Reading european newspapers, you can find key words like these: “economic growth”, “austerity”, “meltdown”… and every politician, regardless of the country he represents, seems to move in the same direction. It would be something like this:

Austerity > Trust > Economic Growth >bye Meltdown.

However, everybody here seems to forget about the basics of economics. Do you remember Keynes and his Income-Expenditure model? Well.. using keynesian terms (I bet that terms are the correct ones) we should do the opposite. It is:

Government Spending (it’s not Austerity, just the opposite) > Economic growth > Trust > bye Meltdown.

I personally believe we should do that Keynes said long time ago. If we increase the government spending, and we consider the multiplier effect, the GDP will eventually increase as it happened in the Great Recession,it’s a good example.

On the other hand, I’d like to say I’m a supporter of saving, but saving in stupid expenditures. The key point is not spending money in things with no future, instead we should use it for investment in productive sectors (technology, innovation…) or research that encourage the productivity. In short, what matters is where we spend the money because there are some important differences between investment and throwing the money away. 

Using the basics of economics and thinking a little bit about it, we’ll get the fact that we don’t need austerity, we only need politicians with a solid head in their shoulders. Politicians who know how to use the public money, something that it’s gone long time ago. This is our terrifying outlook. 

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s