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Paul Ryan equals austerity

Paul Ryan equals austerity. This is what he has pushed in the Republican budget. He and other conservatives have basically told us that we need to “get our house in order.” This is what we need. The question that I have to Paul Ryan and other conservatives is whether they have any examples where an economy in a recession which adopts austerity measures begins to prosper. Let’s just think about this for half a second. Currently, we are in a “mini recession.” By definition, a recession is decreased demand. We aren’t buying anything. Don’t believe me? Read the annual report from the US Bureau of Labor Statistics. Americans are spending less. If Americans are spending less, then there is less demand. In the face of less demand, Paul Ryan and other conservative Republicans are telling us that the government needs to spend less. Wouldn’t that decrease demand even more? Of course it would.

This chart is from the IMF (International Monetary Fund). They looked at what has happened when countries with advanced economies put the brakes on growth or tried the austerity game over the last 30 years. Their conclusions fly in the face of what Paul Ryan and other conservatives have been telling us. They conclude “that consolidation lowers incomes in the short term, with wage earners taking more of a hit than others; it also raises unemployment, particularly long-term unemployment.” So, under recessionary conditions austerity lowers income and increases unemployment, particularly long-term unemployment. That’s exactly the wrong medicine for our economy. We want to increase income. We want to increase employment. Paul Ryan’s medicine simply doesn’t work.

By |2012-08-14T20:44:40-04:00August 13th, 2012|Economy|Comments Off on Paul Ryan equals austerity

Mortality and Joblessness

Interesting paper from the IMF. They have found a link between employment and mortality.

From the IMF paper:

The hardship of job loss is also shown to have serious negative impacts on health. In the short run, layoffs are associated with higher risk of heart attacks and other stress-related illnesses (Burgard et al., 2007). But even in the long term, the mortality rate of workers that have been laid off is on average higher than that of comparable workers that did not lose their jobs, controlling for other relevant individual and aggregate characteristics. Based on social security data for the US, Sullivan and von Wachter (2009) estimate that the increased mortality rate due to unemployment persists up to 20 years after the job loss and leads to an average loss of life expectancy from 1 to 1.5 years (see below).

Moreover, this study shows that it is primarily the displaced worker‘s loss in earnings that drives the increase in mortality odds: workers that are displaced but are lucky enough not to suffer a loss in subsequent earnings are not found to have higher rate of mortality. This finding suggests that financial resources serve as an important determinant of individual health. They influence the individual‘s ability to invest in good health care (and access to health insurance) and a healthy lifestyle, while a shortage of resources leads to poor lifestyle choices and can also be the reason for stress and depression.

I think there are two conclusions that can come from this data. First, people can not just sit around. They need to do something (it should probably be something meaningful). Secondly, there is a huge price to pay if we can’t get our eight million laid-off workers back to work.

By |2010-09-16T07:05:19-04:00September 16th, 2010|Economy|Comments Off on Mortality and Joblessness
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