'Austerity Disease' Continues to Infect Europe, Fuel Popular Protest

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http://www.commondreams.org/headline/2012/01/27-2

"What do Nobel Prize-winning development economist Amartya Sen and IMF chief Christine Lagarde have in common?" asks Alan Wheatley today in the Cyprus Mail.

Ireland is among the many European nations feeling the squeeze from austerity pressure. (Photograph: Cathal McNaughton/Reuters) The anwser: They both think austerity-driven economic policies are incompatible with effectively fighting off the financial woes of Western countries still reeling from the global recession that began in 2008. Wheatley reports:

Amartya Sen, an economics professor at Harvard University, said it was folly for governments to bend all their efforts to eliminate deficit spending.

Apart from stoking democratic discontent, the "austerity disease" sweeping the West was killing the goose that laid the golden egg of growth.

"It is very hard to find adequately pragmatic grounds for severe austerity that cuts demand and makes economic expansion much more problematic," Sen said in a lecture at the London Stock Exchange last week.

Sen suggested that some governments were opting for indiscriminate cuts for ideological reasons or even regarded debt reduction as a moral imperative.

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