The case against austerity today

Article

The near-default of Greece, with contagion gradually spreading to other countries in the eurozone, has led policymakers around the world to switch from fiscal stimulus to fiscal austerity. What finance minister can sleep easy when there is a chance that they too might be forced down the road being travelled by Greece, Ireland, Spain, Portugal and Italy?

To all the world it looks like government debt is the overwhelming problem, dwarfing concerns about a weak recovery. I want to argue that this is a profound misreading of the situation. An alternative view, which appears more consistent with the facts, is that the crisis which started with Greece in fact tells us about some basic design flaws in the eurozone. Outside of the eurozone, the problem is that we have too little government debt, rather than too much.

Related items

  1. A row of red brick Victorian houses with panoramic views across to the skyscrapers and financial district of the city of London

    Towards a fair and proportional property tax

  2. In search of the Scottish economy's 'low-hanging fruit': IPPR Scotland responds to the Muscatelli report

    The report is a serious and thoughtful analysis of what is and isn’t working in Scotland’s economic development eco-system.

  3. Celebrating 10 years of IPPR Scotland

    In celebration of our 10th anniversary, IPPR Scotland was delighted to host a daylong conference on October 29.