The austerity-growth trade off fantasy
The significance of austerity, its meaning, is an un-adorned disciplined practice of attaining steady growth associated with modest personal gains on the part of those governing the enterprise and taking decisions. Today, few managers have this vocational approach as managers and directors of innovation and disseminators of enhanced social conditions. Managers tend to be more inward-looking, concentrating their gaze on their personal power and income level. Austerity spells out to such people something to be avoided at all costs, or, at least, that austerity is something that should be practiced by others, preferably to the benefit of the managers concerned. This is the current state of affairs. Social and evironmental concerns tend to be associated with high profile tax-break initiatives use to attempt to assure the constituencies of their serious social responsibities.
But a far more serious social responsibility is for government, assumed representatives of the national constituency, to guide the economy through the selection of policy targets and use of appropriate policy instruments, to ensure that economic activity has an automatic social and economic function through the growth in real incomes. To achieve this microeconomic management needs to be assisted to support an internal oerganizational austerity where performance is reflected, not only in terms of efficiency in production and therefore in driving down unit costs buty also by driving down unit output prices and therefore the maintenance or enhancement of the purchasing power of the currency, that is, to drive up real incomes of everyone in the nation.
There is no trade-off between austerity and growth; real growth and real incomes depend upon an austerity becoming the basis for business and governmental practice. In this way the economy can be reorientated towards a real incomes approach which has at its root a micro-economic based prudent behaviour which in turn will support a prudent macro-economic outcome.
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