• "Well written, well researched, and the thesis put forth is well argued.... Woods has opened up an area of historical analysis that should invite further study."
    -Journal of American History

  • "During these times that challenge our freedoms there is no one more qualified to make U.S. history relevant to the fight against big government than Thomas Woods."
    -Barry Goldwater Jr.
    Former Member of Congress

  • "I strongly recommend Woods's work."
    -The Honorable Ron Paul,
    U.S. House of Representatives

  • "Written with great clarity and fluency, making the complex philosophical and theological concepts approachable."
    -Journal of American Studies

  • "A must-read."
    -Barron's

  • "An excellent reading source for anyone interested in financial markets, and much more so for anyone interested in learning about capitalism without all the misinterpretations being thrown about in the financial media."
    -Asia Times

  • "Provocative, well-written, and deserves to be read."
    -Catholic Historical Review

  • "An engaging and important contribution to scholarship on the history of American Catholicism."
    -Journal of the Historical Society

  • "Woods and [co-author Kevin] Gutzman appeal to both left and right in this constitutionalist jeremiad…. The authors' exegeses of the Constitution and court decisions, heavy on original intent arguments, are lucid and telling."
    -Publishers Weekly

  • "A marvelous read. Every chapter taught me something new and unexpected."
    -Tom Bethell, senior editor,
    The American Spectator

  • "The hottest book today is Meltdown, by my friend Tom Woods."
    -Judge Andrew Napolitano, senior judicial analyst,
    FOX News Channel

  • "Should be required reading."
    -Economic Affairs (London)

  • "Woods, one of the best classical liberal [libertarian] scholars of his generation, has once more placed us in his debt with this lucid and tightly argued book."
    -David Gordon, The Mises Review

  • "Tom Woods is one of my dearest allies in the struggle against wrong-headed and dangerous economic policy."
    -Peter Schiff

Those Awful European Austerity Programs! Oh, Wait….

Here’s a graph showing the real numbers. As you suspected, “austerity” doesn’t mean to reporters and politicians what it would mean to a normal person — severe cuts in government spending. Sometimes it doesn’t mean any cuts in government spending at all. And here’s a follow-up post to the first one. (Thanks to Bob Murphy.)

Unlearn the Propaganda!

  • Greg

    not too sure about this, are those real or nominal values???  if those numbers are nominal than the decrease in the rate of growth of nominal spending could be a real cut if the new growth rate of nominal spending is below the growth rate of real economy. 

    it would be much more meaningful to look at a broader picture: spending as a % of GDP, on what and how the money is being spent on etc.  for example its better if all the money is spent on the military rather than all the money being spent on an alphabet of environmental regulatory agencies even if the same amount of money is being spent: marginal cost of military is very low for the economy compared to the marginal cost of an extra environmental regulator.

  • Anonymous

    I’m from the UK,  The political debate here is consumed with the Conservative “Austerity” vs Labour “Investment” argument.  The Conservative plan was to cut £6 million from our £170 million budget deficit this year, roughly 3%.  Labour would hold spending at current levels till the recovery kicked in. I say it was the Conservative “plan” because they have already failed to do this due partly to increasing interest payments and increased EU contributions.

    The country actually sees this as ‘austerity’ vs ‘investment’.  It is in fact ‘far too much spending’ vs. ‘a little bit more than far too much spending’

    Regardless, our gargantuan public sector are more than happy to take to the streets at the mere mention on spending cuts.

    This will not end well.  You don’t know how lucky you are in the US to have even a possibility of a small government movement such as the tea party.

  • Edouardh17

    For a french article commenting on this , click this link : http://h16free.com/2012/05/10/15116-lausterite-quelle-austerite

  • http://TheInterventionistParadox.wordpress.com/ Bharat

     It’s nominal

  • Joe_Zed

     FYI – austerity also means tax hikes.  Which have occured. 

  • Greg

    so maybe in real terms its a real cut, i.e. gov. spending as a % of GDP is going to fall as long as inflation is quite high which in UK right now is around 4% i think.

  • Erik Carlseen

    I think that those of us who understand how the economics of this actually work need to be correcting their terminology and replacing “austerity” with “prosperity” – reflecting what would actually happen if governments were shrunk considerably. We need much more prosperity!!!

  • http://www.facebook.com/matthew.swaringen Matthew Swaringen

    Cowen partly explains why that’s the wrong view to take here: http://marginalrevolution.com/marginalrevolution/2012/05/economic-growth-is-not-contractionary-and-other-confusions-about-stimulus-and-spending.html

    Also, you can’t just say that government spending should increase in line with the GDP.  This is kind of nonsense.  The only reason government should spend more as a percentage is if it should be doing more, otherwise it should spend the same, or perhaps increase in line with inflation, but the % GDP of it should not necessarily stay the same.

    (I don’t actually think the state should exist, so I think it should be 0% of GDP, but even if I accepted it, the argument that it should always stay around the same % of GDP assumes 0 economic growth or that it must expand in line with the private sector for absolutely no reason). 

  • Greg

    i didn’t mean to say that gov. spending should go up in line with gdp, or not.  

    Cowen doesn’t cover what i said: (he talked about levels, i talked about growth rates, so from now on lets talk about levels) if gov. spending is 100 now, then its 100 in the next period but inflation is 5% then real gov. spending is now 95 in 2nd period => real gov. spending has shrunk.  in nominal terms gov spending doesn’t change but in real terms, which matters, gov. spending has shrunk because gov. can now physically buy less for the same nominal amount of cash.

    its like with debt: if you have 100 in debt now and inflation is 10000% then next period you still have 100 in debt but in real terms you have no debt any more.

    as long as inflation is higher than the rate of growth of gov. spending than in real terms gov. is spending less.

  • Greg

    by what i’ve said i do not mean to support the lack of true cuts in gov. spending!!!  i think gov. needs to shrink much much much more than it is doing now.

  • Guest

    If inflation isn’t being used to fund government programs, couldn’t we say that it’s being used to benefit the politically connected?

    If so, then it doesn’t help to say that government spending hasn’t increased, if government is helping to misallocate resources in other ways.

    The same thing happens when inflation funds government programs, as it does when it funds crony capitalism. The currency loses value, and it creates a bubble.

  • Greg

    of course, i did not mean to say that inflation is not very costly or destructive in all sorts of ways.

    i was only trying to show that nominal increase in gov. spending could still result in real decrease of gov. spending, provided inflation is high enough.

    whether we want to have high inflation etc. is another question which i did not address.  but note again, that inflation is not all bad, it has certain positive attributes under certain circumstances.  

    very few things are wholly bad or wholly good. right Woods?!

  • Guest

    You two are great, by the way.

    You guys should get a room. ^^

  • Jovan Galtic

     Why would government spend anything?

  • Greg

    to protect you from Chinese soldiers.

  • http://profiles.google.com/xanas3712 Matthew Swaringen

    The ocean is more than ample for that along with personal firearms.

  • Greg

    hahaha.  yeah it sure is.   hahaha i would really like to see how you would do against WZ-10 or a Su 30.  i am sure your russian army surplus mosin nagant will do just fine.  

    i think you’ve been watching a bit too much of Red Dawn.

  • http://www.facebook.com/matthew.swaringen Matthew Swaringen

    How is China going to get the troops here in significant numbers Greg?  And if the state doesn’t exist, then people aren’t prevented from owning weapons that would compete with the Chinese.

    It also would be extraordinarily dumb for China to attack such a country (that had no military and therefore was focused only on voluntary trade), since they would have everything to lose and nothing to gain. 

  • Jovan Galtic

    Protecting me from Chinese soldiers (though I don’t see any around here…), is probably less than 10% of the budget. What about the rest of spending?

  • Greg

    hahah, PLAN has no landing ships???  that’s going to news for the CO of Kunlun Shan.  if there were no USN and no ally like the French or British to provided any kind of blockade the chinese wouldn’t even need a navy, they could just fly over, land and transport all of usa to a gulag in a month.

    if we take ALL the billionaires in usa and take ALL their money, that wouldn’t be enough even for a carrier battle group never mind putting together an air force or an army.  

    all the chinese are going to do is laugh at your fat, racist militia before dropping a tonne of HE on them.  

    EVEN IF your anarchist utopia can exist, such a utopian society would NEVER be able to provide a force capable of resisting even a fairly weak organised armed force never mind the big boys like russia or china.  

    and there would be no Alamo, because while you are trying to organise your militia men a laser guided or a satellite guided cruise missile would be landing on top of you.

  • tomshag

    And you base those claims on your own masturbatory fantasies, I see. 

    Being an anarchist society automatically causes technology to regress 200 years and we’ll be fighting tanks with a blunderbuss. Yeah, sure.Greg, again and again you show yourself to be nothing more than a troll.

  • David

     I’m not an anarchist, but to suggest that China has the capabilities of maintaining any significant military effort in Europe or North America, let alone a full on conquest of the USA or UK (even if we assume they would ever want to do such a thing) is absurd. Furthermore, look at how Somalia, Iraq, and Afghanistan have been able to hold off foreign invasion forces with little to no effective central government.  China is not nearly as powerful as the USA or USSR was, and the USA and UK are far more formidable targets than any of the three countries I mentioned.