In the short term, this is indeed the case: the cuts work as a brake on the economy because less money is put into circulation, people lose their jobs and spend less.Others who are not affected themselves are often made kopschuw and give less and this has a snowball effect.
However, cuts may be necessary to prevent the state from making too much debt.This can also allow an economy to run from the rails. Cuts can best be done when the economy is running at full speed. Then the inhibitory effect is not so bad or even useful not to let the mess overheat. However, the political pressure to do just the opposite is also the greatest. After all, there is enough money? Edit But! As a result, it is often too long to wait until the economy is in the slum and cuts can no longer be postponed because otherwise there is a state bankruptcy threat. But then the pain for the citizen is much greater.
This is the same: irresponsible policy of our politicians who like to make themselves popular today and leave tomorrow to another.
Sensible citizens should ask their politicians for cuts if they are going well .
Why is the government’s austeration policy always making it worse for the economy?
That is not always the way, on policies that do not work you can cut back, and if the companies are running in full, the government does not need to stimulate them (but to guard against negative external impacts such as environmental damage).But if the economy is deteriorating it can make cuts that worsen. That’s why we usually go out of 芒 鈧?艙anticyclisch芒 鈧?budget policy: saving if it goes well, spending if it goes bad in the economy.
Economising means that the government is exerting less economic demand and that slows down the economy.The idea is that over time the economy has been eroded and the economy will flourish again. Because the government has narrowed through all that remediation, the tax can be lowered and that gives people more spending space than before. That is the Milton Friedman approach.
Keynes said that the government should not cut down on the recession, but the demand failures in the business sector-which, for example, does not invest and relieve people-must be handled by borrowing and investing in large projects.
What is a better approach is primarily a political choice.
Euhm, Jees.I think it often goes wrong because with a big rescession like that of 2008 till now the money was mainly achieved with the normal working man. The companies were spared so much movelijk.
But, the companies always produce for the work man/consumer.However, this had to pay more taxes and make j谩ren a piece of wage moderation. And kept less over to spend.
This had its effect on the companies that continue to feel the slave economy despite the incentives for the business community.
Buying power increase by lowering the burden on labor is I think a better solution.People are less inhibited to make purchases, which is good for the businesses, which is good for the economy.