Austerity vs. spending

Here is a BBC source on the pros and cons of austerity.

Here is an article from The Economist with the two positions: Keynes vs. Hayek.

Here is a piece from Paul Krugman's blog on The New York Times website.  Thank you O!

During the session March 29th, we split into two camps to table the advantages and disadvantages of austerity to help the EU economies out of the crisis with a view to reaching a common ground on the issue.  This was supposed to be a meeting composed of the members of a task force, which was set up to come up with some proposals to help the EU economies get out of the crisis in the nearest possible future.

During the session we seemed to have reached a common ground on the following issues:

1- Necessary measures should be taken to stimulate economic growth evenly across the EU.

2. We should decrease unemployment.

3- We should increase European companies' competitiveness in the global markets.

4- Foreign investors' confidence in EU economies should be maintained if not increased.

5- Average citizens should not bear the burden of the  austerity measures if we cannot avoid them.

6- These measures should not have a negative impact on consumer confidence.

7-  More spending does not necessarily mean more public spending; there could be public-private partnerships to stimulate economic growth.

8- Waste in the public sector should be minimized if not eliminated.

9- If companies and/or countries need to be bailed out, we need to make sure that there is no  moral hazard.

10- We should try to avoid social unrest and/or populist take-overs. 

These are the ten points I wrote down. If I have missed something, please let me know.

As you suggested at the end of the previous session, on April 5th we revisited two of these points to come up with a common action plan.

We thus discussed points no. 7 and 8. 

Concerning point no. 7, we agreed that promotion of public-private partnership (PPP) should be done in such a way that the relation is not only sysmetrically reciprocal, e.g., between unversities and the industry, but also transparent.   In reference to the issue of transparency, the role of the lobbyists and/or think tanks representing various industries was mentioned.  The documentary entitled "The Brussels Business" was also relevant in this context. We also talked about incentivization and regulation, which could both be used to promote PPP, with the preference given the former.

Concerning point no. 8,  after having asked what is meant by 'waste', we mainly focused on human resource management.  We agreed that continuity and consistency should be the two priorieties in HR management. We then discussed the EI's policy concerning contract agents to see if it is in line with these two priorities.  We also agreed that the main criteria in hiring, firing and promotion decisions should be merit and productivity.