Krugman’s Own Hubris

As a follower of Paul Krugman’s blog, I noticed that the lion’s share of his posts contains either of the following two messages:

1) Republicans are idiots

2) Austerity economists are idiots

Yesterday, Krugman wrote once again that economically Europe is not recovering as it potentially could, because it insists on policies of austerity – that is to say, to cut on government spending. He even argues that austerity measures caused that Mario Monti had to step down, whereas I think we should not underestimate the influence of Mr Berlusconi in this matter. Continue reading

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Austerity: It’s About Time

A discussion rages with regard to the austerity measures implemented by European countries. Paul Krugman, a notable opponent of austerity measures, even refers to it as “Europe’s Austerity Madness“. If one believes Krugman’s and some other populistic outbursts, one might actually believe that governments did not take on addional debt in past years. But the graph below tells you an entirely different story, I hope!

Government consolidated gross debt as a % of GDP. Data is retrieved from Eurostat.

Government consolidated gross debt as a % of GDP. Data is retrieved from Eurostat.

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SP Member of Parliament Wants to… Decrease Retirement Ages?!

Sadet Karabulut, member of the Dutch parliament for the Socialist Party, published a report this week to fight youth unemployment. One of the proposed features of policy interventions is to reintroduce the “VUT” – a measure that stimulates early retirement.

Sadet Karabulut

SP member Sadet Karabulut

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Financing Education Sustainably – There is a Way

Recently, less recently, even less recently, and on many other occasions has the financing of education been an issue. Costs have grown too high, now after decades of expanding welfare states a structural economic recession seems to have set in. In many countries tuition fees have been raised and students are entitled to less and smaller allowances from the government. This raises an issue of equity: children of poorer families might have smaller and fewer opportunities to enjoy a good education. It also raises an issue of underinvestment in education: too many might decide not to enroll in schools because of the massive debts they would accumulate. Continue reading

Pitfalls of Funded Pensions

A trend can be observed that countries switch from pay-as-you-go (PAYG) to funded or semi-funded systems. “Brussels” supports this switch, because it supposedly is “actuarially fair”. The interest in pension systems has risen because of the aging problem. Many welfare states instituted fairly generous pension systems in post-WWII decades. They started paying out pensions to those who suffered the war and could no longer work. But since those governments had not collected contributions, these pensions had to be paid out of taxes. Implicitly, the workers who paid those taxes were promised that whenever they were to retire, that the workers of that time – future generations – would pay their pensions. This is basically what is called a PAYG pension system. Pension payments increased steadily over time, thus becoming more generous, which was not really a problem during the 20th century because of increasing populations and economic growth. Continue reading

Behind Billows of Smoke: Why Colorado and Washington Made the Right Decision

Colorado and Washington have become the first U.S. states to legalise the possession and sale of marijuana for recreational use. I find this a sensible development and I congratulate the responsible voters. I do so while I never, ever used marijuana or anything like it (I never even took a single puff on a cigarette) and while I live directly above a coffeeshop (I still wonder why they called them coffeeshops). Let’s look at some reasons why legalisation could should even make sense to conservatives. Continue reading