Austerity Myth

Europe's struggles prove that "austerity" fails!

So say the Big Spenders.

With a condescending sigh, they explain that Europe made deep cuts in government spending, and the result was today's high unemployment. "With erstwhile middle-class workers reduced to picking through garbage in search of food, austerity has already gone too far," writes Paul Krugman in The New York Times.

One problem with this conclusion: European governments didn't  cut! If workers pick through garbage, cuts can't be a reason, since they didn't happen.

That doesn't stop leftists from complaining about cuts or stop Europeans from protesting announced austerity plans. But if austerity means spending less, that hasn't happened.

Some European countries tried to reduce deficits by raising taxes. England slapped a 25 percent tax increase on the wealthy, but it didn't bring in the revenues hoped for. Rich people move their assets elsewhere, or just stop working as much.

If politicians honestly want to boost their nation's economies, they should look to what happened in countries that bounced back from economic slumps.

Iceland was hit by bank collapses -- but government ignored street protests and cut real spending.

Iceland's budget deficit fell from 13 percent of gross domestic product to 3. Iceland's economy is now growing.

More @ Rasmussen