Noah denkt™  -
    Project for Philosophical Evaluations of the Economy
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Growth and Austerity
Dialogue with the Alter Ego on achieving both of the above, first drafted on Dec. 20,
published on Dec. 22, 2011
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Question by Alter Ego of Noah denkt™ (AE): You have repeatedly stated that, in your opinion,
austerity and
growth do not necessarily have to exclude each other. And yet not even Britain has been able to achieve both
goals at the same time. Now, since Mariano Rajoy is taking office in
Spain these days, it seems the right moment
for us to press you a little further on how you would try to be austere and growth generating at once.
Answer by Noah denkt™ (Nd): Well, it certainly makes sense to bring this up. Now, let’s see. In an ideal world, we
would probably suggest the following course of action for any government in dire financial straits:
  • raise pension age (as has been done in most European countries)
  • radically cut or reduce certain government programs (such as subsidies for the arts, subsidies for certain
    public TV and radio stations etc…)
  • send all non-essential government workers on vacation (albeit with a x% reduction of their salaries)
  • freeze salaries of public sector workers (with the exception of the police)
  • reduce the size of parliaments and the size of government ministries,
  • change labor laws to an American hire and fire system (and juxtapose that with a general, publicly available
    company registry that details and evaluates every employers and hire and fire record),
  • introduce a flat rate tax system (a three step system with 5% (low income)15% (middle income), 25% (high
    income)
  • freeze or reduce corporate income tax
  • bring down VAT  
  • put the education system from its head on its feet (less theory, more practice) and orientate the reform
    towards the German dual education system for vocational training
  • demonstrate leadership by proving that you can reinvent yourself and be successful at that even if it looks
    for a quite a while as if the odds are overwhelmingly stacked up against you.

AE: Do you really believe that this package would bring the fiscal debt down? After all, it will cost money to
implement educational reform. And what’s more cutting taxes and introducing a flat tax system will substantially
reduce the government’s intake at least in the beginning.
Nd: True. But the first goal of your budget proposal should be to gain the confidence of the financial markets. And
it seems to us that our proposal would in deed reach that goal.

AE: Who knows? What we know however is that your ideas would certainly raise the specter of a civil war in most
European countries. So that certainly wouldn’t help you with the financial markets, would it?
Nd: Clearly, you are right in signaling that our ideas would be met with a huge amount of resistance. That is why
you would ultimately have to see how far you can go without causing a complete upheaval.

AE: But where do you think the fine line is that separates wishful thinking from social reality?
Nd: This is largely dependent on the credibility of the government leadership. In other words, you will need a
government leadership that can actually personify the entrepreneurial vision that it is trying to sell to others

AE: Is that what you are referring to when you talk about a leadership that has successfully demonstrated how to
reinvent itself
(see above)?
Nd: Correct. You simply have to understand that average people tend to be scared by the pace of the changes
that a free market economy produces. And hence it is only natural for them to try and protect whatever it is that
they have accrued instead of reaching out to the unknown. So, anyone who wants the electorate to be more
daring and hopeful about the unknown needs to show them through his own personal biography that there is
hope even if circumstantial evidence seems to suggest otherwise.

AE: That is a tall order though, isn’t it? After all it is next to impossible to be a successful self-made entrepreneur
and a well connected and a gifted politician at the same time.
Nd: You are right. There are not many examples which demonstrate that it can be done. But that doesn’t mean
that one should forego the option of even trying it. Just think about Vaclav Havel! Isn’t his life evidence enough
that surprising things can happen?

AE: Well, yeah. But, we also have to be realistic here….
Nd: And being realistic certainly also entails understanding that our cushioned Western life style is at risk, and
that some special courage is required to defend our prosperity.

AE: Let others do that, will you? Or, at least, let’s not go overboard here?
Nd: But you asked us for our proposal, didn’t you? So please do not recoil if we deliver on what you wanted us to
do.
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Keywords:

politics of austerity and growth, increasing national competitiveness, European debt crisis, debt crisis
in the EURO-zone,
generating growth while being austere, social capitalism, flat-rate tax
system, educational reform, labor law reform