Summary: The Great Recession has been going on for four years, with no end in sight. A great part of the problem is financial: we borrowed too much money for too long and now don’t have the ability to pay off our debts. That is the reason why governments across Europe have been calling for austerity measures. The argument for austerity is as follows: governments have spent too much money on social programmes. They have borrowed from the future to pay for expenditure for today. To get our fiscal houses in order, the argument goes, we need to cut government expenditure. This will reduce our borrowing requirements to pay for everyday items and will enable us to keep on paying the interest on our debts when they are due. Note that no government has a policy of paying down our debts: the best that they can hope for is to maintain debt levels and not default by failing to pay interest payments. As a goal, the ambition is rather modest, but the damage being caused to our societies is huge. Unfortunately, whilst important, this policy ignores the fundamental problem with our economies. While politicians may struggle with the issue of indebtedness and fret over which social or military programme to cut, they are ignoring the central social and economic threat to our countries: the loss of good jobs. If you have good jobs you can afford to pay lots of taxes, which allows the government to pay for the various programmes that it is used to spending money on. If you have no jobs, you have no taxes and you cant afford to do anything. This raises two questions. First, why are the good jobs leaving? And second, what can we do to bring them back?
