stagnation crisis is entirely the product of right-wing ideology, guys.
Nice to see some economists might be starting to clue in. Now if only they can grow some balls and talk about this out in the open.