Austerity policies do more harm than good, IMF study concludes.

[elleng]

Economists give strong critique of neoliberal doctrine ushered in by Ronald Reagan and Margaret Thatcher in the 1980s.

'A strong warning that austerity policies can do more harm than good has been delivered by economists from the International Monetary Fund, in a critique of the neoliberal doctrine that has dominated economics for the past three decades. In an article seized on by the shadow chancellor, John McDonnell, the IMF economists said rising inequality was bad for growth and that governments should use controls to cope with destabilising capital flows.

The IMF team praised some aspects of the liberalising agenda that was ushered in by Ronald Reagan and Margaret Thatcher in the 1980s, such as the expansion of trade and the increase in foreign direct investment. But it said other aspects of the programme had not delivered the expected improvements in economic performance. Looking specifically at removing barriers to flows of capital and plans to strengthen the public finances, the three IMF economists came up with conclusions that contradicted neoliberal theory.

“The benefits in terms of increased growth seem fairly difficult to establish when looking at a broad group of countries,” they said. “The costs in terms of increased inequality are prominent. Such costs epitomise the trade-off between the growth and equity effects of some aspects of the neoliberal agenda.­

“Increased inequality in turn hurts the level and sustainability of growth. Even if growth is the sole or main purpose of the neoliberal agenda, advocates of that agenda still need to pay attention to the distributional effects.­”'>>>

https://www.theguardian.com/business/2016/may/27/austerity-policies-do-more-harm-than-good-imf-study-concludes

So why do they keep imposing 'austerity' on devastated countries???

Neoliberalism: Oversold?

Instead of delivering growth, some neoliberal policies have increased inequality, in turn jeopardizing durable expansion.

http://www.imf.org/external/pubs/ft/fandd/2016/06/ostry.htm

[LiberalArkie]

1. Gee, who would have thunk that if the people have no money to spend that it affect the

economy. I bet they had to spend millions on the study to find out.

[elleng]

2. Imagine THAT!

[Warpy]

3. They've known that for many decades

but it hasn't stopped them from pursuing it in country after country and it won't stop them now. They don't mind choking off the demand side of the economic equation in the pursuit of allowing the local robber barons to keep their ill gotten wealth.

That's really the problem, governments have been kept too weak to force a clawback and enough redistribution to put the population back to work repairing the commons. Only the 1%'s terror of communism allowed the slight reform of the New Deal.

[enough]

4. No kidding. Wonder why the conventional wisdom is shifting right now. (nt)

[Jack Rabbit]

5. We already know that

That is why austerity should be made the equivalent of a war crime under international law. That's just my modest proposal. We'll start with putting Angela Merkel and Wolfgang Schäubel on trial in Athens.

[elmac]

6. They do a lot of good

for the uber rich, can have their cake and eat it too.

[Punx]

7. When the IMF is willing to speak out against your policies.

You can bet that they are bad.

But really this is all about power. Strong middle classes, and working classes with some spare time and job security tend to make demands on the top, especially in pushing $ back toward the bottom of the pyramid. Austerity is just another excuse to keeping those not at the top down, as well as part of Jude Wanniski's "Two Santa Clause Theory.".

http://www.democraticunderground.com/10021632181

Better economic growth would come through a Guaranteed Basic Income (GBI) than Austerity, but that doesn't work for those at the top. I'm stealing the following quote from another blog:

"People always plot to overthrow their masters in their free time. And If there was a GBI, we could live a good life rather than a rich life."