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Austerity ruined Europe, and now it’s back

By Yanis Varoufakis

4 min read

informed Summary

  1. The austerity measures implemented by European governments following the 2008 financial crisis have led to a significant decline in Europe's wealth, the author argues.

ATHENS – In 2008 Europeans earned, in aggregate, 10% more than Americans. By 2022, Americans were earning 26% more than Europeans. This week, the Wall Street Journal confirmed that Europeans are becoming poorer not just collectively but also privately. This shocking reversal of fortune was caused by the unprecedented level of austerity European governments inflicted upon their economies following the 2008 global financial crisis.

Austerity is not only bad for vulnerable people in need of state support during tough times; it also stifles investment. In any economy, collective expenditure equals collective income. By substantially reducing public expenditure at a time when private expenditure was falling, European governments hastened the rate at which total income diminished.

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