Doing the Same Thing and Expecting a Different Result

Cheer up. Things could be worse. We could be living in the Eurozone. Oh wait. Some of us do live there. Wonder how that austerity’s been working out …

For those who have been trying not to pay attention, perhaps a brief summary of the situation is in order:

Unemployment, on last report, rose to a record 11.9 percent for the 17 nation Euro Area, and 10.8 percent for the 27 nation area. In Greece the most recent figure was 27.0 percent, Spain 26.2 percent, and Portugal 17.6 percent. Youth unemployment was 24.2 percent in the 17 nation area and 23.6 percent for the 27 nation area.

Apparently, the contractionary expansionists were slightly off in their estimates of the boom times austerity would deliver on the back of rising confidence and greater certainty.

Those unemployment figures suggest that income growth may not have been quite the mad gallop out of the gates that we had been led to expect. And so it turned out, with GDP declining — rather than booming — in the final quarter of 2012 at the rate of 0.6 percent. Powerhouse Germany, as it happens, performed right on that average.

Now, negative growth can’t have been good for tax revenues, which probably meant that most governments were still in deficit, which suggests public debt must have risen further.

And if public debt rose alongside declining income, public debt as a percentage of GDP must also have increased, which it did, to 90 percent.

This virtuous circle of hardship and despair is encapsulated in a simple diagram that I believe is now taught to children in European primary schools as a kind of Euro pride building exercise.

Idiot Circle 4

In high school, I am told, they perform this in assembly as a chant. “Austerity, anyone?” ask the girls. “Yes. please,” shout the boys. And so forth.

Then the school captain jots the following example on a whiteboard up the front of assembly:

“If the budget deficit is 50, income 1000, public debt 800, the expenditure multiplier 1.5, and the marginal propensity to tax 40 percent, will government spending cuts of 50 jeopardize the virtuous circle of hardship and despair?”

“No,” shout the female prefects. “Income will fall by 75, the budget will still be in deficit by 30, and public debt will rise to 830!”

“Is it true?” asks the school captain.

“‘Tis true!” shout the male prefects. “Public debt will rise from 80 percent of GDP to 89.7297 percent, rounded to four decimal places!”

“Hurrah!” shout the student body. “We can live out the virtuous circle of hardship and despair for another period!”


3 thoughts on “Doing the Same Thing and Expecting a Different Result

  1. Reading Dan Kervick and ‘Euro-da-fe’ today over at NEP:

    I think human meanness descends as deep as the infamy of a Hitler, Mussolini, Stalin or Mao. Satire is putting on a brave face, when the horns of the beast seem untouchable.

    But as satire goes, the Dark Ages and religious persecution, penance and self-flagellation is parallel enough; and one cannot help but empathise with Dan over the imposition and idiocy hobbling the less fortunate in the peripheral nations of Europe – especially the wounds callously inflicted on younger people in these countries! Or wonder about the human stature of those hovering over the honey-pot of America.

    One day I was walking over rolling hills, wooded copses and pastureland. An electrical storm was brewing and the air was alive and stirring, Nature energised and a powerful presence; the clouds building. Suddenly, over a rise a few horses came streaming, at full gallop – manes flying in the wind and hooves pounding the earth – at full flight as only horses can run; ‘animal spirits’ celebrating the summit of their nature. It was a beautiful sight – the spirit of beautiful animals flying free over the earth happy to be alive; enjoying their nature and the Nature of which they were a part. I have always remembered that spirit of freedom in those horses on the hills that day!

    Then I think of how humans take these animals and ‘break their spirit’ so that they become dependent upon and subservient to their master’s will. Made to work or race and compete, or carry the handicap of a pleasure seeking human on their back. I know most horse-lovers will not want to forgive me, but I don’t completely wear this business about partnerships, mutual respect and cooperation, or ‘progress’ for the horse. A broken spirit is a broken spirit and the horse is trained so that the easiest thing for it to do is obey. One species commands another; the ‘love’ bought. That is what is brewing in Europe in my view! The only difference is that it is the same species. I think it all goes much deeper than ideology and therefore satire.

    It is an ancient human argument about sharing and caring; arising from out of the core of our being and unresolved.

    Perhaps human ‘animal spirits’ need the mold of culture, civilisation and law to tame their excesses, learn how to cooperate and get along. But there is a deeper spirit within each and every human being that yearns to soar free and is unbreakable!

    They shoot egregious horses don’t they?

    After 200,000 years on the road, what is a human being?

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