The Boston Globe

Business

Britain’s austere cutbacks a cautionary tale for US

SALISBURY, England — Trussell Trust was founded here more than a decade ago to help starving children in Bulgaria, but in recent years the nonprofit has expanded its mission dramatically in a once-unthinkable direction, opening more than 200 food banks across the United Kingdom.

This year alone, the centers have distributed free groceries to about 130,000 British families, more than double the number in 2011.

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Great Britain is the home of socialized medicine. It's what Donald Berwick of Harvard thinks is the ideal situation ("I LOVE IT" said Donald, about the UK's "Death Panels"). And it's the ideal for ObamaCare. That's a big reason why the UK's economy has gone downhill and it needs austerity measures. Before it joins the European Union and becomes Greece...And for this article that isn't why Megan hopes the US government will be "Cautious". Austerity measures mean smaller government, more private sector employment. That's something she and the Globe do not want.

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I don't disagree, just a clarification.  There are "Death Panels" under private health insurance ... they decide what coverage you get.  If there is a potential cure for cancer with a 1 % chance of success that costs a billion dollars,  it's not going to be provided under private insurance, or approved by the Obamacare panel.   The difference is that if government is the ONLY one deciding, you have no choice, and of course it becomes a political football up for bid ( money and votes ).  Could you see hugely expensive procedures that are in demand by politically favored voting blocks/demographics win out over others?  Of course, the same as you can ignore and break laws for politically favored voting blocks ( Obamas 11th hour decrees for gay marriage and work permits/amnesty for illegal immigrants).

 

The National Health Service did not tank the UK economy.  The worldwide recession did that.  Then, because the conservatives reacted dogmatically, instead of wisely, they created more problems by contracting the economy at the worst of times.

 

Sometimes, borrowing is wise. Like when your roof is leaking and you need money to pay for a new roof.  You can let the house get destroyed by the leaks, losing more and more value, or you can borrow to patch the leaks.

 

When the cost of borrowing is low and the cost of continuing damage is high, it's betst to borrow.

 

What is stupid is borrowing to fight two unfunded wars and give tax cuts to the wealthy.

“We got into this mess because of borrowing and we can’t get ourselves out of it by borrowing,” Twyman said. "..Megan Woolhouse IGNORES what Britons are saying in her own article...

AGAIN, Megan  “We got into this mess because of borrowing and we can’t get ourselves out of it by borrowing,” Twyman said.

Republicans would love to see another recession. It is there dream scenario. The country failed under Obama. lets not forget that when Mitch Mc Connell became Senate President in 2008 he stated matter of factly that his only goal was to insure Obama was not re elected. Nothing has changed, if he was willing to sacrifice the good of the nation then, then he is willing to do it now.

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Can the editor or moderator please move the non sequiturs to a different part off the website?  Serious discussion of the actual article presented only, please.

From the article: "The Cameron government also imposed a wage freeze for all but the lowest tiers of government workers, tougher requirements to qualify for public housing and disability payments, and massive cuts to the welfare system." It's sounds as though they're doing the right thing. The alternative is Greece.

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Their "right thing" tanked their economy, lead to widespread unemployment, and increasing poverty.  No.  Not the right way to "fix" an ecomony.  They followed conservative ideology rather than practical common sense.

Good story, but entirely wrong conclusions.   This is like watching a junkie suffering and deciding it was wrong to take away his drugs. No, the best course was not to get addicted to drugs in the first place, just as the U.S. and European countries should not have gotten addicted to runaway debt.

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I'm sure you were very vocal about the debt as George W. Bush ran it up on two unfunded wars and tax cuts for millionaires.

kate2468 - reasonable assumption, but wrong.  I didn't vote for George Bush, but did vote for Obama ( in 2008 ).  I couldn't vote for Obama or Romney, voted for Jill Stein last election.    But yes, it is a combination of the Bush and Obama administrations and Congress during those administrations that have resulted in our employment and debt problems and erosion of civil rights.

Austerity now will be painful. Austerity a few years from now will be excrutiating.  Taking our lumps now is the better medicine. Europe is a living laboratory.   The Germans faced reality all along, and are weathering this fairly well.  Greece avoided reality, spending what it didn't have, somehow expecting the frugal countries to save them from their bad habits.  Their avoidance has amplified the pain they must endure.  I'd rather hope we avoid the Greek path. I can't understand why some would prefer deferring minor pain for unavoidable future major pain.

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And *sigh* the best this government (faulting both parties) will be to slightly decrease our yearly deficit ... we'll still be adding to our $16.4 trillion debt, just at a slower rate.

 

* Pass a balanced budget amendment

* Put a U.S. debt clock in every classroom so kids know what their parents are doing to them.

http://www.usdebtclock.org/

 

Of course austerity would cause a US recession in the SHORT term.  I hate articles that trumpet this as "insight" that somehow proves that austerity is a bad idea.  The actual question is whether spending less today will improve our future tomorrow?  

To decide this, we must decide whether our financial problems are short term blips or long term declines.  If we face decline, then adding on more debt will just rob the future to delay the inevitable "right-sizing" of our lifestyles and will actually make things worse.  

And is there any real debate?  American workers are already among the highest paid in the world.  Consider global competition... an aging workforce... and technical change... and one canot see how our average wages can possibly grow much from where they are.  Since our population is flat, that means our GDP will stay flat and quite possibly decline a bit after inflation, for decades to come.  

Taxes move wealth but they do not create wealth.  If anything, taxing income discourages the investments and extra work needed to create more income.  The pie may be shared more evenly, but it will be a smaller pie.

The far better place to focus is how we spend our money.  The litmus test must be this:  will a proposed expense actually create future income that repays the debt in full plus all the interest?  If so, please proceed.  If not, we must cut the expenditure.

 

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