The Edmond Sun

Opinion

April 26, 2013

BY THE NUMBERS: U.S. just might learn Spain’s economic lessons

EDMOND — Rising debts amidst a slumping economy spur leaders to aggressively reduce budget deficits. For congressional Republicans, this is apparently their ideal economic policy. For Spain, it’s what they have lived through for the past two years and they are much worse off for it.

In November 2011 with an unemployment rate exceeding 20 percent and a government budget deficit above 8 percent of GDP, Mariano Rajoy became Spain’s prime minister with the promise to enact an “austerity” program to slash the deficit. Following through on that promise, Rajoy ushered through significant government spending cuts and tax increases and has successfully reduced the budget deficit in half in just two years. Unfortunately for the Spanish people, it has come at a heavy price.

Since Prime Minister Rajoy’s austerity program has been implemented, the Spanish economy, which had grown in five of the six quarters immediately prior to Rajoy’s election, has now contracted for five consecutive quarters. This week the country announced that its already high unemployment rate has now soared to 27.2 percent with little hope for improvement in the immediate future.

The worsening state of the Spanish economy coupled with Prime Minister Rajoy’s worsening approval numbers, led the prime minister to abruptly ditch his signature austerity program to embrace a pro-growth agenda. In short, Spain has learned that an aggressive contractionary policy actually contracts the economy.

Unfortunately, we have not learned that lesson in the U.S. Here, austerity is still idealized. Here, cuts in government spending are perceived to be the quickest path to prosperity. Here, decades of economic evidence are ignored.

In the U.S. today, the disparity between the fiscal policies advocated by economists and the policies actually implemented by our leaders, has never been greater. Standard economics tells us that in times of high unemployment and low interest rates, the government should spend more — more money to support teacher salaries, more money to invest in infrastructure. Yes, the debt will increase, but with low interest rates the costs will be minimal. It’s much the same as with families who are more likely to take out a mortgage at lower interest rates than at higher ones. Furthermore, the greater spending levels put more money in more people’s pockets helping to further stimulate the economy.

Yet, the current Congress does not ascribe to, or believe in, the economic evidence of the past 80 years. Nor do they believe the reports from their own experts in the Congressional Budget Office. The CBO has estimated that the increased government spending from the 2009 stimulus law increased employment by more than 3.5 million jobs, and that the decline in spending we are seeing now will act as a drag on the national economy. Yet Congress is still intent on forcing more declines in government spending.

Our Congress is following Spain’s economic lead.

We can do better. Congress could act, if they wanted to, to significantly reduce unemployment this year. Congress could act, if they wanted to, to significantly increase economic growth and job creation right now. Congress could act, if they wanted to, to ease the pain of economic hardship being borne by millions of American families.

But they don’t want to.

It appears that Spain has finally learned their lesson. Will we?

MICKEY HEPNER is the dean of the College of Business Administration at the University of Central Oklahoma. Hepner serves on the Executive Committee of the Board of Directors for The Oklahoma Academy.

1
Text Only
Opinion
  • Is English getting dissed?

    Is the English language being massacred by the young, the linguistically untidy and anyone who uses the Internet? Absolutely.
    Is that anything new? Hardly.
    Many words and expressions in common parlance today would have raised the hackles of language scolds in the not-so-distant past. For evidence, let’s look at some examples from recent newspaper articles.

    July 31, 2014

  • 'Too big to fail' equals 'too eager to borrow'

    Four years ago this month, President Barack Obama signed the Dodd-Frank Act into law, promising that the 848-page financial law would “put a stop to taxpayer bailouts once and for all,” he said. But recently, Massachusetts Sen. Elizabeth Warren told a Detroit crowd that “the biggest banks are even bigger than they were when they got too big to fail in 2008.”
    Who’s right?

    July 30, 2014

  • Sheltons travel for better life for family

    Some time around 1865 a mixed-race African American couple, William and Mary Shelton, made their way from Mississippi to east Texas. Nothing is known for certain of their origins in he Magnolia state, or the circumstances under which they began their new lives in Texas.

    July 29, 2014

  • Film critic Turan produces book

    Kenneth Turan, who is the film critic for National Public Radio’s “Morning Edition,” has written a book “Not to be Missed, Fifty-Four Favorites from a Life Time of Film.” His list of movies span the gamut from the beginnings of filmmaking through the present day.
    There are some surprising omissions on his list. While he includes two films, “A Touch of Evil” and Chimes at Midnight” made by Orson Welles, and one, “The Third Man,” that Welles starred in but did not direct. He did not however, include “Citizen Kane,” that was the first movie Welles made, that is  often cited by both film critics and historians as a favorite film.

    July 28, 2014

  • Logan County’s disputed zone

    Watchers of “Star Trek” may recall the episode from the original series entitled, “Day of the Dove.” In this episode, Captain Kirk and his crew are forced by a series of circumstances into a confrontation with the Klingons. The conflict eventually resolves after Kirk realizes that the circumstances have been intentionally designed by an alien force which feeds off negative emotions, especially fear and anger. Kirk and his crew communicate this fact to the Klingons and the conflict subsides. No longer feeding upon confrontation, the alien force is weakened and successfully driven away.

    July 28, 2014

  • Russell leads in Sun poll

    Polling results of an unscientific poll at www.edmondsun.com show that Steve Russell, GOP candidate for the 5th District congressional seat, is in the lead with 57 percent of the vote ahead of the Aug. 26 runoff election. Thirty readers participated in the online poll.

    July 28, 2014

  • Healthier and Wealthier? Not in Oklahoma

    Increased copays, decreased coverage, diminished health care access, reduced provider budgets and increased frustration are all the outcomes of the Legislature’s 2014 health care funding decisions. Unlike some years in the past when a languishing state economy forced legislators into making cuts, the undesirable outcomes this year could easily have been avoided.

    July 26, 2014

  • Medicaid reform a necessity

    Historically, education spending by the state of Oklahoma has been the largest budget item. This is no longer the case. In recent years, the state of Oklahoma spends more on Medicaid (operated by the Oklahoma Health Care Authority) than common education and higher education combined, according to the state’s Comprehensive Annual Financial Report.

    July 25, 2014

  • Remembering lessons from 1974

    This week marks the 40th anniversary of an important milestone in America’s constitutional history. On July 24, 1974, the Supreme Court voted 8-0 to order the Nixon White House to turn over audiotapes that would prove the president and his close aides were guilty of criminal violations. This ruling established with crystal clarity that the executive branch could not hide behind the shield of executive privilege to protect itself from the consequences of illegal behavior. It was a triumph for the continued vitality of our constitutional form of government.

    July 25, 2014

  • RedBlueAmerica: Is parenting being criminalized in America?

    Debra Harrell was arrested recently after the McDonald’s employee let her daughter spend the day playing in a nearby park while she worked her shift. The South Carolina woman says her daughter had a cell phone in case of danger, and critics say that children once were given the independence to spend a few unsupervised hours in a park.
    Is it a crime to parent “free-range” kids? Does Harrell deserve her problems? Joel Mathis and Ben Boychuk, the RedBlueAmerica columnists, debate the issue.

    July 24, 2014

Poll

The runoff race for the 5th District congressional seat is set for Aug. 26. If the voting were today, which candidate would you support?

Al McAffrey
Tom Guild
Undecided
     View Results