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Subject:  Austerity doesn't work. Date:  11/15/2012  8:18 AM
Author:  MadCapitalist Number:  655230 of 875624

The Hunt for Bias-Confirming Data

"Canada has been cutting government spending since the early 1990s. It has also cut capital gains taxes, and income taxes, and has brought its corporate tax rate down form 29% in 2000 to just 15% today. It’s national debt is now only 34% of GDP, while ours is over 100%—and its budget deficit is just 3.5% of GDP, while ours is 8.3%. Canada is looking at 2.6% GDP growth this year — ours, 1.9%. Its unemployment rate is 7.3%, while ours sits at 7.9%.

In a CNBC interview yesterday, Cisco Systems CEO John Chambers stated that Canada is a great place to do business, and Cisco plans to invest heavily there in the years to come. He said “we could learn a lot from them”.

Switzerland abides by its constitution that limits its ability to grow debt and increase taxes. Consequently, its national debt is only 41% of GDP and on the decline, and it sports the lowest unemployment rate in Europe, 3.1%.

Lithuania dramatically cut spending on public sector wages and pensions. Sadly, however, they are offsetting those cuts with tax increases. Still, GDP is expected to come in at 2.2% this year.

Latvia responded to the recession with the toughest budget cuts in Europe. Half of all government run agencies were eliminated, one-third of all government employees were let go, and public sector wages were cut by 25%. Unemployment has dropped from 19% to 15%. This year’s budget deficit is just 1.2% of GDP and the national debt is only 37% of GDP and declining. GDP growth looks to come in at 3.5% this year.

Estonia cut government spending sizably and has “liberalized the country’s labor market, making it easier for business to hire and fire workers”. Result; a budget surplus, while servicing a national debt of only 6% of GDP. While it enacted a small increase in its value-added tax, “it deliberately kept taxes low on businesses, investors, and entrepreneurs, refusing to make changes to its flat 21 percent income tax. In fact, the government has put in place plans to reduce the income tax to 20 percent by 2015.” Its GDP looks to come in just north of 2% this year, after growing at an amazing 7.6% in 2011. Unemployment remains at a high 11.7%, however that’s a reduction of 38% from the recession-depth high of 19%."

Savage spending cuts are devastating their economies.
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