From Huffington Post: http://www.huffingtonpost.com/jakob-von-uexkull/costs-of-austerity-2-3-trillion_b_4595644.html
Jakob von Uexkull
01/14/2014
The meaning of the term austerity has undergone a significant transformation. It was originally used in Britain during the Second World War when the challenge was how to maximize the output of war materials and how to ration popular consumption.
The “modern” version of austerity began in the western industrialized countries during the mid-seventies, and has been continued at irregular intervals until today. Modern austerity is deliberately created, justified by the need to reduce government debt and fight inflation. Modern austerity policies generate artificial scarcity, rising unemployment and idle productive resources. After the 2008 financial crisis, many nations had to borrow heavily to rescue their banking systems, increasing public debt. This increased debt was then used to justify more austerity in order to satisfy the financiers “worried” about the debts governments had taken on to save them. Public spending is being cut further, reducing aggregate demand. Austerity policies thus create scarcity that is then used to justify the need for more savings. The implementation of austerity becomes its own justification.
Both the extent of the freely available but unused production potential as well as the level of unemployment have subsequently been at record levels in most countries. In the most affected countries, unemployment has reached figures in excess of twenty per cent, in the area of youth unemployment even up to fifty percent. A whole generation is thus being denied the transition to a normal working life.
This dramatic waste of productive resources is especially scandalous because these resources are needed to address urgent global problems such as climate change and poverty reduction. Even the use of a fraction of the available free productive capacity could have a major impact.
The constraints on demand caused by austerity policies mean that we unnecessarily live beneath our actual means. The value of unproduced useful goods and services are the costs of austerity.
We live below our human potential because we fail to use all the productive resources available to us and, as a result, over 200 million people are unemployed around the world. On the other hand, we live beyond our natural limits because we use more natural and finite resources than is sustainable. A huge opportunity thus presents itself: by employing even a portion of the 200 million global unemployed and by implementing a better degree of utilization of available productive capital we can increase our economic potential so as to make significant investments in the transformation of our energy consumption and in the sustainable restructuring of our production methods.
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