Athens - Arabstoday
The medical profession no longer drills holes into fevered skulls because science has demonstrated that such measures do not work, often kill the patient and leave a shocking mess in the surgery room. When it comes to economics, however, there is no shortage of amateurs recycling discredited miracle cures: deficit spending and printing money. Bryan Gould has been complaining that austerity does not work and is no solution to our current woes. He points to Greece, Spain, et al, to illustrate his point. Greece, however, is a mess precisely because it has never practised austerity. Greek governments used to print drachmas, and lately borrowed euros. If borrowing money was a path to riches then Greece would be wealthy. It isn\'t. Like the other pigs in Europe\'s sty, Greece gorged at the trough of cheap money for the past two decades and it is now so bloated it can no longer stand. Gould seems under an illusion our Government is running an austerity model. Treasury, by contrast, tells us tax receipts are a billion dollars lower than forecast and we are running a $13.6 billion deficit, nearly 7 per cent of our gross domestic product. It was not austerity that destroyed Greece, it was Keynesian deficit spending at all stages of the economic cycle. Pointing to the recent economic recovery of the United States does not help because the US, like New Zealand, is doing what Greece did five years ago, running unsustainable deficits. We know how that story ends. The recession is over. The ugly truth is we cannot afford a welfare state where the Crown collects as much in PAYE and income tax from workers as it pays in social welfare and borrows the rest. Making it hard for solo mothers to buy cigarettes and firing a few diplomats is admirable but we need to cut government spending by $13.6 billion, or the diminishing pool of taxpayers need to pay more. Twenty-two per cent more, in fact. Check your PAYE statement and work out your share. If that sounds unpleasant, do not worry. Bryan Gould and Bernard Hickey have an idea - we can print the $13.6 billion. All we need to do is write ourselves cheques for $3000 each. Christchurch will be rebuilt, our butter will be cheaper and the Auckland man-drought will end as our talented lost-boys rush back. Sadly, this will not work. Printing money to stimulate growth worked when citizens could be tricked that inflation meant economic conditions had improved. Quantitative easing, a modern form of printing money, has been used overseas to help bolster the capital base of failing banks and prevent deflation in Japan. It does not create jobs. There is no miracle cure. It is time we stopped listening to the snake oil salesmen.