Local Austerity

The Wall Street Journal had a actually heart-warming article, Europe's Recession Sparks Grass-Roots Political Push  about groups taking over local governments inwards southern Europe, together with cleaning out years of mismanagement. An excerpt

At her inauguration Ms. Biurrun [the novel mayor of Torroledones, Spain] choked upwards earlier a jubilant crowd.

Then she began slashing away. She lowered the mayor's salary past times 21%, to €49,500 a year, trimmed council members' salaries together with eliminated 4 paid advisory positions.

She got rid of the police line escort together with the leased car, together with gave the chauffeur a dissimilar job. She returned a carpet, emblazoned amongst the town seal, that had terms nearly €300 a calendar month to clean. She ordered council members to pay for their ain meals at move events instead of billing the town.

"I was then indignant seeing what these people had been doing amongst everyone's coin every bit if it were their own," Ms. Biurrun said.

Those cuts, combined amongst savings achieved past times renegotiating contracts for garbage pickup together with other services, helped hand a million-euro boost to the metropolis treasury inwards her start twelvemonth inwards office.

Great, no?

But wait, isn't this all "austerity?" Isn't cutting spending  exactly the sort of affair that Keynesian macroeconomists, every bit good every bit the reigning IMF-style policy consensus decries, proverb nosotros demand stimulus now, austerity later?

Keynesian, together with specially new-Keynesian economic science wants to a greater extent than authorities spending, fifty-fifty if completely wasted. Those trimmed salaries, fired "advisers," cleaning bills, eating theater spending, overpaid contracts are, inwards the criterion mindset, all crucial for "demand" together with goosing GDP.  If stimulus advocates were at all honest, they would endure writing weblog posts decrying Ms. Birrun together with her kind.

Of course of written report they don't. Abstract "spending" sounds good, together with touting abstract "topsy-turvy" model predictions sounds fine.  But when it is concrete, it's then acre absurd that you lot don't take away heed it.

The Greek metropolis of Thessaloniki cutting costs after Yannis Boutaris, a businessman-turned-politician, took job inwards belatedly 2010 together with ended City Hall's human relationship amongst a few selected providers. Competitive bidding has saved the metropolis 80% of its previous spending on accounting, 25% on waste materials disposal trucks together with 20% on printer paper. The savings convey allowed Mr. Boutaris to pass to a greater extent than on social services, fifty-fifty piece cutting taxes together with paying downwardly City Hall's debt to suppliers.

How sad. So much "demand"-destroying "austerity."

(Of course, the principal indicate of the articles is almost a political realignment, inwards which local governments are becoming responsive to local voters, transparent, together with efficient, rather than existence cronyist machines of national political parties. I can't imagine anyone non feeling warm almost that!)

Update: Courtesy Marginal Revolution, I establish this nice story almost the novel Castilian $680 ane grand 1000 submarine that volition sink if seat inwards water.  MR snarkily asks "did this assist Kingdom of Spain or wound Spain." $680 ane grand 1000 of authorities spending raises Castilian gross domestic product past times nearly $1 billion, then this is great, right?