Austerity is Austerity, No Matter How You Get There

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Via Tyler Cowen, Veronique de Rugy presents the chart on the right as evidence that Europe isn’t really undergoing any kind of real austerity after all. There are, obviously, some problems here: the figures are in nominal euros/pounds, there’s no adjustment for population growth, and anyway, the whole point of the anti-austerity Keynesians is that during a massive recession spending should be sharply higher, especially in the face of relatively tight central bank policy. Spending that’s flat or slightly down is massively contractionary.

But there are two other curiosities here that interest me more. First, de Rugy says this:

The most important point to keep in mind is that whenever cuts took place, they were always overwhelmed by large counterproductive tax increases….I wish anti-austerity critics would start acknowledging that taxes have gone up too — in most cases more than the spending has been cut.

Has this been a problem among the anti-austerity crowd? There are arguments over what kind of stimulus is most efficient, with Keynesians generally concluding that direct government spending is best, but their main obsession is simply about running big central government deficits any way you can. For this reason the Keynesian crowd all agrees that tax increases are counterproductive during a zero-bound recession, and that’s part of the reason for criticizing the European approach.

Then there’s this:

Also, if this data were adjusted for inflation (which I would prefer but the data isn’t available)….

What’s up with this? A few days ago I was trying to get European GDP numbers for some project or other, and about halfway through I realized that my data was no good unless it was in real dollars/pounds/euros. So I went looking, but couldn’t find numbers more recent than 2010. FRED didn’t have more up-to-date figures, and when I went to Eurostat they didn’t have them either. Why? They know the nominal numbers, and they have inflation data for each country, so why aren’t real GDP and spending figures available all the way up to Q1 of 2012?

In my case, I ditched the post I was planning to write because, although the nominal data made my point, it obviously wasn’t accurate. In de Rugy’s case, she just went ahead anyway. Which of us made the right call?

UPDATE: I have just been taught how to extract real GDP data from Eurostat. I’d tell you all how to do it, but then I’d have to kill you.

Seriously, whoever designed that interface should be shot. Why not just outsource their data presentation to the St. Louis Fed and dump it all into FRED?

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WHO DOESN’T LOVE A POSITIVE STORY—OR TWO?

“Great journalism really does make a difference in this world: it can even save kids.”

That’s what a civil rights lawyer wrote to Julia Lurie, the day after her major investigation into a psychiatric hospital chain that uses foster children as “cash cows” published, letting her know he was using her findings that same day in a hearing to keep a child out of one of the facilities we investigated.

That’s awesome. As is the fact that Julia, who spent a full year reporting this challenging story, promptly heard from a Senate committee that will use her work in their own investigation of Universal Health Services. There’s no doubt her revelations will continue to have a big impact in the months and years to come.

Like another story about Mother Jones’ real-world impact.

This one, a multiyear investigation, published in 2021, exposed conditions in sugar work camps in the Dominican Republic owned by Central Romana—the conglomerate behind brands like C&H and Domino, whose product ends up in our Hershey bars and other sweets. A year ago, the Biden administration banned sugar imports from Central Romana. And just recently, we learned of a previously undisclosed investigation from the Department of Homeland Security, looking into working conditions at Central Romana. How big of a deal is this?

“This could be the first time a corporation would be held criminally liable for forced labor in their own supply chains,” according to a retired special agent we talked to.

Wow.

And it is only because Mother Jones is funded primarily by donations from readers that we can mount ambitious, yearlong—or more—investigations like these two stories that are making waves.

About that: It’s unfathomably hard in the news business right now, and we came up about $28,000 short during our recent fall fundraising campaign. We simply have to make that up soon to avoid falling further behind than can be made up for, or needing to somehow trim $1 million from our budget, like happened last year.

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