Austerity
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Austerity

Do your Politicians Misinform and Manipulate you?

Is your politicians' idea of austerity for taxes to increase while the government keeps on spending and only tax-payers tighten their belt? Throughout the European Union, governments talk a lot about austerity, and most of them, such as Portugal, Ireland, Italy, Greece and Spain, pretend that they're implementing austerity programs.

But it's only austerity for the tax-payers, the government drastically increases taxes while barely making a nod to cutting expenses. The problem is that governments have been running budget deficits for years, and can no longer borrow enough to keep the same scam going.

Politicians been bribing voters for their vote by promising them freebies at someone else's expense for years, and now they're seeing the consequences of such unsustainable promises.

Profligate government overspending

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Emaciated Taxpayer feeding Bloated Government
To help hide the recklessness of their immense overspending, politicians give government deficits as a percentage of GDP (Gross Domestic Product), rather than as a percentage of the government's income.

This implies politicians view all the income of the whole country and all its citizens as theirs to spend. They seem to think they're being generous in allowing you to keep barely enough to live on. And that wealth creation is unnecessary.

Yet Generally Accepted Accounting Principles ensure companies list deficits as a percentage of their actual income, and company officials would go to jail if they tried such misrepresentation. If governments were also forced to adhere to the same standards, listing deficits as percentages of their actual income, their reckless overspending would be far more obvious - several times higher than they pretend.

Government "austerity" is only a pretense

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No Austerity for UK Government Spending just Increases
Click to enlarge this chart from HM Treasury
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In Britain, as in the USA and most other countries, Cameron and Clegg only pretend to austerity - their coalition spends more and more each year. Yes, you read that right, despite the British coalition's deceptive smooth talk, government spending continues to increase each year.

The European Union considers a deficit of over 3% of GDP as unsustainable, yet British politicians from all parties have been running a significantly higher deficit for many years. UK public sector debt is over - well over - the 60% the EU considers viable. The Eurozone now measures it at over 90%, and expects it to peak at more like 100%.

Politicians want economic growth, not realizing that it's only when people are allowed to keep more of what they earn, and have the freedom to spend, or create the wealth they desire, is economic recovery possible. Yet politicians fail to appreciate - or deliberately ignore - their
self sabotage here. How can the economy grow when the government taxes and spends so much?

Economic growth needs investment in the productive areas, not growth in unproductive government overhead. Growth needs more people working in the productive sectors of the economy. Greece supplies a salutary example of the consequences of far too many people working for and dependent on government. Just look at Greece's problems to understand this crucial point.

Genuine Austerity by Government is Viable - and Experience Shows It Works

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Does a country have to impoverish their tax-payers by bailing out their failing banks? Iceland refused, which did cause some short-term problems. Yet just three years later, the unemployment rate had fallen and Iceland's economy is growing. The IMF mission chief for Iceland, Julie Kozack, admiringly notes "For a country whose entire financial system collapsed, Iceland is doing remarkably well."
Accountants know austerity taxes used for more spending
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Real austerity - less government spending - is indeed possible. It's also rewarded by voters! Accountants overwhelmingly agree that governments use tax increases to fund more spending rather than decrease the deficit.

For real success, you need to follow proven strategies. The government needs to spend less, lots less, rather than tax its citizens more! It works to copy budgetary successes like
Switzerland and Hong Kong, rather than disasters like the USA, the European Union, Britain, and Greece.

Canada kept government spending in check while digging out of the financial hole created by years of profligate over-spending. In five short years, Canada turned a 9% budget deficit into a surplus by real - government - austerity.
Chretien’s Liberal's actually shrank the size of government while tax increases were nominal. As a result, despite the real spending cuts, they went on to win two more back-to-back elections. Today Canada enjoys a debt-to GDP ratio of some 35%.*

New Zealand did the same. So have various ex communist countries. Communism gave them the experience needed to see that living at someone else's expense is not sustainable in the long run. They understand that taxing the rich just takes the money which the wealth-creators would have used to create useful jobs...

Food for Thought

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"The Keynesian thinking that dominates our governments, central banks and universities flies in the face of common sense.

"Most of us can see that, when you're in debt, the answer is to spend less, not more. Most of us understand that you can't carry on consuming without producing anything, at least not in the long term.

"Most of us grasp that, when inflation devalues the coin in which we're paid, we've been ripped off. You need to be an economist or a politician not to see these things ...

"You don't see how governments can borrow their way out of debt? You're just revealing your ignorance! You've had to cut back on your own spending, and you think the public sector ought to do the same? You know nothing about economics! ...

"Still, I can't help asking: if they're so bloody clever, how did they get us into this mess?"

- Dan Hannan, Conservative MEP for South East England

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