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Mises Daily: The Three Types of Austerity

September 5, 2013 in Economics

By Mises Updates


This week in Mises Daily: Frank Hollenbeck discusses how only only “austerity” plans that free the private sector at the expense of the government sector will actually bring more prosperity:

Notably, the Merkel form of austerity has led to an increase, not a decrease, in the relative size of the public sector. For example, the Greek public sector, while getting smaller, has nonetheless been contracting at a slower rate than the private sector. Since the first bailout, Greece lost at least 500,000 private sector jobs but shed far fewer public sector jobs. For years, the Greek government has been pledging to cut 500,000 public sector jobs, and in recent months, the Greek government has finally pledged to begin laying off public sector workers over the next two years. A total of 12,500 civil servants, including teachers and police, face reassignment or the axe by the end of the year, with a further 15,000 facing the same options next year. Not only is this too little, too late, but it is also only a pledge.

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