When times are hard in every day life everyone tightens their belts or works harder to bring in new reserves. However, for years now hard times for political economics have been backed up with the excesses of frighteningly vast loans, a mean looking bagpus-like creation of a global banking sector and the license to print money under the auspices of quantitative easing. Now it looks like austerity is back in fashion, but will it be too little too late for the Eurozone.
Italy is the new shining light of economic depression, stealing a bit of the front cover shoot from the massive bailout proposals tabled to save Greece. The problem is that people have gotten used to the comfort blanket of the fake economic foundations and resent the need to take the strain for the mistakes made by men and women paid millions to make them, and with good reason. This has already led to strikes and riots in Greece over the last few years.
The issue is that in terms of coming out the other side with heads held high, bitterly ignoring the need for a dose of good old fashioned austerity isn’t really an option. On the other hand, there’s no chance of succeeding without facing up to the need to work harder to rebuild the entire global economy. However, with the US having less in the bank than Apple and the reality of a €110bn bailout package needed for a country with just a little over 11 million people being all too easily glossed over, surely the resolution to the problem isn’t just belt tightening and elbow grease; surely it goes to the very heart of modern economics. What’s becoming increasingly clear is that Adam Smith’s invisible hand is not the “go to” way out that it is meant to be in a supposedly staunch free market economic model.
However, that’s not something that’s going to change in the short term, let alone overnight, so for now it’s austerity or bust. In particular, Italy will soon be headed up by technocrat Mario Monti, and measures including VAT, fuel price and pension age rises, alongside privatisation will be put into place. These are measures that will inevitably spread throughout the rest of Europe too, but will there be enough of the fighting spirit of innovation included in the mix to make things stick.
One thing to avoid is strangling economies with funding cuts, but with large amounts of public spending being wasted, it’s easy to see why it’s so high on the agenda here in the UK. What’s really needed is more discipline from public service workers, from the top paid highest echelons of the government, right the way down to train drivers and teachers. What everyone seems to forget is that government decisions are made by people that they themselves vote in, so instead of reacting with their feet through strikes, maybe they should think about voting a little cleverer with their polling cards in the first place. Although, it’s probably not easy to see the woods for the trees with the sting of anger still in everyone’s eyes at the thought of the bonuses paid to bankers that were systematically failing the economy.
Austerity is something that everyone is going to have to deal with over the next few years, so you can either fight it and lose, or move with the times, put on your dancing shoes and think fast.
