Austerity Measures Are the Proper Response to a Debt Crisis

Like him I'll keep it short and to the point. Austerity measures mean that the government spends less money. At the very moment when the people are suffering the most because their homes have been foreclosed, because their savings are lost and their jobs are gone, my opponent would advocate that the government should help them the least. The wonderful thing is that you can help them AND reduce the deficit. It's such an amazingly simple policy that I'm surprised my opponent missed it. Rather than spending less, governments should tax more.1. Will Austerity Reduce Debt? Asserting that this is true because it's "common knowledge" isn't enough. The fact is that no government has ever come out of debt by adopting austerity measures. If a government spends less, that has two effects on production. First, the cost of production is increased, reducing production in the private sector. Second, work available in the public sector is decreased. Both effects can be seen wherever it's introduced, with Greece being a good recent example (. http://en.wikipedia.org...). That means that GDP is reduced, like my opponent correctly predicts (nice Keynesian model by the way), far beyond the level of government spending reductions. Less output translates to less income, including less income for the government through taxation. Less income for the government means a reduced ability to pay back loans. Not paying back loans means that governments need to take out even bigger loans to keep up with their repayments, usually from unscrupulous lenders such as the IMF who attach ridiclious political conditions to their loans, such as implementing even more austerity measures. Eventually the combination of high debt and high austerity causes the country's economy to collapse in a sea of debt and the currency to become worthless, as we saw in places like Indonesia during the South-East Asian crisis. Before the IMF existed, Germany ran into a similar chain of events during the German hyperinflation, caused, again, by austerity.2. Will More Taxes Reduce Debt? The common objection to more taxation is that money is taken away from private sector investments, which reduces the efficiency of the market and thus also hurts production and economic growth. The problem is that this presupposes the money will be used in private sector investments. During a debt crisis, it is much more rational to keep the money until the debt crisis is over, tucked away in a vault where it will be safe. Taxation is thus a form of enforced investment. I accept that this investment will be less than during economic boom-times, but it is far better than the alternative, and in practice the effect on production of higher taxation has always been minimal. In countries with a relatively flat tax, more taxes tends to hurt the poor quite significantly during the debt crisis. The simple solution to this is to unflatten the tax brackets in the economy.3. Standard of LivingI'm glad my opponent agrees that this is reduced via austerity measures; it saves me a whole lot of typing. His ideas of long-term standard of living increasing are predicated on austerity measures actually working, which they don't. There is, beyond doubt, a significant connection between whether a policy works and the standard of living of the people. But I'm going to go one step further. Even if austerity works (which it doesn't), the end still doesn't justify the means. Allow me to explain. Austerity creates poverty - it creates unemployment, reduces wages, and devalues the currency. These are also exactly the same things that a debt crisis causes, and is often the very reason why countries try to escape a debt crisis in the first place. Even if these things solutions worked in the end, the means is so abhorrent and so immoral that austerity shouldn't be considered. We're talking about forcing people to live a life of misery and despair because the government ordained it. They have to live through watching their lives crash to ruins - their grandparents dying because they can't afford food without a pension, their children suffering because without a job they can't provide for their family, their former neighbours now reduced to begging on the street because they've been thrown out of their home. It's not worthwhile, because that damage is not undone by any later prosperity. It doesn't matter if I can eat 100 cheeseburgers in 40 years if I'm starving right now for just one cheeseburger. And that's another reason why austerity is not the best solution, if it is a solution at all. ConclusionThis debate is about two things. First, it's about whose model of how to get out of debt will work best (though I contest austerity won't work at all). Second, it's about whether the means of austerity is justified in light of the moral consequences thereof (I think it isn't). I look forward to reading my opponent's response.