Austerity plans are speed bumps to prosperity

Focus on 'stern and severe' economic policies will hurt biz overseas

Austerity is fast becoming the most overused word in the English language — a depressing sign of the times.

Governments are rising and falling based on the “A” word, France being the latest. Mitt Romney’s campaign hinges on the “A” word, while Democrats disdain it.

In corporate life, the “A” word is equally divisive. Liberal commentators accuse mega-companies of hoarding billions in cash rather than advancing growth initiatives or hiring employees. In Hollywood only heretics mention the “A” word, but cutbacks have translated to reduced production and fewer jobs, again despite rising corporate profits.

The “A” word itself has lost its meaning in the face of these debates. According to Webster’s Dictionary, the word connotes a forbidding attitude — “stern and severe.” When I went to the London School of Economics, the “A” word suggested limits on runaway spending. Today it has come to mean opposition to any form of pro-growth stimulus.

Generations ago just about everyone applauded initiatives like the G.I. Bill or highway construction. In the private sector, companies competed feverishly to develop new products and expand markets. Today the words “research and development” have disappeared from the lexicon and marketing executives are temps.

I’ve never thought of myself as liberal or conservative, but I know I’m not comfortable in a society that covets “stern and severe,” nor am I pleased with the “A” word’s social or economic impact. Having studied in London, I take it personally that Britain has fumbled its way into a double- dip recession thanks to its commitment to the “A” word.

Even the right-leaning Economist last week attacked Romney’s “A”-word proposals to slash Medicare and other sectors of government spending while cutting income taxes for the wealthy. Clearly a key problem for the wobbly American economy is low demand, which stems not only from unemployment but from a widening income inequality. As a headline in the New York Times reminds us, a combination of plutocracy and paralysis could push the U.S., too, into a double dip.

Hollywood represents an intriguing microcosm of the national dilemma. On the surface, the industry prospers and corporate profits are huge, but a great divide separates those atop the corporate, or creative, pyramids from the town’s working artisans. No one is “stern and severe” about the budgets of popcorn pictures but modestly-budgeted dramas are extinct.

Despite its largesse, Hollywood has reason for concern about the world’s doddering economies because overseas markets represent its fastest-growing resource. If half the kids in Spain are jobless, the lines for “The Avengers” may be skimpy.

Economists point out that “fixes” are available, including the time-honored Hollywood practice of creative backloading. Budget reforms could be passed now, with the inevitable tax increases and spending cuts phased in gradually as economies recover. Nations like Sweden and Australia over the past 20 years have each practiced “nuanced policies,” and they’ve worked seamlessly, according to Christine D. Romer, the economist who was chair of President Obama’s Council of Economic Advisers. “Current measures aren’t working and sooner or later politicians and citizens will demand a strategy that does,” she notes.

Given the fact that policymakers are fixated on the “A” word, however, it seems reasonable that we all pay attention to the second most overused word today, which also begins with an “A” — awesome. Any positive experience today is defined by kids as “awesome,” as though all synonyms had vanished.

Maybe they have, because so few experiences are turning out to be positive. And that’s yet another reason why constructive thinking is needed. Yes, some sort of stimulus. In fact, lots of stimuli.

That would be positively awesome. Column Calendar: Monday: Peter Bart Tuesday: Cynthia Littleton wednesday: Brian Lowry Thursday: Andrew Barker/David S. Cohen Friday: Tim Gray/Ted Johnson