Sunday, January 11, 2015

The Austerity Smoking-Gun Chart

Kevin Drum finds Tyler Cowen (for me a libertarian economist nit-picker, turns out he's not a jerk, just a zealous free-marketer?) presenting the smoking gun of all smoking guns -- actually two charts to be viewed together -- and what a clear story they tell.

This is total fed, state, and local expenditures, the top being total in 2014 dollars and the bottom a per capita version. Austerity was real until 2014, when the improving economy drove even government spending up, with new spending mostly on the state and local levels.

To which I'd add a very telling chart:

The gap between real GDP and potential GDP is what you might call the misery gap, which is filled by all the unemployed, those whose middle-class lives were destroyed through foreclosure and loss of their retirement savings, the under-employed youth coming out of high school and even college during our long, painfully slow recovery. You know, the people that the usual increased government spending during downturns is supposed to save or at least protect until the economy is back on its feet. We didn't do that this time.

Now the usual suspects are claiming, see, austerity worked. Er, no, geniuses. And by geniuses I mean the GOP and their cabal of bought-and-paid-for economists at the Wall St. Journal -- like Stephen Moore -- or the conservative think tanks -- like John Cochrane, John Taylor, Art Laffer, and, uh, Stephen Moore.

You look for the links. I can't read them anymore.


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