Euro Crisis in Spain Will Not Be Solved By Austerity
Another round of Euro zone talks has yielded another round of austerity measures for Spain. From other Euro zone talks in past weeks, it seemed that Spain would not have to institute harsh austerity measures like Greece in order to receive bailout funds. This is clearly no longer the case, as Prime Minister Mariano Rajoy has unveiled a new round of harsh austerity measures in addition to a tax increase.
While fiscal responsibility is an important value, austerity paired with tax hikes in a country already in a deep recession will do little to help matters. As of May 2012, Spain’s unemployment rate is 24.6% (16.4% higher than the United States), and youth unemployment is at 52.1%. Despite this high unemployment rate, the Spanish government is slashing unemployment benefits. Harsh austerity measures such as those implemented in Greece are not the solution to this recession. Austerity in Greece has only increased unemployment… and anger. Spain seems to be going down a similar path; Wednesday’s anti-austerity protests ended in clashes between protesters and police with a reported 76 injuries.
In Europe and the U.S., the government has been cutting spending. Yet during times of recession and unemployment, people need government spending more than ever. Cutting unemployment benefits in a time of high unemployment, as Spain is doing, makes little sense. Austerity for the sake of austerity should not be the tool with which country’s combat recessions. Governments establish social safety nets just for this purpose, so that people may be protected during times of economic uncertainty or instability.
Europe’s failed experiments with harsh austerity measures should give the U.S. a few hints that austerity cannot be the answer to all our problems. Unemployment in the U.S. is significantly lower than in Spain or Greece, but it is still high. Job creation will not come from austerity; cutting the social safety net will not be a pathway out of recession.
There is no panacea for getting countries out of economic crises, but it has become clear that austerity is not the way. With the worldwide economic crisis entering its fourth year, perhaps it is time to rethink austerity.