Posts tagged austerity

Austerity policies not only generate substantial welfare costs due to supply-side channels, they also hurt demand—and thus worsen employment and unemployment. The notion that fiscal consolidations can be expansionary (that is, raise output and employment), in part by raising private sector confidence and investment, has been championed by, among others, Harvard economist Alberto Alesina in the academic world and by former European Central Bank President Jean-Claude Trichet in the policy arena. However, in practice, episodes of fiscal consolidation have been followed, on average, by drops rather than by expansions in output. On average, a consolidation of 1 percent of GDP increases the long-term unemployment rate by 0.6 percentage point and raises by 1.5 percent within five years the Gini measure of income inequality

via http://www.imf.org/external/pubs/ft/fandd/2016/06/ostry.htm

Last week, the Australian arts community reacted in horror as news was released of the defunding of around 65 arts companies and organisations. In what is already known as “Black Friday”, the Australia Council released its latest figures for multi-year funding, revealing the bleak result of years of cuts and bungled policy. So far discussion has focused on the crisis facing small-to-medium companies and organisations. But this has obscured where the real damage is happening. The number of Australia Council grants to individual artists and projects has decreased by a staggering 70% since the 2013/14 financial year. According to the Australia Council’s 2013/14 annual report, that year it funded 1,340 individual artists and 2,489 total projects. In contrast, the total for the two funding rounds for 2015/16 was 405 individual artists and 694 projects. This represents a fall of 70% for individual artists, and 72% for overall projects. The number of small-to-medium organisations receiving multi-year funding over the same period fell from 178 to 128, around 28%. The 70% reduction particularly hits artists such as writers and visual artists, who mostly work alone. This intensifies the impact that literature has taken in the cuts. As Writers Victoria said: “It’s impossible to know what Australia’s literary landscape may look like in six or 12 months’ time.” This damage doesn’t even have the bad excuse of “savings”. It is a direct result of the former arts minister George Brandis’s requisition of $105m over four years from the Australia Council budget to finance his unaccountable and secretive National Program for Excellence in the Arts (NPEA).

via http://www.theguardian.com/culture/2016/may/19/the–70-drop-australia-council-grants-artists-funding-cuts