Why Not Try Something Besides Austerity?

Both Democratic and Republican Governors—- and, in fact, both parties at the national level—- are in hysteria mode when it comes to tackling the designated Big Problem du jour: budget shortfall, deficit. Note: job-creation is now playing second fiddle; you occasionally hear a tip-of-the-hat to job creation, as in “we must get our financial house in order first, in order to create jobs”—- a new sort of political double entendre. This has created the remarkable spectacle of states slashing public sector jobs in the name of austerity, which only adds to unemployment, instead of reducing it (when the BLS provides the latest stats on unemployment, I wish they’d tell us just how many of those new first-time unemployment applications were the result of governors’ firing state employees). Does this make sense? Two economists say “no,” and offer some sensible, pragmatic alternatives to austerity in the interview below. Instead of simply cut, cut, cut, and thereby destroying our society in the process, why not try a few other policies as well?