Austerity is a poor way to help an economy.

Thanks for a great debate Pro. I will focus on rebuttals than on concluding remarks. -----Rebuttals----- R1: What About the Poor? "The poor rely on a greater number of subsidies to survive. I never meant to suggest that all or even most of lower-income money came from transfer payments, only that these are the people who are hurt when these things diminish." Transfer payments are basically theft. Government steals from some citizens to give to others. This is also unconstitutional, in addition to being morally incorrect. Voluntary institutions, mutual aid societies, and charity are much better alternatives than government redistributive schemes. The private operations are ran by fully consenting parties. They also have the built in incentives to help the poor become self-reliant and live productive, fulfilling, and rewarding lives. "My point is only that GDP is a false metric for the success of a system." Economists believe that each worker's wage is linked to their marginal productivity. Workers "contribute to the output of the companies that employ them, and it is the additional (marginal) contribution to the value of output that will be reflected in the worker's wage". [1] So individual earnings are about equivalent to their productivities. This has various beneficial consequences: employees are rewarded by having the right productive behavior, investing in their human capital, and gaining experience and on-the-job training. It is the basic essence of the free market system: pursuing one's self interest (in the form of gaining higher wages through higher productivity) benefits the whole society (more goods and services). Society's wealth is equal to its production though. We need to create all the goods we have and enjoy. Austerity facilitates production by leaving investment capital in the private sector. R2: Savings and Output "In fact hording larger and larger stockpiles of keep that money out of circulation, and with no circulation, economic stagnation sets in." Hoarding =/= saving. Saving makes possible equivalent investment in production or the availability of credit. "A country's saving rate and its economic growth are closely connected". [2] Economic growth is basically the "increase in the capacity of an economy to produce goods and services, compared from one period of time to another". [3] Increased production is the prerequisite for higher incomes. Incomes serve the end of being able to consume already produced goods. Thus we need to expand production to increase the gross income (GDP) of society. Savings and investment are the fuel for the engine of economic growth. With more capital accumulation and investment, business expansion, and ultimately more production -- the real wealth and incomes of society rise. "Richer individuals and countries DO tend to have greater savings... because they have abundance in productivity or income they are able to save, not the other way around." Richer nations are wealthier because of capital per worker, technology, and human capital. Capital are "the productive resources that are employed in conjunction with labor effort to produce goods and services. Capital includes things like buildings, equipment, power lines, computers, roads, and vehicles." Rich nations are rich because their citizens produce a lot of goods and services; and poor nations are poor because they produce little. [4] Pro basically assumes that government expenditures are necessary because they "drive demand". In places like Ethiopia and North Korea, there is plenty of demand for food. But this hasn't created wealth. Demand doesn't create anything. Production does, and is responsible for meeting the needs of demand. Saving (deferring consumption) allows capital formation, which increases productivity and thus output, overall making society wealthier and improving its economy. R3: Profits "The problem is that this is not what businesses typically do... more and more money is being pocketed as profit." Businesses typically wish to maximize their profits. This requires re-investment and expanding business operations. I'd argue that their is a lack of confidence in the current economic environment, especially from what government legislation will take effect in the near future. Obamacare, Dodd-Frank, rising entitlement costs are all threatening to businesses. In the 1930s, empirical evidence shows us that "private investment remained at depths never plumbed in any decade for which data exist... only in 1946 and the following years did private investment reach and remain at levels consistent with a prosperous and growing economy." [5] If McDonald's followed the argument you are using, they would have consumed and enjoyed the profits that flowed in from its first business. But McDonald's reinvested in its operations and expanded its facilities to maximize profits. "Yes, in theory it gives them the option... the end result has not been economic improvement." If we are talking about America, our economic policies have been messed up for a long time. Worker wages have risen over time as productivity has increased. Health insurance costs have absorbed these benefits though -- the consequence I'd argue as a result of our third party payer system. Regulations hinder competitiveness in the economy and economic growth, as do taxes and spending. R4: Stimulus/ Infrastructure It is the last round of the debate, so new arguments in the form of "infrastructure spending" and "World War II" ought to be dismissed, though I briefly touched the latter earlier in this round. "Long-term improvements pay off in the long term and lend greater prosperity." The private sector has greater incentives (the profit motive) to provide better goods and services. Infrastructure, in the form of roads and highways, is included. This is why government roads and schools generally are of a lower quality than private institutions. "In closing, I would respectfully ask that my opponent address my opening examples." Iceland is a small, very homogenous nation. It would be difficult to emulate its results with such a large and diverse country as America. In contrast, Canada did undertake "austerity". "In the 1990s, Canada suffered from the same economic malaise that plagues the U.S. today: slow economic growth, heavy government spending and a rising national debt... [Canada's] federal program spending was cut by nearly 10 percent ... to restore its budget to balance... leading to a decade of strong growth in employment, gross domestic product and investments". [6] Shovel-ready jobs don't create anything. If government employed the whole citizenry, and paid them wages, society would be poor. There would be no wealth -- no valuable goods or services. Conclusion The private sector has to provide people with valuable and affordable goods that they demand. A nation's income (GDP) is the result of its production of various goods and services. Saving allows for more production by financing capital investment. I have proven this with empirical evidence from the National Bureau of Economic Statistics [6], and other sources. Stimulus spending will just suck up investment capital from the private sector, destroying possible private sector investment and growth. Society needs to allocate savings to productive uses, as efficiently determined by the private sector. If we just consume our savings, we will never recover. Austerity is necessary so that savings can remain in the private economy, so production and thus real incomes rise. So, austerity will facilitate savings and is thus necessary. The resolution is refuted. Sources: [1] Browning, Edgar. Stealing From Each Other. 2008. 5. Print. [2] http://www.econlib.org... [3] http://www.investopedia.com... [4] Browning, Edgar. Stealing From Each Other. 2008. 59. Print. [5] http://www.independent.org... [6] NBER Working Paper Series; "Solow and the States: Capital Accumulation, Productivity, and Economic Growth", PDF.