The Growing Logical Inconsistency in Liberal's Policy Prescriptions

Internal consistency isn’t exactly a hallmark of liberal logic.

The most brazen example has come from the new fetish amongst left-wing talking heads and even-leftier wing bloggers that the perceived failure of European austerity just goes to show that America is due for another stimulus package.

Let’s go ahead and get some caveats out of the way before we dig into this gem of an “argument.”

First, there is a reason that many European countries are trying to cut their debt and it’s not that their inherent masochists who enjoy a good populist riot. As Gideon Rachman explains in the Financial Times, “Their austerity drives were a reaction to the fact that markets were demanding unsustainably high interest rates to lend to them. There is no reason to believe that the markets are now suddenly prepared to fund wider deficits in Europe.”

Second, nobody expected austerity to be an instant success. It took decades for the social welfare state to crumble beneath the weight of impossible promises to its citizens. It will take time, measured in years, not months, for nation’s balance sheets to repair themselves to a point where natural growth prevails. But this is a necessary pain. If economies and living standards can only be supported by year-after-year deficit spending, then we are living in an unsustainable lie.

Third, one of the major problems is demographics – a factor that is immune to stimulus or austerity. Europe is getting gray. As Megan McCardle explains in this month’s Atlantic Magazine, “Not one country on the Continent (Europe) has a fertility rate high enough to replace its current population. Heavy debt and a shrinking population are a very bad combination.” Why? Because there are fewer workers, which makes it hard to grow the economy, and more retirees, which rely on expensive government programs. Bad combo.

But all of that aside, the main logical inconsistency in liberal’s argument is that at the same time they’re lamenting austerity they are arguing for tax increases. Have they completely ignored that European austerity is synonymous with tax hikes?

Take Britain as an example. They appear poised to slide into a double dip recession after passing an austerity package. But it has nothing to do with spending. In fact, total public sector spending, in real terms, was almost 4 percent higher last year than it was in 2009, according to the Atlantic Sentinel. What they have done is raise taxes. The austerity plan raised the top marginal tax rate by 10 percentage points  in 2010 – something that liberals in the United States can only dream of – and another point last year.

It is much the same with other European nations. Kyle Wingfield writes for the Atlanta Journal Constitution:

“If five of the nine recessionary countries, governments cut spending in 2011. In four, they didn’t There were another three European countries in which public spending fell without triggering a recession.

. . . In fact, the EU’s recessionary countries were just as likely to have raised taxes in 2011 as to have cut spending.

The hardest-hit countries – Greece, Portugal, and Spain – did both. These countries are the only ones in Europe that can truthfully say they’ve embraced austerity. Unless, that is, you count Iceland, which returned to robust growth last year despite cutting spending by more than 5 percent.

Yet, in both Portugal and Spain, the tax hikes were larger, percentage-wise, than the spending cuts. So, who’s to say the changes in spending, rather than taxes, are to blame?”

Of course, liberals don’t seem to realize any of that. In their simplistic worldview austerity is simply the equivalent of spending cuts. If Europe is suffering, a lack of spending must the cause.

That leaves them free to advocate for higher taxes, via the Buffett Tax or other harebrained scheme, in an attempt to eliminate the deficit, or (worse) free up more dollars for another stimulus package. Little do they know they are advocating, in their own way, for the very austerity that they simultaneously bemoan. Logical inconsistency at its finest, or worst, depending on where you stand.