The facts are that various local, state and federal government entities in the US have cut jobs over the almost four years since the financial crisis. We do not happen to believe that has generated anything other than greater misery for the individuals and families affected, contrary to the promises of austerity's avatars.
What is particularly noteworthy, however, is the difference with past practice. In every other recession in the past 40+ years, the government (or its various, deeply intertwined co-dependencies) added 1.7 million jobs, on average. The authors of the study from which this comes jump to the conclusion that this means over 2 million jobs have been lost. There is a theoretical possibility that they are correct, if one assumes a host of assumptions about the relationship between past and present, as well as the notion that economic history repeats itself.
Of greater utility, perhaps, is the question about why western nations have come to embrace a policy whose underpinnings were theoretical rather than experiential to begin with. The evidence in the US and Europe is that austerity has failed to deliver the promised results and as if that weren't enough, even one of the basic components of the theory has now been successfully challenged. Whether the US would have created those extra 1.7 million jobs is arguably less important for a consumer driven society than why the governments representing that society would not have conducted a more rigorous analysis of the alternatives, given the impact it was inevitably going to have on consumers and citizens. JL
Mark Gongloff reports in the Huffington Post:
There are more than 2 million unemployed Americans who might have jobs today if not for austerity.
That's the conclusion of a new study by Michael Greenstone and Adam Looney at the Brookings Institution. In the 46 months since the Great Recession ended, state, local and federal governments have cut about 500,000 jobs. In contrast, in every other U.S. recession since 1970, the government hired approximately 1.7 million people, on average. That means the U.S. is an estimated 2.2 million jobs in the hole.
Given the size of the U.S. labor force, an extra 2.2 million jobs would mean the U.S. unemployment rate would be about 6.1 percent, instead of 7.5 percent. That would be below the 6.5 percent rate the Federal Reserve is targeting with its extraordinary bond-buying program known as quantitative easing. Worried about Fed-fueled financial bubbles? Thank austerity. In fact, the Fed recently called out tight fiscal policy in explaining why it's keeping the economy's gas pedal floored.
That 2.2 million jobs would also get the U.S. job market back to its peak level of employment, set in January 2008, in the early months of the recession. Right now, we're about 2.6 million jobs shy of that peak, making this the slowest job-market recovery since World War II. The government has not helped at all -- in fact, it has pulled in the other direction, firing people when it should be hiring.
That 2.2 million jobs would also help close another wide disconnect: Employers aren't firing people any more, but they're only barely hiring, leaving the economy about 4 million jobs short of where it should be, given current levels of unemployment benefits. More than half of that gap could be attributed to stingy government, if Brookings is right.
Though the austerity movement has taken a serious blow with the discovery of errors in its favorite research report, many austerity fanatics still doubt the U.S. has taken all of the bitter medicine it should. But the fact is that the government has slashed its payrolls after the worst recession since World War II and cut spending at the fastest rate since the end of the Vietnam war.
And this is all before most of the effects of the across-the-board budget cuts of the federal government's sequestration, which might cost the economy another 750,000 jobs, the Brookings study notes.
Austerity is real, and it is choking the life out of the U.S. economy.
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