Obviously there are enormous economic costs to widespread stealing, and the only means of preventing theft is through incarcerating the thieves -- and warehousing them in jails/prisons at somewhere between $70,000 to $100,000 per year.
Or we could allot these economic victims a tiny fraction of that amount in welfare and save on the costs of theft, the costs of policing theft, court costs for prosecuting theft and the massive costs of warehousing thieves in prisons.
There are numerous other examples where spending money saves money. Thus it was the simplest of predictions that slashing spending on vital (and cost-effective) social programs could only cripple these European economies even further. Note that mindless austerity doesn't simply add other (hidden) costs, it destroys revenue, too.
The "fat" has long ago been
of government spending. Now, every $1 cut from spending destroys $2 in tax revenue. How do you ever "balance a budget" with that dynamic? You can only commit economic suicide as Greece has already done, and which Spain, the U.K., and other traitor governments in Europe are mimicking.
This brings us to a more fundamental defect. The colloquial definition of insanity is to do the same thing over and over and over but expect a different result. This is precisely what is taking place in Europe -- both individually and collectively -- where governments copy the failure of other governments, and then continue those policies when they have already failed in their own economies.
This goes beyond simple insanity. It is nothing less than deliberate economic suicide. Which brings us to the real question: Why are Europe's governments engaged collectively in intentional economic suicide?
The answer to that question is multifaceted, and I have addressed all of those facets in previous commentaries. The real issues here are both political and economic in nature.
In terms of economics we have an obvious dynamic: All Western governments are
plummeting toward bankruptcy
There are only two possible ways to (positively) address this dynamic: Eliminate unproductive government spending and/or increase revenue. What austerity has done is to eliminate productive spending and destroy revenue. Obviously, doing the exact opposite of what is necessary must result in total failure.