It's starting to look as if austerity undermines economic growth and leads to recessions.
The European economy shrank for a second quarter in a row, according to official data released Thursday, fulfilling a common definition of recession and signaling that the region still faces a long road to recovery.
Gross domestic product in the euro zone fell 0.1 percent in the three months through September compared to the previous quarter, according to Eurostat, the European Union statistics agency. The euro zone economy improved slightly from the second quarter, when it contracted by 0.2 percent. But it was the fourth quarter in a row of zero growth or worse.
The AP's report added that continental fears are growing that "at a time of high unemployment in many countries, there are fears that the recession will deepen, and make the debt crisis even more difficult to handle."
Domestically, the right looks at these developments and says, "See? Europe has debt crises, which is keeping Eurozone in a recession, and if we want to avoid the same fate, we need to reduce our own debt."
But the repetition of this conservative message doesn't make it less misguided. The United States doesn't have a debt crisis -- we have low inflation, low interest rates, and investors around the globe desperate to loan us money. Indeed, if there's a lesson to be learned about the Eurozone recession it's that austerity is exactly the wrong course of action given the current circumstances.
As Matt Yglesias explained this morning, "The idea of austerity is that you need to be austere. That as a society you need to squelch consumption (with higher taxes, lower social welfare payments, and lower government salaries) in order to generate the capacity to repay external debts. The fear of self-defeating austerity is that these efforts will actually serve to reduce incomes, which makes debt repayment harder. And that's exactly what we're seeing both in the eurozone writ large and especially in the key countries."
Conservatives in the U.S. believe austerity -- taking capital out of the economy, depressing demand -- would boost the domestic economy. Europe should represent a warning of how wrong they are.