Austerity Fallacy

There are many fallacies pervading the issue of fiscal austerity around the globe. The first fallacy is theoretical or semantic. Governments around the world, particularly in Europe are not faced with the "pain" of going from normal to austere - they are faced with the requirement to go from profligate to more reasonable. They are not moving towards true austerity, they are moving slightly away from profligacy.

The second fallacy relates to practice. Keynesian jugheads in the media and in government keep telling us that economies will suffer greatly if faced with so-called "austerity" policies, i.e. government spending cutbacks. This is incorrect both in theory and in practice, but small government types can hardly hope to carry the day by arguing the theory, lefties are impervious to this. So we have to show that economies can grow despite, nay because of, reductions in government spending. Even then it will be an uphill battle, but it'll be somewhat easier. So it is good news that Ireland's economy is showing resiliency and growth under its "austerity" regime.

Ireland's economy grew strongly in the second quarter despite cutbacks in government spending, boosting hopes that it can stick to the terms of its bailout program and return to the international bond markets in 2013.

The Central Statistics Office said Thursday gross domestic product in the three months to June was 1.6% higher than in the first quarter and 2.3% higher than in the same period of 2010.

That was the fastest year-on-year expansion since the last three months of 2007, after which Ireland's previously fast-growing economy was felled by the financial crisis and the collapse of a debt-fueled property boom.

While the likes of Greece and Portugal attempt to sucker their new lenders with phony austerity, Ireland is getting down to the business of truly repairing its economy with credible measures. In time we're likely to hold Ireland out as a model of reform and recovery, and as an example that disproves all the Keynesian hokum (in addition to our failed stimulus here at home), much the same way that the stagflation of the 1970s (and today) has discredited the Phillips Curvers.