Austerity is a set of economic policies implemented with the aim of reducing government budget deficits. Policies grouped under the term 'austerity measures' may include spending cuts, tax increases, or a mixture of both, and may be undertaken to demonstrate the government's fiscal discipline to creditors and credit rating agencies by bringing revenues closer to expenditures.

Quotes

• Finally, and very importantly, the cause of necessary economic reforms has not been served by confounding that necessity with the policy of austerity. Indeed, serious consideration of the kinds of reform that are needed has been hampered, rather than aided, by the loss of clarity about the distinction between reform of bad administrative arrangements (such as people evading taxes, government servants using favoritism, banks being exempt from necessary discipline, or—for that matter—preserving a nonviable system of early retiring ages), and austerity in the form of ruthless cuts in public services and basic social security. The requirements for alleged financial discipline have tended to amalgamate the two, even though any analysis of social justice would view policies for necessary reform in an altogether different way from drastic cuts in important public services. Even if that distinction may have been lost in rather crude financial thinking, opportunities for adequate public reasoning, in “government by discussion,” could have brought out its relevance clearly enough.
  Europe has been extraordinarily important for the world, which has learned so much from it. It can remain globally important by setting its own house in order—economically, politically, and socially. The first step is to understand properly, with some clarity, the policy challenges that Europe faces today. A failure to do so will reverberate far beyond Europe’s own borders.
  • Amartya Sen, "What Happened to Europe?", New Republic (August 2, 2012)

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