Global economic success stories: not based on austerity ? (WFS)

Good piece by the World Future Society and Rick Docksai, here. Really made me think about what we are doing here in Europe, focussing on austerity and budget cut-backs. What are your thoughts on this?

“Many of these successful countries are, surprisingly perhaps, in the developing world. The report notes that an astonishing 60% of developing countries have higher employment now than they did in 2007. Even more key, three-quarters of the world’s developing countries posted declines in their national poverty rates since 2007. Some advanced economies are making great progress, as well, although not nearly as many: The report indicates higher employment in 20% of the world’s advanced economies, Israel being one of these fortunate few. These findings correspond with that of the International Monetary Fund (IMF), whose country-level data on unemployment for these five countries are as follows:

Meanwhile, the United States, longstanding bulwark of the global economy, is just scraping by, according to the same source. Its unemployment rate, at around 7.7%, is more than one and a half times higher than the 4.6% at which it stood in 2007.  What sets these successful economies apart from the many others whose economies remain in the doldrums? Is it lower taxes, fewer regulations, and fiscally conservative government expenditures—i.e., the standard policy prescriptions that many of today’s orthodox economists advise? Actually, no: While the five countries outlined above do exhibit legal structures that are friendly to businesses and business development, if you place them all next to the United States, you will find that each one’s government collects and spends significantly higher levels of taxes from its citizens every year. From the CIA World Factbook:

These higher tax revenues do not squelch economic growth and job creation in these countries at all; rather, they boost them. This is because the governments wisely return those incoming tax revenues to the people in the forms of public works projects; health-care services; education, job training, and school-tuition assistance; and social-welfare services, such as unemployment assistance and meal vouchers. Public works projects create jobs directly, since every project needs workers. Education and health care are sound investments, since citizens who pursue more education become more employable and, even better, more productive. They acquire greater skills that can help their businesses increase profits. Or, if they are so inclined, they could start new businesses of their own. Meanwhile, adequate health care will ensure that workers do not compromise their productivity by suffering from untreated illnesses or needlessly worrying about their long-term health. Welfare programs also contribute to economic productivity. They put spending money directly into the hands of needy individuals so that those individuals can buy from their local businesses and help those businesses to prosper….”

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