On Austerity

It has become a fact of life that cash-strapped nations are - by their own choice or through IMF or EU demands - turning to austerity measures to trim money off their egregious debts. While in some ways these measures seem necessary and while there is some logic in trimming budgets during a recession, I think that austerity measures are counter-productive and are part of the problem, not the solution. Let me explain:

1. Governments often sell off assets in order to trim money from their budgets to meet austerity requirements. This does save them money in the short-term, but it leads to bigger deficits and debts in the future. Assets often make money for a government (ex. the LCBO in Ontario) and governments don't often make moves to replace that lost income...except for maybe burdening citizens with higher taxes and tuition costs, which they can't afford.

2. Austerity usually means cutting education funding, which is going to make the enormous problem of unemployment in almost every nation on the planet worse. One of the reasons for the huge protests in England in the past 18 months was the doubling of tuitions for many universities. This increase will prevent thousands of young people from being able to afford a post-secondary education, which significantly hampers their job prospects in life.

3. The last time that such budget cuts were made en mass was during The Great Depression in the 1930s. Do you remember what got the world out of that funk? That's right! It wasn't an economy that slowly recovered due to budget cuts...it was World War II. WWII forced governments to stimulate the economy by spending billions on soldier training, munitions, planes, tanks etc. That also gave millions of people soldier or factory jobs they didn't necessarily want. Are we going to make the same mistake and wait until another huge world-wide catastrophy comes along and forces governments to spend money and  create jobs again?

This is what I would prefer to see happen to end this recession and get the world back on track:

1. The oft-heard cry of "make wealthy people and corporations pay their fair share" needs to be heard and acted upon. Close loopholes that allow these two groups of citizens to pay less taxes than their secretaries and there ya go...many nations would suddenly have billions more dollars to work worth.

2. Stimulate the economy in a smart way by investing in infrastructure. If you put money into education programs, re-training programs for people who have lost their jobs, green energy projects, road and bridge repair initiatives and other such programs you will fix a lot of the current problems in this country and many others.

Funding education more will drop tutions and allow more people to get post-secondary degrees, which makes it much easier for them to find employment once school is finished.

If you spend money re-training people, their job prospects will also increase and they won't need to collect social assistance from the government anymore, thus saving the government money in the long-term.

If you put money into green energy, you will employee thousands of previously unemployed workers and you will build a sustainable future for your country.

If you repair roads and bridges, you will have a safer society and you will create jobs for thousands more people.

And the other side effect of all this investment is that it will help bring in foreign businesses and investment. If companies see a growing economy with a growing middle class that has some disposable income, they will decide that is a place to set up shop. If they see a city/country with a low unemployment rate and a pretty good average household income, which is the goal of my plan, they will see that as a place where people will buy their products.

Where will all this money that would be needed to stimulate the economy so much come from? Why, from tax reform of course!!!

This is a topic I am very passionate about and would love to hear other perspectives in this controversial debate. Leave comments below to spark the debate.