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Do austerity programs even work? Europe tried such an approach in 2008, and expressing that we did better than the US would be a lie.

Greece's austerity programs resulted in the biggest brain drain the country has ever seen, and people make peanuts.




To channel Bill Clinton define "works".

Austerity works in the sense of reducing deficits and no longer digging a fiscal hole. It is something which happens eventually after a country runs out of creditors who don't demand austerity as a precondition.

Austerity does seems to perform inferior to stimulus but not everyone can afford it. Stimulus being unavailable is itself a statement of lack of faith in existing plans. Austerity is hard to screw it up in the same sense it is hard to screw up losing weight in a Gulag. Hence why lenders of last resort insist upon it as a precondition.


In Argentina, it is well proven that economic programs not based on austerity always fail. For 24 years, the country has not attempted a path of austerity, always trying to spend more than it has and accumulating debt to very high levels. Two debt defaults later, it is evident that another path must be attempted.


You're saying it's well proven that austerity programs are required for success. Your evidence is that it hasn't been tried there yet.


your reply only makes sense if Argentina is only 24 years old. It is not.


Have your edit:

You're saying it's well proven that austerity programs are required for success. Your evidence is that it hasn't been tried there in 24 years.


Sure austerity works. Austerity means not throwing good money after bad. Whereas you can lose unbounded amounts of money with stimulus spending, or cause hyperinflation.

If people felt like Greece would have been successful without austerity, they could have lent Greece money at lower rates and with less conditions than the IMF.


This all being said, the poverty trap is a real thing and making people so poor they can't pull themselves up by their bootstraps it can be very expensive in the long run.


I guess we'll find out




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