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How Austerity Kills (The Continuation of War by Other Means, Part 2)

 

Dave Emory’s entire life­time of work is avail­able on a flash drive that can be obtained here. (The flash drive includes the anti-fascist books avail­able on this site.)

Joseph Goebbels, Hitler’s pro­pa­ganda chief, once said: ‘In 50 years’ time nobody will think of nation states.’

. . . At the moment the so-called “Euro­pean Eco­nomic Com­mu­nity” is not yet fact; there is no pact, no organ­i­sa­tion, no coun­cil and no Gen­eral Sec­re­tary. How­ever, it is not just a part of our imag­i­na­tion or some dream by a politi­cian — it is very real. . . .
. . . . Its roots are in the eco­nomic co-operation of the Euro­pean nations and it will develop after the war into a per­ma­nent Euro­pean eco­nomic community. 

Gus­tave Koenigs, Third Reich Sec­re­tary of State at a 1942 con­fer­ence

COMMENT: In past posts, we’ve analyzed the grinding conditions being imposed by Germany on the poorer countries of Europe under the “austerity” doctrine.

That analysis views the ravaging of those countries in the context of the theories of Prussian military theoretician Carl von Clausewitz.

His doctrines of “total war” and “postwar” have yielded the strategy of effectively subjugating and/or decimating targeted societies through political means, when military tactics are effectively exhausted. 

A recent op-ed piece in the New York Times illustrates this reality very clearly. Note the elderly Italian pensioners who committed suicide because they couldn’t afford to live on the pittance left them after “austerity”-mandated budget cutting.

It would be a mistake not to see such cruelty as capricious. It is deliberate and pre-conceived. People such as those unfortunate Italian pensioners are viewed as “useless bread gobblers.”

Their  elimination is seen as desirable by the corporatists and their German role models.

In addition to people who take their own lives, stress compromises the immune system, as do poor nutrition and poor access to health care.  All of these factors will result in illness and early death for the less affluent members of society.

Austerity made manifest is NOTHING if not stressful.

We note in passing that one of the factors that has made German fascism and imperialism so successful over the decades is the fact that their doctrines dovetail very nicely with the brutal social philosophy of what Mussolini referred to as “the corporate state”--fascism.

The eugenics doctrine, the anti-labor and anti-Communism of fascism, as well as their racism and anti-Semitism endeared Hitler’s minions to a much larger share of the world’s power elite than our history books–most of them anyway–will ever disclose. (That is one of the reasons that we have the section featuring the old anti-fascist books.)

The success of Axis aggression derived as much from the subversion of targeted countries by the fifth column movements within them–evolved from the philosophical, ideological allies of Hitler and Mussolini.

From the wealthy luminaries who plotted against Franklin Delano Roosevelt in 1934 to the British traitors grouped around the Cliveden set, Oswald Mosely’s cadre and  the Duke of Windsor, even the U.S. and U.K. were infested with powerful fifth columnists.

The GOP will impose social conditions in the U.S. similar to those being forced upon those European nations now suffering under the yoke of austerity, when and if they get back into power.

“How Austerity Kills” By David Stuckler and Sanjay Basu; The New York Times; 5/12/2013.

EXCERPT: Early last month, a triple suicide was reported in the seaside town of Civitanova Marche, Italy. A married couple, Anna Maria Sopranzi, 68, and Romeo Dionisi, 62, had been struggling to live on her monthly pension of around 500 euros (about $650), and had fallen behind on rent.

Because the Italian government’s austerity budget had raised the retirement age, Mr. Dionisi, a former construction worker, became one of Italy’s esodati (exiled ones) — older workers plunged into poverty without a safety net. On April 5, he and his wife left a note on a neighbor’s car asking for forgiveness, then hanged themselves in a storage closet at home. When Ms. Sopranzi’s brother, Giuseppe Sopranzi, 73, heard the news, he drowned himself in the Adriatic.

The correlation between unemployment and suicide has been observed since the 19th century. People looking for work are about twice as likely to end their lives as those who have jobs.

In the United States, the suicide rate, which had slowly risen since 2000, jumped during and after the 2007-9 recession. In a new book, we estimate that 4,750 “excess” suicides — that is, deaths above what pre-existing trends would predict — occurred from 2007 to 2010. Rates of such suicides were significantly greater in the states that experienced the greatest job losses. Deaths from suicide overtook deaths from car crashes in 2009.

If suicides were an unavoidable consequence of economic downturns, this would just be another story about the human toll of the Great Recession. But it isn’t so. Countries that slashed health and social protection budgets, like Greece, Italy and Spain, have seen starkly worse health outcomes than nations like Germany, Iceland and Sweden, which maintained their social safety nets and opted for stimulus over austerity. (Germany preaches the virtues of austerity — for others.)

As scholars of public health and political economy, we have watched aghast as politicians endlessly debate debts and deficits with little regard for the human costs of their decisions. Over the past decade, we mined huge data sets from across the globe to understand how economic shocks — from the Great Depression to the end of the Soviet Union to the Asian financial crisis to the Great Recession — affect our health. What we’ve found is that people do not inevitably get sick or die because the economy has faltered. Fiscal policy, it turns out, can be a matter of life or death.

At one extreme is Greece, which is in the middle of a public health disaster. The national health budget has been cut by 40 percent since 2008, partly to meet deficit-reduction targets set by the so-called troika — the International Monetary Fund, the European Commission and the European Central Bank — as part of a 2010 austerity package. Some 35,000 doctors, nurses and other health workers have lost their jobs. Hospital admissions have soared after Greeks avoided getting routine and preventive treatment because of long wait times and rising drug costs. Infant mortality rose by 40 percent. New H.I.V. infections more than doubled, a result of rising intravenous drug use — as the budget for needle-exchange programs was cut. After mosquito-spraying programs were slashed in southern Greece, malaria cases were reported in significant numbers for the first time since the early 1970s.

In contrast, Iceland avoided a public health disaster even though it experienced, in 2008, the largest banking crisis in history, relative to the size of its economy. After three main commercial banks failed, total debt soared, unemployment increased ninefold, and the value of its currency, the krona, collapsed. Iceland became the first European country to seek an I.M.F. bailout since 1976. But instead of bailing out the banks and slashing budgets, as the I.M.F. demanded, Iceland’s politicians took a radical step: they put austerity to a vote. In two referendums, in 2010 and 2011, Icelanders voted overwhelmingly to pay off foreign creditors gradually, rather than all at once through austerity. Iceland’s economy has largely recovered, while Greece’s teeters on collapse. No one lost health care coverage or access to medication, even as the price of imported drugs rose. There was no significant increase in suicide. Last year, the first U.N. World Happiness Report ranked Iceland as one of the world’s happiest nations.

Skeptics will point to structural differences between Greece and Iceland. Greece’s membership in the euro zone made currency devaluation impossible, and it had less political room to reject I.M.F. calls for austerity. . . .
. . . .Somewhere between these extremes is the United States. Initially, the 2009 stimulus package shored up the safety net. But there are warning signs — beyond the higher suicide rate — that health trends are worsening. Prescriptions for antidepressants have soared. Three-quarters of a million people (particularly out-of-work young men) have turned to binge drinking. Over five million Americans lost access to health care in the recession because they lost their jobs (and either could not afford to extend their insurance under the Cobra law or exhausted their eligibility). Preventive medical visits dropped as people delayed medical care and ended up in emergency rooms. (President Obama’s health care law expands coverage, but only gradually.)

The $85 billion “sequester” that began on March 1 will cut nutrition subsidies for approximately 600,000 pregnant women, newborns and infants by year’s end. Public housing budgets will be cut by nearly $2 billion this year, even while 1.4 million homes are in foreclosure. Even the budget of the Centers for Disease Control and Prevention, the nation’s main defense against epidemics like last year’s fungal meningitis outbreak, is being cut, by at least $18 million. . . .

Discussion

25 comments for “How Austerity Kills (The Continuation of War by Other Means, Part 2)”

  1. “The real news” youtube channel has a report claiming. an excess of 58,000 seniors and disable froze to death last year due to austerity. Yet the CEO of a gas co. got a 12,000.000 retirement bonus.

    Posted by LFS | May 15, 2013, 11:55 pm
  2. “The real news” youtube vid was about Britain’s austerity.

    Posted by LFS | May 16, 2013, 6:11 pm
  3. HSBC’s chief economist, Steven King, just wrote a book about how the West’s “entitlement culture” is unsustainable because it depends on endless economic growth and that “society will have to reduce these claims and go back on their promises”. Apparently developing better technology, living sustainably, distributing what’s produced more fairly and generally trying to create that Star Trek utopia of a happy planet is not an option (banksters tend to prefer different types of Star Trek utopias). King is also worried that the ongoing tensions in Europe are leading the people to search for scapegoats. I suppose when you’re a bankster trying to peddle a brutal global corporatist paradigm as the only possible option to avoid mass global poverty (customer satisfaction is generally really low with those types of sales) AND your bank just got kid-glove treatment for its global drug/terror money-laundering activities), the search for a scapegoat might be might be on your mind:

    A Sluggish Europe Is ‘Searching for Scapegoats’

    Published: Monday, 20 May 2013 | 11:36 AM ET
    By: Kiran Moodley, special to CNBC.com

    As Western economies come to terms with a sustained period of low growth and an inability to afford its social commitments, nationalist and isolationist movements will increasingly come to the forefront, HSBC’s chief economist Stephen King told CNBC on Monday.

    King argued that the benefit culture of Western countries is only sustainable through continued economic expansion – something he said was highly unlikely.

    “We’ve been living beyond our means,” King said. “From benefits through to financial claims – including those on pieces of paper, like bonds – society will have to reduce these claims and go back on their promises.”

    For King, with growth far weaker than that experienced in the 20th century, people will have to be stripped of entitlements – such as pensions, healthcare benefits and social security – which will create social upheaval.

    King’s argument is outlined in his latest book, “When the Money Runs Out”. He said that while the stimulus reaction of most countries in response to the 2008 financial crisis ensured a major depression was avoided, there has been naive belief from many that a recovery would be quick.

    “Policy makers felt they could avoid a depression and then return us to a situation prior to the financial crisis quickly,” King told CNBC. “For a normal recovery, for example, the U.S. has an extraordinary ability to bounce back. So the fact that we are having a debate at the moment about whether the U.S. will see gross domestic product of 2 or 3 percent – that is where the problem comes from. The nature of the recovery is unusually muted.”

    The economist argued that the baby-boomer generation’s entitlements must be scaled back, but that this will cause problems. He also spoke about the current debate over Britain’s involvement in the EU.

    “Some of the mood music coming through is of a typical nationalism in response to stagnation: you want someone to blame, whether its the Europeans or the immigrants. It’s a blame game. It’s not just economically worrying but politically worrying too,” he said.

    “I was concerned with the lessons of history where a persistence of economic weakness forces people to find scapegoats – even, for example, to the rise of anti-Semitism at times during the last century. These are examples of where a systematic failure that no one can control leads to cultural blame and mistrust. Those levels of mistrust lead to suspicion in society, which undermines markets, as they rely on trust,” he said.

    Posted by Pterrafractyl | May 21, 2013, 9:04 am
  4. Okay…

    Huffington Post
    Oklahoma Senators Jim Inhofe, Tom Coburn, Face Difficult Options On Disaster Relief

    Posted: 05/20/2013 7:50 pm EDT | Updated: 05/21/2013 3:23 pm EDT

    WASHINGTON — As frantic rescue missions continued Monday in Oklahoma following the catastrophic tornadoes that ripped through the state, it appeared increasingly likely that residents who lost homes and businesses would turn to the federal government for emergency disaster aid. That could put the state’s two Republican senators in an awkward position.

    Sens. Jim Inhofe and Tom Coburn, both Republicans, are fiscal hawks who have repeatedly voted against funding disaster aid for other parts of the country. They also have opposed increased funding for the Federal Emergency Management Agency (FEMA), which administers federal disaster relief.

    Late last year, Inhofe and Coburn both backed a plan to slash disaster relief to victims of Hurricane Sandy. In a December press release, Coburn complained that the Sandy Relief bill contained “wasteful spending,” and identified a series of items he objected to, including “$12.9 billion for future disaster mitigation activities and studies.”

    Coburn spokesman John Hart on Monday evening confirmed that the senator will seek to ensure that any additional funding for tornado disaster relief in Oklahoma be offset by cuts to federal spending elsewhere in the budget. “That’s always been his position [to offset disaster aid],” Hart said. “He supported offsets to the bill funding the OKC bombing recovery effort.” Those offsets were achieved in 1995 by tapping federal funds that had not yet been appropriated.

    In 2011, both senators opposed legislation that would have granted necessary funding for FEMA when the agency was set to run out of money. Sending the funds to FEMA would have been “unconscionable,” Coburn said at the time.

    Well, at least Senator Coburn shouldn’t have too much trouble getting recommendations from other folks Congress about which Federal programs are in need of a cut.

    Posted by Pterrafractyl | May 21, 2013, 2:05 pm
  5. With Greece’s experiment in racing to the bottom continuing to hit new lows we appear to now see a flood of Greek pensioners seeking employment just to eek by. That should do wonders for the Greek youth unemployment catastrophe and the long-term recovery prospects:

    Deutsche Welle
    Little hope for Greece’s jobless youth
    Date 21.05.2013
    Author Jannis Papadimitriou, Athens / bk

    Nearly two-thirds of young Greeks are currently jobless. The unemployment rate in the country has reached a record 27 percent. Experts are warning of dramatic consequences for Greek society.

    Before Europe’s debt crisis set in, young Greeks complained of poorly-paid jobs and described themselves as the “1,000-euro generation.” Today, a situation like that would be paradise – currently more than 60 percent of young people have no jobs at all, and analysts and unions are warning of grave social consequences.

    “A whole generation of well-educated young people feel like they’ve simply been set aside, especially because many of them are long-term unemployed,” says Ilias Katsoulis, professor of sociology and political sciences at Athens University. He thinks that society could face serious problems. “In a crisis, our society needs these people especially,” he says. “But society hardly offers them any opportunities to use their qualifications, and that makes the crisis worse.”

    It’s a vicious circle, but Katsoulis, who has been analyzing the upheavals and reforms in the Greek job market for the past ten years, still sees some hope for the future. After all, he reasons, the Greeks currently leaving the country will all return at some point, and then they will bring their expertise and experience back with them.

    Imported expertise or brain-drain?

    International studies have shown that countries of origin profit just as much as do the countries to which the emigrants move, says Katsoulis. But many commentators in Greece disagree, lamenting the “brain-drain” of young Greeks to northern Europe, the US, or Arab countries. Economist and newspaper publisher Giorgos Kyrtsos, who himself studied in the US, is also concerned.

    On Athens-based TV network Skai, Kyrtsos criticized politicians both inside and outside Greece for prescribing a drastic cure for the country’s economy, and then completely ignoring its social consequences. It has led, he said, to the disappearance of the Greek middle classes. “That means we can no longer finance the aging of our society,” he warned, pointing to the record levels of Greeks moving to Germany. “The 3.7 million people with an income are faced with three million pensioners – soon every single one of them will have to finance one pensioner. What if the much-vaunted recovery actually comes and there’s no one left in Greece to profit from it?

    According to the experts, it’s only the traditionally strong solidarity within Greek families that has prevented a social revolution so far, for it’s still considered normal in Greece for older family members to support their children and grandchildren financially.

    Tradition meets reality

    But that generosity is now facing a grim reality, believes Athens-based economic journalist Babis Papadimitriou. The most recent job market data shows that registered unemployment in the 65+ age group has multiplied by a factor of ten in the past five years. That means that more and more Greeks of pensionable age are seeking paid work in order to contribute to their families.

    “A lot of young people are standing utterly helpless in front of the patronage system that still dominates Greek politics,” says Katsoulis. Greeks are traditionally very reserved about state institutions, he argues, and the record unemployment rate in the past few years has only strengthened that.

    “They have no chance of getting on and maybe getting a good job in the administration, unless they belong to a political party,” he said. “They would like to trust the state institutions, but they know that it’s all clientele politics.” That, he added, was also the reason why many Greeks have vented their anger in recent weeks by giving their votes to extremist parties.

    Posted by Pterrafractyl | May 22, 2013, 11:13 am
  6. Guess what: when you impoverish someone you might be starving them too:

    The Atlantic
    Nearly a Quarter of People in Greece and the U.S. Can’t Afford Food
    Hunger has grown dramatically in Europe since 2007

    Olga Khazan May 23 2013, 1:09 PM ET

    No matter where you’re from, not having enough to eat is the ultimate signifier of economic distress. Food is the base of Maslow’s hierarchy. It’s the first concern in disaster zones. It’s usually the last thing to go — after the car and the nice apartment — when you lose your job.

    If you can’t afford food, there’s really nowhere to go but up. That’s why it’s so shocking just how many more hungry people there are now in what were formerly known as the world’s well-off nations. According to a new Pew report released today, almost a quarter of people (24 percent) in the United States and Greece answered “yes” to the question, “Have there been times during the last year when you did not have enough money to buy food your family needed?”

    The levels in other Western countries weren’t quite that high, but the rate at which hunger has swept the eurozone since 2007 is still really dramatic:

    [see graphic]

    Germany, which has been relatively sheltered from Europe’s economic woes, bucks the trend: only 8 percent of Germans can’t afford food, fewer than the 10 percent who said so in 2007.

    Some Eastern European countries also seem to be doing better: Hunger plummeted in Poland from 35 percent in 2002 to 16 percent this year, and in Russia from 50 to 23 percent in the same timeframe. (We’ve written before about how currency depreciation had a big role in Poland’s relative economic success.)

    These numbers are particularly stark when you think about them in terms of countries that are historically not as wealthy. In Lebanon, only 1 percent of the population said they couldn’t afford food (down from 12 percent in 2007), and in China, it was just 8 percent.

    Of course, Europe obviously does not have it as bad as most of Africa and parts of the Middle East. In Uganda, Kenya and Senegal — some of the poorer countries surveyed — the majority of respondents said food is hard to come by.

    Posted by Pterrafractyl | May 24, 2013, 2:45 pm
  7. Not that this shouldn’t have been expected, but in case you were curious, that recent chatter about a shift away from austerity policies in the EU is all ass-covering bullshit:

    Analysis: Europe’s austerity-to-growth shift largely semantic

    By Paul Taylor

    PARIS | Mon May 27, 2013 1:55am EDT

    (Reuters) – To listen to some European leaders, especially in France, you would think the era of austerity was over and the euro zone was going full steam ahead to revive economic growth.

    In a striking change of tone, European Commission President Jose Manuel Barroso said last month that austerity – the policy of cutting public debt by reducing spending and raising taxes – had reached the limits of public acceptance.

    In reality, the shift is more in words than deeds. The rhetoric has changed but there has been no policy U-turn.

    To be sure, the European Commission is granting governments more time to reduce their budget deficits to EU limits, chiefly because recession had made those targets unattainable.

    Euro zone states have a breathing space because bond markets have ceased to panic since the European Central Bank said last year it would act decisively if necessary to preserve the euro.

    The EU emphasis is now on reducing “structural deficits” – an elastic measure meant to take account of the economic cycle – and on reforming labor markets and pension systems, opening up more sectors to competition and easing business regulation to improve countries’ growth potential.

    Small initiatives are in the works, amid great political fanfare, to combat the scourge of mass youth unemployment which threatens southern Europe with a lost and alienated generation.

    The ECB is exploring ways to ease lending to smaller businesses in the hardest-hit peripheral countries of the euro zone. But while it is keeping the liquidity taps to banks open, it has no intention of following the U.S., British and Japanese central banks into massive money printing to try to spur growth.

    “It is not that we are letting austerity policies go,” said Carsten Brzeski, European economist at ING in Brussels. “It’s only about the pace of adjustment and a shift towards structural reforms to avoid ending up in a downward spiral of austerity.”

    While the ECB could perhaps do a bit more to increase the supply of credit to business in depressed southern Europe, the main inhibitor to investment there was the lack of demand, for which there was no easy solution, he said.

    EU policymakers and central bankers say highly indebted countries will have no alternative for several years to curbing public spending and shrinking the state, however politically unpalatable that may be.

    “Growth is the key to getting out of the crisis, we all agree on that,” German Bundesbank chief Jens Weidmann, the ECB’s leading hawk, said in a speech to French businessmen last week. “But renouncing budget consolidation will not bring us closer to that objective.”

    POLITICAL LIMITS

    Barroso’s April 22 recognition of the political limits of austerity recalled his predecessor Romano Prodi’s 2002 comment that the EU’s budget rules were “stupid” because they were too rigid.

    “While I think this policy is fundamentally right, I think it has reached its limits,” Barroso said. “A policy to be successful not only has to be properly designed, it has to have the minimum of political and social support.”

    To some, that sounded a bit like the pope questioning the existence of God. It prompted gleeful “austerity is over” headlines in countries such as Ireland that have endured harsh cuts, and irritated several European governments.

    In Brussels, a senior official in regular contact with national leaders said Barroso had “miscommunicated” and there was no alternative to austerity, even if the word was avoided.

    “The idea that there will now be deficit spending, that the age of austerity is finished, is misleading,” the official said, speaking on condition of anonymity because of the sensitivity of his position.

    “On the margins, we can postpone budget consolidation by a year, or by two years, but it’s not really the answer. The answer is growth, and that is only going to come through structural reform and improved productivity.

    German Chancellor Angela Merkel, who has used Berlin’s financial clout since the start of the crisis to press for fiscal discipline, made clear that austerity and growth were not opposites and that budget savings must continue.

    In a veiled criticism of close ally France, which has so far raised revenue rather than cut public spending to narrow its budget gap, Berlin says governments should avoid increasing the tax burden because that harms growth.

    Two events in the economics profession have sapped the theoretical case for so-called front-loaded austerity – making drastic public spending cuts at the start of an economic adjustment program.

    First IMF chief economist Olivier Blanchard acknowledged that cutting government spending may have had a bigger impact than previously calculated on reducing economic output. Then U.S. economists found flaws in data underpinning the influential theory of Harvard economists Kenneth Rogoff and Carmen Reinhardt that public debt above 90 percent of GDP stunts growth.

    That leaves the economics of austerity murkier today than when the euro zone debt crisis struck in 2010, while the politics just keep getting harder.

    Posted by Pterrafractyl | May 28, 2013, 7:02 am
  8. Former Chairman of the Federal Reserve Paul Volcker is thinking about starting “The Volcker Alliance”, a new group set up to reinstill the public’s trust in government and its ability to actually solve problems and address the issues of the day. We always have to be a little wary about new organizations that suddenly pop up an claim that “sensible centrist” mantle given the history of seemingly non-partisan think-tanks that end up just providing a bipartisan veneer for far-right policies. But at the same time, there’s no shortage of issues so maybe this will actually be a good thing? Hopefully?

    Former fed chair Volcker aims to boost government trust with new group

    By Susan Heavey

    WASHINGTON | Wed May 29, 2013 9:00am EDT

    (Reuters) – Former Federal Reserve Chairman Paul Volcker, most recently known for his efforts to rein in Wall Street’s risky lending habits, is now targeting Washington with a nonpartisan policy group aimed at bolstering public trust in basic government service.

    The Volcker Alliance will sponsor studies on government performance, make recommendations on public policies, and work to improve the implementation of government policy at federal, state and local levels, the group said in a statement.

    Volcker cited citizens’ declining trust over the past few decades. “Too often government, at all levels, in the eyes of its citizens, has been unable to respond effectively to the challenges of the day,” Volcker said in a statement.

    Volcker, who led the Fed’s charge to end high inflation in the 1970s, was tapped by Obama in 2008 to lead a two-year advisory board to help steer an economic recovery plan. He is also known for the namesake rule under the 2010 Dodd-Frank overhaul of Wall Street to protect taxpayers from bank bailouts.

    The so-called Volcker rule would bar banks from betting their own money on financial markets, but it is unclear when the rule will be finalized and some have said it does not go far enough.

    His new group aims to rekindle taxpayer confidence in government, as well.

    Unlike other Washington “think tanks” that focus “on issues of ‘high policy,’ Volcker said his effort “will endeavor to rekindle intellectual, practical, and academic interest in the implementation of policy – the ‘nuts and bolts’ of governance.”

    It will be run by Shelley Metzenbaum, an expert in measuring public sector performance who has worked in Washington and at various universities. Its board includes former U.S. Securities and Exchange Commission chairman Bill Donaldson and former Federal Reserve Vice Chairman Alice Rivlin, among others.

    Well, at least on the surface this doesn’t appear to be a particularly scary sounding new group. Heck, maybe it’ll even come up with some great new policy-proposals using the `nuts and bolts` approach to policy-analysis. Unfortunately, if his speech before the Economic Club of New York on Wednesday is any indication of what kinds of ‘thoughts’ we should expect to emerge from this think-tank, the Volcker Alliance looks like it might be another member of the global Austerian Alliance. This probably. shouldn’t be surprising. It’s where we’ve been for a while. But it’s still a bad sign for the Let’s-Not-Intentionally-Destroy-Society Alliance:

    Bloomberg
    Volcker Cautions Federal Reserve May ‘Fall Short’
    By John Detrixhe – May 29, 2013 2:56 PM CT

    Former Federal Reserve Chairman Paul Volcker said today the central bank will probably “fall short” by being asked to do too much.

    “It’s fashionable to talk about a dual mandate, that policy should somehow be directed toward two objectives, of price stability and full employment,” Volcker told the Economic Club of New York. “Fashionable or not, I find that mandate both operationally confusing and ultimately illusory.”

    With unemployment lingering at 7.5 percent — still higher than before the last recession — the Federal Open Market Committee announced May 1 that it will increase or decrease the pace of its monthly bond purchases in response to changes in inflation and the labor market. The policy makers agreed to maintain monthly buying of $40 billion in mortgage securities and $45 billion of U.S. Treasuries in a bid to boost employment.

    “Asked to do too much, for instance to accommodate misguided fiscal policies, to deal with structural imbalances, to square continuously the hypothetical circles of stability, growth and full employment, then it will inevitably fall short,” Volcker said. Those efforts cause it to lose “sight of its basic responsibility for price stability, a matter that is within the range of its influence.”

    Volcker, 85, served as chairman of the Fed from 1979 to 1987. He helped cut the unemployment rate to an eight-year low of 5.7 percent in 1987, his last year as Fed chairman, after reversing interest-rate increases that brought inflation down from as high as 15 percent.
    Rewriting Regulations

    He has provided advice to the federal government on economic issues as well as the rewriting of regulations for financial institutions. The law enacting those regulations included the so-called Volcker rule, which would ban proprietary trading at banks and restrict their investments in private-equity and hedge funds.

    “The Federal Reserve, any central bank, should not be asked to do too much to undertake responsibilities that it cannot responsibly meet with its appropriately limited powers,” Volcker said. He said a central bank’s basic responsibility is for a “stable currency.”

    “Credibility is an enormous asset,” Volcker said. “Once earned, it must not be frittered away by yielding to the notion that a little inflation right now is a good a thing, a good thing to release animal spirits and to pep up investment.”

    “The implicit assumption behind that siren call must be that the inflation rate can be manipulated to reach economic objectives,” according to Volcker. “Up today, maybe a little more tomorrow and then pulled back on command. Good luck in that. All experience demonstrates that inflation, when fairly and deliberately started, is hard to control and reverse.”

    Part of what’s so sad about seeing Volcker’s call for a repeal of the Federal Reserve’s “dual mandate” (which is another way to call for austerity policies) is that it appears to be rooted in some sort of intellectual capitulation over the intertwined nature of monetary policy and social objectives. The duel mandate of price stability and full employment is just too hard to implement according to Volcker. It’s “both operationally confusing and ultimately illusory,” and this is the guy that used to be the chairman of the Fed!? Was he a closet-Rick Perry all these years? I mean, yeah, the dual mandate is inherently tricky but that’s because economics and finance are inherently tricky topics. Calling for the abandonment of the dual mandate is like saying “Hey, I heard Judges have to factor both the needs of society AND the needs of the individuals before the court. OMG, we totally need to simplify that!” Or, “Hey, IRS agents have to prevent rampant political money-laundering/tax-fraud while simultaneously adhering to the principles of freedom of speech and equivalence before the law while attempting to investigate financial/political fraud. We should simplify that!”

    Somehow we almost never-ish hear calls to just ‘simplify’ something like justice system by just ignoring entire dimensions of its nature but for some reason “price stability” in economics has this magical quality that justifies the abandonment of other variables like employment. Why is that? Money is tricky. Finance is tricky. Weird internal contradictions can pop up all the time in an economy because our economic system is imperfect but also vital and must fulfill a diverse number of social needs. Isn’t that why we have economists?! To study tricky stuff and try to make the tough judgment calls? We wedded our fates and futures to this weird “finance” thing quite a long time ago and the complexity of this system isn’t exactly uncharted territory. But this is our sad state of affairs: Paul Volcker announces his plans to start a new, novel think-tank that will take a `nuts and bolts` approach to implementing novel policy-solutions and one of the first proposals we see from him soon afterwards is a call to dumb-down our central bank. The zombies really do have immense strength in numbers.

    Posted by Pterrafractyl | May 30, 2013, 9:26 pm
  9. Reinhart and Rogoff – the dynamic duo that happened to publish a now-discredited academic paper that provided the intellectual backing for austerity policies – have been waging a bit of a counter-attack of late against the growing chorus of critics, taking particular offense at Paul Krugman’s “spectacularly uncivil behavior”. The defensive tactic appears to be ‘hey, Paul is being mean and we’re not wrong anyways’ so it’s more of Jedi mind-trick attempt. So Reihart and Rogoff are doubling down on their conclusions, Krugman is continuing to point out their irresponsibility, and more studies are coming out raising further doubts on their validity of their pro-austerity findings. So the Reinhart/Rogoff/Krugman austerity saga doesn’t appear to be going away any time soon. And if Stanley Fischer’s comments are any indication of what to expect, it’s looking like the Reinhart/Rogoff paper of 2010 that was so handy in justifying mindless austerity policies is about to be replaced with a new Reinhart/Rogoff publication. The ‘Paul Krugman is a meanie‘ letter is actually serving as a kind of pro-austerity rallying cry of sorts. This is where we are:

    Bloomberg
    Fischer Defends Reinhart, Rogoff Against ‘Unfair’ Attacks (1)
    By Alisa Odenheimer and Simon Kennedy
    June 04, 2013

    Bank of Israel Governor Stanley Fischer defended Harvard University economists Carmen Reinhart and Kenneth Rogoff against criticism from fellow academics.

    A 2010 paper by Reinhart and Rogoff used to justify austerity in the U.S. and Europe is at the center of a storm in economics and policy making after flaws were revealed. While acknowledging mistakes, Reinhart and Rogoff say their basic findings hold and last week accused Nobel laureate Paul Krugman of “spectacularly uncivil behavior” in his critique.

    “The attack on these two outstanding economists is completely wrong, unfair and unacceptable,” Fischer said in a speech today to economists in Tel Aviv, without mentioning the critics by name. “You can’t behave this way.”

    Reinhart and Rogoff last week hit back at Krugman for asserting in an article published in the New York Review of Books that they had withheld data from their research. Krugman then said the two have done little to dispel what he called a misconception generated by their paper — that economies falter when debt levels exceed 90 percent of gross domestic product.

    Fischer and Krugman both taught at the Massachusetts Institute of Technology in the 1980s and 1990s. Krugman is now a professor at Princeton University and in February said Fischer would be “highly qualified” to lead the Federal Reserve.

    No Love

    Fischer, who spoke at an Israel Economic Association meeting, said he is often helped by his knowledge of central-banking history, since lessons from the past can aid in framing current policy. Federal Reserve Chairman Ben S. Bernanke’s familiarity with the lessons of the Great Depression led him to make different policy choices in the current crisis, with a better outcome for the U.S. economy, he said.

    Fischer said that Reinhart and Rogoff have made an “important contribution” to understanding the connection between various historical financial crises. While economists have frequently disagreed, they have kept their disputes civil and should do so for the good of the discipline, he said.

    Get ready for the era of “Paul Krugman is a meanie and that’s why [insert awful austerity policy here] is totally justifiable”. With the realities of the austerity-debacle piling up around the globe these kinds of arguments are all they have left.

    Posted by Pterrafractyl | June 4, 2013, 10:39 am
  10. The IMF is again admitting that its calls for austerity in Greece might have made a bad situation a lot worse. Well, better late than never ever, although that rule doesn’t apply to everything. Some things are better never ever tried:

    The American Prospect
    A German Tea Party?

    Chase Gummer

    May 31, 2013

    What the popular rise of a new anti-euro political party says about fraying nerves in Europe’s economic powerhouse.

    A new anti-euro political party, AfD (Alternative for Germany) is gaining ground in the polls, threatening Angela Merkel’s ruling center-right coalition just as the campaign season heats up ahead of general elections in the fall. While the political establishment in Berlin is only beginning to take this new brand of conservative populism seriously, the rise of the AfD is sure to entrench austerity politics at a time when the opposite is needed. Germany just got its own Tea Party.

    At the AfD’s first party convention this past April, there was little of the pageantry we’ve come to associate with the Tea Party: no Colonial-era uniforms, no powdered wigs, no effigies of chancellor Merkel burning in the hotel foyer, only a few guys in T-shirts depicting the European Union as a Stalinist dictatorship (“(E)USSR”) and one gentlemen with a nationalist tricolor sash of gold, red, and black. Most of the 1,300 delegates, a vast sea of wizened, grey-haired men, looked exceedingly prim and middle-class, as if they had come to discuss their retirement plans or maybe the future of dentistry.

    What the AfD does share with the Tea Party, however, are uncompromising and, many would say, illusory political goals. In the U.S. that means dismantling the welfare state; in Germany, getting rid of the euro. “The mainstream parties are exhausted … we have seen this crisis and the way in which parliamentarians have given in to this government without a thought, only because they thought there was no alternative to the bail-out policies,” said AfD party leader, Bernd Lucke, in his opening speech at the convention. “But there is an alternative. It’s now here!” Because all of the mainstream national parties support the euro, the AfD has been able to gain momentum since the party’s founding in February of this year. The party recently cracked the 5 percent hurdle in national polls, which would give it seats in the German parliament, the Bundestag, if elections were held today.

    Euro-skeptics have long existed on the fringes of conservative politics in Europe. They usually come from the nationalist right, with xenophobia not far behind. Yet what is remarkable about the AfD is the degree to which they have avoided the trap of the far right and instead aimed for the center. So far the party has kept known right-wing extremists out of key positions. It’s tried to appeal to mainstream sentiments by not demonizing Southern Europe fo its own failings, merely claiming that the currency union is a bad deal for all involved. Even on immigration, the AfD strikes a centrist chord, arguing for “smart” policies based on the Canadian points system and maintaining Germany’s historic position as home to those seeking political asylum. This is not your typical “Germany first” type of crowd.

    Perhaps one reason why the AfD has done well in shielding itself from far-right extremism is the libertarianism many in the party leadership share. Whereas the German far right tends to use the collectivist appeal of nationalism and race to find support, the AfD’s leadership is more at home in the economics and business faculties of German universities, where radical pro-market ideas have often found a home. Party chairman Bernd Lucke, for example, is a professor of economics in Hamburg. Other prominent supporters like Hans Olaf Henkel, a businessman and mainstay on the German talk- show circuit, is also a notorious supply-sider and opponent of state intervention, who has long been critical of the euro as well as the massive fiscal response in the United States to the crisis.

    At a time when many economists believe that Germany needs to be dialing back its push for austerity and focus on stimulative measures, it is the AfD’s commitment to libertarian ideas of non-interventionism that could prove most troubling. The party’s sudden success is already forcing the mainstream parties to push back, especially in the conservative camp, where even a small number of party defections could result in a loss in the September general election. The AfD’s ascent has already pulled the debate further to the right; many political observers think that the importance of austerity could grow in the short run as conservatives try to keep voters from drifting toward the AfD.

    If the center-right coalition does not hold, then a grand coalition between the Christian Democrats and their main rival on the left, the Social Democrats, is the likeliest scenario. They would no doubt be able to enact meaningful legislation on the domestic front, but fear of further voter disaffection to the anti-Euro fringe could keep such a coalition from doing anything dramatic to get Europe growing again, like slowing fiscal consolidation in Southern Europe. With German growth expected to be slightly positive for the rest of 2013 and recent polls suggesting that 70 percent of Germans are happy with the current state of the euro, a grand coalition would have little incentive to alter the status quo. The Eurozone will no doubt survive, but it will not thrive.

    Somehow, at this point, is almost seems fitting that the rising stars of German political opposition to the eurozone madness would be a bunch of pro-austerity Teabaggers. How could it be any other way?

    Posted by Pterrafractyl | June 6, 2013, 9:45 am
  11. Uh oh, the Netherlands has a growing deficit in spite of its austerity policies. Time for more austerity!

    mainly macro
    Tuesday, 11 June 2013
    Does the Dutch central bank employ any macroeconomists?
    Simon Wren-Lewis

    Did you think that the policy of fighting recession by increasing austerity was now intellectually bankrupt? No one seems to have told the Dutch central bank. (Hence the deliberately provocative title of this post.) The latest forecast by the Bank says

    – The economy will shrink by 0.8% this year, followed by growth of 0.5% next, “accelerating” to 1.1% in 2015
    – The unemployment rate will rise sharply, reaching a peak point at 7.2% of the labour force midway through 2014.
    – The budget deficit will increase from 3.5% this year to 3.9% next.

    What should the government do about this? The central bank says “”The forecast course of the factual and structural deficit in 2014 does not meet the recommendations given in May by the European Commission to correct the excessive budget deficit in the Netherlands. Extra consolidation measures are therefore necessary.”

    Unfortunately the central bank is being entirely predictable in continuing to urge austerity as the economy weakens. In earlier posts (here and here), I noted how the central bank’s advice was rather different from the Dutch CPB (Bureau for Economic Policy Analysis), which clearly does employ macroeconomists. What is just so depressing is that the central bank seems oblivious to the increasingly overwhelming evidence that austerity during a recession is the complete opposite of what you should be doing in a country without its own monetary policy. Unlike some other Eurozone countries, there is no market pressure forcing policymakers’ hands in the Netherlands.

    It’s easy to see why everyone loves austerity. While austerity might seem like an already-failed policy since they’ve been trying it for a while. But they’re totally not failed. At all. Don’t ask why that is. Just accept it:

    Dutch finance minister defends austerity approach
    June 11, 2013

    The Hague, NETHERLANDS (AP) — Dutch Finance Minister Jeroen Dijsselbloem defended his strategy of cutting government spending and increasing taxes to reduce the country’s budget deficit — despite a lengthy recession in the Netherlands that some economists believe is being worsened by the government’s austerity policies.

    Speaking to reporters in The Hague Tuesday alongside Olli Rehn, the European Union’s top monetary affairs official, Dijsselbloem said he expects the Netherlands deficit to fall below 3 percent of annual gross domestic product, the limit mandated by European rules, in 2014.

    “The approach is not failing,” he said.

    Austerity is totally not at all failing. It’s us, the people, that are failing austerity. Right Jeroen?

    Posted by Pterrafractyl | June 12, 2013, 10:24 am
  12. ECB member Joerg Asmussen rejected the recent calls for the end to the IMF/EU/ECB “troika”, arguing that not only was there no alternative but that the troika is actually doing a good job. Just look at how well things are going in Athens:

    ECB’s Asmussen rejects call for troika to be abolished

    FRANKFURT | Wed Jul 17, 2013 10:46am EDT

    (Reuters) – European Central Bank policymaker Joerg Asmussen rejected on Wednesday a call from the EU justice commissioner for the “troika” of the European Commission, ECB and International Monetary Fund to be dissolved.

    Commissioner Viviane Reding, said on Tuesday “the time of the troika is over”, arguing that in future Europe must resolve its problems without the IMF.

    But Asmussen, a member of the ECB’s Executive Board, said there was no other immediate option.

    “There is, in the short-term, no functional alternative to the Troika,” he told newspaper Rheinische Post’s online edition.

    “The Troika also works very well together, as one sees on the ground in Athens, for example,” he said. “There is no reason, in the middle of the crisis, to change this proven structure.”

    Yes, why on earth would one want to disrupt this proven structure. Just look at Athens:

    Greece bans protests during Schaeuble visit
    July 17, 2013

    ATHENS, Greece (AP) — The Greek police has banned public protests in central Athens on Thursday, when German Finance Minister Wolfgang Schaeuble will visit, a decision the left-wing opposition party described as ‘‘fascist and undemocratic.’’

    A police statement Wednesday said a cordon would be set up around the city center in which ‘‘public gatherings and rallies’’ would be banned between 9:00 a.m. and 8:00 p.m. (0600-1700GMT).

    The cordoned area includes parliament and the city’s main Syntagma Square, focal points of scores of anti-austerity demonstrations.

    ‘‘This action is fascist and undemocratic. It is inconceivable to have a demonstration and to exclude Syntagma Square. It is inconceivable for any European city,’’ Panos Skourletis, a spokesman for the left-wing main opposition party, Syriza, told the AP.

    ‘‘If we can’t go there, where are we supposed to go? Varkiza?’’ he added, referring to a seaside resort near Athens.

    Schaeuble’s visit is his first since the Greek crisis broke out more than three years ago and it follows three days of massive protests against government plans for mass firings and transfers of public servants.

    Greece’s two largest unions said they had no plans to demonstrate Thursday, but Skourletis said members of his party would join protests if any take place.

    With results like that it’s almost surprising that more countries facing tough economies aren’t asking for a troika of their own. Just think of the possibilities:

    Greece Lays Off 25,000 Even Though One In Four Greeks Is Unemployed

    By Alan Pyke on Jul 18, 2013 at 4:04 pm

    The Greek government approved a new round of public worker layoffs required by the country’s ongoing bailout, affecting 25,000 employees. Unemployment in the country is nearly 27 percent, according to the most recent figures, with the youth unemployment rate more than double that.

    The European authorities administering Greece’s bailout insisted upon the new job cuts before they would release the next $9.2 billion in rescue funds. As a result, 15,000 jobs will be eliminated, and another 10,000 will not have their contracts renewed when they expire later this year. The job cuts mean thousands more without disposable income in a country already three years deep in a vicious economic cycle driven by austerity.

    The Greek economy has been so bad for so long that it was recently downgraded by one investment firm from a “developed” country to an ‘emerging market,’ a move that is without precedent. Cuts to public services have not spared the health care sector, leading to a surge in the rate of stillbirths. While the International Monetary Fund has acknowledged it was far too optimistic when it predicted the cuts would spark economic growth, the country’s creditors have not eased the bailout requirements.

    The Greek experience should be a cautionary tale for American policymakers, though not in the ways deficit hawks claim. The initial U.S. response to the economic crisis – central government spending to buoy the economy – has given way to the same sort of cut-and-grow thinking that has been so harmful for Greece. Recently, the IMF criticized the ongoing American spending cuts as “excessively rapid,” and warned that continuing with sequestration will hurt U.S. growth in both the short and long terms.

    Posted by Pterrafractyl | July 19, 2013, 7:43 am
  13. ECB member Joerg Asmussen rejected the recent calls for the end to the IMF/EU/ECB “troika”, arguing that not only was there no alternative but that the troika is actually doing a good job. Just look at how well things are going in Athens:

    ECB’s Asmussen rejects call for troika to be abolished

    FRANKFURT | Wed Jul 17, 2013 10:46am EDT

    (Reuters) – European Central Bank policymaker Joerg Asmussen rejected on Wednesday a call from the EU justice commissioner for the “troika” of the European Commission, ECB and International Monetary Fund to be dissolved.

    Commissioner Viviane Reding, said on Tuesday “the time of the troika is over”, arguing that in future Europe must resolve its problems without the IMF.

    But Asmussen, a member of the ECB’s Executive Board, said there was no other immediate option.

    “There is, in the short-term, no functional alternative to the Troika,” he told newspaper Rheinische Post’s online edition.

    “The Troika also works very well together, as one sees on the ground in Athens, for example,” he said. “There is no reason, in the middle of the crisis, to change this proven structure.”

    Yes, why on earth would one want to disrupt this proven structure. Just look at Athens:

    Greece bans protests during Schaeuble visit
    July 17, 2013

    ATHENS, Greece (AP) — The Greek police has banned public protests in central Athens on Thursday, when German Finance Minister Wolfgang Schaeuble will visit, a decision the left-wing opposition party described as ‘‘fascist and undemocratic.’’

    A police statement Wednesday said a cordon would be set up around the city center in which ‘‘public gatherings and rallies’’ would be banned between 9:00 a.m. and 8:00 p.m. (0600-1700GMT).

    The cordoned area includes parliament and the city’s main Syntagma Square, focal points of scores of anti-austerity demonstrations.

    ‘‘This action is fascist and undemocratic. It is inconceivable to have a demonstration and to exclude Syntagma Square. It is inconceivable for any European city,’’ Panos Skourletis, a spokesman for the left-wing main opposition party, Syriza, told the AP.

    ‘‘If we can’t go there, where are we supposed to go? Varkiza?’’ he added, referring to a seaside resort near Athens.

    Schaeuble’s visit is his first since the Greek crisis broke out more than three years ago and it follows three days of massive protests against government plans for mass firings and transfers of public servants.

    Greece’s two largest unions said they had no plans to demonstrate Thursday, but Skourletis said members of his party would join protests if any take place.

    With results like that it’s almost surprising that more countries facing tough economies aren’t asking for a troika of their own. Just think of the possibilities:

    ThinkProgress
    Greece Lays Off 25,000 Even Though One In Four Greeks Is Unemployed

    By Alan Pyke on Jul 18, 2013 at 4:04 pm

    The Greek government approved a new round of public worker layoffs required by the country’s ongoing bailout, affecting 25,000 employees. Unemployment in the country is nearly 27 percent, according to the most recent figures, with the youth unemployment rate more than double that.

    The European authorities administering Greece’s bailout insisted upon the new job cuts before they would release the next $9.2 billion in rescue funds. As a result, 15,000 jobs will be eliminated, and another 10,000 will not have their contracts renewed when they expire later this year. The job cuts mean thousands more without disposable income in a country already three years deep in a vicious economic cycle driven by austerity.

    The Greek economy has been so bad for so long that it was recently downgraded by one investment firm from a “developed” country to an ‘emerging market,’ a move that is without precedent. Cuts to public services have not spared the health care sector, leading to a surge in the rate of stillbirths. While the International Monetary Fund has acknowledged it was far too optimistic when it predicted the cuts would spark economic growth, the country’s creditors have not eased the bailout requirements.

    The Greek experience should be a cautionary tale for American policymakers, though not in the ways deficit hawks claim. The initial U.S. response to the economic crisis – central government spending to buoy the economy – has given way to the same sort of cut-and-grow thinking that has been so harmful for Greece. Recently, the IMF criticized the ongoing American spending cuts as “excessively rapid,” and warned that continuing with sequestration will hurt U.S. growth in both the short and long terms.

    Posted by Pterrafractyl | July 19, 2013, 7:43 am
  14. According to Greece’s “Minister of Administrative Reform” (the austerity czar), they dramatic cuts to the public sector aren’t even about saving money. No, it’s about “creating a public administration that is effective and serves the needs of the Greek people”:

    The Los Angeles Times
    Facing the challenge of paring back Greece’s public workforce
    Kyriakos Mitsotakis, Greece’s minister of administrative reform, discusses the government’s plan under which 25,000 civil servants will be moved out of their current jobs.

    By Anthee Carassava

    August 1, 2013, 4:00 a.m.

    ATHENS — Greece’s Parliament last month approved the first official culling of the country’s bloated public sector. The move, opposed by government workers but viewed by many economists as long overdue for an indebted economy, will push 25,000 civil servants into a “mobility scheme,” giving them eight months to find work in another state department or get fired.

    Kyriakos Mitsotakis, the young Harvard-cum-Stanford educated economist who fills the country’s least coveted government job — as minister of administrative reform, a stuffy-sounding title that puts him in the thick of controversy — spoke last week to The Times about efforts to pare back public employment, the controversial closure of the state broadcaster and the tough austerity measures demanded by international lenders.

    State statistics show about 1,000 private sector employees losing their jobs daily since the start of the crisis in 2009. How many have been forced out of the public sector in that same period?

    The public sector has been reduced significantly. The government has been applying a 1-to-5 attrition rule [one person hired for every five who retire]. At the same time, it has reduced temporary contracts and has not renewed fixed-term contracts. We are on track to achieve a reduction in the number of civil servants by 150,000 by 2015.

    So, no one to date has been fired from the public sector?

    That is absolutely correct.

    You’re being asked to deliver on something that three previous governments did not do, even on a smaller scale, in the past three years. Can it realistically be done?

    I was appointed to this position in order to implement long-overdue reforms in Greek public administration, and I want to assure you that I have embraced this task with determination and resolve…. It is true that we missed the end-June target for transferring the required 12,500 employees to the mobility scheme.

    In order to get back on schedule regarding public sector mobility, we will place 4,250 ordinary employees in the mobility scheme by end-July and 8,250 by end-September. Another 12,500 will be placed by end-December 2013.

    Do the 2,700 employees who were sacked in the sudden closure of the state broadcaster fit into this scheme?

    They were fired. Some will have the opportunity to apply for rehiring, but there are no certainties.

    Just last month the government nearly collapsed when it shut down the state broadcaster. Do you think the government can survive another, possibly even bigger backlash?

    There is a silent majority in Greece that understands that we can no longer sweep the mistakes of the past under the rug. For a long time, there was a sense in this country that bad habits would with the benefit of time just disappear. Today, the majority understands very difficult decisions must be taken and that vital reforms can no longer be put on the back burner.

    Whether the employees are rehired or not, 25,000 jobs will be terminated by the end of the year, as the bill says, correct?

    This is not true. Public sector employees placed in the mobility scheme will have their wages reduced by 25% and will go through an assessment process, within an evaluation framework to be established by end-September, before being reallocated to new posts. Only a fraction of employees placed in the mobility scheme will be destined to exit the public sector.

    How does that make the public sector more efficient? Are these underperforming, political hires?

    Throughout the past decade, I have repeatedly spoken openly and clearly about the need for administrative reform in the public sector, not only to make it more efficient per se but to help it promote competitive private sector economy.

    This message is ever more relevant today, as Greece is paving its way out of recession, trying to create economic growth and new job opportunities. Setting up a transparent and merit-based appraisal framework should help improve individual performance and increase accountability and efficiency in the civil service.

    With official unemployment at 27%, how wise is it on behalf of lenders to be demanding this from Greece now, and you likewise to be accepting it?

    First of all, this is not a new demand; it goes back to commitment the Greek government signed up to in February 2012. Secondly, for every one of the 15,000 who exit the public sector, another one will be hired, adding new talent and skills to the Greek civil service.

    Thirdly, dismissals due to disciplinary offenses will be one of the main pools for the direct exit from the civil service, and this is something long overdue. Those public sector employees facing disciplinary review, or who entered presenting fake credentials, or who have abused legal loopholes to make temporary positions into almost permanent, have to go, and I believe that the Greek society will embrace this move.

    How much will this cost the state, and how much does it stand to save?

    As I mentioned earlier, it is not a matter of achieving savings, but creating a public administration that is effective and serves the needs of the Greek people.

    So are the Greek healthcare cuts also about better serving the needs of the Greek people? Because, while it’s debatable as to whether or not the Greeks need more malaria and HIV, these kind of cuts don’t look the types of “reforms” that will actually save money in the run. Disease, unfortunately, happens to be very pro-austerity:

    The Atlantic
    Malaria and HIV Spike as Greece Cuts Healthcare Spending
    The nasty downside of austerity.
    Michael Scaturro May 15 2013, 9:00 AM ET

    One day in late March, European finance and health ministry officials met at the OECD’s Paris office to discuss how healthcare systems are faring in times of austerity.

    On the second day of the two-day conference, Greek finance ministry official Evdoxia Andrianopoulou read from a series of brown-colored PowerPoint slides riddled with details of attrition and savings. Greece’s cuts were deep, of the sort commonly seen in a corporate turnaround – but rarely on a government’s balance sheet, and almost never to healthcare expenses.

    The takeaway from the meeting – according to two people who attended it – was that Greek officials knew that these huge cuts would result in the curtailing of essential services for their people. But the officials were working under the stress of having to meet a financial target set by their tri-party group of creditors: the European Commission, the International Monetary Fund, and the European Central Bank. And so they delivered.

    According to an Austrian finance ministry official who attended the meeting, participants in the room “were in a state of shock” after Andrianopoulou concluded her talk. Another attendee who asked that he not be quoted said “a pin-drop silence” filled the room.

    Meanwhile, across the Channel in London, academics were preparing to release a study in “The Lancet” on the healthcare crisis that has followed deep budget cuts in Southern Europe.

    One of that work’s principal researchers, David Stuckler of Oxford University, warned that not just Greece, but also Spain and Portugal, faced a potential healthcare disaster due to their own steep budget cuts.

    Yet of the three crisis-stricken countries, Greece seems to have suffered the most.

    “Greece is an example of perhaps the worst case of austerity leading to public health disasters,” Mr. Stuckler explained in a telephone interview.

    “After mosquito spraying programs were cut, we’ve seen a return of malaria, which the country has kept under control for the past four decades. New HIV infections have jumped more than 200 percent,” he noted.

    Malaria returned because municipal governments lacked the funds to spray against mosquitoes. HIV spiked because government needle exchange programs ran out of clean syringes for heroin addicts. By Stuckler’s estimate, the average Greek junkie requires 200 clean needles in a given year.

    “But now they’re only getting three a year each,” Stuckler said.

    Athenian drug addicts sharing needles or malaria-carrying mosquitoes biting Spartans have put Greece in the media spotlight over the past few months. But a decidedly less headline-grabbing fact is this: cuts taken over the last two years could look even worse a few years from now.

    “The thing about healthcare systems,” the OECD’s Ankit Kumar explained in a telephone interview, “Is you cut the money today, and start to see the cuts’ impact at least three to four years from now. You know that people aren’t getting their medications. But it takes a couple of years before this manifests itself in high levers or sickness, fewer people being able to work, and more people facing shorter lives. Given the consequences of what has happened in Greece, these outcomes are just going to get worse and worse.”

    Some experts have suggested that Greece’s budgetary ax fell unduly hard on its healthcare sector, which was slated to grow at around 4 percent annually, but which has instead been jolted by a series of wage freezes, firings, and drug rationing programs. Economists around the world warned of the cuts’ consequences – but it was the Greeks themselves who opted for deep gashes to their healthcare system.

    “IMF doesn’t say ‘you have to cut 10 percent of your economy, but you can’t close hospitals or schools.’ Where the cuts are made remains a country’s sovereign right,” Kumar explained.

    Posted by Pterrafractyl | August 2, 2013, 1:54 pm
  15. An economist that published a book on using the elimination of free school lunches as a model for how to tackle fiscal imbalances wants you all to know that there hasn’t actually been any real austerity implemented yet in Europe so the arguments that austerity policies are harming the European economies simply doesn’t apply. Eat that kiddos.

    Posted by Pterrafractyl | August 12, 2013, 1:02 pm
  16. Here’s something nice to see: it looks like it’s increasingly difficult to find a self-respecting economist that advocates austerity policies. It probably won’t make a difference in terms of policy since the advocates of austerity were never actually engaged in an honest debate. Still, it’s always nice when the forces of deception and destruction are forced to drop the pretense of having any integrity:

    The Conscience of a Liberal
    Where Are The Austerian Economists?
    Paul Krugman
    September 23, 2013, 9:21 am

    I’ve been part of a discussion over the direction of economic policy debate — as opposed to the direction of actual economic policy — in which an interesting question has been raised: which prominent economists are now making the best case for fiscal austerity? It’s a tough question to answer, because at this point it’s hard to find any prominent economists making that case.

    By “prominent”, by the way, I’m trying not to make a personal judgment. I may think that [redacted] is actually not too bright, and doesn’t deserve his reputation, while I may think that [redacted] is actually a far better economist than many others with bigger professional reputations, but that’s not the question here; the question is which economists with big reputations and large citation indexes are making the austerian case.

    And the answer is, it’s hard to think of any. Alberto Alesina, once the guru of expansionary austerity, is still defending his earlier research, but not playing a major role in current policy debate. Reinhart and Rogoff, whose 90-percent cliff was once gospel, are defending their professional reputations while trying to move on, but aren’t lending their voices to calls for continuing austerity. Who’s left?

    Yes, you can find economists at right-wing think tanks and some international organizations making the austerian case, but again, I’m talking about economists with big independent reputations, justified or not. And I can’t think of any. That wing of austerianism has simply dissolved.

    And as far as we can tell, it makes no difference. Have Paul Ryan, George Osborne, Olli Rehn, Wolfgang Schäuble changed their tune even a bit? No, they’re busy claiming one quarter of positive growth as vindication.

    For those who like to think that serious economic debates matter, it has been a humbling experience.

    Well, at least the German elections are over so, who knows, maybe Merkel really will do that long-expected post-election policy pivot and advocate less destructive policies for her neighbors. She wouldn’t even have to admit that her policies have destroyed the prospects an entire generation of Europeans using a foundation fraudulent ideology. A simple policy shift would suffice! That’s how these things work. Or, more likely, she’ll change nothing at all. It’s a different kind of integrity:

    The New York Times
    Vote for Merkel Seen as Victory for Austerity

    By ANDREW HIGGINS
    Published: September 23, 2013

    BRUSSELS — As Angela Merkel savored the results of Germany’s national elections, newspapers on the left and right in Greece on Monday gave the same mournful assessment of what the result means beyond German borders. “Victory for the Queen of Austerity,” declared the front page of Ta Nea, a center-left daily. “Merkel victory atop the ruins of the South,” said the conservative Dimokratia.

    Bloggers, meanwhile, posted a cartoon that showed Ms. Merkel, a stethoscope around her neck, wagging her finger at a skeleton slumped in a blue chair and ordering, “Exercise, exercise, exercise to strengthen your muscles.”

    For months now, Europe has been waiting for the end of a German election campaign that, while focused almost entirely on domestic issues, stirred furtive hope among those outside Germany that, if re-elected to a third term, Ms. Merkel, despite having given no indication, would try a more energetic, and perhaps more economically stimulative, approach to leading Europe out of its extended slump. The waiting has now ended — and so, too, has any hint of a new approach.

    Instead of a respite from years of grinding budget cuts and tax increases in return for bailout funds, Ms. Merkel’s conservative Christian Democrats campaigned on holding the line against expensive commitments to reviving Germany’s neighbors. Her financial aides claimed that signs that Europe’s long recession had recently become less severe had proved that its austerity policies were working.

    Ms. Merkel’s electoral success — the Christian Democrats and their allies, the Christian Social Union in Bavaria, together won 41.5 percent of the popular vote — will bring “more of the same,” predicted Mats Persson, director of Open Europe, a London-based research group. For countries now on economic life support, this would mean yet more painful “exercise,” which in Greece has slimmed job prospects so significantly that over 60 percent of youth are now unemployed.

    Whatever coalition government emerges in Berlin from what could be weeks of haggling, Mr. Persson said, “there may be a little change of rhetoric, but the substance will remain the same.”

    “There will be a continued focus on austerity,” he said.

    Ms. Merkel said as much herself during a final day of campaigning on Saturday. “We have to continue on this course,” she told a rally in Berlin, denouncing the European policies of her main rival, Peer Steinbrück, who had called for a presumably mostly German-financed Marshall Plan to relieve what he called “a deadly dose of austerity.”

    Posted by Pterrafractyl | September 24, 2013, 8:10 am
  17. Hey, what do you know: New research finds that parenting in poverty is extremely stressful so when you help the parents with the poverty you help the children too. And everyone else:

    The New York Times
    Opinionator
    The Great Divide January 18, 2014, 3:47 pm

    What Happens When the Poor Receive a Stipend?
    By MOISES VELASQUEZ-MANOFF

    Growing up poor has long been associated with reduced educational attainment and lower lifetime earnings. Some evidence also suggests a higher risk of depression, substance abuse and other diseases in adulthood. Even for those who manage to overcome humble beginnings, early-life poverty may leave a lasting mark, accelerating aging and increasing the risk of degenerative disease in adulthood.

    Today, more than one in five American children live in poverty. How, if at all, to intervene is almost invariably a politically fraught question. Scientists interested in the link between poverty and mental health, however, often face a more fundamental problem: a relative dearth of experiments that test and compare potential interventions.

    So when, in 1996, the Eastern Band of Cherokee Indians in North Carolina’s Great Smoky Mountains opened a casino, Jane Costello, an epidemiologist at Duke University Medical School, saw an opportunity. The tribe elected to distribute a proportion of the profits equally among its 8,000 members. Professor Costello wondered whether the extra money would change psychiatric outcomes among poor Cherokee families.

    When the casino opened, Professor Costello had already been following 1,420 rural children in the area, a quarter of whom were Cherokee, for four years. That gave her a solid baseline measure. Roughly one-fifth of the rural non-Indians in her study lived in poverty, compared with more than half of the Cherokee. By 2001, when casino profits amounted to $6,000 per person yearly, the number of Cherokee living below the poverty line had declined by half.

    The poorest children tended to have the greatest risk of psychiatric disorders, including emotional and behavioral problems. But just four years after the supplements began, Professor Costello observed marked improvements among those who moved out of poverty. The frequency of behavioral problems declined by 40 percent, nearly reaching the risk of children who had never been poor. Already well-off Cherokee children, on the other hand, showed no improvement. The supplements seemed to benefit the poorest children most dramatically.

    When Professor Costello published her first study, in 2003, the field of mental health remained on the fence over whether poverty caused psychiatric problems, or psychiatric problems led to poverty. So she was surprised by the results. Even she hadn’t expected the cash to make much difference. “The expectation is that social interventions have relatively small effects,” she told me. “This one had quite large effects.”

    She and her colleagues kept following the children. Minor crimes committed by Cherokee youth declined. On-time high school graduation rates improved. And by 2006, when the supplements had grown to about $9,000 yearly per member, Professor Costello could make another observation: The earlier the supplements arrived in a child’s life, the better that child’s mental health in early adulthood.

    She’d started her study with three cohorts, ages 9, 11 and 13. When she caught up with them as 19- and 21-year-olds living on their own, she found that those who were youngest when the supplements began had benefited most. They were roughly one-third less likely to develop substance abuse and psychiatric problems in adulthood, compared with the oldest group of Cherokee children and with neighboring rural whites of the same age.

    Cherokee children in the older cohorts, who were already 14 or 16 when the supplements began, on the other hand, didn’t show any improvements relative to rural whites. The extra cash evidently came too late to alter these older teenagers’ already-established trajectories.

    What precisely did the income change? Ongoing interviews with both parents and children suggested one variable in particular. The money, which amounted to between one-third and one-quarter of poor families’ income at one point, seemed to improve parenting quality.

    Vickie L. Bradley, a tribe member and tribal health official, recalls the transition. Before the casino opened and supplements began, employment was often sporadic. Many Cherokee worked “hard and long” during the summer, she told me, and then hunkered down when jobs disappeared in the winter. The supplements eased the strain of that feast-or-famine existence, she said. Some used the money to pay a few months’ worth of bills in advance. Others bought their children clothes for school, or even Christmas presents. Mostly, though, the energy once spent fretting over such things was freed up. That “helps parents be better parents,” she said.

    A parallel study at the University of North Carolina at Chapel Hill also highlights the insidious effect of poverty on parenting. The Family Life Project, now in its 11th year, has followed nearly 1,300 mostly poor rural children in North Carolina and Pennsylvania from birth. Scientists quantify maternal education, income and neighborhood safety, among other factors. The stressors work cumulatively, they’ve found. The more they bear down as a whole, the more parental nurturing and support, as measured by observers, declines.

    By age 3, measures of vocabulary, working memory and executive function show an inverse relationship with the stressors experienced by parents.

    These skills are thought important for success and well-being in life. Maternal warmth can seemingly protect children from environmental stresses, however; at least in these communities, parenting quality seems to matter more to a child than material circumstances. On the other hand, few parents managed high levels of nurturing while also experiencing great strain. All of which highlights an emerging theme in this science: Early-life poverty may harm, in part, by warping and eroding the bonds between children and caregivers that are important for healthy development.

    Evidence is accumulating that these stressful early-life experiences affect brain development. In one recent study, scientists at the Washington University School of Medicine in St. Louis followed 145 preschoolers between 3 and 6 years of age for up to 10 years, documenting stressful events — including deaths in the family, fighting and frequent moves — as they occurred. When they took magnetic resonance imaging scans of subjects’ brains in adolescence, they observed differences that correlated with the sum of stressful events.

    Uh oh, if this idea catches on the world might actually make serious attempts at eliminating childhood poverty! It could even spread beyond helping children and apply to everyone! *gasp* Without poverty, what will motivate people to work hard and drag themselves out of poverty? Civilizational collapse in 3…2…1…

    Posted by Pterrafractyl | January 22, 2014, 10:02 am
  18. It’s always a beautiful moment when simple, effective solutions are found for complicated problems. This is sort of the opposite of one of those moments:

    Raw Story
    ‘Enough is enough’: Rand Paul suggests cutting benefits for unwed mothers with too many kids

    By Travis Gettys
    Sunday, January 26, 2014 9:30 EST

    Sen. Rand Paul (R-KY) suggested the possibility of cutting government benefits for unwed mothers who have multiple children.

    “Maybe we have to say ‘enough’s enough, you shouldn’t be having kids after a certain amount,’” said Paul, who opposes legal abortion and has criticized the federal health care law’s contraception mandate as a violation of religious and economic liberty.

    The likely 2016 presidential candidate made the remarks Thursday during a luncheon in Lexington, reported the Lexington Herald-Leader, in response to a question about workforce development.

    He admitted the suggestion, which he did not directly endorse, might be unpopular and difficult to implement.

    “I don’t know how you do all that because then it’s tough to tell a woman with four kids that she’s got a fifth kid we’re not going to give her any more money,” Paul said. “But we have to figure out how to get that message through because that is part of the answer. Some of that’s not coming from government. It needs to come from ministers and people in the community and parents and grandparents to convince our kids to do something different.”

    The conservative senator said communities or families should be responsible for the prevention of unplanned or unwanted pregnancy, but he said government policies could discourage unwed mothers from having additional children.

    “Married with kids versus unmarried with kids is the difference between living in poverty and not,” Paul said.

    U.S. Census Bureau data back his claim, showing that 30.9 percent of families led by a single mother were living in poverty in 2012, compared to 6.3 percent of families led by a married couple and 16.4 percent of families led by a single father.

    “We should sell that message,” Paul said. “Not in a mean way to tell people who already have made a bad decision, but if you’ve had one child and you’re not married, you shouldn’t have another one.”

    He said children should be strongly encouraged not to have children until they’re married, arguing that this would allow them entry into the middle class.

    “There’s all kinds of ways, and we can debate … but there are all kinds of ways to stop having kids,” said Paul, although he didn’t specifically identify any of those ways.

    An aide to Paul declined to comment later Thursday when asked to clarify the senator’s remarks, but Paul himself offered an explanation Sunday morning on CNN’s “State of the Union.”

    “I mused about how you’d have a government policy, but I actually came down saying it would be very difficult to have a government policy,” Paul said. “I mostly concluded by saying it’s a community, it’s a religious, it’s a personal problem, but it is a problem.”

    He conceded during the television program that “government can’t do anything about this, (but) we shouldn’t just give up.”

    Complicated problems sometimes have simple, effective solutions although not always.

    Posted by Pterrafractyl | January 27, 2014, 10:39 pm
  19. More helpful and humane austerity outcomes: Housing HIV-positive prisoners in close quarters with tuberculosis patients is now something they’re doing in Greece’s only prison hospital due to massive overcrowding. The resulting hunger strike presumably cuts down on costs too:

    Greek Prison Hospital Inmates on Hunger Strike
    ATHENS, Greece February 24, 2014 (AP)
    By ELENA BECATOROS Associated Press

    Inmates of Greece’s only prison hospital said Monday they were on hunger strike and were refusing medication to protest severely overcrowded conditions they say are leading to the spread of disease.

    Korydallos prison hospital, west of Athens, is designed to hold 60 men but currently houses more than 200, according to prison staff and inmates. Most are HIV positive. Others have cancer, kidney failure and heart problems and are held in close quarters with those suffering from communicable diseases such as tuberculosis, hepatitis and scabies.

    Three inmates at the hospital told the AP by phone that 178 prisoners began refusing prison food and medication on Feb. 16, after two cases of tuberculosis were identified among inmates who had not been isolated from other patients.

    They said 150-160 of the protesters began a full-blown hunger strike Sunday, while those too severely ill to participate were eating only bread. The protesters were also refusing medication, including antiretroviral and cancer drugs.

    The head of the prison guards’ union, Spiros Karakitsos, said they accurately depicted current conditions.

    “It’s a shocking situation,” Karakitsos told AP.

    The Council of Europe’s human rights commissioner, Nils Muiznieks, tweeted he was “worried at reports of degrading conditions of prisoners” at Korydallos hospital and that a quick resolution was necessary.

    Chronically overcrowded, Greek prisons have suffered an increase in inmate numbers and decrease in staff and funding over the past few years, exacerbated by the country’s severe financial crisis. Korydallos hospital has seen a dramatic increase in HIV positive inmates, who are held there even if they are not sick.

    The European Court of Human Rights has ruled several times that conditions in Greek prisons and police holding cells constitute inhuman or degrading punishment.

    Posted by Pterrafractyl | March 9, 2014, 7:12 pm
  20. Something to keep in mind in during the age of endless austerity: raising the retirement age for all occupations is only really fair if lifespans are actually rising for all occupations:

    The New York Times
    The Conscience of a Liberal
    Don’t Prosper and Die Early
    Paul Krugman
    Mar 16, 10:41 am

    I was pleased to see this article by Annie Lowrey documenting the growing disparity in life expectancy between the haves and the have-nots. It’s kind of frustrating, however, that this is apparently coming as news not just to many readers but to many policymakers and pundits. Many of us have been trying for years to get this point across — to point out that when people call for raising the Social Security and Medicare ages, they’re basically saying that janitors must keep working because corporate lawyers are living longer. Yet it never seems to sink in.

    Maybe this article will change that. But my guess is that in a week or two we will once again hear a supposed wise man saying that we need to raise the retirement age to 67 because of higher life expectancy, unaware that (a) life expectancy hasn’t risen much for half of workers (b) we’ve already raised the retirement age to 67.

    If Krugman thinks the debate over fair retirement-age thresholds are painfully frustrating now, just wait.

    Posted by Pterrafractyl | March 17, 2014, 11:04 am
  21. You can’t make an omelette without breaking a few eggs:

    The Guardian
    Child poverty up in more than half of developed world since 2008
    Unicef report finds number of children entering poverty during global recession is 2.6 million greater than number lifted out of it

    Harriet Sherwood

    Tuesday 28 October 2014 06.01 EDT

    Child poverty has increased in 23 countries in the developed world since the start of the global recession in 2008, potentially trapping a generation in a life of material deprivation and reduced prospects.

    A report by Unicef says the number of children entering poverty during the recession is 2.6 million greater than the number who have been lifted out of it. “The longer these children remain trapped in the cycle of poverty, the harder it will be for them to escape,” it says in Children of Recession: the Impact of the Economic Crisis on Child Wellbeing in Rich Countries.

    Greece and Iceland have seen the biggest percentage increases in child poverty since 2008, followed by Latvia, Croatia and Ireland. The proportion of children living in poverty in the UK has increased from 24% to 25.6%.

    Eighteen of the 41 countries in the study have seen falls in child poverty, topped by Chile which has seen a reduction from 31.4% to 22.8%.

    Norway has the lowest child poverty rate, at 5.3% (down from 9.6% in 2008), and Greece has the highest, at 40.5% (up from 23% in 2008). Latvia and Spain also have child poverty rates above 36%. In the US, the rate is 32%.

    “In the past five years, rising numbers of children and their families have experienced difficulty in satisfying their most basic material and educational needs,” says the report. “Unemployment rates not seen since the Great Depression of the 1930s have left many families unable to provide the care, protection and opportunities to which children are entitled. Most importantly, the Great Recession is about to trap a generation of educated and capable youth in a limbo of unmet expectations and lasting vulnerability.”

    It adds: “The impact of the recession on children, in particular, will be felt long after the recession itself is declared to be over.”

    The study’s authors asked people about their experiences and perceptions of deprivation, based on four indicators: not having enough money to buy food for themselves or their family; stress levels; overall life satisfaction; and whether children have the opportunity to learn and grow.

    In 18 of the 41 countries, scores showed a worsening situation between 2007 and 2013, revealing “rising feelings of insecurity and stress”.

    The percentage of households with children unable to afford a meal with meat, chicken, fish or a vegetable equivalent every second day more than doubled in four European countries – Estonia (to 10%), Greece (18%), Iceland (6%) and Italy (16%).

    Material deprivation and stress affected parents’ relationships with their children, the report for the UN’s agency found. “Lower levels of consumer confidence are associated with increased levels of high-frequency spanking, a parenting behaviour that is associated with greater likelihood of being contacted by child protective services.”

    “Even when unemployment or inactivity decreases, that does not mean that young people are finding stable, reasonably paid jobs. The number of 15- to 24-year-olds in part-time work or who are underemployed has tripled on average in countries more exposed to the recession,” the report says.

    Many countries responded to the recession by adopting economic stimulus packages and pushing up public spending, it points out. “Governments that bolstered existing public institutions and programmes helped to buffer countless children from the crisis – a strategy others may consider adopting.”

    The report concludes: “The problems have not ended for children and their families, and it may well take years for many of them to return to pre-crisis levels of wellbeing. Failing to respond boldly could pose long-term risks.”

    Posted by Pterrafractyl | October 29, 2014, 7:18 pm
  22. Here’s another reminder that the folks that advocate austerity policies that are obviously going to result in higher levels of child poverty are basically indirect child abusers:

    NBC News
    Being Poor Affects Kids’ Brains, Study Finds
    BY MAGGIE FOX
    First published March 30th 2015, 2:57 pm

    Children raised in poor households have clear differences in the physical structures of their brains compared to wealthier children, a new study finds.

    Brain scans of 1,099 children and teenagers in nine major cities shows the poorer kids have less surface area of the brain. This is important because having more brain surface area is linked with intelligence.

    “Specifically, among children from the lowest-income families, small differences in income were associated with relatively large differences in surface area in a number of regions of the brain associated with skills important for academic success,” said Dr. Kimberly Noble, an assistant professor of pediatrics and director of the Neurocognition, Early Experience and Development Lab at Columbia University Medical Center, who helped lead the study published in the journal Nature Neuroscience.

    Researchers know that socioeconomic status affects school achievement and intelligence, but it has not been clear why.

    “We know that families from disadvantaged backgrounds tend to experience more stress,” Noble told NBC News. Children in more well-to-do families tend to get more mental stimulation at younger ages, and that can affect brain development. And kids living in poor situations are often exposed to brain-damaging chemicals such as lead, cigarette smoke and perhaps even air pollution.

    They’ve been running a program to examine various differences among families with lower and higher incomes.

    Surface area of the brain is important because that’s where the brain cells linked with intelligence are. The human brain is very wrinkled, with deep nooks and crannies. This is because a lot of brain is crammed into a small skull. If flattened out on a table, the human brain would be much bigger than it looks.

    They divided the families into groups based on income — from less than $5,000 a year to more than $300,000 a year. Education ranged from less than seven years of schooling to advanced professional degrees such as PhD and MD.

    “Among children from lower income families, small differences in income were associated with relatively large differences in surface area,” the researchers wrote in the journal Nature Neuroscience.

    “These relationships were most prominent in regions supporting language, reading, executive functions and spatial skills.”

    It’s not at all clear that these differences are permanent or unchangeable, the researchers said. In fact, they are starting a new study giving cash to low-income families to see if it makes a difference.

    “We are going to follow the children from birth to age 3 and see what effects are on cognitive, emotional and brain development,” Noble said. “What is it about increased income that changes things in development?” she added.

    “Family income is linked to factors such as nutrition, health care, schools, play areas and, sometimes, air quality,” said Elizabeth Sowell, director of the Developmental Cognitive Neuroimaging Laboratory and a professor of pediatrics at Keck School of Medicine of the University of Southern California, who also worked on the study.

    The team also wants to tease out the other differences they found. Do better educated parents earn more, or do they interact with their kids in different ways? Do richer parents perhaps buy more nutritious food for their kids, are they able to stimulate them in superior ways, or does being able to relax and not worry about safety and day-to-day survival help brain development?

    The team did magnetic resonance imaging brain scans of 1,099 normal children and teenagers aged 3 to 20. They also looked at every detail they could — family income, family education, genetic lineage, age and so on — among the participants.

    They found that more educated parents tended to have children with more brain surface area. It was a direct, linear relationship.

    But the relationship between income and a child’s brain surface area was much bigger. It was logarithmic — meaning the effect was very strong at the lower income levels. Just a little more income made a big difference in terms of brain surface area at the lower end, and it made less difference as income levels grew.

    “There was approximately a 6 percent difference in surface area between the children from the lowest income and highest-income families in the study,” Noble said.

    Other studies have shown that poverty can affect brain function.

    In one, a team at Princeton University found that being poor stresses people out, taking up bandwidth in their thinking and leading to faulty decision-making.

    Oh wow, so the poorer you are the more an income boost can make a positive difference in your developing child’s brain:

    But the relationship between income and a child’s brain surface area was much bigger. It was logarithmic — meaning the effect was very strong at the lower income levels. Just a little more income made a big difference in terms of brain surface area at the lower end, and it made less difference as income levels grew.

    Huh, so does this study suggest that our dominant trickle-down socioeconomic paradigms that elevate market dynamics above human welfare are actually resulting in the systematic abuse of children across the world since the wealth doesn’t actually trickle down and you just end up with a lot of child poverty? It seems like something worth investigating.

    Posted by Pterrafractyl | March 31, 2015, 9:41 am
  23. As should be obvious by now, one of the worst things a populace can do to itself is elect an austerian administration promising to heal all fiscal wounds by making the rich richer and poor poorer. But there are indeed worse forms of self-inflicted national wounds, like rewarding the austerians with a reelection. That’s always a really bad idea:

    The Guardian
    Government to scrap child poverty target before tax credits cut

    Iain Duncan Smith to remove measure that required eradication of child poverty by 2020 after publication of statistics reveals no fall in level

    Patrick Wintour Political Editor

    Wednesday 1 July 2015 10.11 EDT

    The government is to scrap its child poverty target and replace it with a new duty to report levels of educational attainment, worklessness and addiction, rather than relative material disadvantage, work and pensions secretary Iain Duncan Smith has said.

    The old target set by Tony Blair, based on the percentage of households with below average income, will continue to be published as a government statistic – but will no longer be seen as a target.

    The new measures were largely worked out by Duncan Smith with the Liberal Democrat schools minister, David Laws, in the coalition government. They were shelved when blocked by the chancellor, George Osborne, who was worried about the politics of reforming the system.

    The downgrading of the existing target comes before a big cut in tax credits, expected in the 8 July budget as part of a drive to cut the welfare budget.

    The cuts to tax credits would have made it even harder to reach the old child poverty target by 2020, the target date set by Labour and the end point of this parliament. Although some MPs welcomed the attempt to focus on the root causes of poverty, the removal of the material income target was denounced by Labour as the obituary notice for compassionate Conservatism.

    Duncan Smith told MPs: “Worklessness measures will identify the proportion of children living in workless households and the proportion of children in long-term workless households.

    “The educational attainment measures will focus on GCSE attainment for all pupils and for particularly disadvantaged pupils.”

    Duncan Smith argued the measures set by Tony Blair are a poor measure of poverty, since families can fall or go above the relative poverty line for reasons that have little to do with their material wealth.

    “We know in households with unstable relationships, where debt and addiction destabilise families, where parents lack employment skills, where children just aren’t ready to start school, these children don’t have the same chances in life as others. It is self evident.

    “They cannot break out of that cycle of disadvantage. We are currently developing these measures right now – family breakdown, problem debt and drug and alcohol dependency – and we will report each year on these life chances as well.”

    Duncan Smith said the child poverty and social mobility commission, chaired by Alan Milburn, the former Labour cabinet minister, will be renamed the social mobility commission.

    Duncan Smith has been given the political leeway to make the reforms after the annual child poverty statistics, published by government last week, did not show the widely predicted rise.

    Duncan Smith said: “Governments will no longer just focus on moving families above a poverty line, instead we want to focus on making a meaningful change to children’s lives by extending opportunity for all, so both they and their children can escape from the cycle of poverty and improve their life chances.

    “This process marks a shift, I hope, from solely measuring inputs of expenditure to measuring the outcomes of children-focused policy.”

    He continued: “The problem with the statutory framework set around the relative income measure has become … all too apparent.

    “At 60% of median income, if you sit below the line you are said to be poor, if you sit above it you are not. Asking government to raise everyone above that set percentage, I think, has led often to unintended consequences for good reasons.”

    Duncan Smith cited “massive spikes” in tax credit spending ahead of the 2005 and 2010 elections. He said between 2002 and 2010, spending on tax credits “more than doubled” to £258 billion, while overall welfare spending was up 60% in real terms.

    The former Labour health secretary, Alan Milburn, said: “It has long been obvious that the existing child poverty targets are not going to be met. In fact, they will be missed by a country mile. The commission has argued in the past that a more rounded way of measuring poverty – taking greater account of causal risk factors – is sensible.”

    He added: “It is not credible to try to improve the life chances of the poor without acknowledging the most obvious symptom of poverty: lack of money. Unless the government sets out a clear target for improving the life chances of the poorest families, its agenda for healing social division in our country will lack both ambition and credibility.

    “Abolishing the legal targets doesn’t make the issue of child poverty go away,” Milburn continued. “It remains a deep scar in the fabric of our nation. The key issue is less how child poverty is measured and more how it is tackled. Far more needs to be done to make sure that the poorest families share in the proceeds of economic growth.

    When two in three poor children are nowadays in families where someone is in work, the priority has to be to tackle in-work poverty. That’s why we look to the government to champion the living wage and to ensure that welfare cuts do not fall exclusively on the working poor.

    The acting shadow work and pensions minister, Stephen Timms, quoted comments from David Cameron in 2006, when he said: “Poverty is relative and those who pretend otherwise are wrong.

    “The prime minister promised that a government he led would – I quote – ‘act on relative poverty’. Why is that promise being broken?”

    Child Poverty Action Group also voiced concerns: “The statement isn’t about strengthening efforts to end child poverty, but about burying the failure of the government’s child poverty approach. And with more cuts coming down the line, child poverty is set to rise.”

    Well, that’s one way to eliminate poverty: redefine it to no longer involve a lack of money:

    “Governments will no longer just focus on moving families above a poverty line, instead we want to focus on making a meaningful change to children’s lives by extending opportunity for all, so both they and their children can escape from the cycle of poverty and improve their life chances.”

    Posted by Pterrafractyl | July 1, 2015, 7:07 pm
  24. You know how, in a lot of vampire movies, the scenario is that society is secretly run by real life elite vampires that feed on the homeless. Well, it turns out we sort of have to hope that’s really the case in the UK and there’s a sudden shortage of homeless youth for the elite vampires like to feed on. It’s really the most charitable explanation for what the UK government is about to do to the UK’s most vulnerable youths:

    The Guardian
    What have young people done to Osborne to deserve such contempt?

    As if the chancellor hasn’t monstered the young enough, he introduces a gratuitous cut to housing benefit and other exemptions that will cause misery

    Polly Toynbee

    Thursday 9 July 2015 06.02 EDT

    Why are the young caught in the cross-hairs of this government? That will mystify future social historians. Most societies talk of them as “our future”, to be nurtured and encouraged, but in yesterday’s budget, yet again they were pursued in a special vendetta of dislike, bordering on disgust.

    Perry fits most of the criteria for the image of a disreputable young person to be starved into shape – though his only crime is to be born. He’s 20 and lives in a YMCA hostel in Burton-on-Trent. He is one of six children, and that’s become almost a crime in itself, now benefits are being withdrawn from any family with more than two – if they’re low-paid. (Cameron has three children, Iain Duncan Smith four.) He comes from a “broken home”, crime number two. When he was 10 his mother took off with a new man who beat her up and took against Perry. Home life was turbulent and he missed a lot of school. His mother took to drinking, and after rows, he was eventually thrown out and can’t go back. So now he relies on housing benefit – crime number three – which has just been axed for under-21s in the budget.

    He has sofa-surfed with friends and slept rough, until, traumatised and lonely, he reached this safe haven, where he is being helped to recover and get himself into work. “When I moved into the YMCA I had really bad depression and anxiety,” he says. “I was in a bad way. Apart from going to the jobcentre, I pretty much didn’t leave my room at all for a month or two.”

    He was going for an interview the day I talked to him, but wants to go back to college to pick up his missed education and become a computer and mobile phone repair technician. Painfully shy and unsure of himself at first, now he’s tenant representative at the hostel.

    He is one of 19,894 under-21s on jobseeker’s allowance who claim housing benefit, which until yesterday was costing the state £128m a year. The government will still pay for those who have children, leaving 17,689 to be cut adrift to fend for themselves with nowhere to live. Housing benefit pays £220 a week to keep Perry there – but the Burton YMCA doesn’t know how it will manage to keep the 34 under-21s in its care without that money. Mediators help get young people back to their families where possible, about 40 a year here, saving the state.

    In his lonely travels, Perry has met lots more like him. Even if specialist hostels get a dispensation – nothing in the small print says so yet – most of those cut adrift will be on the streets without housing benefit. They aren’t living the high-life in flats: previous benefit cuts made sure under-35s can only rent a room. On the streets they are vulnerable and may be forced into crime: if so, that £220 a week housing benefit looks good value compared with the £170 a night cost of a youth offender institution. When the young were cut off from housing benefit by Margaret Thatcher in the 80s, they poured out onto the streets in cardboard cities, highly visible and politically embarrassing. Research from Heriot-Watt University suggests the social costs – health, crime, mental problems – mean this petty meanness will barely even save any money.

    This cut is such a gratuitous blow, a political gesture designed to imply there is a generation living off the fat of the state because they prefer it to living with boring parents. Jobseeker’s allowance is being removed from the young too, putting them on a new youth obligation scheme instead. Worst of all, the new higher minimum wage won’t apply to the under 25s – the ones most likely to be on starvation wages. But only 0.6% of 18 to 21-year-olds are on both housing benefit and jobseeker’s allowance, and all the research shows these are mainly abandoned and dislocated young people like Perry.

    In his time, Osborne has stripped the young of education maintenance allowances, shrunk tax credits, child benefits, upped tuition fees, cut further education colleges and careers advice while stripping away youth services. But above all, he and his party have monstered the young. Nice young people now stay home until their 30s, unable to find housing. Nice families stay together forever. The children of the rest are blamed and punished.

    As the article suggest, future historians are probably going to be rather mystified as to why, in the 21st century, a wealthy society like the UK would lie to itself about the practicality and its ability to care for its most vulnerable young adults and embrace a policy of collectively monstering the young (they’re going to be mystified a lot). But you also have to wonder what the future George Osborne is going to think about this when he’s, say, 90 and on his death bed. Do people look back fondly on a life spent monstering the young as a political gesture?

    Of course, we just have to hope that death bed confessions aren’t really an issue for this crop of UK elites because they have already joined the ranks of the undead. It’s, in many ways, so much more pleasant a thought than the alternative.

    Posted by Pterrafractyl | July 11, 2015, 12:49 pm
  25. It looks record high unemployment wasn’t the only austerity-induced record for Spain: suicides in Spain at record highs and now the leading cause of unnatural death:

    TheLocal.es

    Spain’s suicide rate jumps to record high in economic crisis

    The suicide rate in Spain has risen 20 percent since the start of the economic crisis and now causes more than twice the number of deaths than from road traffic accidents.

    Published: 31 Mar 2016 12:46 GMT+02:00

    Suicide is the leading cause of unnatural death in Spain far outpacing death on the roads, from accidental falls or from drowning, and has soared by 20 percent since Spain’s economic crisis hit in 2008.

    An average of ten people kill themselves each day in Spain, according to new figures released by the country’s National Statistics Agency amounting to a total of 3,910 suicides during 2014 up from 3,263 in 2007.

    In comparison, road deaths claimed the lives of 1,873 during 2014 a huge drop from the peak in 1989 when 8,218 people were killed on Spanish roads.

    Spain’s economic crisis saw the nation suffer strict austerity measures, high unemployment, and a surge in house repossessions, which are widely considered to have contributed to a spike in suicide rates.

    The largest rise in the suicide rate since the start of the crisis is seen in middle aged men, the number of men aged around 50 to kill themselves has leapt 38 percent during the eight year period.

    “The age groups who feel the crisis most fully are most affected. You don’t react the same way to life’s challenges at 50 as you to at 20,” explains Julio Perez Diaz, an analyst at Spain’s national scientific research centre (CSIC).\

    Luis de Rivera, a psychiatrist at the Madrid’s Institute of Psychotherapy told El Mundo that it wasn’t just economic hardship that is to blame for the rise in suicides but the disillusionment caused by the crisis.

    “The breakdown of basic beliefs and convictions are also to blame,” he explained.

    “For example (the crisis) brings an end to the certainty that if you gain a university degree you will live very well. In Spain we tended to equate psychological security with economic security and have sacrificed things like family, relationships and personal well being along the way. Now we find such sacrifices have been in vain.”

    In fact, although Spain’s suicide rate has reached a 25 years high, it still has one of the lowest rates within the European Union according to Eurostat figures from 2013.

    Spain’s rate of 8.4 suicides per 100,000 people is below the 11.6 EU average where Lithuania has the highest rate at 35, followed by Hungry, 21, Latvia, 19 and Belgium, 17.2.

    Despite suffering the highest unemployment in the Eurozone, Greece’s suicide rate remains the lowest at 4.7, while the UK rate comes in at 7.3 and Italy 6.6.

    “The largest rise in the suicide rate since the start of the crisis is seen in middle aged men, the number of men aged around 50 to kill themselves has leapt 38 percent during the eight year period.
    So tanking the economy and shredding the safety-net fills people with despair, especially those who will need that safety-net sooner. How unexpected.

    And note that when you read…


    Despite suffering the highest unemployment in the Eurozone, Greece’s suicide rate remains the lowest at 4.7, while the UK rate comes in at 7.3 and Italy 6.6.

    keep in mind that Greek suicide rate might be low relative to other EU countries, but it’s also at record high levels for Greece.

    Posted by Pterrafractyl | March 31, 2016, 6:54 pm

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