That's how bureaucrats play the game. When an organisation gets their budget cut, they don't immediately look through the services they provide to see which ones can be cut or delivered at a lower cost. The first move is to float stories about cutting their most popular services to generate adverse press for the budget cuts. c.f. local councils in the UK threatening libraries whenever they get a budget reduction (or not as much of an increase as they would like).
In Berlin, we have a district called Neukölln, a poor district accumulated a lot of social and economic problems, such as high levels of violent crimes, drug abuse, a lot of homeless, gang wars etc.
The solutions for Neukölln problems devised by left-leaning municipal and city govs were absolutely fabulous, such as public swimming pools. At some point when it became clear that the district (or rather Berlin in general) is an eternal money pit, it was decided to cut its funding.
What was the response of local gov? Cut unnecessary and redundant services (sarcasm) like school security, drug addiction helping centers among others. Basically what they do is an open blackmailing, "you cut the funds, we are fucking things up", but that's how political blanket-pulling game works. Nobody likes funding cuts, so it's not uncommon that executives, local governments and various institutions sabotaging such initiatives.
He openly admitted that the Conservative party manifesto of 2010 was a lie. That it was totally impossible to do what they promised about the deficit. Now, I'm not sure I remembered the manifesto pledge correctly, but even with that caveat, he still insisted that lying was absolutely acceptable. He refused to accept that normalising lies in this fashion is a problem (I wish I'd asked him about the Boy Who Cried Wolf, but I didn't) and then promptly changed the topic.
If we can fix housing we can fix a lot of what's wrong the UK I think.
Atm in the US, it's 16% of the budget goes on repayments, or ~3.5% of GDP.
Likewise in the UK, it's ~12% at ~3.5% GDP
I suspect it's fairly easy for a society to this level
The debts of governments of this type is about the lowest risk investments its possible to make, and they're treated that way.
But that also means severe economic crises in those countries has an outsized impact. If the US debt were to increase 12.5% of GDP YoY for years, the entire global financial system would melt down -- as US debt is basically the baseline of the entire system
The above goods and services can simply be “stability” relative to the rest of the world, such that wealth seeking a safe haven continues to choose assets denominated in they nation’s currency.
That is really a statement without a real point. Countries can of course print currency to keep covering their debt obligations but that just impoverishes their citizens and means they lose access to debt markets (effectively).
I know people make this statement a lot, but I never really understand what point they're trying to make.
It sounds like they're trying to claim "free lunch" but I don't really know.
Can you name an instance in which a developed country, borrowing in its own currency, has defaulted? I can't, at least not since the end of the gold standard.
If for some internal or external reason people are suddenly only willing to lend to you at 4x the previous cost, your cost-of-repayment will quadruple over the next ~20 years. Having a lower debt-to-gdp ratio gives you more flexibility on how to react to this because lowering your debt by a significant margin becomes one of the viable strategies.
Like, it is true that oversupplying government bonds creates some really nasty economic effects, but so does undersupply. The government budget is not a household budget, and it's simply not true that their debts can or should be paid back.
No. US Treasuries are one of the most liquid and easy to borrow against assets in the world. When institutions buy Treasuries, they use them as collateral to borrow against with new money created by the banking system. This money is then spent in the real economy. That’s very different from taxes.
Ironically one major contributor to government debt today and 200 years ago were war expenses.
[1] https://en.wikipedia.org/wiki/History_of_the_British_nationa... [2] https://data.imf.org/?sk=806ed027-520d-497f-9052-63ec199f5e6...
English kings had a tendency to spend all the money on foreign wars. Take Henry VIII for example:
> Henry inherited a vast fortune and a prosperous economy from his father, who had been frugal. This fortune is estimated at £1,250,000 (the equivalent of £375 million today). By comparison, Henry VIII's reign was a near disaster financially. He augmented the royal treasury by seizing church lands, but his heavy spending and long periods of mismanagement damaged the economy.
> Henry VII had not involved Parliament in his affairs very much, but Henry VIII had to turn to Parliament during his reign for money, in particular for grants of subsidies to fund his wars.
https://en.wikipedia.org/wiki/Henry_VIII#Finances
Hmmm, having said that, the section mentions he spent a lot of money on tapestries, so maybe it was not all war.
Which is technically true, but impossible over the long run for the levels of deficits the US is running now.
And sometimes austerity means stupid spending reductions that would not even qualify as cost savings under any meaningful accounting scheme. You save money on infrastructure maintenance, education, preventative healthcare, mental health services, and youth work, and you don't see any changes in the short term. But in the long term, you get failing infrastructure, a less productive workforce, higher healthcare costs, mental health issues, and more crime.
Instead of cutting fixed spending, it would often be less harmful to cut discretionary spending – the programs the current government uses to achieve its policy goals. But of course no government wants to do that. People get into politics to change something, not to manage the existing system.
Austerity is therefore a self-defeating strategy. It does not remove wasteful spending, rather it creates more of it. What states should focus on is what are the best resources to purchase and how that spending should be apportioned, not whether there is money to spend with.
This is in effect an infinite-money glitch, until you overplay your hand and a market upset bankrupts the state (or the state triggers hyper-inflation in an attempt to prevent bankruptcy). Austerity is just a roundabout way of saying "let's get more breathing room by abusing this infinite-money glitch less".
In an ideal world any country would go through periods of austerity to get rid of wasteful spending, before increasing spending again. But of course this is not how politics works: it's hard to sell to voters, and the things that get cut in "austerity" are often not the most wasteful things.