It’s mercantilism, stupid

Os meus conhecimentos económicos não são suficientes para saber se a analogia é correcta, mas a comparação da austeridade na Europa com o mercantilismo é interessante:

By contrast, we find little reporting of the considerably stronger spread of EU mercantilism, the witch’s familiar of fiscal austerity. Adam Smith defined mercantilism as government policy that seeks to “restrain imports and encourage exports”. It is as applicable to current EU austerity programmes as it was to Smith’s world three centuries ago.

In the 18th century governments used direct restrictions on imports and other market interventions in an attempt to achieve permanent trade surpluses. Governments implement the 21st century version of mercantilism with different policy instruments. In the place of direct restrictions on trade we now see real wage reductions, manipulation of business taxes, and currency depreciation through loose monetary policy (so-called quantitative easing and negative interest rates).

This “market friendly” version of mercantilism allows the ideologues to maintain the fiction of “free trade” while pursuing the mercantilist goal of persistent trade surpluses. This perverse inversion of rhetoric seeks to justify recovery in Europe based on beggar-thy-neighbour policies.

[…]

How times have changed. The seizure of policy debates by advocates of austerity has rehabilitated trade surpluses from mercantilist delusion to competitive virtue. For the theologists of austerity the national equivalent of household prudence means consuming and investing less than a country produces. Contrary to common sense the new economic theology considers this squandering of national resources as “saving”.

[…]

The table below shows two growth rates for Germany and five other euro zone countries over eight years, 2008-2015. The five are the infamous PIIGS, countries that showed varying degrees of resistance to European Commission pressure to undertake fiscal austerity in exchange for assistance to ailing financial institutions. The first column of numbers reports the usual measure of growth, gross domestic product. The second subtracts each country’s trade balance from its GDP. This might be called “domestic income”, what is left for residents after adding in imports and subtracting exports.

The last column is the difference between the two, which in all cases is negative and except for Germany substantial. The difference for Greece is the largest, overall GDP declining at an annual rate of 3.8%, while domestic income contracted at almost 6%. Ireland provides a striking case, especially because the EC austerity ideologues hold it up as a case of successful recovery. Even for this star pupil of austere recovery, the income available to Irish residents declined.

 

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