Heritage Foundation, Economic Freedom, and Greece P


By: inoljt, http://mypolitikal.com/

(Note: I strongly encourage you to click the image links on this post when reading; they're essential to understanding what I'm saying.)

What country cut government spending the most in 2011?

Most people would generally agree that the answer is Greece. Smack in the middle of a debt crisis, Greece’s government has been forced to take an axe to government spending. Month after month has been marked by budget cut after budget cut.

The Heritage Foundation is a conservative think tank which publishes a ranking of economic freedom according to each country. These rankings are based on conservative economic values, such as low government spending. According to the Heritage Foundation, the less your government spends, the more economically free your country is.

So, after three years of cutting government spending to the bone, how’s Greece doing on the Heritage Foundation’s ranking of economic freedom?

Pretty Poorly.

In fact, the Heritage Foundation states that Greece has recorded the “largest score decline in the 2012 Index.” Why is this? Well:

Greece’s economic freedom score is 55.4, making its economy the 119th freest in the 2012 Index. Its score is 4.9 points lower than last year, reflecting declines in six of the 10 economic freedoms with particularly acute problems in labor freedom, monetary freedom, and the control of government spending.

This pattern is not only limited to Greece. The four other Eurozone countries in trouble (Ireland, Italy, Portugal, and Spain) have all been slashing their budgets to the bone. Austerity and cuts in government spending have been the main preoccupation of their governments and will continue to be for probably all of next year.

Unfortunately, all of these countries have also suffered corresponding declines in the Heritage Foundation’s rank of economic freedom. Here is Ireland:

Here is Ireland.



And Spain.

Why has this happened?

Well, the answer is kind of ironic. Here’s what the Heritage Foundation says:

Ireland’s economic freedom score is 76.9, making its economy the 9th freest in the 2012 Index. Its score has decreased by 1.8 points from last year, reflecting poorer management of government spending and reduced monetary freedom.

Italy’s economic freedom score is 58.8, making its economy the 92nd freest in the 2012 Index. Its overall score is 1.5 points lower than last year, with significant declines in freedom from corruption and the control of government spending.

Portugal’s economic freedom score is 63.0, making its economy the 68th freest in the 2012 Index. Its score is 1.0 point worse than last year, mainly due to deterioration in the management of government spending, labor freedom, and fiscal freedom.

Spain’s economic freedom score is 69.1, making its economy the 36th freest in the 2012 Index. Its score is 1.1 points lower than last year, with a significant deterioration in the management of government spending overwhelming a modest gain in business freedom.

After cutting government spending by enormous amounts, the scores of these five European countries have gotten worse…because they can’t control government spending.

Indeed, the vast majority of the decline in economic freedom of Italy, Ireland, Portugal, and Spain occurs due to lower scores on government spending. Here’s a table that specifically shows how much worse their scores on government spending have gotten since 2011:

Score Changes Since 2011 Country Government Spending Greece -18.1 Ireland -16.7 Italy -9.2 Portugal -10.7 Spain -12.2

It’s pretty undeniable that these countries have been cutting government spending. And yet their scores on the control of government spending keep on getting worse. What gives?

Well, it has to do with the way that Heritage Foundation measures government spending. Specifically it uses government spending as a percentage of GDP; as a government spends more relative to GDP, its score gets exponentially worse.

What’s happening with these five European countries is that while they have indeed cut government spending, their economies have fallen into recession (coincidence?). So government spending, while numerically less, ends up composing a larger percentage of their GDP (which is declining even faster than spending).

Poor Greece. It cuts government spending to the bone for three years, falls into a depression that will be remembered for one hundred years, only to default on its debt anyways. And worst of all, its score on the conservative Heritage Foundation’s economic freedom ranking falls more than any other country because – wait for it – Greece has failed to control government spending adequately.


Weekly Audit: Why Are Unemployment Benefits A Major Political Fight?

by Zach Carter, Media Consortium blogger

Congress finally authorized an extension of unemployment benefits on Wednesday, providing a critical lifeline to families across the country and an absolutely essential boost to the economy.

But with the jobless rate hovering near 10 percent, minimum measures like unemployment benefits shouldn’t be a source of controversy. Lawmakers should be debating big-picture jobs packages to get people back to work, not drips and drabs that keep a worst-case-scenario from getting unbearable.

As Annie Lowrey notes for the Iowa Independent, Senate Republicans blocked the unemployment benefits bill for two months, causing benefits to lapse for 2.6 million Americans. That’s a humanitarian outrage. When people don’t have access to this minimal support, they can’t pay bills or feed their kids. There is no excuse for anyone in a position of power to cut off access to such basic social necessities. So what’s the hold up?

It’s a mix of talking points and public misconception. Conservatives have been demonizing the unemployed and using erroneous claims about the federal budget deficit as an excuse to block unemployment benefits, and that narrative has been reinforced by President Barack Obama’s handling of the public debate over the economic stimulus package approved in February 2009.

Unemployment Benefits = Economic Stimulus

In addition to the humanitarian imperative, there’s a broader economic case for extending unemployment benefits. When people are out of work, they can’t spend money. If people don’t spend money, businesses can’t sell anything. And if businesses can’t sell anything, they have to lay off more workers. Putting money in the pockets of the unemployed isn’t just a humanitarian necessity—it also prevents layoffs and creates jobs.

But you wouldn’t know it from the economically illiterate nonsense that conservatives have been spewing during the unemployment benefits debate. Writing for The Nation, Robert Scheer quotes prominent conservative intellectual Niall Ferguson. Here’s Ferguson’s vile diatribe blaming lazy, unemployed people for the recession:

“If you pay people to do nothing, they’ll find themselves doing nothing for very long periods of time. Long-term unemployment is at an all-time high in the United States, and it is a direct consequence of a misconceived public policy.”

$293 a week

Ferguson actually said that. He really believes that a major reason why unemployment is so high is because the United States pays out unemployment benefits, and that jobs would just miraculously be created if we stopped supporting the people hit hardest by the recession. And as Seth Freed Wessler emphasizes for ColorLines, Republican politicians repeatedly parroted this nonsense argument again as they attempted to block the unemployment benefits legislation.

Wessler notes that the average unemployment benefits package comes to just $293 per week. People like to feel like they have contributed meaningfully to society and be rewarded with an honest day’s pay. They do not choose to live in squalor out of laziness, as much as Ferguson might wish that were the case.

Preventing more public-sector layoffs

The economy has shed 8 million jobs since the Wall Street crash. Our job woes are a direct result of recklessness in the upper echelons of the financial sector—lazy workers did not create the recession, and they are not prolonging it.

Given the enormity of lost jobs, you’d think politicians would be considering robust programs to put people back to work—hundreds of billions of dollars in jobs programs, rather than a $30 billion extension of unemployment checks.

As Danny Schechter details for GRITtv, the economy is facing a host of major hurdles that hit families hardest. In addition to epic joblessness, we’re also facing record foreclosure numbers and state budgets that are stretched beyond the breaking point. The state situation is dire. Without federal aid, states will be forced to lay off 900,000 public employees in the coming months

That’s what makes the jobs debate so crazy. There are easy ways to prevent layoffs and create jobs right now. A quick injection of cash into state governments would have an immediate stabilizing effect. The government can’t bring the unemployment rate down to 5 percent overnight, but it can keep things from getting worse and start bringing the rate down.

Don’t blame the deficit

But, as Lowrey notes, some conservatives are not blaming the unemployed, but harping on the deficit, claiming that they’re all for benefits, they just want them to be paid for. This is a disingenuous excuse for inaction.

The conservative deficit-talk is totally misleading, and it’s the wrong way to deal with deficits. Since Republicans have been universally opposed to all tax increases, demanding that unemployment benefits be paid for means pulling spending out of other programs, which means cutting jobs in other areas (slashing the defense budget probably wouldn’t hurt the jobs picture, but good luck getting a Republican to vote for it).

The U.S. doesn’t have a deficit problem. If it did, investors would be demanding a very high interest rate on U.S. Treasury bonds. But in fact, the interest rate on those bonds is at record lows. If the U.S. did have a deficit problem, however, sabotaging jobs and growth would be a lousy way to fix it. Consider Ireland. The country had a vastly larger deficit than that faced by the U.S., and implemented draconian austerity programs. Those spending cuts hit economic growth so hard that the nation’s deficit problem actually got worse, so much worse that the rating agency Moody’s just downgraded Ireland’s debt.

If the U.S. wants to deal with deficit issues, it should address big long-term structural issues, like the enormous defense budget, extremely generous tax rates for the wealthy and the rising cost of health care. It makes zero economic sense to be attacking jobs in the name of the deficit, when doing so only makes the deficit larger.

What about that economic stimulus package?

So why can’t we get a decent jobs package? As Steve Benen notes for The Washington Monthly, much of the public uneasiness stems from misunderstandings about how the economic stimulus package passed in February 2009 worked.

The stimulus was very much a success—it kept the unemployment rate from reaching 12 percent or higher. But it was also much too small, in part because the Obama administration underestimated the severity of the recession, but mostly because Republicans created ludicrous political hurdles for the package, forcing it to shrink. Unfortunately, with unemployment still out of control, many in the public believe the stimulus didn’t actually stimulate. That’s the wrong lesson to learn. As Benen puts it:

“Imagine there’s a massive, dangerous fire. Those responsible for the blaze insist that some lighter fluid should take care of the problem, while the fire department recommends water. Forced to compromise, the fire department uses less water than is needed, and the blaze is only partially contained.”

It’s about time Congress got around to extending unemployment benefits. But in the face of the longest and most severe jobs crisis since the Great Depression, much stronger action on jobs is needed, and soon.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.



St. Patrick's Day Eve - A Plan for N. Ireland

I've written about Hillary's work regarding the peace process in Northern Ireland several times over the past week because this is an issue I followed closely and pushed for back in the mid-90s.  I read everything I could get my hands on.  I poured through The Irish News, the Belfast Telegraph (both out of Belfast) and the Irish Times (Dublin) on a daily basis.  I talked with friends on the ground up there and was very active in discussion boards on line (you think I post here a lot!).  And I've known people from both traditions who've lost loved ones to the senseless violence.

I'm hardly an expert but I know more than most Americans about what went down back then.  And my respect for those who risked everything to make the Good Friday Agreement possible is immeasurable.  The process had been going on for years and a lot of other major agreements among the British, Irish and those in the North laid the groundwork to be sure.  But the peace process was given a huge shot in the arm when Bill Clinton granted Gerry Adams (President of Sinn Fein) a visa to come to the US, and then appointed Senator George Mitchell as his envoy to Belfast in an effort to bring the parties together to work out a lasting peace agreement.

The success of the parties to the Good Friday Agreement represents the single-most significant foreign policy accomplishment in recent US history.  And this model's being used to try to bring peace to other parts of our world in turmoil.

There's more...

Experience? The unravelling of the HRC myth

The  term vettign has been thrown around a lot lately, primarily by supporters of Hillary Clinton, the problem with demanding vetting is that once it starts you can't always control where it goes. This is certainly the case with the recent media attention to Hillary foriegn policy "experience" and given what has turned up in the last few days (see the following), one has to wonder whether Clinton's potemkin resume will even exist by the Pennsylvania primary:

Hillary a "cheerleader" in Irish Peace Talks, says Nobel Winner who actually led them: http://www.telegraph.co.uk/news/main.jht ml?xml=/news/2008/03/08/wuspols108.xml

Hillary's Resume is basically a puff piece:
http://www.chicagotribune.com/news/polit ics/chi-experiencemar07,1,394674.story

And this doesn't evn get into the absurdity of claiming a trip to the Balkans as experience when it was basically a photo-op (though it is possible I guess that Hillary intends to nominate Sinbad DCI and place Sheryl Crow of the NSC).

There's more...

Hillary: I helped bring peace to Northern Ireland....NOT


Hillary Clinton had no direct role in bringing peace to Northern Ireland and is a "wee bit silly" for exaggerating the part she played, according to Lord Trimble of Lisnagarvey, the Nobel Peace Prize winner and former First Minister of the province. "

There's more...


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